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MASTER LOAN AND SECURITY AGREEMENT
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Dated as of April 1, 2000
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NEW CENTURY MORTGAGE CORPORATION
as Servicer
NC CAPITAL CORPORATION
as Borrower
and
SALOMON BROTHERS REALTY CORP.
as Lender
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TABLE OF CONTENTS
Page
Section 1. Definitions and Accounting Matters ............................ 1
1.01 Certain Defined Terms ................................. 1
1.02 Accounting Terms and Determinations ................... 12
Section 2. Advances, Note and Prepayments ................................ 12
2.01 Advances .............................................. 12
2.02 Notes ................................................. 12
2.03 Procedure for Borrowing ............................... 13
2.04 Limitation on Types of Advances; Illegality ........... 13
2.05 Repayment of Advances; Interest ....................... 14
2.06 Mandatory Prepayments or Pledge ....................... 14
2.07 Optional Prepayments .................................. 15
2.08 Requirements of Law ................................... 15
2.09 Extension ............................................. 16
2.10 Reserved .............................................. 17
Section 3. Payments; Computations; Taxes; Fees ........................... 17
3.01 Payments .............................................. 17
3.02 Computations .......................................... 17
3.03 U.S. Taxes ............................................ 17
3.04 Additional Fees and Payments to Lender ................ 18
Section 4. Collateral Security ........................................... 18
4.01 Collateral; Security Interest ......................... 18
4.02 Further Documentation ................................. 20
4.03 Changes in Locations, Name, etc. ...................... 20
4.04 Lender's Appointment as Attorney-in-Fact .............. 20
4.05 Performance by Lender of Borrower's Obligations ....... 21
4.06 Proceeds .............................................. 22
4.07 Remedies .............................................. 22
4.08 Limitation on Duties Regarding Presentation of
Collateral ............................................ 23
4.09 Powers Coupled with an Interest ....................... 23
4.10 Release of Security Interest .......................... 23
4.11 REO Subsidiary; Formation; REO Property
Representations and Warranties ........................ 23
Section 5. Conditions Precedent .......................................... 24
5.01 Initial Advance ....................................... 24
5.02 Initial and Subsequent Advances ....................... 26
Section 6. Representations and Warranties ................................ 28
6.01 Existence ............................................. 28
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6.02 Reserved .............................................. 28
6.03 Litigation ............................................ 28
6.04 No Breach ............................................. 28
6.05 Action ................................................ 29
6.06 Approvals ............................................. 29
6.07 Margin Regulations .................................... 29
6.08 Taxes ................................................. 29
6.09 Investment Company Act ................................ 29
6.10 No Legal Bar .......................................... 29
6.11 No Default ............................................ 29
6.12 Collateral; Collateral Security ....................... 30
6.13 Chief Executive Office; Chief Operating Office ........ 30
6.14 Location of Books and Records ......................... 30
6.15 True and Complete Disclosure .......................... 31
6.16 Reserved .............................................. 31
6.17 ERISA ................................................. 31
6.18 Licenses .............................................. 31
6.19 True Sales ............................................ 31
6.20 No Burdensome Restrictions ............................ 31
6.21 Reserved .............................................. 31
6.22 Acquisition of Mortgage Loans ......................... 31
6.23 No Adverse Selection .................................. 32
6.24 Borrower Solvent; Fraudulent Conveyance ............... 32
Section 7. Covenants of the Borrower ..................................... 32
7.01 Financial Statements .................................. 32
7.02 Litigation ............................................ 34
7.03 Existence, Etc. ....................................... 34
7.04 Prohibition of Fundamental Changes .................... 35
7.05 Borrowing Base Deficiency ............................. 35
7.06 Notices ............................................... 36
7.07 Servicing ............................................. 36
7.08 Servicer Reports; Management of Assets ................ 36
7.09 True and Complete Disclosure .......................... 37
7.10 Lines of Business ..................................... 37
7.11 Transactions with Affiliates .......................... 37
7.12 Reserved .............................................. 37
7.13 Limitation on Liens ................................... 37
7.14 Limitation on Sale of Assets .......................... 37
7.15 Plans and Multiemployer Plans ......................... 37
7.16 Reserved .............................................. 37
7.17 Reserved .............................................. 37
7.18 Reserved .............................................. 37
7.19 Restricted Payments ................................... 37
7.20 Reserved .............................................. 38
7.21 No Amendment or Waiver ................................ 38
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7.22 Maintenance of Property; Insurance .................... 38
7.23 Further Identification of Collateral .................. 38
7.24 Mortgage Loan or REO Property Determined to be
Defective ............................................. 38
7.25 Reserved .............................................. 38
7.26 Reserved .............................................. 38
7.27 Special Purpose Entity ................................ 38
7.28 Broker's Price Opinions ............................... 39
Section 8. Events of Default ............................................. 40
Section 9. Remedies Upon Default ......................................... 42
Section 10. No Duty on Lender's Part ...................................... 43
Section 11. Miscellaneous ................................................. 43
11.01 Waiver ................................................ 43
11.02 Notices ............................................... 43
11.03 Indemnification and Expenses .......................... 43
11.04 Amendments ............................................ 44
11.05 Successors and Assigns ................................ 44
11.06 Survival .............................................. 44
11.07 Captions .............................................. 44
11.08 Counterparts .......................................... 45
11.09 Loan Agreement Constitutes Security Agreement;
Governing Law ......................................... 45
11.10 SUBMISSION TO JURISDICTION; WAIVERS ................... 45
11.11 WAIVER OF JURY TRIAL .................................. 45
11.12 Acknowledgments ....................................... 46
11.13 Hypothecation or Pledge of Collateral ................. 46
11.14 Assignments; Participations ........................... 46
11.15 Servicing ............................................. 47
11.16 Periodic Due Diligence Review ......................... 48
11.17 Set-Off ............................................... 49
Section 12. Limitations on Liability ...................................... 49
12.01 Limitation on Liability ............................... 49
12.02 Limitation on Liability of Lender's Officer's,
Employees, Etc. ....................................... 50
12.03 Reserved .............................................. 50
12.04 Conflict of Terms ..................................... 50
12.05 New Century ........................................... 50
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SCHEDULES
SCHEDULE 1 Representations and Warranties re: Mortgage Loans
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Representations and Warranties re: REO Properties
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to the Borrower
EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E [Reserved]
EXHIBIT F Required Fields for Servicing Transmission
EXHIBIT G Required Fields for Asset Data Transmission
EXHIBIT H [Reserved]
EXHIBIT I Form of REO Subsidiary Pledge Agreement
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MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of April 1, 2000, among
NC Capital Corporation, a California corporation (the "Borrower"), New Century
Mortgage Corporation (the "Servicer") and Salomon Brothers Realty Corp., a New
York corporation (the "Lender").
RECITALS
The Borrower wishes to obtain financing from time to time.
The Lender has agreed, subject to the terms and conditions of this
Loan Agreement (as defined herein), to provide such financing to the Borrower as
more particularly described herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Accepted Servicing Practices" the servicing standards set forth in
Section 3.01 of the Pooling and Servicing Agreement.
"Advance" shall have the meaning specified in Section 2.01(a)
hereof.
"Affiliate" means with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregation Facility" means the Letter Agreement, dated as of April
1, 2000, among the Lender, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., the Borrower and the
Servicer.
"ALTA" means the American Land Title Association.
"Applicable Percentage" means the following percentages:
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Principal Balance of Mortgage Loan
or value of REO Property or the BPO Value Applicable Percentage
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$50,000.00 or less 25%
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$50,000.01 to $75,000.00 50%
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$75,000.01 or greater 65%
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"Asset Data Transmission" shall mean a computer-readable magnetic or
other electronic format incorporating the fields identified on Exhibit G.
"Asset File" shall have the meaning assigned thereto in the
Custodial Agreement.
"Asset Schedule" shall mean the hard copy report provided by the
Borrower which shall include (a) with respect to each Mortgage Loan to be
included as Collateral: (i) the Mortgage Loan number, (ii) the Mortgagor's last
name, (iii) the original principal amount of the Mortgage Loan, and (iv) the
current principal balance of the Mortgage Loan, and (b) with respect to each REO
Property, the street address of the REO Property.
"Assignment of Mortgage" shall mean, with respect to any Mortgage,
an assignment of the Mortgage, notice of transfer or equivalent instrument in
blank or in recordable form (excepting therefrom mortgage recordation
information that has not yet been returned by the applicable recorder's office),
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect the assignment and pledge of the Mortgage.
"Available Proceeds" shall mean, as of each Payment Date, the amount
available in the Collection Account for distribution to Borrower after
distribution of amounts required by Section 11.15(c)(ii) and after
reconciliation for chargebacks and other items; provided, however, that
Available Proceeds for any Payment Date shall not include any amounts in the
Collection Account received after the last day of the related Collection Period.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of
1978, as amended from time to time.
"Borrower" shall have the meaning provided in the heading hereof.
"Borrowing Base" shall mean the aggregate Collateral Value of (i)
all Mortgage Loans that have been, and remain, pledged to the Lender hereunder
and (ii) any REO Property then owned by an REO Subsidiary.
"Borrowing Base Certificate" shall mean a certificate prepared by
the Lender setting forth the Borrowing Base and the aggregate outstanding
principal amount of Advances.
"Borrowing Base Deficiency" shall have the meaning provided in
Section 2.06 hereof.
"BPO" shall mean, with respect to a Mortgage Loan or REO Property, a
broker's price opinion prepared by a duly licensed real estate broker who has no
interest, direct or indirect, in the Mortgage Loan or REO Property or in the
Borrower or any Affiliate or REO Subsidiary of the Borrower and whose
compensation is not affected by the results of the broker's price opinion and
which valuation indicates the expected proceeds for a sale of the related
Mortgaged Property or REO
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Property and, with respect to any condominium development or planned unit
development that was not ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇▇ Mac approved, the amount, if any,
by which the valuation was decreased as a result of such lack of approval, and
includes certain assumptions, including those as to the condition of the
interior of the applicable Mortgaged Property or REO Property and marketing
time.
"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, the Servicer or the Custodian is authorized or obligated by
law or executive order to be closed.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this Loan
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Change of Control" means the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of outstanding shares of voting stock of the Borrower at
any time if after giving effect to such acquisition (i) such Person or Persons
owns twenty percent (20%) or more of such outstanding voting stock or (ii) the
existing shareholders of the Borrower do not own more than fifty percent (50%)
of such outstanding shares of voting stock.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall have the meaning assigned to such term in Section
4.01(b) hereof.
"Collateral Value" shall mean:
(a) (I) with respect to any Mortgage Loan which, in the Lender's sole
discretion, is of insufficient quality to be purchased pursuant to the terms of
the Aggregation Facility or (II) with respect to any Mortgage Loan which is
missing documentation or other information and such problem is not cured by the
Borrower in sixty days, an amount equal to (A) for the first ninety-day period
after such Mortgage Loan becomes subject to the terms of this Agreement, 90% of
the unpaid principal balance of the Mortgage Loan as of such date and (B)
thereafter, 90% of the unpaid principal balance of the Mortgage Loan, minus an
additional 10% of the unpaid principal balance of such Mortgage Loan for each
additional month after the initial ninety-day period;
(b) with respect to any Mortgage Loan which was more than thirty days but
less than sixty days delinquent on more than one occasion in the prior twelve
months and is now current, an amount equal to (A) 95% of the unpaid principal
balance of the Mortgage Loan as of the date such Mortgage Loan becomes subject
to the terms of this Agreement, if such Mortgage Loan has been more than thirty
days delinquent but less than sixty days delinquent on two occasions in the
prior twelve months; (B) 90% of the unpaid principal balance of the Mortgage
Loan as of the date such Mortgage Loan becomes subject to the terms of this
Agreement, if such Mortgage Loan has been sixty days
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delinquent on one occasion in the prior twelve months and (C) 85% of the unpaid
principal balance of the Mortgage Loan, if such Mortgage Loan does not meet the
requirements set forth in (A) or (B) above; or
(c) (I) with respect to each Mortgage Loan that is delinquent one Monthly
Payment or delinquent two Monthly Payments, an amount equal to the lesser of (i)
the Market Value and (ii) 90% of the unpaid principal balance of such Mortgage
Loan; (II) with respect to each Mortgage Loan that is delinquent three Monthly
Payments, the lesser of (i) the Market Value and (ii) 80% of the unpaid
principal balance of such Mortgage Loan; (III) for a maximum of $25,000,000 in
Mortgage Loans and REO Properties, with respect to each Mortgage Loan that is
delinquent four or more Monthly Payments or with respect to each REO Property,
the least of (i) the Market Value, (ii) the Applicable Percentage of the unpaid
principal balance of such Mortgage Loan (or with respect to an REO Property, the
related Mortgage Loan immediately prior to foreclosure) and (iii) the Applicable
Percentage of the most recent BPO; provided, that, the Collateral Value shall be
deemed to be zero:
(1) with respect to any Mortgage Loan or REO Property, there is a
material breach of a representation and warranty set forth on
Schedule 1 or Schedule 3, as applicable (assuming each
representation and warranty is made as of the date Collateral Value
is determined);
(2) if any Mortgage Loan or REO Property has been released from the
possession of the Custodian under Section 5(a) of the Custodial
Agreement to the Borrower or its bailee for a period in excess of
ten (10) Business Days;
(3) if any Mortgage Loan or REO Property has been released from the
possession of the Custodian (i) under Section 5(b) of the Custodial
Agreement under any Transmittal Letter in excess of the time period
stated in such Transmittal Letter for release, or (ii) under Section
5(c) of the Custodial Agreement under an Attorney Bailee Letter,
from and after the date such Attorney's Bailee Letter is terminated
or ceases to be in full force and effect;
(4) (a) if the related Mortgage Note or the related Mortgage is not
genuine or is not the legal, valid, binding and enforceable
obligation of the maker thereof, subject to no right of rescission,
set-off, counterclaim or defense, or (b) if such Mortgage is not a
valid, subsisting, enforceable and perfected first lien on the
Mortgaged Property; or
(5) with respect to any Mortgage Loan or REO Property whose
Collateral Value has been determined pursuant to (c)(III) of this
definition for greater than 90 days.
"Collection Account" shall mean the account established by the
Servicer in accordance with the terms and provisions of the Pooling and
Servicing Agreement with the Custodian, except that such account is subject to a
security interest in favor of the Lender and into which all Collections shall be
deposited.
"Collection Period" shall mean, with respect to each Payment Date,
the immediately preceding calendar month (or in the case of the first Payment
Date following the date as of which any
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Eligible Asset is funded under this Agreement, the period from and including the
Funding Date through the end of the calendar month in which the Funding Date
occurs).
"Collections" shall mean, collectively, all Principal Collections,
all Interest Collections, all Operation Proceeds, all Sale Proceeds and Other
Collections.
"Contractual Obligation" shall mean as to any Person, any material
provision of any agreement, instrument or other undertaking to which such Person
is a party or by which it or any of its property is bound or any material
provision of any security issued by such Person.
"Custodial Agreement" shall mean the Custodial Agreement, dated as
of the date hereof, among the Borrower, the Custodian and the Lender,
substantially in the form of Exhibit B hereto, as the same shall be modified and
supplemented and in effect from time to time.
"Custodian" shall mean U.S. Bank National Association, its
successors and permitted assigns.
"Custodian Asset Transmission" shall have the meaning assigned
thereto in the Custodial Agreement.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Due Date" means the day of the month on which the Monthly Payment
is due on a Mortgage Loan, exclusive of any days of grace.
"Due Diligence Review" shall mean the performance by the Lender of
any or all of the reviews permitted under Section 11.16 hereof with respect to
any or all of the Mortgage Loans, the REO Properties or the Borrower, any REO
Subsidiary or the Servicer, 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 Asset" shall mean a Mortgage Loan which is secured by a
first mortgage lien on a one-to-four family residential property or an REO
Property and as to which (i) the representations and warranties in Section 6.12
and Schedule 1 (or, in the case of an REO Property, the representations and
warranties in Schedule 3) hereof are correct, (ii) the related Asset File
contains all required Mortgage Loan Documents without Material Exceptions unless
otherwise waived by the Lender and (iii) such other customary criteria for
eligibility determined by the Lender shall have been satisfied.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
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"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 Report" shall mean the exception report prepared by the
Custodian pursuant to the Custodial Agreement.
"Existing Financing Documents" shall mean the Greenwich Capital
Financing Documents, the PaineWebber Financing Documents and the U.S. Bank
Financing Documents.
"▇▇▇▇▇▇ ▇▇▇" means ▇▇▇▇▇▇ Mae, formerly known as the Federal
National Mortgage Association, or any successor thereto.
"▇▇▇▇▇▇▇ Mac" means ▇▇▇▇▇▇▇ Mac, formerly known as the Federal Home
Loan Mortgage Corporation, or any successor thereto.
"Funding Date" shall mean the date on which an Advance is made
hereunder.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America.
"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 REO Subsidiaries or any of their properties.
"Greenwich Capital Financing Documents" shall mean (i) the Master
Loan and Security Agreement, dated as of June 23, 1999, by and between the
Borrower and Greenwich Capital Financial Products, Inc. ("GCFP"), as amended as
of October 23, 1999, (ii) the Residual Financing Facility Agreement, dated as of
June 23, 1999, by and between the Borrower and GCFP, (iii) the Custodial
Agreement, dated as of June 23, 1999 by and among the Borrower, U.S. Bank
National Association and GCFP, (iv) the Affiliate Guaranty, dated as of June 23,
1999, made by the Servicer and New Century Financial Corporation in favor of
GCFP and (v) all other documents or agreements executed in connection therewith,
or replacement facilities or extensions thereof with substantially similar
terms.
"Guarantee" shall mean, as to any Person, any obligation of such
Person directly or indirectly guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, or to take-or-pay or otherwise),
provided that the
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term "Guarantee" shall not include (i) endorsements for collection or deposit in
the ordinary course of business, or (ii) obligations to make servicing advances
for delinquent taxes and insurance, or other obligations in respect of a
Mortgaged Property, to the extent required by the Lender. The amount of any
Guarantee of a Person shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith. The
terms "Guarantee" and "Guaranteed" used as verbs shall have correlative
meanings.
"Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for account of such Person; (e) Capital Lease Obligations of such Person; (f)
obligations of such Person under repurchase agreements or like arrangements; (g)
Indebtedness of others Guaranteed by such Person; (h) all obligations of such
Person incurred in connection with the acquisition or carrying of fixed assets
by such Person; (i) Indebtedness of general partnerships of which such Person is
a general partner; and (j) any other indebtedness of such Person evidenced by a
note, bond, debenture or similar instrument.
"Insurance Proceeds" means with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Interest Collections" shall mean collections on the Mortgage Loans
attributable to interest paid thereon.
"Interest Period" shall mean, with respect to any Advance, (i)
initially, the period commencing on the Funding Date with respect to such
Advance and ending on the 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 Maturity Date.
"Junior Securitization Interests" shall mean a mortgage-backed
security created in a securitization transaction that represents a subordinated
right to receive principal or interest payments on the mortgage loans underlying
such securitization (whether or not such subordination arises only under
particular circumstances).
"Lender" shall have the meaning assigned thereto in the heading
hereto.
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"LIBO Base Rate" shall mean with respect to any Interest Period, the
rate per annum equal to the rate appearing at page 3750 of the Telerate Screen
as one-month LIBOR at or about 11:00 A.M., eastern time, on the second Business
Day preceding such Interest Period, and if such rate shall not be so quoted, the
rate per annum at which the Lender is offered Dollar deposits at or about 11:00
A.M., eastern time, on such date by prime banks in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations in
respect of its Advances are then being conducted for delivery on such day for a
period of one month and in an amount comparable to the amount of the Advances to
be outstanding on such day.
"LIBO Rate" shall mean with respect to each Interest Period
pertaining to an Advance, a rate per annum equal to the LIBO Base Rate plus 200
basis points (rounded upwards to the nearest 0.0625%).
"Lien" shall mean any mortgage, lien, pledge, charge, security
interest or similar encumbrance.
"Loan Agreement" shall mean this Master Loan and Security Agreement,
as such agreement may be amended, supplemented or otherwise modified from time
to time as mutually agreed by the parties in writing.
"Loan Documents" shall mean, collectively, this Loan Agreement, the
Note, any REO Subsidiary Pledge Agreement and the Custodial Agreement.
"Market Value" shall mean the market value as determined by the
Lender in its sole discretion.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the property, business, operations, financial condition or prospects of the
Borrower, (b) the ability of the Borrower to perform in all material respects
its obligations under any of the Loan Documents to which it is a party, (c) the
validity or enforceability in all material respects of any of the Loan
Documents, (d) the rights and remedies of the Lender under any of the Loan
Documents, (e) the timely payment of the principal of or interest on the
Advances or other amounts payable in connection therewith or (f) the Collateral
(other than changes in Market Value due to market conditions).
"Material Exception" shall have the meaning assigned thereto in the
Custodial Agreement.
"Maturity Date" shall mean March 31, 2001, or such earlier date on
which this Loan Agreement shall terminate in accordance with the provisions
hereof or by operation of law.
"Maximum Credit" shall mean $25,000,000.
"Monthly Payment" means the scheduled monthly payment of principal
and interest on a Mortgage Loan as adjusted in accordance with changes in the
Mortgage Interest Rate pursuant to the provisions of the Mortgage Note for an
adjustable rate Mortgage Loan.
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"Mortgage" shall mean the mortgage, deed of trust or other
instrument creating a first lien on, or first priority security interest in, a
Mortgaged Property securing a Mortgage Note.
"Mortgage Interest Rate" means the annual rate of interest borne on
a Mortgage Note, which shall be adjusted from time to time with respect to
adjustable rate Mortgage Loans.
"Mortgage Loan" shall mean a mortgage loan (together with any
related prepayment charges and the related servicing rights) which the Custodian
has been instructed to hold for the Lender pursuant to the Custodial Agreement,
and which Mortgage Loan includes, without limitation, (i) a Mortgage Note, the
related Mortgage and all other Mortgage Loan Documents and (ii) all right, title
and interest of the Borrower in and to the Mortgaged Property covered by such
Mortgage.
"Mortgage Loan Documents" shall mean, with respect to a Mortgage
Loan, the documents comprising the Asset File for such Mortgage Loan.
"Mortgage Note" shall mean the original executed promissory note or
other evidence of the indebtedness of a mortgagor/borrower with respect to a
Mortgage Loan.
"Mortgaged Property" means the real property (including all
improvements, buildings and fixtures thereon and all additions, alterations and
replacements made at any time with respect to the foregoing) and all other
collateral securing repayment of the debt evidenced by a Mortgage Note.
"Mortgagee" means either the Borrower or any subsequent holder of a
Mortgage Loan.
"Mortgagor" means the obligor on a Mortgage Note.
"Multiemployer Plan" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been or are required to be
made by the Borrower or any ERISA Affiliate and that is covered by Title IV of
ERISA.
"Note" shall mean the promissory note provided for by Section
2.02(a) hereof for Advances and any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Notice of Borrowing and Pledge" shall have the meaning assigned to
such term in Section 2.03(a).
"Operation Proceeds" shall mean collections of rent and other
amounts realized from the operation of REO Property.
"Other Collections" shall mean all collections and proceeds on or in
respect of the Mortgage Loans or REO Properties (other than Principal
Collections, Interest Collections, Operation Proceeds and Sale Proceeds) and
excluding collections required to be paid to a Mortgagor on the Mortgage Loans
or held for the Mortgagor, whether or not in escrow, including, without
limitation, collections for taxes and insurance.
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"PaineWebber Financing Documents" shall mean (i) the Master Loan and
Security Agreement, dated as of July 20, 1999, by and among the Borrower, the
Servicer and PaineWebber Real Estate Securities, Inc. ("PaineWebber"), as
amended as of September 30, 1999, (ii) the Custodial Agreement dated as of July
20, 1999, by and among the Borrower, the Servicer, U.S. Bank National
Association and PaineWebber, and (iii) all other documents or agreements
executed in connection therewith, or replacement facilities or extensions
thereof with substantially similar terms.
"Payment Date" shall mean the thirtieth (30th) day of each calendar
month, or if such day is not a Business Day, the next succeeding Business Day.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean (i) those Liens that existed on an REO
Property as of the Funding Date; (ii) any taxes, assessments or governmental
charges on any of the REO Properties which the Servicer has not advanced because
the Servicer has determined, in accordance with Accepted Servicing Practices
that any advance of such charges would not be likely recoverable from the sale
of such REO Property; (iii) any obligation to cure existing violations under
environmental laws with regard to REO Properties which the Servicer has not
advanced because the Servicer has determined, in accordance with Accepted
Servicing Practices and the terms and conditions of the Pooling and Servicing
Agreement, that any advance on such obligations would not be likely recoverable
from the sale of such REO Property; and (iv) any Liens granted by Borrower in
favor of Lender.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate and that is covered by Title
IV of ERISA, other than a Multiemployer Plan.
"Pooling and Servicing Agreement" shall mean the Pooling and
Servicing Agreement, Series 1999-NC5 dated as of December 1, 1999 among U.S.
Bank National Association, Salomon Brothers Mortgage Securities VII, Inc. and
the Servicer, as the same may be amended, supplemented or otherwise modified and
in effect from time to time.
"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 (other than the Custodial Agreement) that is not paid when due to
the Lender (whether at stated maturity, by acceleration or mandatory prepayment
or otherwise), a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 2%
per annum, plus (i) the interest rate otherwise applicable to such Advance or
other amount, or (ii) if no interest rate is otherwise applicable, the LIBO
Rate.
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"Principal Collections" shall mean collections on the Mortgage Loans
attributable to principal payments thereon.
"Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Qualified Originator" shall mean (a) the Borrower, the Servicer or
any of their affiliates and (b) any other originator of Mortgage Loans;
provided, however, the Lender shall have the right to reject an originator (in
its reasonable discretion) by delivering written notice to the Borrower 15 days
prior to ceasing to accept Collateral originated by such person.
"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.
"Reimbursable Expenses" shall mean (x) all costs and expenses
reasonably incurred in the ordinary course of business consistent with Accepted
Servicing Practices to preserve, protect, maintain or secure the Eligible Assets
or otherwise reasonably incurred in the course of the Servicer's performance of
its services under this Agreement to the extent related to such Eligible Assets
(other than the Servicer's overhead expenses), or similar costs incurred
directly by the Borrower in connection with the Eligible Assets and (y) any
other costs and expenses otherwise authorized in writing by the Borrower and
approved in writing by the Lender. Reimbursable Expenses specifically excludes
any servicing advances outstanding by the Servicer or any other servicer prior
to the date of this Agreement.
"REO Property" shall mean any Mortgaged Property (together with the
related servicing rights) the title to which has been acquired by an REO
Subsidiary by foreclosure, deed-in-lieu of foreclosure or similar means, in each
case together with all buildings, fixtures and improvements thereon and all
other rights, benefits and proceeds arising from and in connection with such REO
Property.
"REO Subsidiary" shall have the meaning assigned to such term in
Section 4.11 hereof.
"REO Subsidiary Pledge Agreement" shall mean a pledge agreement made
by the Borrower in favor of the Lender, substantially in the form of Exhibit I
hereto, as the same may be amended, supplemented or otherwise modified from time
to time.
"REO Subsidiary Pledged Stock" shall mean all capital stock or other
equity interests of any REO Subsidiary, which capital stock or interests (x)
evidence the Borrower's 100% equity ownership interest in such REO Subsidiary,
together with all stocks, certificates, options or rights of any nature
whatsoever that may be issued or granted by such REO Subsidiary to the Borrower
while this Loan Agreement is in effect and (y) are pledged to the Lender
pursuant to an REO Subsidiary Pledge Agreement.
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"Requirement of Law" shall mean as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Required Documents" shall mean those documents identified in
Section 2(I) of the Custodial Agreement.
"Residual Finance Subsidiaries" shall mean any wholly-owned
Subsidiary of the Borrower that, pursuant to its articles or certificate of
incorporation, has a purpose limited to the ownership of Junior Securitization
Interests, the establishment of one or more securitization trusts, issuing
securities backed by such Junior Securitization Interests, otherwise financing
such Junior Securitization Interests, and lawful activities incidental to and
necessary and convenient to the foregoing.
"Responsible Officer" shall mean, as to any Person, the chief
operating officer, the chief executive officer, the chief financial officer and
any executive vice president or senior vice president of such Person and, with
respect to the Borrower and any REO Subsidiary, any other Person designated as a
responsible officer by the Borrower or such REO Subsidiary (including any
manager) to the Lender; provided, that in the event any such officer is
unavailable at any time he or she is required to take any action hereunder,
Responsible Officer shall mean any officer authorized to act on such officer's
behalf as demonstrated by a certificate of corporate resolution.
"Restricted Payments" shall mean with respect to any Person,
collectively, all dividends or other distributions of any nature (cash,
securities, assets or otherwise), and all payments, by virtue of redemption or
otherwise, on any class of equity securities (including, without limitation,
warrants, options or rights therefor) issued by such Person, whether such
securities are now or may hereafter be authorized or outstanding and any
distribution in respect of any of the foregoing, whether directly or indirectly.
"Sale Proceeds" shall mean (i) any proceeds of any sales,
liquidations, transfers or dispositions of any Mortgage Loan, net of reasonable
costs, including reasonable attorneys' fees, and (ii) any proceeds of any sales,
liquidations, dispositions, condemnations, casualty insurance and other amounts
from any disposition, taking, damage or destruction of all or any portion of any
Mortgaged Property or REO Property, net of reasonable costs of closing,
including but not limited to brokerage commissions, make-ready expenses, title
insurance, financing costs, recording fees, transfer taxes, tax certificates,
title and closing agent fees and pro-rated items; provided, however, that with
respect to the foreclosure of any Mortgaged Property that is acquired by an REO
Subsidiary, Sale Proceeds shall not include any proceeds of such foreclosure
sale if the entire amount of such proceeds were advanced to such REO Subsidiary
by an Affiliate of such REO Subsidiary to enable such REO Subsidiary to acquire
such Mortgaged Property.
"Secured Obligations" shall have the meaning assigned thereto in
Section 4.01(c) hereof.
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"Servicing Records" shall have the meaning assigned thereto in
Section 11.15(b) hereof.
"Servicing Transmission" shall mean a computer-readable magnetic or
other electronic format acceptable to the parties containing the information
identified on Exhibit F.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
"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.
"U.S. Bank Financing Documents" shall mean (i) the Fourth Amended
and Restated Credit Agreement, dated as of May 26, 1999, by and between the
Servicer and U.S. Bank National Association ("U.S. Bank"), as amended August 31,
1999 and October 14, 1999, (ii) the Pledge and Security Agreement, dated as of
May 29, 1998, by and between the Servicer and U.S. Bank, as amended, (iii) the
Servicing Security Agreement, dated as of May 29, 1998, between the Servicer and
U.S. Bank, (iv) the Guaranty dated December 11, 1998 by the Borrower in favor of
U.S. Bank, (v) the Security Agreement, dated as of February 17, 2000, by and
among the Borrower, NC Residual II Corporation and U.S. Bank and (vi) all other
documents or agreements executed in connection therewith, or replacement
facilities or extensions thereof with substantially similar terms.
1.02 Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
Section 2. Advances, Note and Prepayments.
2.01 Advances.
(a) Subject to fulfillment of the conditions precedent set forth in
Sections 5.01 and 5.02 hereof, and provided that no Default shall have occurred
and be continuing hereunder, the Lender agrees, from time to time, on the terms
and conditions of this Loan Agreement, to make loans
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(individually, an "Advance"; collectively, the "Advances") to the Borrower in
immediately available funds, on any Business Day from and including the
Effective Date to but excluding the Maturity Date in an aggregate principal
amount at any one time outstanding up to but not exceeding the lesser of (i) the
Maximum Credit and (ii) the Borrowing Base as in effect from time to time.
(b) Subject to the terms and conditions of this Loan Agreement,
during such period the Borrower may borrow, repay and reborrow hereunder.
(c) In no event shall an Advance be made when any Default or Event
of Default has occurred and is continuing.
(d) The minimum amount of any Advance made by the Lender hereunder
shall be $500,000.
(e) The Lender shall not be obligated to make more than four
Advances in any one calendar month.
2.02 Notes.
(a) The Advances made by the Lender shall be evidenced by a single
promissory note of the Borrower substantially in the form of Exhibit A hereto
(the "Note"), dated the date hereof, payable to the Lender in a principal amount
equal to the amount of the Maximum Credit as originally in effect and otherwise
duly completed. The Lender shall have the right to have its Note subdivided, by
exchange for promissory notes of lesser denominations or otherwise.
(b) The date, amount and interest rate of each Advance made by the
Lender to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of the Note, noted by the Lender on the grid attached to the Note or any
continuation thereof; provided, that the failure of the Lender to make any such
recordation or notation shall not affect the obligations of the Borrower to make
a payment when due of any amount owing hereunder or under the Note in respect of
the outstanding Advances.
2.03 Procedure for Borrowing.
(a) Borrowing Procedure for Requesting an Advance. The Borrower may
request a borrowing to be secured by any Eligible Assets hereunder, on any
Business Day during the period from and including the Effective Date to but
excluding the Maturity Date, by delivering to the Lender, with a copy to the
Custodian, an Asset Data Transmission and an irrevocable Notice of Borrowing and
Pledge substantially in the form of Exhibit D hereto (a "Notice of Borrowing and
Pledge"), appropriately completed, which must be received no later than three
(3) Business Days prior to the requested Funding Date. Such Notice of Borrowing
and Pledge shall include an Asset Schedule in respect of the Eligible Assets
that the Borrower proposes to pledge to the Lender and to be included in the
Borrowing Base in connection with such borrowing.
(b) Pursuant to the Custodial Agreement, the Custodian shall review
any Required Documents delivered prior to 12:00 p.m. (eastern time) on the
second Business Day prior to the
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requested Funding Date in time to include the related Mortgage Loans and REO
Properties in the Borrowing Base determination for such Funding Date. Not later
than 1:00 p.m. (eastern time) on the Business Day prior to each Funding Date,
the Custodian shall deliver to the Lender, via electronic transmission
acceptable to the Lender, the Custodian Asset Transmission and an Exception
Report showing the status of all Mortgage Loans and REO Properties then held by
the Custodian, including but not limited to the Mortgage Loans and REO
Properties which are subject to document exceptions, and the time the related
Mortgage Loan Documents have been released pursuant to Section 5(a) or 5(b) of
the Custodial Agreement. In addition, the Custodian shall deliver to the Lender
no later than 1:00 p.m. (eastern time) by facsimile transmission on the Business
Day prior to each Funding Date, one or more Trust Receipts (as defined in the
Custodial Agreement) relating to the Mortgage Loans and REO Properties. The
original copies of such Trust Receipts shall be delivered to ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Realty Corp., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (telephone number (▇▇▇) ▇▇▇-▇▇▇▇) by overnight delivery
using a nationally recognized insured overnight delivery service for receipt on
each Funding Date.
(c) Upon the Borrower's request for a borrowing pursuant to Section
2.03(a) above, the Lender shall, assuming all conditions precedent set forth in
this Section 2.03 and in Sections 5.01 and 5.02 have been met, and provided no
Default shall have occurred and be continuing (in accordance with Section 2.01),
not later than 1:00 p.m. (eastern time) on the requested Funding Date make an
Advance in an amount (determined by the Lender) which would not cause the
aggregate amount of Advances then outstanding to exceed the lesser of (i) the
Maximum Credit or (ii) the Borrowing Base shown on the latest Borrowing Base
Certificate of the Lender. Subject to the foregoing, such borrowing will be made
available to the Borrower by the Lender transferring, via wire transfer
(pursuant to wire transfer instructions provided by the Borrower in the related
Notice of Borrowing and Pledge), in the aggregate amount of such borrowing in
funds immediately available to the Borrower.
2.04 Limitation on Types of Advances; Illegality. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of any LIBO
Base Rate:
(a) the Lender reasonably determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of "LIBO Base Rate" in Section 1.01 hereof
are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Advances as
provided herein; or
(b) it becomes unlawful for the Lender to honor its obligation to
make or maintain Advances hereunder using a LIBO Rate;
then the Lender shall give the Borrower prompt notice thereof and, so long as
such condition remains in effect, the Lender shall be under no obligation to
make additional Advances, and the Borrower shall, at its option, either prepay
such Advances or pay interest on such Advances at a rate per annum as determined
by the Lender taking into account the increased cost, if any, to the Lender of
making the Advances.
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2.05 Repayment of Advances; Interest.
(a) The entire unpaid principal amount of all Advances, together
with all accrued and unpaid interest thereon, if not previously paid, shall be
due and payable to the Lender on the Maturity Date.
(b) No later than the Business Day prior to each Payment Date, the
Lender shall provide to the Borrower a report which shall state the interest
amount due for the current Interest Period on the Advances and the amount of any
mandatory principal prepayment pursuant to Section 2.06. The calculation on such
report shall be based upon information provided in the most recent Servicing
Transmission and the most recent Custodian Asset Transmission and Exception
Report.
(c) The Borrower shall pay to the Lender interest on the unpaid
principal amount of each Advance for the period from and including the date of
such Advance to but excluding the date such Advance shall be paid in full, at a
rate per annum equal to the LIBO Rate. Notwithstanding the foregoing, the
Borrower shall pay to the Lender interest at the applicable Post-Default Rate on
any principal of any Advance and on any other amount payable by the Borrower
hereunder or under the Note, that shall not be paid in full when due (whether at
stated maturity, by acceleration or by mandatory prepayment or otherwise), for
the period from and including the due date thereof to but excluding the date the
same is paid in full. Accrued interest on each Advance as calculated in Section
2.05(b) above shall be payable monthly on each Payment Date and on the Maturity
Date, except that interest payable at the Post-Default Rate shall accrue daily
and shall be payable promptly upon receipt of invoice. Promptly after the
determination of any interest rate provided for herein or any change therein,
the Lender shall give written notice thereof to the Borrower.
2.06 Mandatory Prepayments or Pledge.
Pursuant to the Custodial Agreement, on each Business Day on which
there is a sale, release or other change in the Mortgage Loans held by the
Custodian or REO Properties owned by an REO Subsidiary, the Custodian shall
deliver to the Lender and the Borrower a Custodian Asset Transmission and an
Exception Report. On the fifth Business Day of each calendar month, the Borrower
shall cause the Servicer to deliver to the Lender the Servicing Transmission. No
later than 5:00 p.m. eastern time on the Business Day preceding each Payment
Date the Lender shall deliver to the Borrower a Borrowing Base Certificate, the
calculation in such certificate to be based on (a) the principal balance and
appraised value of the Mortgage Loans as of the last day of the preceding
calendar month and (b) the appraised value of the REO Properties as of the last
day of the preceding calendar month. Such information shall be ascertained from
the Custodian Asset Transmission, the Exception Report and the Servicing
Transmission. In the event that such Borrowing Base Certificate indicates that
the aggregate outstanding principal amount of Advances exceeds the Borrowing
Base (a "Borrowing Base Deficiency"), the Borrower shall on the related Payment
Date, either prepay the Advances in part or in whole or pledge additional
Eligible Assets (which Collateral shall be in all respects acceptable to the
Lender) to the Lender, such that after giving effect to such prepayment or
pledge the aggregate outstanding principal amount of the Advances does not
exceed the Borrowing Base.
2.07 Optional Prepayments.
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(a) The Advances are prepayable without premium or penalty, in whole
or in part on each Payment Date. The Advances are prepayable at any other time,
in whole or in part, in accordance herewith and subject to clause (b) below. Any
amounts prepaid shall be applied to repay the outstanding principal amount of
any Advances (together with interest thereon) until paid in full. Amounts repaid
may be reborrowed in accordance with the terms of this Loan Agreement. If the
Borrower intends to prepay an Advance in whole or in part from any source, the
Borrower shall give two (2) Business Days' prior written notice thereof to the
Lender. If such notice is given, the amount specified in such notice shall be
due and payable on the date specified therein, together with accrued interest to
such date on the amount prepaid. Partial prepayments shall be in an aggregate
principal amount of at least $1,000,000.
(b) If the Borrower makes a prepayment of the Advances on any day
which is not a Payment Date, the Borrower shall indemnify the Lender and hold
the Lender harmless from any actual loss (excluding any lost profit or
opportunity cost) which the Lender may sustain or incur arising from (a) the
re-employment of funds obtained by the Lender to maintain the Advances hereunder
or (b) fees payable to terminate the deposits from which such funds were
obtained, in either case, which actual loss or expense shall be equal to an
amount equal to the excess, as reasonably determined by the Lender, of (i) its
cost of obtaining funds for such Advances for the period from the date of such
payment through the following Payment Date over (ii) the amount of interest
likely to be realized by the Lender in redeploying the funds not utilized by
reason of such payment for such period. This Section 2.07 shall survive
termination of this Loan Agreement and payment of the Note.
2.08 Requirements of Law.
(a) If the adoption of 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) made subsequent to the
date hereof or any change in the interpretation or application thereof or
compliance by the Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever with
respect to this Loan Agreement, the Note or any Advance made by it
(excluding net income taxes) or change the basis of taxation of payments
to the Lender in respect thereof;
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory advance or similar requirement against assets held by
deposits or other liabilities in or for the account of Advances or other
extensions of credit by the Lender, or any other acquisition of funds by
any office of the Lender which requirement is not otherwise included in
the determination of the LIBO Base Rate hereunder;
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Advance or to reduce any
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amount receivable hereunder in respect thereof, then, in any such case, the
Borrower shall promptly pay the Lender such additional amount or amounts as will
compensate the Lender for such increased cost or reduced amount receivable
thereafter incurred.
(b) If the Lender shall have determined that the adoption of or any
change in any Requirement of Law (other than with respect to any amendment made
to the Lender's certificate of incorporation and by-laws or other organizational
or governing documents) regarding capital adequacy or in the interpretation or
application thereof or compliance by the Lender or any corporation controlling
the Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which the Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
the Lender's or such corporation's policies with respect to capital adequacy) by
an amount deemed by the Lender to be material in its commercially reasonable
discretion, then from time to time, after the Lender submits to the Borrower a
written request therefor, the Borrower shall promptly pay to the Lender such
additional amount or amounts as will thereafter compensate the Lender for such
reduction.
(c) If the Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Borrower of the event
by reason of which it has become so entitled. A certificate (providing
reasonable support as to amounts requested) as to any additional amounts payable
pursuant to this subsection submitted by the Lender to the Borrower shall be
conclusive in the absence of manifest error.
2.09 Extension.
At the request of the Borrower, at least thirty (30) days prior to
the Maturity Date, the Lender may in its sole discretion extend the Maturity
Date for a period of 364 days by giving written notice of such extension to the
Borrower no later than twenty (20) days, but in no event more than thirty (30)
days, prior to the Maturity Date.
2.10 Reserved.
Section 3. Payments; Computations; Taxes; Fees.
3.01 Payments.
Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this Loan
Agreement and the Note, shall be made in immediately available funds, without
deduction, set-off or counterclaim, to the Lender at the following account
maintained by the Lender at The Chase Manhattan Bank: Account Number 066612187,
Account Name: Salomon Brothers Realty Corp., ABA Number: ▇▇▇▇▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, not later than 2:00 p.m., eastern time, on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
The Borrower acknowledges that it has no rights of
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withdrawal from the foregoing account. Notwithstanding the foregoing, if payment
is made after 2:00 p.m., eastern time but prior to 5:00 p.m., eastern time, the
Borrower will owe an additional day's interest but such late payment will not
constitute an Event of Default hereunder.
3.02 Computations. Interest on the Advances shall be computed on the
basis of a 360-day year for the actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
3.03 U.S. Taxes.
(a) The Borrower agrees to pay to the Lender such additional amounts
as are necessary in order that the net payment of any amount due to the Lender
hereunder after deduction for or withholding in respect of any U.S. Tax (as
defined below) imposed with respect to such payment (or in lieu thereof, payment
of such U.S. Tax by the Lender), will not be less than the amount stated herein
to be then due and payable; provided, that the foregoing obligation to pay such
additional amounts shall not apply:
(i) to any payment to the Lender hereunder unless the Lender is
entitled to submit a Form 1001 (relating to the Lender and entitling it to
a complete exemption from withholding on all interest to be received by it
hereunder in respect of the Advances) or Form 4224 (relating to all
interest to be received by the Lender hereunder in respect of the
Advances), or
(ii) to any U.S. Tax imposed solely by reason of the failure by the
Lender to comply with applicable certification, information, documentation
or other reporting requirements concerning the nationality, residence,
identity or connections with the United States of America of the Lender if
such compliance is required by statute or regulation of the United States
of America as a precondition to relief or exemption from such U.S. Tax.
For the purposes of this Section 3.03(a), (i) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (ii) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates) and (iii) "U.S. Taxes" shall mean any present or
future tax, assessment or other charge or levy imposed by or on behalf of the
United States of America or any taxing authority thereof or therein.
(b) Within 30 days after paying any such amount to the Lender, and
within 30 days after it is required by law to remit such deduction or
withholding to any relevant taxing or other authority, the Borrower shall
deliver to the Lender evidence satisfactory to the Lender of such deduction,
withholding or payment (as the case may be).
(c) The Lender represents and warrants to the Borrower that on the
date hereof the Lender is either incorporated under the laws of the United
States or a State thereof or is entitled
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to submit a Form 1001 (relating to the Lender and entitling it to a complete
exemption from withholding on all interest to be received by it hereunder in
respect of the Advances) or Form 4224 (relating to all interest to be received
by the Lender hereunder in respect of the Advances).
3.04 [Reserved]
Section 4. Collateral Security.
4.01 Collateral; Security Interest.
(a) Pursuant to the Custodial Agreement, the Custodian shall hold
the Mortgage Loan Documents as exclusive bailee and agent for the Lender
pursuant to the terms of the Custodial Agreement and shall deliver to the Lender
Trust Receipts with Exception Reports (as such terms are defined in the
Custodial Agreement) to the effect that it has reviewed such Mortgage Loan
Documents in the manner required by the Custodial Agreement and identifying any
deficiencies in such Mortgage Loan Documents as so reviewed.
(b) Each of the following items or types of property, whether now
owned or hereafter acquired, now existing or hereafter created and wherever
located, is hereinafter referred to as the "Collateral":
(i) all Eligible Assets identified on an Asset Schedule attached to
a Notice of Borrowing and Pledge delivered by the Borrower to the Lender
and the Custodian from time to time;
(ii) all Mortgage Loan Documents, including without limitation all
promissory notes, and all Servicing Records (as defined in Section
11.15(b) hereof), and any other collateral pledged or otherwise relating
to such Mortgage Loans, together with all files, material documents,
instruments, surveys (if available), certificates, correspondence,
appraisals, computer records, computer storage media, Mortgage Loan
accounting records and other books and records relating to any Mortgage
Loan or REO Property, in each case, only to the extent such collateral
relates to the Mortgage Loan or REO Property;
(iii) all mortgage guaranties and insurance (issued by governmental
agencies or otherwise) and any mortgage insurance certificate or other
document evidencing such mortgage guaranties or insurance relating to any
Mortgage Loans and all claims and payments thereunder;
(iv) all other insurance policies and insurance proceeds relating to
any Mortgage Loans or the related Mortgaged Property or to any REO
Property;
(v) the Custodial Agreement;
(vi) any purchase agreements or other agreements or contracts
relating to or constituting any or all of the foregoing;
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(vii) all purchase or take-out commitments relating to or
constituting any or all of the foregoing;
(viii) the Collection Account and all monies from time to time on
deposit therein;
(ix) the escrow accounts and similar arrangements relating to the
Mortgage Loans and REO Properties and all monies from time to time on
deposit therein;
(x) any REO Subsidiary Pledged Stock;
(xi) all "accounts", "chattel paper" and "general intangibles" as
defined in the Uniform Commercial Code relating to or constituting any or
all of the foregoing; and
(xii) any and all replacements, substitutions, distributions on or
proceeds of any or all of the foregoing.
(c) The Borrower hereby assigns, pledges and grants a security
interest to the Lender in all of its right, title and interest in, to and under
all the Collateral, whether now owned or hereafter acquired, now existing or
hereafter created and wherever located, to secure the repayment of principal of
and interest on all Advances and all other amounts owing to the Lender
hereunder, under the Note and under the other Loan Documents (collectively, the
"Secured Obligations"). The Borrower agrees to ▇▇▇▇ its computer records and
tapes to evidence the security interests granted to the Lender hereunder.
4.02 Further Documentation. At any time and from time to time, upon
the written request of the Lender, and at the sole expense of the Borrower, the
Borrower will promptly and duly execute and deliver, or will promptly cause to
be executed and delivered, such further instruments and documents and take such
further action as the Lender may reasonably request for the purpose of obtaining
or preserving the full benefits of this Loan Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens created hereby. The Borrower also
hereby authorizes the Lender to file any such financing or continuation
statement without the signature of the Borrower to the extent permitted by
applicable law. A carbon, photographic or other reproduction of this Loan
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
4.03 Changes in Locations, Name, etc. The Borrower shall not (i)
change the location of its chief executive office/chief place of business from
that specified in Section 6 hereof 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 15 days prior written notice thereof and shall have
delivered to the Lender all Uniform Commercial Code financing statements and
amendments thereto as the Lender shall request and taken all other actions
deemed reasonably necessary by the Lender to continue its perfected status in
the Collateral with the same or higher priority.
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4.04 Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably constitutes and appoints the
Lender and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Loan Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
without limiting the generality of the foregoing, the Borrower hereby gives the
Lender the power and right, on behalf of the Borrower, without assent by, but
with notice to, the Borrower, if an Event of Default shall have occurred and be
continuing, to do the following:
(i) in the name of the Borrower or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
mortgage insurance or with respect to any other Collateral and to file any
claim or to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Lender for the purpose of
collecting any and all such moneys due under any such mortgage insurance
or with respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B) to
ask or demand for, collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof
and to enforce any other right in respect of any Collateral; (E) to defend
any suit, action or proceeding brought against the Borrower with respect
to any Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to
give such discharges or releases as the Lender may deem appropriate; and
(G) generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Lender were the absolute owner thereof for all
purposes, and to do, at the Lender's option and the Borrower's expense, at
any time, or from time to time, all acts and things which the Lender deems
necessary to protect, preserve or realize upon the Collateral and the
Lender's Liens thereon and to effect the intent of this Loan Agreement,
all as fully and effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
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(b) The Borrower also authorizes the Lender, at any time and from
time to time, to execute, in connection with the sale provided for in Section
4.07 hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither the Lender nor any of its officers, directors, or employees shall be
responsible to the Borrower for any act or failure to act hereunder, except for
its own gross negligence or willful misconduct.
4.05 Performance by Lender of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its material agreements
contained in the Loan Documents and the Lender may itself perform or comply, or
otherwise cause performance or compliance, with such agreement, the reasonable
out-of-pocket expenses of the Lender incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum
equal to the Post-Default Rate, shall be payable by the Borrower to the Lender
on demand and shall constitute Secured Obligations.
4.06 Proceeds. If an Event of Default shall occur and be continuing,
(a) all proceeds of Collateral received by the Borrower consisting of cash,
checks and other near-cash items shall be held by the Borrower in trust for the
Lender, segregated from other funds of the Borrower, and shall forthwith upon
receipt by the Borrower be turned over to the Lender in the exact form received
by the Borrower (duly endorsed by the Borrower to the Lender, if required) and
(b) any and all such proceeds of Collateral received by the Lender will be
applied by the Lender against the Secured Obligations. Any balance of such
proceeds remaining after the Secured Obligations shall have been paid in full
and this Loan Agreement shall have been terminated shall be promptly paid over
to the Borrower or to whomsoever may be lawfully entitled to receive the same.
For purposes hereof, proceeds shall include, but not be limited to, all
principal and interest payments, all amounts on deposit in the Collection
Account, all prepayments and payoffs, insurance claims, condemnation awards,
sale proceeds, real estate owned rents and any other income and all other
amounts received in each case with respect to the Collateral.
4.07 Remedies. If an Event of Default shall occur and be continuing,
the Lender may exercise, in addition to all other rights and remedies granted to
it in this Loan Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and remedies of a
secured party under the Uniform Commercial Code. Without limiting the generality
of the foregoing, the Lender without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Borrower or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels or as an entirety at public or private sale
or sales, at any exchange, broker's board or office of the Lender or elsewhere
upon such terms and conditions and at prices that are consistent with the
prevailing market for similar
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collateral as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Lender shall act in good faith to obtain the best execution possible under
prevailing market conditions. The Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Borrower, which right or equity is
hereby waived or released. The Borrower further agrees, at the Lender's request,
to assemble the Collateral and make it available to the Lender at places which
the Lender shall reasonably select, whether at the Borrower's premises or
elsewhere. The Lender shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Lender hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in part
of the Secured Obligations, in such order as the Lender may elect, and only
after such application and after the payment by the Lender of any other amount
required or permitted by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Uniform Commercial Code, need the Lender account for
the surplus, if any, to the Borrower. To the extent permitted by applicable law,
the Borrower waives all claims, damages and demands it may acquire against the
Lender arising out of the exercise by the Lender of any of its rights hereunder,
other than those claims, damages and demands arising from the gross negligence
or willful misconduct of the Lender. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition. The Borrower shall remain liable for any deficiency (plus accrued
interest thereon as contemplated pursuant to Section 2.05(b) hereof) if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay the Secured Obligations and the reasonable fees and disbursements of any
attorneys employed by the Lender to collect such deficiency.
4.08 Limitation on Duties Regarding Presentation of Collateral. The
Lender's duty with respect to the custody, safekeeping and physical preservation
of the Collateral in its possession, under Section 9-207 of the Uniform
Commercial Code or otherwise, shall be to deal with it in the same manner as the
Lender deals with similar property for its own account. Neither the Lender nor
any of its directors, officers or employees shall be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Borrower or otherwise.
4.09 Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
4.10 Release of Security Interest. Upon termination of this Loan
Agreement and repayment to the Lender of all Secured Obligations and the
performance of all obligations under the Loan Documents, the Lender shall
release its security interest in any remaining Collateral; provided that if any
payment, or any part thereof, of any of the Secured Obligations is rescinded or
must otherwise be restored or returned by the Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower, or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or a trustee or similar officer for the Borrower or any substantial part of its
Property, or otherwise, this Loan Agreement, all rights hereunder and the Liens
created hereby shall continue to be effective, or be reinstated, until such
payments have been made.
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4.11 REO Subsidiary; Formation; REO Property Representations and
Warranties. The Borrower shall cause any REO Property to be taken by deed in the
name of a wholly-owned subsidiary of the Borrower (any such subsidiary, an "REO
Subsidiary") formed for the sole purpose of holding any REO Property. The
Borrower may establish one or more REO Subsidiaries. Promptly upon the formation
of any REO Subsidiary, the Borrower shall (or shall cause the applicable REO
Subsidiary to):
(A) provide written notice thereof to the Lender;
(B) execute and deliver to the Lender an REO Subsidiary Pledge
Agreement (or, if an REO Subsidiary Pledge Agreement shall have already
been executed and delivered, a supplement thereto) pursuant to which all
REO Subsidiary Pledged Stock of such REO Subsidiary shall be pledged to
the Lender or the Custodian, as instructed by the Lender;
(C) deliver all certificates representing REO Subsidiary Pledged
Stock, together with an undated transfer power for each such certificate
duly executed in blank on behalf of the Borrower, to the Lender or the
Custodian, as instructed by the Lender;
(D) deliver an acknowledgment of such REO Subsidiary in the form
attached to the REO Subsidiary Pledge Agreement;
(E) deliver an officer's certificate signed by a Responsible Officer
and a secretary of such REO Subsidiary, together with a good standing
certificate with respect to such REO Subsidiary and certified copies of
the certificate of formation, articles of incorporation, bylaws and
operating agreement (or equivalent documents) of such REO Subsidiary and
of all resolutions or other authority of such REO Subsidiary with respect
to holding REO Property, all in form and substance satisfactory to the
Lender, all of which organizational documents shall contain such terms and
provisions, including, without limitation, provisions relating to the
nature of the REO Subsidiary as a special, single purpose vehicle, as the
Lender may reasonably require; and
(F) deliver an opinion of counsel satisfactory to the Lender as to
the formation of the REO Subsidiary, the attachment and perfection of the
security interest in favor of the Lender in the REO Subsidiary Pledged
Stock and such other matters as the Lender may reasonably request.
Upon the acquisition of title to the underlying property by an REO Subsidiary,
the Borrower shall be deemed to make the representations and warranties listed
on Schedule 3 hereto with respect to such REO Property. The Borrower shall, at
its sole cost and expense, take all such other steps as may be necessary in
connection with the pledge of all REO Subsidiary Pledged Stock to properly
perfect the security interest created pursuant to the REO Subsidiary Pledge
Agreement therein.
Section 5. Conditions Precedent.
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5.01 Initial Advance. The obligation of the Lender to make its
initial Advance hereunder is subject to the satisfaction, immediately prior to
or concurrently with the making of such Advance, of the following conditions
precedent:
(a) Loan Agreement. The Lender shall have received this Loan
Agreement, executed and delivered by a duly authorized officer of the
Borrower.
(b) Loan Documents. The Lender shall have received the following
documents, each of which shall be satisfactory to the Lender in form and
substance:
(i) Note. The Note, duly completed and executed;
(ii) Custodial Agreement. The Custodial Agreement, duly
executed and delivered by the Borrower and the Custodian. In
addition, the Borrower shall have filed all Uniform Commercial Code
and related filings and performed under the Custodial Agreement and
taken such other action as the Lender shall have requested in order
to perfect the security interests created pursuant to the Loan
Agreement; and
(iii) Pooling and Servicing Agreement. A copy of the Pooling
and Servicing Agreement.
(c) Organizational Documents. A good standing certificate and
certified copies of the charter and by-laws (or equivalent documents) of
the Borrower and of all corporate or other authority for the Borrower with
respect to the execution, delivery and performance of the Loan Documents
and each other document to be delivered by the Borrower from time to time
in connection herewith (and the Lender may conclusively rely on such
certificate until it receives notice in writing from the Borrower to the
contrary).
(d) Legal Opinion. A legal opinion of counsel to the Borrower,
substantially in the form attached hereto as Exhibit C.
(e) 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 Permitted Liens and those created hereunder, shall have been
properly prepared and executed for filing (including the applicable
county(ies) if the Lender determines such filings are necessary in its
reasonable discretion), registration or recording in each office in each
jurisdiction in which such filings, registrations and recordations are
required to perfect such first-priority security interest.
(f) 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) and such fees and expenses may
be netted out of any Advance made by the Lender hereunder. In addition any
other ongoing fees and expenses required to be paid by the Borrower to the
Lender may be netted out of any Advance made by the Lender hereunder.
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(g) REO Subsidiary. The Borrower shall have established an REO
Subsidiary and complied with the provisions set forth in Section 4.11 with
respect to such REO Subsidiary.
(h) Financial Statements. The Lender shall have received the
financial statements referenced in Section 7.01(a).
(i) Consents, Licenses, Approvals, etc. The Lender shall have
received copies certified by the Borrower of all consents, licenses and
approvals, if any, required in connection with the execution, delivery and
performance by the Borrower of, and the validity and enforceability of,
the Loan Documents, which consents, licenses and approvals shall be in
full force and effect.
(j) Insurance. The Lender shall have received evidence in form and
substance satisfactory to the Lender showing compliance by the Borrower as
of such initial Funding Date with Section 7.22 hereof.
(k) Collection Account. The Collection Account shall have been
established with a financial institution satisfactory to the Lender, and
the terms of all documentation relating to such accounts shall be in
accordance with the requirements of the Loan Documents and shall be
satisfactory to the Lender in form and substance and the Borrower shall
provide evidence of same, including any agreements with respect thereto.
The Borrower shall provide to the Lender evidence of the foregoing.
(l) Other Documents. The Lender shall have received such other
documents as the Lender or its counsel may reasonably request.
5.02 Initial and Subsequent Advances. The making of each Advance to
the Borrower (including the initial Advance) on any Business Day is subject to
the following further conditions precedent, both immediately prior to the making
of such Advance and also after giving effect thereto and to the intended use
thereof:
(a) no Default or Event of Default shall have occurred and be
continuing;
(b) both immediately prior to the making of such Advance and also
after giving effect thereto and to the intended use thereof, the
representations and warranties made by the Borrower in Section 6 hereof,
and in each of the other Loan Documents, shall be true and complete on and
as of the date of the making of such Advance in all material respects (in
the case of the representations and warranties set forth on Schedule 1
solely with respect to Mortgage Loans included in the Borrowing Base) with
the same force and effect as if made on and as of such date (or, if any
such representation or warranty is expressly stated to have been made as
of a specific date, as of such specific date). At the request of the
Lender, the Lender shall have received an officer's certificate signed by
a Responsible Officer of the Borrower certifying as to the truth and
accuracy of the above, which certificate shall specifically include a
statement that the Borrower is in compliance with all governmental
licenses and authorizations and is qualified to do business and in good
standing in all required jurisdictions;
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(c) the aggregate outstanding principal amount of the Advances shall
not exceed the Borrowing Base;
(d) subject to the Lender's right to perform one or more Due
Diligence Reviews pursuant to Section 11.16 hereof, the Lender shall have
completed its due diligence review of the Mortgage Loan Documents for each
Advance and such other documents, records, agreements, instruments,
mortgaged properties or information relating to such Advances as the
Lender in its reasonable discretion deems appropriate to review and such
review shall be satisfactory to the Lender in its reasonable discretion;
(e) the Lender shall have received a Notice of Borrowing and Pledge,
Asset Schedule and Asset Data Transmission and all other documents
required under Section 2.03;
(f) the Lender shall have received from the Custodian, a Custodian
Asset Transmission and one or more Trust Receipts in respect of Mortgage
Loans to be pledged hereunder on such Business Day and an Exception
Report, in each case dated such Business Day and duly completed;
(g) in the event that the Mortgage Loans to be pledged would cause
the aggregate outstanding principal balance of Mortgage Loans pledged
secured by Mortgaged Property from any state to exceed 10% of the
aggregate outstanding principal balance of Mortgage Loans pledged
hereunder, then the Borrower shall, upon request by the Lender, deliver an
opinion of counsel acceptable to the Lender in such state, substantially
in the form of items number 12 and 13 of Exhibit C;
(h) with respect to any Mortgage Loan that was funded in the name of
or acquired by a Qualified Originator which is an Affiliate of the
Borrower, the Lender may, in its sole discretion, require the Borrower to
provide evidence sufficient to satisfy the Lender that such Mortgage Loan
was acquired in a legal sale, including without limitation, an opinion, in
form and substance and from an attorney, in both cases, acceptable to the
Lender in its sole discretion, that such Mortgage Loan was acquired in a
legal sale;
(i) none of the following shall have occurred and/or be continuing:
(i) a catastrophic event or events shall have occurred
resulting in the effective absence of a "repo market" or comparable
"lending market" for financing debt obligations secured by mortgage
loans or securities for a period of (or reasonably expected to be)
at least 30 consecutive days and the same has resulted in the Lender
not being able to finance any Advances through the "repo market" or
"lending market" with traditional counterparties at rates which
would have been reasonable prior to the occurrence of such
catastrophic event or events;
(ii) a catastrophic event or events shall have occurred
resulting in the effective absence of a "securities market" for
securities backed by mortgage loans for a period of (or reasonably
expected to be) at least 30 consecutive days and the same results in
the Lender not being able to sell securities backed by mortgage
loans at
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prices which would have been reasonable prior to such catastrophic
event or events; or
(iii) there shall have occurred a material adverse change in
the financial condition of the Lender which affects (or can
reasonably be expected to affect) materially and adversely the
ability of the Lender to fund its obligations under this Loan
Agreement and the Lender shall have given notice thereof pursuant to
Section 11.02 hereof to the Borrower at least 30 days prior to the
requested Funding Date;
(j) Reserved.
(k) with respect to each Eligible Asset that is an REO Property at
the time that an Advance is made with respect to such Eligible Asset, the
Borrower shall deliver, or cause to be delivered, to the Custodian for
recordation in the appropriate governmental recording office of the
jurisdiction where such REO Property is located, the original executed
deed (in recordable form) to such REO Property, naming the related REO
Subsidiary as the grantee;
(l) Reserved.
Each request for a borrowing by the Borrower hereunder shall constitute a
certification by the Borrower to the effect set forth in this Section (both as
of the date of such notice, request or confirmation and as of the date of such
borrowing).
Section 6. Representations and Warranties. The Borrower represents
and warrants to the Lender that throughout the term of this Loan Agreement:
6.01 Existence. The Borrower (a) is a California corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and
approvals, necessary to own its assets and carry on its business as now being or
as proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect on its property, business or financial condition, or
prospects, (c) is qualified to do business and is in good standing in all other
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary, except where failure so to qualify would not be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect on its property, business or financial condition, or prospects
and (d) is in compliance in all material respect with all Requirements of Law.
6.02 Reserved.
6.03 Litigation. There are no actions, suits, arbitrations,
investigations or proceedings pending or, to its knowledge, threatened against
the Borrower or affecting any of its property before any Governmental Authority,
(i) as to which individually or in the aggregate there is a reasonable
likelihood of an adverse decision which would be reasonably likely to have a
Material Adverse Effect on the property, business or financial condition, or
prospects of the Borrower or (ii) which questions the validity or enforceability
of any of the Loan Documents or any action to be taken
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in connection with the transactions contemplated hereby and there is a
reasonable likelihood of a materially adverse effect or decision.
6.04 No Breach. Neither (a) the execution and delivery of the Loan
Documents nor (b) the consummation of the transactions therein contemplated in
compliance with the terms and provisions thereof will conflict with or result in
a breach of the certificate of incorporation or bylaws of the Borrower, or any
applicable law, rule or regulation, or any order, writ, injunction or decree of
any Governmental Authority, or other material agreement or instrument to which
the Borrower, or any of its REO Subsidiaries, is a party or by which any of them
or any of their property is bound or to which any of them is subject, or
constitute a default under any such material agreement or instrument, or (except
for the Liens created pursuant to this Loan Agreement) result in the creation or
imposition of any Lien upon any property of the Borrower or any of its REO
Subsidiaries, pursuant to the terms of any such agreement or instrument.
6.05 Action. The Borrower has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its obligations
under each of the Loan Documents to which it is a party; the execution, delivery
and performance by the Borrower of each of the Loan Documents to which it is a
party has been duly authorized by all necessary corporate or other action on its
part; and each Loan Document has been duly and validly executed and delivered by
the Borrower and constitutes a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as enforceability may be limited by 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).
6.06 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority, or any other Person,
are necessary for the execution, delivery or performance by the Borrower of the
Loan Documents to which it is a party or for the legality, validity or
enforceability thereof, except for filings and recordings in respect of the
Liens created pursuant to this Loan Agreement.
6.07 Margin Regulations. Neither the making of any Advance
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation G, T, U or X.
6.08 Taxes. The Borrower and its REO Subsidiaries have filed all
Federal income tax returns and all other material tax returns that are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by any of them, except for any such taxes,
if any, that are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the books of the
Borrower and its REO Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of the Borrower, adequate.
6.09 Investment Company Act. Neither the Borrower nor any of its REO
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company",
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within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to any Federal or state statute or regulation which
limits its ability to incur indebtedness.
6.10 No Legal Bar. The execution, delivery and performance of this
Loan Agreement and the Note, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien (other than the Liens created
hereunder) on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
6.11 No Default. Neither the Borrower nor any of its Affiliates, is
in default under or with respect to any of its Contractual Obligations in any
respect which should reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
6.12 Collateral; Collateral Security.
(a) The Borrower has not assigned, pledged, or otherwise conveyed or
encumbered any Mortgage Loan to any other Person, and immediately prior to the
pledge of each such Mortgage Loan, the Borrower was the sole owner of such
Mortgage Loan and had good and marketable title thereto, free and clear of all
Liens, in each case except for Liens to be released simultaneously with the
Liens granted in favor of the Lender hereunder and following such release no
Person other than the Borrower has any Lien on any Mortgage Loan.
Notwithstanding the foregoing, the Borrower may sell, transfer, assign or pledge
or otherwise convey any foreclosed Mortgaged Property to an REO Subsidiary.
(b) The provisions of this Loan Agreement are effective to create in
favor of the Lender a valid security interest in all right, title and interest
of the Borrower in, to and under the Collateral.
(c) Upon receipt by the Custodian of each Mortgage Note, endorsed in
accordance with the Custodial Agreement, the Lender shall have a fully perfected
first priority security interest therein, in the Mortgage Loan evidenced thereby
and in the Borrower's interest in the related Mortgaged Property.
(d) Upon the filing of financing statements on Form UCC-1 naming the
Lender as "Secured Party" and the Borrower as "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 2
attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected first priority security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral, which can be perfected by filing under the Uniform
Commercial Code.
(e) The REO Subsidiary Pledged Stock of any REO Subsidiary will
constitute all of the issued and outstanding capital stock or other equity
interests of all classes of such REO Subsidiary, and all of such REO Subsidiary
Pledged Stock will have been duly and validly issued and, if capital stock,
shall have been fully paid and non-assessable. Upon the delivery to the Lender
or
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Custodian of any certificates or stocks evidencing such REO Subsidiary Pledged
Stock, the security interest created by the REO Subsidiary Pledge Agreement
therein will constitute a perfected first priority security interest in such REO
Subsidiary Pledged Stock in favor of the Lender as security for the Secured
Obligations.
6.13 Chief Executive Office; Chief Operating Office. The Borrower's
chief executive office and chief operating office on the Effective Date are
located at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
6.14 Location of Books and Records. The location where the Borrower
keeps its books and records including all computer tapes and records relating to
the Collateral is its chief executive office or the office of the Servicer
located at 17701 ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or the chief operating office
or offices of the Custodian.
6.15 True and Complete Disclosure. The written information, reports,
financial statements, exhibits and schedules (other than projections) prepared
by the Borrower and furnished to the Lender (and, to the Borrower's knowledge,
prepared on behalf of the Borrower and furnished to the Lender) in connection
with the negotiation, preparation or delivery of this Loan Agreement and the
other Loan Documents or included herein or therein or delivered pursuant hereto
or thereto, when taken as a whole, do not contain any untrue statement of
material fact or omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading. All written information furnished after the date
hereof by or on behalf of the Borrower to the Lender in connection with this
Loan Agreement and the other Loan Documents and the transactions contemplated
hereby and thereby will be true, complete and accurate in every material
respect, or (in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified. There is no fact known
to a Responsible Officer that could reasonably be expected to have a Material
Adverse Effect that has not been disclosed herein, in the other Loan Documents
or in a report, financial statement, exhibit, schedule, disclosure letter or
other writing furnished to the Lender for use in connection with the
transactions contemplated hereby or thereby.
6.16 Reserved.
6.17 ERISA. Each Plan to which the Borrower or its Subsidiaries make
direct contributions, and, to the knowledge of the Borrower, each other Plan and
each Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other federal or state law. No event or
condition has occurred and is continuing as to which the Borrower would be under
an obligation to furnish a report to the Lender under Section 7.01(d) hereof.
6.18 Reserved.
6.19 True Sales. Any and all interest of a Qualified Originator in,
to and under any Mortgage funded in the name of or acquired by such Qualified
Originator or seller which is an Affiliate of the Borrower has been sold,
transferred, conveyed and assigned to the Borrower pursuant to a legal sale and
such Qualified Originator retains no interest in such Mortgage Loan.
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6.20 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Affiliates has a Material
Adverse Effect.
6.21 Reserved.
6.22 Acquisition of Mortgage Loans. The Mortgage Loans were acquired
by the Borrower, and the collection practices used by the Servicer with respect
to the Mortgage Loans have been, in all material respects, legal, proper,
reasonable and customary in the residential sub-prime mortgage loan servicing
business. Each of the Mortgage Loans complies with the representations and
warranties listed on Schedule 1 hereto.
6.23 No Adverse Selection. The Borrower used no selection procedures
that identified the Mortgage Loans as being less desirable or valuable than
other comparable mortgage loans owned by the Borrower.
6.24 Borrower Solvent; Fraudulent Conveyance. As of the date hereof
and immediately after giving effect to each Advance, the fair value of the
assets of the Borrower is greater than the fair value of the liability
(including, without limitation, contingent liabilities if and to the extent
required to be recorded as a liability on the financial statements of the
Borrower in accordance with GAAP) of the Borrower and the Borrower is and will
be solvent, is and will be able to pay its debts as they mature and does not and
will not have an unreasonably small capital to engage in the business in which
it is engaged and proposes to engage. The Borrower does not intend to incur, or
believe that it has incurred, debt beyond its ability to pay such debts as they
mature. The Borrower is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of the
Borrower or any of its assets. The Borrower is not pledging any Mortgage Loans
with any intent to hinder, delay or defraud any of its creditors.
Section 7. Covenants of the Borrower. The Borrower covenants and
agrees with the Lender that, so long as any Advance is outstanding and until
payment in full of all Secured Obligations:
7.01 Financial Statements. The Borrower shall deliver to the Lender:
(a)(i) as soon as available and in any event within 30 days after
the end of each month (other than those calendar months that are
quarter-end months), the unaudited (or, upon request of the Lender, the
audited) consolidated balance sheets of the Borrower and each REO
Subsidiary as at the end of such month and the related unaudited
consolidated statements of income and retained earnings and of cash flows
for the Borrower and each REO Subsidiary for such month and the portion of
the fiscal year through the end of such month, setting forth in each case
in comparative form the figures for the previous year, accompanied by a
certificate of a Responsible Officer of the Borrower, which certificate
shall state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Borrower
and each REO Subsidiary as at the end of, and for, such month (subject to
normal year-end audit adjustments);
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(ii) as soon as available and in any event within 45 days after the
end of each of the first three quarterly fiscal periods of each fiscal
year of the Borrower and each REO Subsidiary, the unaudited (or, upon
request of the Lender, the audited) consolidated balance sheets of the
Borrower and each REO Subsidiary as at the end of such period and the
related unaudited consolidated statements of income and retained earnings
and of cash flows for the Borrower and each REO Subsidiary for such period
and the portion of the fiscal year through the end of such period, setting
forth in each case in comparative form the figures for the previous year,
accompanied by a certificate of a Responsible Officer of the Borrower,
which certificate shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of
operations of the Borrower and each REO Subsidiary in accordance with
GAAP, consistently applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments);
(b) as soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, the consolidated balance sheets
of the Borrower and each REO Subsidiary as at the end of such fiscal year
and the related consolidated statements of income and retained earnings
and of cash flows for the Borrower and each REO Subsidiary for such year,
setting forth in each case in comparative form the figures for the
previous year, accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall
not be qualified as to scope of audit or going concern and shall state
that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Borrower
and each REO Subsidiary at the end of, and for, such fiscal year in
accordance with GAAP, and a certificate of such accountants stating that,
in making the examination necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any Default or Event of
Default; and
(c) from time to time such other information regarding the financial
condition, operations, or business of the Borrower and each REO Subsidiary
as the Lender may reasonably request.
(d) as soon as reasonably possible, and in any event within thirty
(30) days after a Responsible Officer knows, or with respect to any Plan
or Multiemployer Plan to which the Borrower or any of its Subsidiaries
makes direct contributions, has reason to believe, that any of the events
or conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by a senior financial
officer of the Borrower setting forth details respecting such event or
condition and the action, if any, that the Borrower or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC by the Borrower or an ERISA
Affiliate with respect to such event or condition):
(i) any reportable event (a "Reportable Event"), as defined in
Section 4043(b) of ERISA and the regulations issued thereunder, with
respect to a Plan, as to which PBGC has not by regulation or
otherwise waived the requirement of Section 4043(a) of ERISA that it
be notified within thirty (30) days of the occurrence of such event
(provided that a failure to meet the minimum funding standard of
Section 412 of the Code or Section 302 of ERISA, including, without
limitation, the failure to
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make on or before its due date a required installment under Section
412(m) of the Code or Section 302(e) of ERISA, shall be a Reportable
Event regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code); and any request for a waiver under
Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041(c) of ERISA of a
notice of intent to terminate any Plan or any action taken by the
Borrower or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Borrower or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by the Borrower or any ERISA Affiliate that results in
liability under Section 4201 or 4204 of ERISA (including the
obligation to satisfy secondary liability as a result of a purchaser
default) or the receipt by the Borrower or any ERISA Affiliate of
notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it
intends to terminate or has terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; and
(vi) the adoption of an amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such
Plan is a part if the Borrower or an ERISA Affiliate fails to timely
provide security to such Plan in accordance with the provisions of
said Sections.
The Borrower will furnish to the Lender, at the time it furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a certificate of
a Responsible Officer of the Borrower to the effect that, to the best of such
Responsible Officer's knowledge, the Borrower during such fiscal period or year
has observed or performed all of its covenants and other agreements, and
satisfied every material condition, contained in this Loan Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate (and, if any Default or Event of Default
has occurred and is continuing, describing the same in reasonable detail and
describing the action the Borrower has taken or proposes to take with respect
thereto).
7.02 Litigation. The Borrower will promptly, and in any event within
10 days after service of process on any of the following, give to the Lender
notice of all legal or arbitrable proceedings affecting the Borrower or any of
its REO Subsidiaries that questions or challenges the
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validity or enforceability of any of the Loan Documents or as to which there is
a reasonable likelihood of adverse determination which would result in a
Material Adverse Effect.
7.03 Existence, Etc. The Borrower shall, and shall cause each REO
Subsidiary to:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises;
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, truth in lending, real estate settlement procedures and all
environmental laws) if failure to comply with such requirements would be
reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect;
(c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied;
(d) not move its chief executive office or chief operating office
from the addresses referred to in Section 6.13 unless it shall have
provided the Lender 15 days prior written notice of such change;
(e) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of
its Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves are being maintained;
(f) permit representatives of the Lender, during normal business
hours upon three (3) Business Days' prior written notice at a mutually
desirable time, to examine, copy and make extracts from its books and
records, to inspect any of its Properties, and to discuss its business and
affairs with its officers, all to the extent reasonably requested by the
Lender. The Borrower hereby acknowledges and confirms that the Lender (i)
will rely on such information in the performance of the services
contemplated by Agreement without independently investigating or verifying
any of it and (ii) assumes no responsibility for the accuracy or
completeness of such information. The Lender hereby acknowledges the
confidential nature of the information to be provided to it by the
Borrower and agrees that it will not disclose any such information to any
third party (other than its Affiliates, its counsel or its independent
accountants) without the prior written consent of the Borrower; provided
however, the Lender may use such information if necessary in connection
with an Event of Default hereunder to market the Mortgage Loans or REO
Properties for sale; and
(g) at all times, maintain and keep in force insurance with
financially sound and reputable insurance companies or associations in
such amounts and covering such risks as are usually carried by companies
engaged in the same or a similar business and similarly situated, which
insurance may provide for reasonable deductibility from coverage thereof.
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7.04 Prohibition of Fundamental Changes. Except as otherwise
contemplated by the Loan Documents, the Borrower shall not enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation, winding up or dissolution) or sell
all or substantially all of its assets.
7.05 Borrowing Base Deficiency. If at any time there exists a
Borrowing Base Deficiency the Borrower shall cure same in accordance with
Section 2.06 hereof.
7.06 Notices. The Borrower shall give notice to the Lender promptly:
(a) upon the Borrower becoming aware of, and in any event within one
(1) Business Day after, the occurrence of any Default or Event of Default
or any event of default or default under any other material agreement of
the Borrower which could reasonably be expected to have a Material Adverse
Effect;
(b) upon, and in any event within three (3) Business Days after,
service of process on the Borrower or any of its REO Subsidiaries, or any
agent thereof for service of process, in respect of any legal or
arbitrable proceedings affecting the Borrower or any of its REO
Subsidiaries (i) that questions or challenges the validity or
enforceability of any of the Loan Documents or (ii) in which the
cumulative amount of such controversies exceeds $1,000,000;
(c) upon the Borrower becoming aware of any default related to any
Collateral, any Material Adverse Effect and any event or change in
circumstances which should reasonably be expected to have a Material
Adverse Effect;
(d) upon the Borrower becoming aware during the normal course of its
business that the Mortgaged Property in respect of any Mortgage Loan or
Mortgage Loans with an aggregate unpaid principal balance of at least
$100,000 has been damaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty, or otherwise damaged so as to
materially and adversely affect the Collateral Value of such Mortgage
Loan;
(e) upon the entry of a judgment or decree against the Borrower or
any of its REO Subsidiaries in an amount in excess of $500,000 and
(f) upon, and in any event within three (3) Business Days after,
service of process on the Servicer, or any agent thereof for service of
process, in respect of any legal or arbitrable proceedings affecting the
Servicer (i) that seeks certification of a class of plaintiffs, (ii) that
questions or challenges the validity or enforceability of any mortgage
loan based on a violation of federal or state law with respect to the
origination or servicing of such mortgage loan and the cumulative amount
of liability to the Servicer, if such proceedings are adversely
determined, exceeds $1,000,000 or (iii) whenever the cumulative amount of
liability to the Servicer, if such proceedings are adversely determined,
exceeds $5,000,000..
Each notice pursuant to this Section 7.06 (other than 7.06(e)) shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken or proposes to take with respect thereto.
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7.07 Servicing. The Borrower shall not permit any Person other than
the Servicer to service Mortgage Loans without the prior written consent of the
Lender, which consent shall not be unreasonably withheld.
7.08 Servicer Reports; Management of Assets. The Servicer shall: (i)
promptly deliver to the Lender all reports, statements and other materials
relating to the Collateral or the financial condition of the Servicer in
accordance with the provisions of the Pooling and Servicing Agreement, (ii)
fully perform all of its covenants, agreements and obligations in accordance
with the provisions of the Pooling and Servicing Agreement, (iii) promptly
deliver to the Lender any notice of default or prospective termination of the
Servicer and any notice of default or termination given by the Servicer and (iv)
cause the Collateral to be administered in accordance with the standards set
forth in the Pooling and Servicing Agreement.
7.09 True and Complete Disclosure. All written information furnished
after the date hereof by or on behalf of the Borrower to the Lender in
connection with this Loan Agreement and the other Loan Documents and the
transactions contemplated hereby and thereby will be true, complete and accurate
in every material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or certified.
7.10 Reserved.
7.11 Transactions with Affiliates. Except for (i) the guaranties of
Indebtedness created under this Loan Agreement and under the Existing Financing
Documents, (ii) transfers of mortgage loans and REO properties between
Affiliates and the Borrower and (iii) transfers of Junior Securitization
Interests between Affiliates and the Borrower, the Borrower will not enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Loan Agreement, (b) in
the ordinary course of the Borrower's business and (c) upon fair and reasonable
terms no less favorable to the Borrower than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate, or make a
payment that is not otherwise permitted by this Section 7.11 to any Affiliate;
provided, however, that nothing contained in this Section 7.11 is intended to
limit the Borrower's ability to sell any Collateral that has a Collateral Value
deemed by the Lender to be zero on terms that do not comply with clause (c)
above.
7.12 Reserved.
7.13 Limitation on Liens. The Borrower will not, nor will it permit
or allow others to, create, incur or permit to exist any material Lien, security
interest or claim on or to any of the Collateral, except for Permitted Liens.
The Borrower will defend the Collateral against, and will take such other action
as is necessary to remove, any Lien, security interest or claim on or to the
Collateral, other than Permitted Liens and the security interests created under
this Loan Agreement, and the Borrower will defend the right, title and interest
of the Lender in and to any of the Collateral against the claims and demands of
all persons whomsoever.
7.14 Limitation on Sale of Assets. Except as specifically
contemplated in Section 5(b) of the Custodial Agreement, the Borrower shall not
convey, sell, lease, assign, transfer or
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otherwise dispose of (collectively, "Transfer"), any of the Collateral, business
or assets whether now owned or hereafter acquired or allow any REO Subsidiary to
Transfer any of its assets to any Person.
7.15 Plans and Multiemployer Plans. Neither the Borrower nor any REO
Subsidiary shall adopt or make direct contributions to any Plan or Multiemployer
Plan.
7.16 Reserved.
7.17 Reserved.
7.18 Reserved.
7.19 Restricted Payments. The Borrower shall not make any Restricted
Payments following an Event of Default or if the making of such Restricted
Payment is reasonably likely to result in the occurrence of an Event of Default.
7.20 Reserved.
7.21 No Amendment or Waiver. Except as expressly provided in the
Pooling and Servicing Agreement, the Borrower will not, nor will it permit or
allow others to amend, modify, terminate or waive any provision of any Mortgage
Loan to which the Borrower is a party in any manner which could reasonably be
expected to materially and adversely affect the value of such Mortgage Loan as
Collateral.
7.22 Maintenance of Property; Insurance. The Borrower shall cause
the Servicer to keep all property useful and necessary in its business in good
working order and condition. The Borrower shall, and shall cause each REO
Subsidiary to, 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 the Lender in writing) and shall not
reduce such coverage without the written consent of the Lender, and shall also
maintain, or cause to be maintained, title and hazard insurance with financially
sound and reputable insurance companies, with respect to property and risks of a
character usually maintained by entities engaged in the same or similar business
similarly situated, against loss, damage and liability of the kinds and in the
amounts customarily maintained by such entities.
7.23 Further Identification of Collateral. The Borrower will furnish
to the Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable detail.
7.24 Mortgage Loan or REO Property Determined to be Defective. Upon
discovery by the Borrower or the Lender of any breach of any representation or
warranty listed on Schedule 1 hereto applicable to any Mortgage Loan or on
Schedule 3 hereto applicable to any REO Property, the party discovering such
breach shall promptly give notice of such discovery to the other.
7.25 Reserved.
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7.26 Reserved.
7.27 Special Purpose Entity. (a) The Borrower shall cause such REO
Subsidiary to: (i) continue to be duly formed and existing and a single purpose
entity; (ii) continue to comply with the provisions of its organizational
documentation delivered to the Lender pursuant to Sections 4.11 and 5.01(c)
hereof and the laws of the state of its formation relating to entities of the
same type; (iii) observe all legal requirements regarding its existence; (iv)
continue to accurately maintain its financial statements, accounting records and
other documents separate and apart from those of any other Person; (v) not
commingle its assets with those of any other Person; (vi) continue to accurately
maintain its own bank accounts and separate books of account; (vii) continue to
pay its own liabilities (other than those liabilities incurred under the
Custodial Agreement) from its own separate assets; (viii) continue to identify
itself under its own name (or its d/b/a name as required by the laws of certain
jurisdictions in order to do business therein) and as a separate and distinct
entity in all dealings with the public; (ix) not identify itself as being a
division or part of any other entity (except, in the case of an REO Subsidiary,
as a wholly-owned subsidiary of the Borrower); (x) not identify any other Person
as being a division or part of such REO Subsidiary and (xi) to the extent
permitted by applicable law, not cause such REO Subsidiary to become the debtor
in any case or proceeding, or otherwise avail itself of relief under, any
bankruptcy, insolvency or similar law; provided, however, that nothing contained
in this Section 7.27(a) is intended to prevent the Borrower and any one or more
REO Subsidiaries from (x) maintaining joint accounting records and books of
account with each other, (y) paying their liabilities from each others' assets
and (z) identifying themselves as related entities in dealings with the public.
(b) The Borrower shall not permit such REO Subsidiary to: (i)
create, incur, assume or suffer to exist any Indebtedness (other than under this
Loan Agreement) or guarantee obligation; (ii) create, incur or permit to exist,
or permit or allow others to create, incur or permit to exist, any Lien,
security interest or claim on or to any of its property, other than the Liens in
favor of the Lender; (iii) consummate any transaction of merger or consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution) or sell all or substantially all of its assets; (iv)
convey, sell, lease, assign, transfer or otherwise dispose of, any of its
property, business or assets (including, without limitation, receivables and
leasehold interests) whether now owned or hereafter acquired, except as
specifically contemplated in Section 5(b) of the Custodial Agreement, provided
that the Sale Proceeds thereof are deposited into the Collection Account; (v)
make any advance, loan, extension of credit or capital contribution to, or
purchase any stock, bonds, notes, debentures or other securities of or any
assets constituting a business unit of, or make any other investment in (any of
the foregoing, an "Investment"), any Person other than an REO Subsidiary; (vi)
amend its certificate of incorporation or by-laws or other similar
organizational or constitutive documents without the prior written consent of
the Lender which consent shall not be unreasonably withheld; (vii) form any
Subsidiaries other than REO Subsidiaries or (viii) with respect to each REO
Subsidiary, engage in or transact any business or operations other than the
acquisition of REO Properties.
(c) The Borrower shall cause each REO Subsidiary to maintain the REO
Properties in the condition received (reasonable wear and tear excepted) and
promptly repair any damage or casualty (except to the extent that the Servicer
reasonably has determined in accordance
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with Accepted Servicing Practices and the terms and provisions of the Pooling
and Servicing Agreement, not to apply the related insurance proceeds or
condemnation awards to the repair or restoration of the REO Property, in which
event such unapplied proceeds shall be included in Collections for purposes
hereof). The Borrower shall cause each REO Subsidiary to permit the Lender and
its agents, representatives and employees, upon reasonable prior notice, at the
Lender's cost, to inspect any REO Property and conduct such environmental and
engineering studies as the Lender may require; provided, that such inspections
and studies do not materially and unreasonably interfere with the use, operation
and occupancy of such REO Property.
7.28 Broker's Price Opinions. The Lender may obtain, at the
Borrower's expense, within the month prior to the related Funding Date (or
immediately, if an Advance has already been made with respect to a Mortgage Loan
and such Mortgage Loan subsequently becomes delinquent three Monthly Payments),
a BPO with respect to each Mortgage Loan that is delinquent three or more
Monthly Payments and with respect to each REO Property for which an Advance will
be made on such Funding Date; provided, however, that the vendor providing such
BPO must be approved by the Lender. The Lender hereby approves ▇▇▇▇▇▇ Quality
Loan Services, Nationwide Appraisal Services Corp. and Ocwen Federal Bank FSB.
The Lender has the right to obtain a new BPO, at the expense of the Borrower,
with respect to each Mortgage Loan delinquent more than three Monthly Payments
and with respect to each REO Property every six (6) months.
Section 8. Events of Default. Each of the following events shall
constitute an event of default (an "Event of Default") hereunder:
(a) the Borrower shall default in the payment of any principal of or
interest on any Advance when due (whether at stated maturity, upon
acceleration or at mandatory prepayment) and such default shall have
continued unremedied for one Business Day; or
(b) the Borrower shall default in the payment of any other amount
payable by it hereunder or under any other Loan Document after
notification by the Lender of such default, and such default shall have
continued unremedied for three Business Days; or
(c) any representation, warranty or certification made or deemed
made herein or in any other Loan Document by the Borrower or any
certificate furnished to the Lender pursuant to the provisions thereof,
shall prove to have been false or misleading in any material respect as of
the time made or furnished (other than the representations and warranties
set forth in Schedule 1 or Schedule 3 which shall be considered solely for
the purpose of determining the Collateral Value of the Mortgage Loan or
REO Properties; unless the Borrower shall have made any such
representations and warranties with knowledge that they were materially
false or misleading at the time made) and, within 30 days after written
notice thereof shall have been given to the applicable Borrower by the
Lender, the condition or circumstance in respect of which such
representation, warranty or certification was false or misleading shall
not have been eliminated as otherwise cured; or
(d) the Borrower shall fail to comply with the requirements of
Section 7.03(a), Section 7.04, Section 7.06(a) or (c), Section 7.13,
Section 7.14, Section 7.19 or Section 7.22 hereof; or the Borrower shall
default in the performance of its obligations under Section 7.05
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hereof, and such default shall continue unremedied for a period of one (1)
Business Day; or the Borrower shall otherwise fail to observe or perform
any other agreement contained in this Loan Agreement or any other Loan
Document and such failure to observe or perform shall continue unremedied
for a period of ten (10) Business Days; or
(e) a final judgment or judgments for the payment of money in excess
of $1,000,000 in the aggregate shall be rendered against the Borrower or
any REO Subsidiary by one or more courts, administrative tribunals or
other bodies having jurisdiction over them and the same shall not be
discharged (or provision shall not be made for such discharge) or bonded,
or a stay of execution thereof shall not be procured, within 60 days from
the date of entry thereof and the Borrower or any such REO Subsidiary
shall not, within said period of 60 days, or such longer period during
which execution of the same shall have been stayed or bonded, appeal
therefrom and cause the execution thereof to be stayed during such appeal;
or
(f) the Borrower shall admit in writing its inability to pay its
debts as such debts become due; or
(g) either the Borrower or any REO Subsidiary shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator of itself or of all or a
substantial part of its property, (ii) make a general assignment for the
benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of
debts, (v) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary
case under the Bankruptcy Code or (vi) take any corporate or other action
for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the application
or consent of the Borrower or any of its REO Subsidiaries, in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment
of its debts, (ii) the appointment of a receiver, custodian, trustee,
examiner, liquidator or the like of the Borrower or any such REO
Subsidiary or of all or any substantial part of its property, or (iii)
similar relief in respect of the Borrower or any such REO Subsidiary under
any law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and
in effect, for a period of 60 or more days; or an order for relief against
the Borrower or any such REO Subsidiary shall be entered in an involuntary
case under the Bankruptcy Code; or
(i) the Custodial Agreement or any Loan Document shall for whatever
reason (including an event of default thereunder) be terminated by the
Borrower or the lien on the Collateral created by this Agreement or the
Borrower's material obligations hereunder shall
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cease to be in full force and effect as to the Borrower, or the
enforceability thereof shall be contested by the Borrower; or
(j) any other event shall occur which, in the sole judgment of the
Lender, may have a Material Adverse Effect; or
(k) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any material "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to
any Plan or any Lien in favor of the PBGC or a Plan shall arise on the
assets of the Borrower or any commonly controlled entity as defined under
ERISA, (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) the Borrower or any commonly controlled entity as defined under ERISA
shall, or in the reasonable opinion of the Lender is likely to, incur any
liability in connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect; or
(l) any Change of Control of the Borrower shall have occurred
without the prior consent of the Lender or any of the key personnel (as
determined by the Lender) shall fail to continue to be employed by the
Borrower, the Servicer or any of their Affiliates; or
(m) the Borrower shall grant, or suffer to exist, any Lien on any
Collateral except Permitted Liens and the Liens contemplated hereby; or
the Liens contemplated hereby shall cease to be first priority perfected
Liens on the Collateral in favor of the Lender or shall be Liens in favor
of any Person other than the Lender; or
(n) the Borrower shall default under, or fail to perform as
requested under, or shall otherwise materially breach the terms of any
instrument, agreement or contract between the Borrower and the Lender or
any of the Lender's Affiliates and such failure or breach is not cured
within the applicable cure period; or
(o) the Lender shall reasonably request, specifying the reasons for
such request, information, and/or written responses to such requests,
regarding the financial well-being of the Borrower and such information
and/or responses shall not have been provided within three Business Days
of such request, provided that the nature and scope of such request are
such that the Borrower could reasonably be expected to respond within such
period.
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Section 9. Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default (subject to
the expiration of the applicable cure period contained therein) other than those
referred to in Section 8(g) or (h), the Lender may immediately declare the
principal amount of the Advances then outstanding under the Note to be
immediately due and payable, together with all interest thereon and reasonable
fees and out-of-pocket expenses accruing under this Loan Agreement; provided
that upon the occurrence of an Event of Default referred to in Sections 8(g) or
(h), such amounts shall immediately and automatically become due and payable
without any further action by any Person. Upon such declaration or such
automatic acceleration, the balance then outstanding on the Note shall become
immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower, and the Lender may thereupon exercise any remedies available to it at
law and pursuant to the Loan Documents.
(b) Upon the occurrence of one or more Events of Default (subject to
the expiration of the applicable cure period contained therein), the Lender
shall have the right to obtain physical possession of the Servicing Records and
all other files of the Borrower relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come in to the
possession of the Borrower or any third party acting for the Borrower and the
Borrower shall deliver to the Lender such assignments as the Lender shall
request. The Lender shall be entitled to specific performance of all agreements
of the Borrower contained in this Loan Agreement.
Section 10. No Duty on Lender's Part. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its or their own gross negligence or willful
misconduct.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Lender to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under
any Loan Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
11.02 Notices. Except as otherwise expressly permitted by this Loan
Agreement, all notices, requests and other communications provided for herein
and under the Custodial Agreement (including, without limitation, any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including, without limitation, by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof); or, as to any party, at
such other address as shall be designated by such party in a written notice to
each other party. Except as otherwise provided in this Loan Agreement and except
for notices given under Section 2 (which shall be effective only on receipt),
all such
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communications shall be deemed to have been duly given when transmitted by telex
or telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
11.03 Indemnification and Expenses.
(a) The Borrower agrees to hold the Lender harmless from and
indemnify the Lender against all liabilities, losses, damages, judgments, costs
and expenses of any kind which may be imposed on, incurred by, or asserted
against the Lender, relating to or arising out of, this Loan Agreement, the
Note, any other Loan Document or any transaction contemplated hereby or thereby,
or any amendment, supplement or modification of, or any waiver or consent under
or in respect of, this Loan Agreement, the Note, any other Loan Document or any
transaction contemplated hereby or thereby, that, in each case, results from
anything other than the Lender's gross negligence or willful misconduct. In any
suit, proceeding or action brought by the Lender in connection with any Mortgage
Loan for any sum owing thereunder, or to enforce any provisions of any Mortgage
Loan, the Borrower (subject to Section 12.01) 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 of liability
whatsoever of the account debtor or obligor thereunder, arising out of a breach
by the Borrower of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
account debtor or obligor or its successors from the Borrower. The Borrower also
agrees to reimburse the Lender as and when billed by the Lender for all the
Lender's reasonable out-of-pocket 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 reasonable fees and
disbursements of its counsel. The Borrower hereby acknowledges that,
notwithstanding the fact that the Note is secured by the Collateral, the
obligations of the Borrower under the Note are recourse obligations of the
Borrower.
(b) The Borrower agrees to pay as and when billed by the Lender all
of the out-of pocket costs and expenses incurred by the Lender in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Loan Agreement, the Note, any other Loan
Document or any other documents prepared in connection herewith or therewith.
The Borrower agrees to pay as and when billed by the Lender all of the
out-of-pocket costs and expenses incurred in connection with the consummation
and administration of the transactions contemplated hereby and thereby
including, without limitation, (i) all the reasonable fees, disbursements and
expenses of counsel to the Lender, (ii) all the due diligence, inspection,
testing and review costs and expenses incurred by the Lender with respect to
Collateral under this Loan Agreement, including, but not limited to, those costs
and expenses incurred by the Lender pursuant to Sections 11.03(a), 11.14 and
11.16 hereof other than any costs and expenses incurred in connection with the
Lender's rehypothecation of the Mortgage Loans prior to an Event of Default and
(iii) initial and ongoing fees and expenses incurred by the Custodian and any
trustee with respect to the Mortgage Loans.
11.04 Amendments. Except as otherwise expressly provided in this
Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in
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writing signed by the Borrower and the Lender and any provision of this Loan
Agreement may be waived by the Lender.
11.05 Successors and Assigns. This Loan Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
succesors and permitted assigns.
11.06 Survival. The obligations of the Borrower 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 by reason of such representation or warranty proving to have been false or
misleading, notwithstanding that the Lender may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time such Advance was made.
11.07 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.
11.08 Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.
11.09 Loan Agreement Constitutes Security Agreement; Governing Law.
This Loan Agreement shall be governed by New York law without reference to
choice of law doctrine (but with reference to Section 5-1401 of the New York
General Obligations Law, which by its terms applies to this Loan Agreement), and
shall constitute a security agreement within the meaning of the Uniform
Commercial Code.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
-▇▇-
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL
(OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF
WHICH THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO ▇▇▇ IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE LENDER AND THE
SERVICER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
11.12 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Loan Agreement, the Note and the other Loan Documents to
which it is a party;
(b) the Lender has no fiduciary relationship to the Borrower, and
the relationship between the Borrower and the Lender is solely that of
debtor and creditor; and
(c) no joint venture exists among or between the Lender and the
Borrower.
11.13 Hypothecation or Pledge of Collateral. The Lender shall have
free and unrestricted use of all Collateral and nothing in this Loan Agreement
shall preclude the Lender from engaging in repurchase transactions with the
Collateral or otherwise pledging, repledging, transferring, hypothecating, or
rehypothecating the Collateral. Nothing contained in this Loan Agreement shall
obligate the Lender to segregate any Collateral delivered to the Lender by the
Borrower.
11.14 Assignments; Participations.
(a) The Borrower may assign any of their rights or obligations
hereunder or under the Note only with the prior written consent of the Lender.
The Lender may assign or transfer all or any of its rights or obligations under
this Loan Agreement and the other Loan Documents; provided, however, the Lender
must give one Business Day's notice to the Borrower.
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(b) The Lender may, in accordance with applicable law, at any time
sell to one or more lenders or other entities ("Participants") participating
interests in any Advance, the Note, its commitment to make Advances, or any
other interest of the Lender hereunder and under the other Loan Documents. In
the event of any such sale by the Lender of participating interests to a
Participant, the Lender's obligations under this Loan Agreement to the Borrower
shall remain unchanged, the Lender shall remain solely responsible for the
performance thereof, the Lender shall remain the holder of the Note for all
purposes under this Loan Agreement and the other Loan Documents, and the
Borrower and the Lender shall continue to deal solely and directly with the
Lender in connection with the Lender's rights and obligations under this Loan
Agreement and the other Loan Documents. The Borrower agrees that if amounts
outstanding under this Loan Agreement and the Note are due or unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts owing under this
Loan Agreement and the Note to the same extent as if the amount of its
participating interest were owing directly to it as the Lender under this Loan
Agreement or the Note; provided, that such Participant shall only be entitled to
such right of set-off if it shall have agreed in the agreement pursuant to which
it shall have acquired its participating interest to share with the Lender the
proceeds thereof. The Lender also agrees that each Participant shall be entitled
to the benefits of Sections 2.07 and 11.03 with respect to its participation in
the Advances outstanding from time to time; provided, that the Lender and all
Participants shall be entitled to receive no greater amount in the aggregate
pursuant to such Sections than the Lender would have been entitled to receive
had no such transfer occurred.
(c) The Borrower agrees to cooperate with the Lender in connection
with any such assignment and/or participation, to execute and deliver such
replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Loan Agreement and the other Loan
Documents in order to give effect to such assignment and/or participation. The
Borrower further agrees to furnish to any Participant identified by the Lender
to the Borrower copies of all reports and certificates to be delivered by the
Borrower to the Lender hereunder, as and when delivered to the Lender.
Notwithstanding the Borrower's obligations set forth in this Section 11.14(c),
the Borrower shall not be obligated to incur either (i) material additional
obligations or (ii) material additional costs or expenses in connection with the
fulfillment of such obligations except with respect to clause (ii) above if the
Lender agrees to reimburse such costs and expenses.
11.15 Servicing.
(a) Unless otherwise agreed to among the parties hereto, the
Borrower hereby appoints the Servicer to service; and the Servicer hereby
covenants and agrees to service the Mortgage Loans and REO Properties for an
initial term, commencing on the first Funding Date and ending 30 days
thereafter, which term shall be extendable by the Borrower for successive terms
of one calendar month thereafter, until the Maturity Date; provided, however,
that if an Event of Default has occurred and is continuing or has not been
cured, the Servicer shall immediately be terminated as servicer. The Mortgage
Loans and REO Properties shall be serviced in accordance with the servicing
provisions of the Pooling and Servicing Agreement, including the representations
and warranties and servicing standards with respect to the prepayment charges.
As part of its servicing duties, the Servicer shall enforce "due-on-sale"
provisions to the extent permitted by law, shall administer all escrow/impound
deposits and shall make all servicing advances (not including advances
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of delinquent principal and interest) on the Mortgage Loans. The Mortgage Loans
shall be serviced for a servicing fee equal to 0.50% per annum payable monthly
on the then-outstanding principal balance of each Mortgage Loan (the "Servicing
Fee") and any additional servicing compensation as set forth in Section 3.18 of
the Pooling and Servicing Agreement, which Servicing Fee and additional
servicing compensation will be paid in accordance with the provisions of the
Pooling and Servicing Agreement. Notwithstanding the foregoing, in the event an
Event of Default shall occur and be continuing, the Servicer will no longer be
servicer, unless the term of servicing is extended by the Lender in its sole
discretion. In such event, Lender shall have the right to transfer such
servicing to another servicer without payment of any fee to the Servicer;
provided, however, that the Servicer will be entitled to all amounts owed to it
in respect of its Servicing Fee up to the date the Servicer is terminated as
servicer. In addition, in the event any proceeds from any sale of the Mortgage
Loans to a third party in connection with a default by Borrower exceeds the
amounts owed to Lender under this Loan Agreement, the Lender will reimburse the
Servicer for any unpaid servicing advances and any ancillary income accrued
during the Servicer's period as servicer. The Servicer will cooperate in good
faith to effect such servicing transfer and shall pay all costs associated with
such servicing transfer. The Borrower shall cause the Servicer to service the
Mortgage Loans and REO Properties in accordance with the terms of the Pooling
and Servicing Agreement and this Loan Agreement and the Borrower shall enforce
all of the obligations of the Servicer.
(b) (i) The Borrower agrees that the Lender has a first priority
perfected security interest in all servicing records of the Borrower relating to
the Collateral, 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 the Mortgage Loans and REO Properties (the
"Servicing Records"), and (ii) the Borrower grants the Lender a security
interest in all servicing rights relating to the Mortgage Loans and REO
Properties and all Servicing Records to secure the obligation of the Borrower or
its designee to service in conformity with this Section and any other obligation
of the Borrower to the Lender. The Borrower covenants to safeguard such
Servicing Records and to deliver them promptly to the Lender or its designee
(including the Custodian) at the Lender's request; provided that prior to an
Event of Default, delivery of copies of the Servicing Records will satisfy the
Borrower's obligations on the last sentence of this Section 11.15(b).
(c) (i) The Borrower shall deposit or cause the Servicer to deposit
all Collections into the Collection Account within one Business Day of receipt
of good funds thereof.
(ii) Except as expressly provided for in this paragraph (ii)
and paragraph (iii) below, no withdrawals shall be made from the Collection
Account. On each Payment Date prior to an Event of Default, the Servicer shall
distribute upon receipt of notice from the Borrower or the Lender as to the
amount due and payable (the calculation of such amounts shall be the
responsibility of the party submitting the notice), from such amounts available
in the Collection Account as of the close of business on the last Business Day
of the immediately preceding Collection Period for application in the following
priority:
(a) to the Borrower and the Servicer, an amount equal to
Reimbursable Expenses (to the extent not previously
reimbursed); and (B) to
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the Servicer, an amount equal to the Servicing Fee and all
unpaid Servicing Fees from prior Payment Dates.
(b) to the Lender, all amounts due (including the
amounts sufficient to cause the outstanding principal amount
of Advances to equal the Borrowing Base) as of such Payment
Date pursuant to this Loan Agreement; and
(c) to the Borrower, an amount equal to all Available
Proceeds.
At any time after Servicer receives notice from Lender that an Event
of Default under this Agreement is then continuing, Servicer shall make payments
from the Collection Account only in accordance with the express written
instructions of Lender.
11.16 Periodic Due Diligence Review. The Borrower acknowledges that
the Lender has the right to perform continuing due diligence reviews with
respect to the Mortgage Loans and REO Properties, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and the Borrower agrees that upon reasonable (but no
less than five (5) Business Day's) prior notice to the Borrower, the Lender or
its authorized representatives will be permitted during normal business hours to
examine, inspect, make copies of, and make extracts of, the Asset Files and any
and all documents, records, agreements, instruments or information relating to
such Mortgage Loans or REO Properties in the possession, or under the control,
of the Borrower and/or the Custodian. The Borrower also shall make available to
the Lender a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Asset Files and the Mortgage Loans and REO
Properties. Without limiting the generality of the foregoing, the Borrower
acknowledges that the Lender shall make Advances to the Borrower based solely
upon the information provided by the Borrower to the Lender in the Asset Data
Transmission and the representations, warranties and covenants contained herein,
and that the Lender, at its option, has the right at any time to conduct a
partial or complete due diligence review on some or all of the Mortgage Loans
securing such Advance, including, without limitation, ordering new credit
reports, lien searches, new BPO's or other appraisals on the related Mortgaged
Properties and otherwise re-generating the information used to originate such
Mortgage Loan or REO Properties. The Lender may underwrite such Mortgage Loans
itself or engage a third party underwriter to perform such underwriting. The
Borrower agrees to cooperate with the Lender and any third party underwriter in
connection with such underwriting, including, but not limited to, providing the
Lender and any third party underwriter with access to any and all documents,
records, agreements, instruments or information relating to such Mortgage Loans
or REO Properties in the possession, or under the control, of the Borrower. In
addition, the Lender has the right to perform continuing Due Diligence Reviews
of the Borrower. The Borrower further agrees to provide to the Lender upon
request an updated appraisal with respect to any Mortgaged Property. The
Borrower and the 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 as agreed by the Borrower and the Lender.
11.17 Set-Off. In addition to any rights and remedies of the Lender
provided by this Loan Agreement and by law, the Lender shall have the right,
without prior notice to the Borrower,
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any such notice being expressly waived by the Borrower to the extent permitted
by applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all Property and
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Lender or any Affiliate thereof to
or for the credit or the account of the Borrower. The Lender agrees promptly to
notify the Borrower after any such set-off and application made by the Lender;
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
Section 12. Limitations on Liability.
12.01 Limitation on Liability. Except as otherwise provided below,
the Lender's recourse shall be limited to the Borrower and none of its
Affiliates, officers, directors, employees, shareholders or any other Person,
disclosed or undisclosed, shall be personally liable for the repayment of any of
the Advances, except that the Servicer (but not any direct or indirect general
or limited partners or shareholders, officers, directors or employees of the
general or limited partners in the Servicer) shall be personally liable (1) for
either the Borrower's fraud (but only to the extent of actual damages suffered
by the Lender caused by such fraud) and (2) whether prior to or after an Event
of Default for the Borrower's misappropriation of any amounts on deposit or
required to be on deposit in the Collection Account and any other amounts
required to be held by the Borrower in escrow or segregated accounts pursuant to
the terms hereof and any other escrow deposits, but only to the extent of the
amounts so misapplied. By separately executing this Loan Agreement and as
further consideration for the making of the Advances by the Lender, the Servicer
agrees that it shall be liable and responsible for the liabilities referenced in
clauses (1) and (2) above to the extent set forth above.
12.02 Limitation on Liability of Lender's Officer's, Employees, Etc.
Any obligation or liability whatsoever of the Lender which may arise at any time
under this Loan Agreement or any other Loan Document shall be satisfied, if at
all, out of the Lender's assets only. No such obligation or liability shall be
personally binding upon, nor shall resort for the enforcement thereof be had to,
the property of any of the Lender's shareholders, directors, officers, employees
or agents, regardless of whether such obligation is in the nature of contract,
tort or otherwise.
12.03 Reserved.
12.04 Conflict of Terms. In the event of any conflict between the
provisions of this Loan Agreement and the provisions of any of the other Loan
Documents, the provisions of this Loan Agreement shall prevail; provided,
however, that if there is a specific cross-reference in this Loan Agreement to
one of the other Loan Documents or to the other Loan Documents generally with
respect to a provision or a right or obligation which this Loan Agreement
permits only as provided therein and not otherwise, then such other Loan
Document or Loan Documents shall govern.
12.05 The Servicer. The parties to this Loan Agreement hereby
acknowledge and agree that the Servicer is a signatory to this Loan Agreement
only with respect to Section 11.11, Section 11.15 and Section 12.01 hereof.
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12.06 Termination. Other than those sections intended to survive in
the Master Loan and Security Agreement dated November 18, 1998 among the
Servicer and Liquidation Properties, Inc. (including those sections related to
indemnification), such agreement is hereby terminated.
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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.
Address for Notices: NC CAPITAL CORPORATION
NC Capital Corporation
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ------------------------
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ Name:
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Title: Senior Vice President
Address for Notices: NEW CENTURY MORTGAGE
CORPORATION
New Century Mortgage Corporation
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ------------------------
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ Name:
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Title: EVP / COO
Address for Notices: SALOMON BROTHERS REALTY
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Attention: Mr. ▇▇▇ ▇▇▇▇▇▇ By: /s/ [ILLEGIBLE]
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇ ------------------------
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Name:
Title:
