Mortgage Loan Warehousing Agreement - First National Bank of Chicago, First Chicago National Processing Corp., ABN AMRO Bank NV, Bank of America NT & SA, Bank of New York, Chase Manhattan Bank NA, Credit Lyonnais, FNBC and Nationsbank of Texas, NA, Bankers Trust Co., Canadian Imperial Bank of Commerce, Citicorp USA Inc., Long-Term Credit Bank of Japan Ltd., Los Angeles Agency and Countrywide Funding Corp.
TABLE OF CONTENTS
Page
COUNTRYWIDE FUNDING CORPORATION: MORTGAGE LOAN WAREHOUSING
AGREEMENT: FACILITY A ....................................... 1
RECITALS ........................................... 1
AGREEMENT ........................................... 1
1. Facility A Credit Facilities ........................ 1
1(a) Primary Loan Facility ......................... 1
1(b) Negotiated Loan Facility ...................... 2
1(c) Swing Loan Facility ........................... 3
1(d) Letter of Credit Facility ..................... 3
1(e) GNMA Pool Advance Facility .................... 4
2. Requests for Credit Events and Issuance of CPNs;
Funding ........................................... 4
2(a) Requests for Credit Events .................... 4
2(b) Direct and Discount Primary Loans ............. 5
2(c) Funding of Facility A Loans and GNMA Pool
Advance Loans ................................. 5
2(d) Sale and Assignment of Discount Loans by
Balance Banks ................................. 6
2(e) Funding ....................................... 7
3. Payment of Principal and L/C Drawings; Prepayments .. 7
3(a) Required Principal Payments ................... 7
3(b) Prepayments ................................... 7
4. Calculation and Payment of Interest; Related
Provisions .......................................... 8
4(a) Interest on Direct Loans and Swing Loans ...... 8
4(b) Interest on Discount Loans .................... 9
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4(c) Interest on Negotiated Loans .................. 9
4(d) Interest on GNMA Pool Advance Loans ........... 9
4(e) Interest on L/C Drawings ...................... 9
4(f) Payment of Interest ........................... 9
4(g) Inability to Determine Rate ................... 10
4(h) Funding Indemnification ....................... 10
4(i) Illegality; Impracticality .................... 11
4(j) Requirements of Law; Increased Costs .......... 11
4(k) Taxes ......................................... 12
4(l) Treatment of Qualifying Balances; Indemnity ... 13
5. Miscellaneous Lending Provisions .................... 14
5(a) Use of Proceeds ............................... 14
5(b) Assumption of Funding/Purchase ................ 14
5(c) Notes ......................................... 14
5(d) Interest and Fee Billing and Payment .......... 15
5(e) Nature and Place of Payments .................. 15
5(f) Post-Default Interest ......................... 16
5(g) Computations .................................. 16
5(h) Disbursement of Payments Received ............. 16
5(i) Capital Requirements .......................... 17
5(j) Fees .......................................... 17
5(k) Wire Transfers of Funds ....................... 17
6. Security Agreement; Guaranty; Subordination;
Additional Documents ................................ 18
6(a) Security Agreement ............................ 18
6(b) Guaranty and Subordination Agreement .......... 18
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Page
6(c) Further Documents ............................. 18
7. Conditions Precedent ................................ 18
7(a) First Credit Event ............................ 18
7(b) All Credit Events ............................. 20
8. Representations and Warranties of the Company ....... 21
8(a) Financial Condition ........................... 21
8(b) No Change ..................................... 21
8(c) Corporate Existence; Compliance with Law ...... 21
8(d) Corporate Power; Authorization; Enforceable
Obligations ................................... 22
8(e) No Legal Bar .................................. 22
8(f) No Material Litigation ........................ 22
8(g) Taxes ......................................... 22
8(h) Investment Company Act ........................ 22
8(i) Subsidiaries .................................. 23
8(j) Federal Reserve Board Regulations ............. 23
8(k) ERISA ......................................... 23
8(l) Assets ........................................ 23
9. Affirmative Covenants ............................... 23
9(a) Financial Statements .......................... 23
9(b) Certificates; Reports; Other Information ...... 24
9(c) Payment of Indebtedness ....................... 25
9(d) Maintenance of Existence and Properties ....... 25
9(e) Inspection of Property; Books and Records;
Discussions ................................... 25
9(f) Notices ....................................... 26
9(g) Expenses ...................................... 26
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Page
9(h) Credit Documents .............................. 27
9(i) Insurance ..................................... 27
9(j) CPN Program ................................... 27
10. Negative Covenants .................................. 27
10(a) Liens ......................................... 27
10(b) Mandatory Coverage ............................ 28
10(c) Indebtedness .................................. 28
10(d) Consolidation and Merger ...................... 28
10(e) Acquisitions .................................. 29
10(f) Payment of Dividends .......................... 29
10(g) Purchase or Retirement of Stock ............... 29
10(h) Investments; Advances; Receivables ............ 29
10(i) Sale of Assets ................................ 29
10(j) Debt to Adjusted Net Worth Ratio .............. 30
10(k) Current Ratio ................................. 30
10(l) Minimum Adjusted Net Worth .................... 30
10(m) Minimum Net Worth ............................. 30
10(n) Minimum Inventory and Unencumbered Servicing
Portfolio ..................................... 30
10(o) Restriction on Refinance Risk Debt ............ 31
11. Events of Default ................................... 31
12. Agency Provisions ................................... 34
12(a) Appointment ................................... 34
12(b) Delegation of Duties .......................... 34
12(c) Exculpatory Provisions ........................ 35
12(d) Reliance by Agent ............................. 35
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12(e) Notice of Default; Agreement to Advance ....... 36
12(f) Non-Reliance on Agent and Other Lenders ....... 36
12(g) Indemnification ............................... 37
12(h) Agent in Its Individual Capacity .............. 37
12(i) Successor Agents .............................. 37
12(j) Sharing of Set-Offs ........................... 38
13. Miscellaneous Provisions ............................ 38
13(a) No Assignment ................................. 38
13(b) Amendment ..................................... 38
13(c) Cumulative Rights; No Waiver .................. 39
13(d) Entire Agreement; Severability ................ 39
13(e) Survival ...................................... 40
13(f) Notices ....................................... 40
13(g) Governing Law ................................. 40
13(h) Counterparts .................................. 40
14. Additional Lenders; Assignments and Participations;
Increases in Availability ........................... 40
14(a) Addition of New Lender ........................ 40
14(b) Assignments Among Existing Lenders ............ 42
14(c) Minimum Loan Commitment ....................... 43
14(d) Sub-Participation by Lenders .................. 44
14(e) Federal Reserve Bank .......................... 44
14(f) Increases in Availability ..................... 44
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COUNTRYWIDE FUNDING CORPORATION:
MORTGAGE LOAN WAREHOUSING AGREEMENT: FACILITY A
THIS MORTGAGE LOAN WAREHOUSING AGREEMENT: FACILITY A (the
"Agreement") is made and dated as of the 15th day of November, 1993, by
and among the lenders signatory hereto (collectively, the "Lenders"),
THE FIRST NATIONAL BANK OF CHICAGO, a national banking association
("FNBC"), as credit agent for the Lenders (in such capacity, the "Credit
Agent"), FIRST CHICAGO NATIONAL PROCESSING CORPORATION, a Delaware
corporation, as collateral agent for the Lenders (in such capacity, the
"Collateral Agent"), ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL
BRANCH, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, THE BANK
OF NEW YORK, THE CHASE MANHATTAN BANK, N.A., CREDIT LYONNAIS SAN
FRANCISCO BRANCH, FNBC and NATIONSBANK OF TEXAS, N.A., as managing
co-agents for the Lenders (in such capacity, the "Managing Co-Agents"),
BANKERS TRUST COMPANY, CANADIAN IMPERIAL BANK OF COMMERCE, CITICORP USA,
INC., THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY, as
co-agents for the Lenders (in such capacity, the "Co-Agents"), and
COUNTRYWIDE FUNDING CORPORATION, a New York corporation (the "Company").
RECITALS
A. Pursuant to that certain Mortgage Loan Warehousing
Agreement: Facility A, dated as of December 4, 1992 among certain of
the Lenders, the Collateral Agent, the Credit Agent, the Company and
others (as amended and extended from time to time to date, the "Existing
Facility A Agreement"), certain of the Lenders agreed to extend credit
to the Company on the terms and subject to the conditions set forth more
particularly therein.
B. The current parties to the Existing Facility A Agreement
desire to terminate the Existing Facility A Agreement and replace the
credit facility evidenced thereby with this Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Facility A Credit Facilities.
1(a) Primary Loan Facility. On the terms and subject to
the conditions set forth herein, the Lenders severally agree that they
shall, from time to time to but not including the Facility A Maturity
Date (as such term and capitalized terms not otherwise defined herein
are defined in the Glossary attached hereto as Annex I), directly, or
indirectly by purchase from a Balance Bank, advance their Primary Loan
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Percentage Share of loans (the "Facility A Primary Loans" or a
"Facility A Primary Loan") to the Company in amounts such that:
(1) The aggregate amount of Facility A Primary Loans
outstanding does not exceed at any date the lesser of:
(i) The Facility A Primary Loan Credit Limit;
and
(ii) The lesser of: a. the Aggregate Credit
Limit, and b. the Collateral Value of the Borrowing Base minus,
in each case, the sum of: (A) Negotiated Loans and Swing Loans
outstanding, (B) the amount available for drawing under
Outstanding Letters of Credit, (C) unrepaid L/C Drawings, (D)
the GNMA Pool Advance Commitment, (E) Verified Outstanding
CPNs, (F) Facility B Loans outstanding and (G) outstanding
Funding Checks, and minus, in addition, in the case of the
Collateral Value of the Borrowing Base, the Current Refinance
Risk Debt Exposure; and
(2) The aggregate dollar amount of each Lender's
Primary Loan Percentage Share of Facility A Primary Loans and
Facility B Loans outstanding does not exceed such Lender's Maximum
Primary Loan Commitment.
In calculating the availability of Facility A Primary Loans on any date,
Loans outstanding, Verified Outstanding CPNs and Current Refinance Risk
Debt Exposure shall not include any of such items which will be repaid
with Loans to be advanced on such date.
1(b) Negotiated Loan Facility. On the terms and subject
to the conditions set forth herein, any Lender may from time to time to
but not including the Facility A Maturity Date in its sole and absolute
discretion offer to make loans ("Negotiated Loans" or a "Negotiated
Loan") to the Company in such amounts, at such interest rates and for
such terms (not to extend beyond the Facility A Maturity Date) as such
Lender and the Company may agree; provided, however, that in no event
will any Lender advance any Negotiated Loan to the Company nor will the
Company accept the proceeds of any Negotiated Loan if upon the funding
thereof the aggregate amount of Negotiated Loans outstanding would
exceed the lesser of: (1) the sum of the Facility A Primary Loan Credit
Limit, the Swing Loan Commitment, the GNMA Pool Advance Commitment and
the aggregate L/C Commitments, and (2) the Collateral Value of the
Borrowing Base minus, in each case, the sum of: (i) Facility A Primary
Loans and Swing Loans outstanding, (ii) the amount available for drawing
under Outstanding Letters of Credit, (iii) unrepaid L/C Drawings, (iv)
the GNMA Pool Advance Commitment, (v) Verified Outstanding CPNs, (vi)
Facility B Loans outstanding and (vii) outstanding Funding Checks, and
minus, in addition, in the case of the Collateral Value of the Borrowing
Base, the Current Refinance Risk Debt Exposure. In calculating the
availability of Negotiated Loans on any date, Loans outstanding,
Verified Outstanding CPNs and Current Refinance Risk Debt Exposure shall
not include any of such items which will be repaid with Loans to be
advanced on such date. The agreement of a Lender to make a Negotiated
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Loan hereunder shall not to any extent reduce such Lender's obligation
to fund Facility A Primary Loans or Facility B Loans to the extent of
such Lender's Maximum Primary Loan Commitment, it being expressly
acknowledged and agreed that the agreement to make Negotiated Loans is
optional on the part of such Lender and in addition to its Maximum
Primary Loan Commitment.
1(c) Swing Loan Facility. On the terms and subject to the
conditions set forth herein, FNBC agrees that it shall, from time to
time to but not including the Facility A Maturity Date advance loans
(the "Swing Loans" or a "Swing Loan") to the Company in amounts such
that the aggregate amount of Swing Loans outstanding does not exceed at
any date the lesser of:
(1) The Swing Loan Commitment; and
(2) The lesser of: (i) the Aggregate Credit Limit,
and (ii) the Collateral Value of the Borrowing Base minus, in
each case, the sum of: a. Facility A Primary Loans and
Negotiated Loans outstanding, b. the amount available for
drawing under Outstanding Letters of Credit, c. unrepaid L/C
Drawings, d. the GNMA Pool Advance Commitment, e. Verified
Outstanding CPNs, f. Facility B Loans outstanding and g.
outstanding Funding Checks, and minus, in addition, in the case
of the Collateral Value of the Borrowing Base, the Current
Refinance Risk Debt Exposure;
In calculating the availability of Swing Loans on any date, Loans
outstanding, Verified Outstanding CPNs and Current Refinance Risk Debt
Exposure shall not include any of such items which will be repaid with
Loans to be advanced on such date.
1(d) Letter of Credit Facility. On the terms and subject
to the conditions set forth herein, each L/C Issuing Lender severally
agrees that it will issue, from time to time from the date hereof to and
including the Facility A Maturity Date, letters of credit (a "Letter of
Credit" and, collectively and severally, the "Letters of Credit") for
the account of the Company in favor of the Mortgage Backed Securities
Clearing Corporation (the "MBSCC") for the purpose of allowing the
Company to meet its margin requirements with the MBSCC; provided,
however, that the aggregate dollar amount available for drawing under
all Outstanding Letters of Credit:
(1) Issued by such L/C Issuing Lender shall not
exceed such L/C Issuing Lender's L/C Commitment at such date; and
(2) Issued by all L/C Issuing Lenders shall not
exceed the lesser of: (i) the Aggregate Credit Limit, and
(ii) the Collateral Value of the Borrowing Base minus, in each
case, the sum of: a. Loans outstanding, b. unrepaid L/C Drawings,
c. the GNMA Pool Advance Commitment, d. Verified Outstanding CPNs,
and e. outstanding Funding Checks, and minus, in addition, in the
case of the Collateral Value of the Borrowing Base, the Current
Refinance Risk Debt Exposure.
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In calculating the availability of Letters of Credit on any date,
Loans outstanding, Verified Outstanding CPNs and Current Refinance
Risk Debt Exposure shall not include any of such items which will be
repaid with Loans to be advanced on such date. The amount and
expiration date of each Letter of Credit shall be as agreed to by each
L/C Issuing Lender and the Company; provided, however, that in no
event may any Letter of Credit issued hereunder have an expiration
date later than the third Business Day immediately preceding the
Facility A Maturity Date or automatically renew or be renewed to a
date beyond such date. Each Letter of Credit issued by a L/C Issuing
Lender shall be in form customarily issued by such L/C Issuing Lender.
Each L/C Issuing Lender shall promptly notify the Credit Agent of the
issuance of a Letter of Credit and of any L/C Drawing and shall at and
as of the end of each calendar quarter, and at such other times as the
Credit Agent may reasonably request, notify the Credit Agent in
writing of the aggregate amount available for drawing under
Outstanding Letters of Credit and unrepaid L/C Drawings at such date.
1(e) GNMA Pool Advance Facility. On the terms and subject
to the conditions set forth in the GNMA Pool Advance Agreement, the GNMA
Pool Advance Lender agrees that it shall, from time to time to but not
including the Facility A Maturity Date, make loans (the "GNMA Pool
Advance Loans" or a "GNMA Pool Advance Loan") to the Company in an
aggregate amount not to exceed the GNMA Pool Advance Commitment.
2. Requests for Credit Events and Issuance of CPNs; Funding.
2(a) Requests for Credit Events.
(1) Subject to Paragraph 4(a) below, on any Business
Day that the Company desires to borrow Loans or request the issuance
of a Letter of Credit hereunder, it shall deliver a Loan Request,
Interest Rate Election and Payoff Notice to the Credit Agent no
later than: (i) in the case of Facility A Primary Loans, GNMA Pool
Advance Loans and Letters of Credit, 10:00 a.m. (Los Angeles time);
(ii) in the case of Negotiated Loans, 12:00 noon (Los Angeles time);
and (iii) in the case of Swing Loans, 2:00 p.m. (Los Angeles time)
on such date. Said Loan Request, Interest Rate Election and Payoff
Notice shall, as applicable, identify the Lender which has agreed to
fund any Negotiated Loan and the L/C Issuing Lender which is to
issue any Letter of Credit. Except for a request for a Negotiated
Loan or a Swing Loan made after 10:00 a.m. (Los Angeles time) on a
given date, only one consolidated Loan Request, Interest Rate
Election and Payoff Notice requesting Facility A Loans and/or
Facility B Loans and/or GNMA Pool Advance Loans and/or Letters of
Credit shall be submitted to the Credit Agent on any date. Any
request for Facility A Primary Loans and Facility B Loans shall be
in such amount that the aggregate dollar amount of Facility A
Primary Loans and Facility B Loans which the Lenders are required to
actually newly fund with respect thereto (after giving effect to the
provisions of Paragraph 8(a) of the Security Agreement) is not less
than $10,000,000.00, and any request for Swing Loans shall be in an
amount not less than $5,000,000.00. On each Business Day, the
Credit Agent shall notify the applicable Lenders (which notification
V82606[7083]94 4
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may be telephonic and, if telephonic, shall be promptly confirmed in
writing) no later than 11:00 a.m. (Los Angeles time) (or in the case
of a Negotiated Loan, 1:00 p.m. (Los Angeles time) or in the case of
a Swing Loan, 2:30 p.m. (Los Angeles time)) of whether or not a Loan
Request, Interest Rate Election and Payoff Notice was delivered to
the Credit Agent on such Business Day and of the aggregate amount of
Credit Events which will occur on such date.
(2) The Company may request the Credit Agent to
facilitate the approval for the issuance of CPNs on any Business Day
by delivering to the Credit Agent no later than 8:30 a.m. (Los
Angeles time) on such day a duly completed CPN Issuance Request.
2(b) Direct and Discount Primary Loans. The Company may
request that Facility A Primary Loans be made, at the election of the
Company as set forth on the related Loan Request, Interest Rate Election
and Payoff Notice:
(1) By the Balance Banks in the form of Discount
Loans; provided, however, that any request for Discount Loans may be
made only in the Loan Request, Interest Rate Election and Payoff
Notice provided for the initial Credit Events and, thereafter, the
Loan Request, Interest Rate Election and Payoff Notice delivered on
the last day of the Discount Loan Interest Period with respect to
the then outstanding Discount Loans or, if no Discount Loans are
then outstanding, on the fifth and twentieth days of each calendar
month (or if any such day is not a Business Day, the next succeeding
Business Day) (the permitted dates for funding of Discount Loans
being referred to herein as "Discount Loan Funding Dates"); and,
provided, further, that as a condition precedent to the Company's
right to request any Balance Bank to fund a Discount Loan, the
Company shall have delivered to the Credit Agent a Pre-Funding
Notice thereof no later than 10:00 a.m. (Los Angeles time) three
Eurodollar Business Days prior thereto (the Credit Agent hereby
agreeing to promptly transmit by facsimile transmission said Pre-
Funding Notice to the applicable Balance Bank and each of the
Lenders); and/or
(2) By the Lenders in the form of Direct Loans on
any Business Day.
2(c) Funding of Facility A Loans and GNMA Pool Advance
Loans. Facility A Loans and GNMA Pool Advance Loans requested pursuant
to any Loan Request, Interest Rate Election and Payoff Notice shall be
funded, subject to the provisions of Paragraph 8(a) of the Security
Agreement, as follows:
(1)(i) Each Balance Bank shall make Discount Loans
net of the applicable Balance Bank Discount, each Lender shall make
its Primary Loan Percentage Share of Direct Loans and the GNMA Pool
Advance Lender shall make GNMA Pool Advance Loans available by
wiring the amount thereof in immediately available same day
(including Federal) funds, to the Credit Agent to the Pre-
Disbursement Account no later than 12:30 p.m. (Los Angeles time) on
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the proposed funding date, such amounts to be held pending
disbursement as provided in subparagraph (2) below; (ii) each Lender
agreeing to make a Negotiated Loan shall make the same available by
wiring the amount thereof in immediately available same day
(including Federal) funds, to the Credit Agent to the Pre-
Disbursement Account no later than 2:30 p.m. (Los Angeles time) on
the proposed funding date; and (iii) FNBC shall make each Swing Loan
available by wiring the amount thereof in immediately available same
day (including Federal) funds to such accounts as the Company may
direct no later than 3:00 p.m. (Los Angeles time) on the proposed
funding date.
(2) On or before 11:00 a.m. (Los Angeles time) on
each proposed funding date the Credit Agent shall transmit the Loan
Request, Interest Rate Election and Payoff Notice (and any CPN
Issuance Request) received by the Credit Agent on such date to the
Collateral Agent and request the Collateral Agent to make a
Determination of Availability pursuant to Paragraph 7 of the
Security Agreement with respect thereto. If the Collateral Agent
notifies the Credit Agent that the Collateral Value of the Borrowing
Base is sufficient to support the requested Credit Events (or a
portion thereof), the Credit Agent shall so notify the Company and
shall, subject to the additional conditions set forth in Paragraph
7(b) below, disburse amounts held in the Pre-Disbursement Account to
the Funding Account and/or the Commercial Paper Account, as
applicable, no later than 12:45 p.m. (Los Angeles time) on the
proposed funding date. Amounts held in the Pre-Disbursement Account
which cannot be disbursed to the Company as a result of a negative
Determination of Availability or non-satisfaction of the additional
conditions set forth in Paragraph 7(b) below shall constitute cash
collateral for the Obligations, shall be transferred to the
Settlement Account prior to the opening of business of the Credit
Agent on the Business Day following the date deposited in the Pre-
Disbursement Account and disbursed to the Company only upon a
favorable Determination of Availability and subject to the
additional conditions set forth in Paragraph 7(b) below. Such
amounts shall constitute "Loans" to the Company for all purposes of
the Credit Documents and shall be payable, with interest, to the
same extent as if such amounts had been fully disbursed.
2(d) Sale and Assignment of Discount Loans by Balance
Banks. Simultaneously with the making of a Discount Loan by a Balance
Bank on a Discount Loan Funding Date, such Balance Bank agrees to sell
and assign, and does hereby sell and assign, to each Lender (including
such Balance Bank in its capacity as a Lender), and each Lender
irrevocably agrees to purchase and acquire, its Primary Loan Percentage
Share of such Discount Loan for a purchase price equal to such Lender's
Primary Loan Percentage Share of the principal amount of such Discount
Loan less the Lender Discount applicable thereto. Such purchase price
will be paid to the Credit Agent for the account of the applicable
Balance Banks in immediately available same day (including Federal)
funds at the Contact Office of the Credit Agent no later than 12:15 p.m.
(Los Angeles time) on the Discount Loan Funding Date. The Company
hereby acknowledges and consents to the assignment of Discount Loans by
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the Balance Banks to the Lenders hereunder. The Company, the Credit
Agent and the Collateral Agent shall deem and treat each Lender as the
creditor in respect of its Primary Loan Percentage Share of each
Discount Loan to the same extent as if such Discount Loan were a Direct
Loan as to which such Lender had advanced its Primary Loan Percentage
Share.
2(e) Funding. Each Lender shall be entitled to fund all
or any portion of its Primary Loan Percentage Share of Facility A
Primary Loans, Negotiated Loans, Swing Loans and GNMA Pool Advance
Loans, as applicable, in any manner it may determine in its sole
discretion, including, without limitation, in the Grand Cayman inter-
bank market, the eurocurrency inter-bank market and within the United
States, but all calculations and transactions hereunder shall be
conducted as though all Lenders actually fund the purchase of amounts
funded on Discount Loans and Eurodollar Loans by them hereunder through
the purchase of offshore dollar deposits in such amounts with maturities
corresponding to the applicable Interest Periods.
3. Payment of Principal and L/C Drawings; Prepayments.
3(a) Required Principal Payments. Subject to the
provisions of Paragraph 3(b) below, the Company shall pay to the Credit
Agent for the account of the applicable Lender or Lenders, including the
GNMA Pool Advance Lender and the L/C Issuing Lenders:
(1) The unpaid principal balance of each Discount
Loan, Eurodollar Loan and Negotiated Loan on the last day of the
applicable Interest Period;
(2) The unpaid principal balance of each Alternate
Base Rate Loan on the Facility A Maturity Date;
(3) The unpaid principal balance of each GNMA Pool
Advance Loan on or before the earlier of: (i) the thirtieth day
following the date advanced and (ii) the Facility A Maturity Date;
and
(4) The full amount of each L/C Drawing on the date
thereof.
3(b) Prepayments.
(1) The Company may voluntarily prepay Direct Loans,
Negotiated Loans, Swing Loans and GNMA Pool Advance Loans in whole
or in part and may voluntarily prepay Discount Loans in whole at any
time; provided, however, that in the case of prepayment of a
Discount Loan, the Company shall pay the net funded amount of such
Discount Loan actually advanced by the Balance Bank with respect
thereto with interest accrued on such net funded amount calculated
at the Balance Bank Discount from the date of funding to but not
including the date of prepayment; and, provided further, that any
prepayment of a Direct Loan, Negotiated Loan, Swing Loan or GNMA
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Pool Advance Loan shall be accompanied by accrued but unpaid
interest on the portion being prepaid.
(2) Facility A Loans and GNMA Pool Advance Loans are
subject to mandatory prepayment pursuant to Paragraph 6 of the
Security Agreement and, in addition, by application of proceeds of
the sale or other disposition of Collateral as provided in the
Security Agreement.
(3) The Company shall pay in connection with any
prepayment hereunder any amount payable on account thereof pursuant
to Paragraph 4(h) below concurrently with such prepayment.
4. Calculation and Payment of Interest; Related Provisions.
4(a) Interest on Direct Loans and Swing Loans.
(1) The Company shall pay interest to each Lender on
such Lender's Primary Loan Percentage Share of Direct Loans and
shall pay interest to FNBC on Swing Loans outstanding calculated, at
the election of the Company made from time to time as permitted
herein and set forth on a duly executed Loan Request, Interest Rate
Election and Payoff Notice, at either: (i) the Alternate Base Rate,
and/or (ii) the Applicable Eurodollar Rate. Each Lender's Primary
Loan Percentage Share of Direct Loans and FNBC's Swing Loans bearing
interest at the Alternate Base Rate shall be referred to herein as
"Alternate Base Rate Loans"; and each Lender's Primary Loan
Percentage Share of Direct Loans and FNBC's Swing Loans bearing
interest at the Applicable Eurodollar Rate shall be referred to
herein as "Eurodollar Loans".
(2) The Company may elect from time to time to
convert Direct Loans and Swing Loans from Eurodollar Loans to
Alternate Base Rate Loans or to have Direct Loans and Swing Loans
funded as Alternate Base Rate Loans by giving the Credit Agent
irrevocable notice of such election as set forth on a duly executed
Loan Request, Interest Rate Election and Payoff Notice delivered on
the proposed conversion or funding date; provided, however, that any
conversion of Eurodollar Loans may only be made on the last day of
the applicable Interest Period. The Company may elect from time to
time to convert Direct Loans and Swing Loans from Alternate Base
Rate Loans to Eurodollar Loans or to have Direct Loans and Swing
Loans funded as Eurodollar Loans by giving the Credit Agent at least
three Eurodollar Business Days' prior irrevocable notice of such
election by delivery of a duly executed Loan Request, Interest Rate
Election and Payoff Notice. Upon receipt of any such notice, the
Credit Agent shall promptly notify each of the Lenders affected
thereby thereof. No Direct Loan or Swing Loan shall be funded as or
converted into a Eurodollar Loan if an Event of Default or Potential
Default has occurred and is continuing on the day occurring two
Business Days prior to the date of the funding or conversion
requested by the Company.
V82606[7083]94 8
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(3) Any Eurodollar Loan may be continued as such
upon the expiration of the Interest Period applicable thereto by
giving the Credit Agent (which shall notify the Lenders) at least
three Eurodollar Business Days' prior irrevocable notice of such
election as set forth on a duly executed Loan Request, Interest Rate
Election and Payoff Notice; provided, however, that no Eurodollar
Loan may be continued as such when any Event of Default or Potential
Default has occurred and is continuing, but shall be automatically
converted to an Alternate Base Rate Loan on the last day of the then
current Interest Period applicable thereto. The Credit Agent shall
notify the Lenders and the Company promptly that such automatic
conversion will occur. If the Company shall fail to give notice as
provided above, the Company shall be deemed to have elected to
convert the affected Eurodollar Loan to an Alternate Base Rate Loan
on the last day of the Interest Period applicable thereto.
(4) The Credit Agent shall give prompt written
notice (or notice by telephone immediately confirmed in writing) to
the Company and the Lenders of the applicable interest rate
determined by the Credit Agent.
(5) Under no circumstances shall the Lenders be
required to make or maintain Eurodollar Loans under this Agreement
and the Facility B Agreement with more than an aggregate number of
eight (8) different Interest Periods.
4(b) Interest on Discount Loans. Since Discount Loans
will be funded by the Balance Banks net of the applicable Balance Bank
Discount, no additional interest shall be payable thereon prior to the
maturity date thereof.
4(c) Interest on Negotiated Loans. The Company shall pay
interest to any Lender making a Negotiated Loan from the date advanced
to but not including the date of payment calculated at the Negotiated
Loan Interest Rate applicable thereto.
4(d) Interest on GNMA Pool Advance Loans. The Company
shall pay interest on GNMA Pool Advance Loans from the date advanced to
but not including the date of payment calculated at such rates and at
such times as may be established in writing from time to time by the
Company and the GNMA Pool Advance Lender.
4(e) Interest on L/C Drawings. L/C Drawings shall bear
interest calculated at a per annum rate equal to the Alternate Bate Rate
plus one percent (1%) from the date such L/C Drawing occurs to but not
including the date paid in full.
4(f) Payment of Interest. The Company shall pay interest
on Alternate Base Rate Loans and GNMA Pool Advance Loans monthly, in
arrears, on the fifth day of each month for the period from and
including the first day of the immediately preceding month to and
including the last day of such month, and the Company shall pay interest
on Eurodollar Loans and Negotiated Loans on the last day of the
V82606[7083]94 9
<PAGE>
applicable Interest Period relating thereto, in each case as provided
more specifically in Paragraph 5(d) below.
4(g) Inability to Determine Rate. In the event that the
Credit Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that by reason of circumstances
affecting the interbank eurodollar market adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate for any given Interest
Period, the Credit Agent shall forthwith give telephonic notice
(promptly confirmed in writing) of such determination to each Lender and
to the Company at least two Eurodollar Business Days prior to, as the
case may be, the proposed funding date of a Discount Loan, the
conversion date of an Alternate Base Rate Loan to a Eurodollar Loan or
the proposed funding or continuation date of a Direct Loan or a Swing
Loan as a Eurodollar Loan. If such notice is given: (1) any Facility A
Loan that was to have been funded as a Discount Loan shall be funded as
a Direct Loan, (2) any Direct Loan or Swing Loan that was to have been
converted to or funded as a Eurodollar Loan shall, subject to the
provisions hereof, be continued or funded as an Alternate Base Rate
Loan, and (3) any outstanding Eurodollar Loan shall be converted, on the
last day of the then current Interest Period with respect thereto, to an
Alternate Base Rate Loan. Until such notice has been withdrawn by the
Credit Agent, the Company shall not have the right to have a Facility A
Loan funded as a Discount Loan or to convert a Direct Loan or Swing Loan
to or fund or continue a Direct Loan or a Swing Loan as a Eurodollar
Loan.
4(h) Funding Indemnification. In addition to all other
payment obligations hereunder, in the event: (1) any Facility A Loan
funded as a Discount Loan or which is outstanding as a Eurodollar Loan
is prepaid prior to the last day of the applicable Interest Period,
whether following a mandatory prepayment, application of proceeds from
the sale of Collateral or otherwise, including, without limitation,
pursuant to Paragraphs 14(a), 14(b) and 14(c) below, or (2) the Company
shall fail to make a conversion into or a borrowing as a Eurodollar Loan
after the Company has given notice thereof as provided in Paragraph
4(a)(2) above, or (3) the Company shall fail to continue any Direct Loan
or a Swing Loan which it has elected to have continued as a Eurodollar
Loan, or (4) the Company shall fail to borrow any Facility A Primary
Loan as a Discount Loan after giving a Pre-Funding Notice with respect
thereto or fail to prepay any Discount Loan after having given notice of
its intention so to do, or (5) the Company shall fail to make any
payment of principal or interest on any Facility A Loan when due, then
the Company shall immediately pay to each of the Lenders, through the
Credit Agent, an additional amount compensating such Lender for all
losses, costs and expenses incurred by such Lender in connection
therewith, including, without limitation, such as may arise out of re-
employment of funds obtained by such Lender or from fees payable to
terminate the deposits from which such funds were obtained, such losses,
costs and expenses and the method of calculation thereof being set forth
in reasonable detail in a statement delivered to the Company by such
Lender, such statement to be conclusive in the absence of manifest
error. Under no circumstances shall any Lender have any obligation to
remit monies to the Company upon prepayment of any Discount Loan or any
V82606[7083]94 10
<PAGE>
Eurodollar Loan, even under circumstances which do not result in the
necessity for the payment by the Company of any amount hereunder. The
provisions hereof shall survive termination of this Agreement and
payment of the outstanding Facility A Loans and GNMA Pool Advance Loans
and all other Facility A Obligations.
4(i) Illegality; Impracticality. Notwithstanding any
other provisions herein, if any law, regulation, treaty or directive or
any change therein or in the interpretation or application thereof,
shall or may in the opinion of any Lender make it unlawful or
impractical for such Lender to make or maintain Eurodollar Loans or
purchase its Primary Loan Percentage Share of Discount Loans: (1) the
commitment of such Lender hereunder to purchase its Primary Loan
Percentage Share of Discount Loans or to make Eurodollar Loans, as
applicable, shall forthwith be cancelled and (2) such Lender's Primary
Loan Percentage Share of Facility A Primary Loans outstanding as
Discount Loans or then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Alternate Base Rate Loans at the end of their
respective Interest Periods or within such earlier period as required by
law. In the event the commitment of any Lender to purchase its Primary
Loan Percentage Share of Discount Loans shall be terminated hereunder,
the agreement of the Balance Banks to fund Discount Loans shall be
reduced in a like amount. In the event of a conversion of any
Facility A Loan prior to the end of its applicable Interest Period the
Company hereby agrees promptly to pay each Lender, upon its written
demand, the amounts required pursuant to Paragraph 4(h) above, it being
agreed and understood that such conversion shall constitute a prepayment
for all purposes hereof. The provisions hereof shall survive the
termination of this Agreement and payment of the outstanding Facility A
Loans and GNMA Pool Advance Loans and all other Facility A Obligations.
4(j) Requirements of Law; Increased Costs. In the event
that a change subsequent to the date hereof in any applicable law,
regulation, treaty or directive or in the governmental or judicial
interpretation or application thereof, or compliance by any Lender with
any request or directive (whether or not having the force of law) issued
subsequent to the date hereof by any central bank or other governmental
authority, agency or instrumentality:
(1) Does or shall subject any Lender to any tax of
any kind whatsoever with respect to this Agreement or any Facility A
Loans or GNMA Pool Advance Loans made or Letters of Credit issued
hereunder, or changes the basis of taxation of payments to such
Lender of principal, fees, interest or any other amount payable
hereunder (except for changes in the rate of tax on the overall net
income of such Lender);
(2) Does or shall impose, modify or hold applicable
any reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for
the account of, advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender
which are not otherwise included in the determination of the Balance
Bank Discount, the Lender Discount, the Alternate Base Rate or the
V82606[7083]94 11
<PAGE>
Eurodollar Rate or the rate applicable to a Negotiated Loan, a GNMA
Pool Advance Loan or a L/C Drawing; or
(3) Does or shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such
Lender of making, renewing or maintaining any Facility A Loan or any
GNMA Pool Advance Loan or Letter of Credit or to reduce any amount
receivable in respect thereof then, in any such case, the Company shall
promptly pay to such Lender, upon its written demand, any additional
amounts necessary to compensate such Lender for such additional cost or
reduced amounts receivable as determined by such Lender with respect to
this Agreement or such credit extensions. If a Lender becomes entitled
to claim any additional amounts pursuant to this Paragraph 4(j), it
shall promptly notify the Company of the event by reason of which it has
become so entitled. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by a Lender to the Company
shall be conclusive in the absence of manifest error. The obligations
of the Company under this Paragraph 4(j) shall survive the termination
of this Agreement and the payment of all outstanding Facility A
Obligations.
4(k) Taxes.
(1) All payments made by the Company, the Credit
Agent and the Lenders on account of the Facility A Obligations shall
be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld
or assessed by any Governmental Authority, excluding, in the case of
the Lenders, net income taxes and franchise taxes (imposed in lieu
of net income taxes), imposed on the Lenders, as the case may be, as
a result of a present or former connection between the jurisdiction
of the government or taxing authority imposing such tax, or any
political subdivision or taxing authority thereof or therein, and
such Lender (other than a connection arising solely from such Lender
having executed, delivered or performed its obligations or received
a payment under, or enforced, the Credit Documents) (all such non-
excluded taxes, levies, imposts, duties, charges, fees, deductions
and withholdings being hereinafter called "Taxes"). If any Taxes
are required to be withheld from any amounts payable to any Lender
under the Credit Documents, the amounts so payable by the Company to
the Credit Agent for the benefit of such Lender shall be increased
to the extent necessary to yield to such Lender (after payment of
all Taxes) interest or any such other amounts payable thereunder at
the rates or in the amounts specified in the Credit Documents.
Whenever any Taxes are payable by the Company or on behalf of the
Company, as promptly as possible thereafter the Company shall send
to the Credit Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official
receipt received by the Company showing payment thereof. If the
Company fails to pay any Taxes when due to the appropriate taxing
V82606[7083]94 12
<PAGE>
authority or fails to remit to the Credit Agent the required
receipts or other required documentary evidence, the Company shall
indemnify the Credit Agent and such Lender for any incremental
taxes, interest or penalties that may become payable by the Credit
Agent and the Lenders as a result of any such failure. The
agreements in this subsection shall survive the termination of this
Agreement and the payment of all Facility A Obligations. Each
Lender by executing this Agreement represents and warrants to the
Company and the Credit Agent that at the date of this Agreement no
Taxes are imposed upon such Lender which would result in increased
liability of the Company to such Lender pursuant to this Paragraph
4(k)(1).
(2) Each Lender that is not incorporated under the
laws of the United States of America or a state thereof agrees that
it will deliver to the Company and the Credit Agent (1) two duly
completed copies of United States Internal Revenue Service Form 1001
or 4224 or successor applicable form, as the case may be, and (2) an
Internal Revenue Service Form W-8 or W-9 or successor applicable
form. Each such Lender also agrees to deliver to the Company and
the Credit Agent two further copies of the said Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms or other manner
of certification, as the case may be, on or before the date that any
such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form previously
delivered by it to the Company, and such extensions or renewals
thereof as may reasonably be requested by the Company or the Credit
Agent, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred
prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Company and
the Credit Agent. Such Lender shall certify (i) in the case of a
Form 1001 or 4224, that it is entitled to receive payments under
this Agreement without deduction or withholding of any United States
federal income taxes and (ii) in the case of a Form W-8 or W-9, that
it is entitled to an exemption from United States backup withholding
tax.
4(l) Treatment of Qualifying Balances; Indemnity. Each
Balance Bank and the Company will consult from time to time with a view
toward allowing the Company to maintain its deposit balances at such
Balance Bank in types of deposit accounts bearing the lowest reserve
requirements practicable consistent with the flexibility required by the
Company to make frequent withdrawals and deposits. In the event that it
shall be determined at any time that (1) any Balance Bank has
incorrectly characterized deposit accounts maintained by the Company
with such Balance Bank for purposes of determining required reserves,
(2) any Balance Bank has maintained inadequate reserves in respect of
such deposit accounts, (3) the cost of reserves used in the calculation
of the amount of Qualifying Balances at any time was the cost of the
inadequate reserves so maintained or (4) any Balance Bank is required to
maintain retroactive reserves, or to pay other costs, penalties or
V82606[7083]94 13
<PAGE>
charges, as a result thereof, then, in any such event, the Company shall
pay to such Balance Bank on demand the additional amounts necessary to
compensate such Balance Bank for the cost of maintaining such
retroactive reserves and for any other costs, penalties or charges
related thereto, including any amounts arising from a recalculation of
the "Balance Deficiency Fee" referred to in the Balance Bank Agreements.
A certificate as to any additional amounts payable pursuant to this
subsection submitted by a Balance Bank, through the Credit Agent, to the
Company shall be conclusive in the absence of manifest error. The
agreements in this subsection shall survive termination of this
Agreement and payment of all Facility A Obligations.
5. Miscellaneous Lending Provisions.
5(a) Use of Proceeds. The proceeds of Facility A Loans
shall be utilized by the Company solely for the purpose of originating
and/or acquiring Mortgage Loans, to repay L/C Drawings and other
Indebtedness of the Company (including Indebtedness of the Company to
the Parent permitted to be repaid by the Company to the Parent pursuant
to the terms of the Credit Documents and including CPNs) and for other
general working capital purposes. The proceeds of the GNMA Pool Advance
Loans shall be used solely for the purpose of fulfilling the Company's
obligations to GNMA as described in the GNMA Pool Advance Agreement.
5(b) Assumption of Funding/Purchase. The Credit Agent may
(but shall not be obligated to) assume that each Lender has made its
Primary Loan Percentage Share of Facility A Primary Loans and any other
Facility A Loans and GNMA Pool Advance Loans to be advanced by it
available on the funding date therefor and may, in reliance upon such
assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Lender shall not have so made such
amounts available, such Lender and the Company jointly and severally
agree to repay to the Credit Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from
the date such amount is made available to the Company until the date
such amount is repaid to the Credit Agent, at, in the case of the
Company, the interest rate applicable at the time to the subject
Facility A Loan or GNMA Pool Advance Loan and, in the case of the
Lenders, the Federal Funds Rate. If such Lender shall repay to the
Credit Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Primary Loan Percentage Share of such
Facility A Primary Loan or other Facility A Loans or GNMA Pool Advances
Loans for all purposes of the Credit Documents. Nothing contained
herein shall affect the liability of any Lender for its failure to make
its Primary Loan Percentage Share of Facility A Primary Loans or other
Facility A Loans or GNMA Pool Advance Loans available to the Company as
required pursuant to this Agreement and the other Credit Documents.
5(c) Notes. The obligation of the Company to repay Direct
Loans shall be evidenced by notes payable to each Lender, each in the
form of that attached hereto as Exhibit A-1 (the "Facility A Direct Loan
Notes"); the obligation of the Company to repay Discount Loans shall be
evidenced by notes payable to each Lender in the form of that attached
hereto as Exhibit A-2 (the "Facility A Discount Loan Notes"); the
V82606[7083]94 14
<PAGE>
obligation of the Company to repay Negotiated Loans shall be evidenced
by notes payable to each Lender in the form of that attached hereto as
Exhibit A-3 (the "Negotiated Loan Notes"); the obligation of the Company
to repay Swing Loans shall be evidenced by a promissory note payable to
FNBC in the form of that attached hereto as Exhibit A-4 (the "Swing Loan
Note"); and the obligation of the Company to repay GNMA Pool Advance
Loans shall be evidenced by a promissory note payable to the GNMA Pool
Advance Lender in the form of that attached hereto as Exhibit A-5 (the
"GNMA Pool Advance Note").
5(d) Interest and Fee Billing and Payment. The Credit
Agent shall: (1) on or before the first Business Day of each month
notify the Company (which notification may be telephonic) of the
estimated amount of interest payable with respect to Alternate Base Rate
Loans and GNMA Pool Advance Loans as of the fifth day of the current
month for the period from and including the first day of the immediately
preceding month to and including the last day of such month, with the
actual amount confirmed by notification by the Credit Agent to the
Company (which notification may be telephonic and which, if telephonic,
shall be promptly confirmed in writing) given no later than 9:00 a.m.
(Los Angeles time) on the due date of payment thereof; (2) on the last
day of the Interest Period for each Eurodollar Loan and Negotiated Loan
notify the Company (which notification may be telephonic and which, if
telephonic, shall be promptly confirmed in writing) of the amount of
interest payable on such date on account thereof (such notification in
the case of a Negotiated Loan to be based, without independent
verification by the Credit Agent, upon information provided by the
Lender which advanced such Negotiated Loan); (3) on or before the first
Business Day of the first month of each calendar quarter notify the
Company (which notification may be telephonic) of the amount of
commitment fees payable pursuant to Paragraph 2 of the Fee Letter on the
fifth day of such month for the period from and including the first day
of the first month of the immediately preceding calendar quarter to and
including the last day of such calendar quarter, with the actual amount
confirmed by notification by the Credit Agent to the Company (which
notification may be telephonic and which, if telephonic, shall be
promptly confirmed in writing) given no later than 9:00 a.m. (Los
Angeles time) on the due date of payment thereof; and (4) from time to
time upon the request of any Lender deliver to the Company a funding
indemnification billing for amounts payable to such Lender pursuant to
Paragraph 4(h) above or a billing for amounts payable to such Lender
pursuant to Paragraphs 4(j), 4(k) and 4(l) above and Paragraph 5(i)
below. The Company shall pay the full amount of interest and fees of
which it has been notified pursuant to subparagraphs (1) and (3) above
on the fifth day of each month, shall pay the full amount of interest of
which it has been notified pursuant to subparagraph (2) above on the
date such notification is given and shall pay the full amount of each
billing delivered to it pursuant to subparagraph (4) above within five
(5) Business Days thereafter.
5(e) Nature and Place of Payments. Except as otherwise
expressly provided in the Credit Documents, all payments made on account
of the Facility A Obligations shall be made to the Credit Agent at the
Contact Office for distribution to the Lenders, as the Company shall
V82606[7083]94 15
<PAGE>
direct pursuant to a Loan Request, Interest Rate Election and Payoff
Notice (but, in any event, consistent with Paragraph 8 of the Security
Agreement), without set-off or counterclaim in lawful money of the
United States of America in immediately available same day funds, and
must be received by the Credit Agent accompanied by a Loan Request,
Interest Rate Election and Payoff Notice at the Contact Office by
11:30 a.m. (Los Angeles time) on the day of payment, it being expressly
agreed and understood that if a payment is received after 11:30 a.m.
(Los Angeles time) by the Credit Agent or the Credit Agent does not
receive a Loan Request, Interest Rate Election and Payoff Notice
therefor, such payment will be considered to have been made on the next
succeeding Business Day or such later date as the Credit Agent receives
the Loan Request, Interest Rate Election and Payoff Notice therefor and
interest thereon shall be payable by the Company at the then applicable
rate during such extension. If any payment required to be made by the
Company hereunder becomes due and payable on a day other than a Business
Day, the due date thereof shall be extended to the next succeeding
Business Day and interest thereon shall be payable at the then
applicable rate during such extension. The Credit Agent is hereby
authorized to debit accounts of the Company maintained with FNBC for
amounts payable by the Company under this Agreement through the Credit
Agent and the Credit Agent will promptly notify the Company of any such
debit.
5(f) Post-Default Interest. Following the occurrence of
an Event of Default and until such Event of Default is cured or waived
as provided herein, Facility A Obligations shall bear interest at a per
annum rate equal to the Alternate Base Rate plus three percent (3%).
5(g) Computations. All computations of interest and fees
payable hereunder and under the Fee Letter and computations of each
Balance Bank Discount and Lender Discount shall be based upon a year of
360 days for the actual number of days elapsed. The determination by
the Credit Agent of a Balance Bank Discount, a Lender Discount or
interest rate hereunder shall be conclusive and binding on the Company
and the Lenders absent manifest error.
5(h) Disbursement of Payments Received. All amounts
received by the Credit Agent on account of the Obligations shall be
disbursed by the Credit Agent to the Lenders consistent with the
provisions of Paragraph 8 of the Security Agreement by wire transfer
prior to the cut-off deadline of the Federal Reserve Wire System on the
date of receipt if received by the Credit Agent before 11:30 a.m. (Los
Angeles time) and accompanied by a Loan Request, Interest Rate Election
and Payoff Notice (or disbursed on the day of receipt although received
later than 11:30 a.m. (Los Angeles time) with the agreement of the
Credit Agent, the Collateral Agent and any Lender) or if received later
or if the Credit Agent has not received a Loan Request, Interest Rate
Election and Payoff Notice therefor, on the next succeeding Business Day
or such later date as the Credit Agent receives the Loan Request,
Interest Rate Election and Payoff Notice relating thereto, without
interest payable by the Credit Agent.
V82606[7083]94 16
<PAGE>
5(i) Capital Requirements. The Company shall pay from
time to time upon demand such amounts as any Lender may determine to be
necessary to compensate such Lender for all reasonable costs which such
Lender determines are attributable to its making, purchasing or
maintaining its Primary Loan Percentage Share of any Facility A Primary
Loan or other Facility A Loan or GNMA Pool Advance Loan under this
Agreement or its obligation to make or purchase its Primary Loan
Percentage Share of any Facility A Primary Loans or to make any other
Facility A Loan or GNMA Pool Advance Loan, including, without
limitation, reserve requirements attributed to the unused portion of the
Aggregate Credit Limit, in respect of any amount of capital required to
be maintained by such Lender pursuant to any law or regulation of any
jurisdiction or any interpretation, directive or request affecting
banks, savings and loan institutions and/or financial institutions
generally notwithstanding the creditworthiness of any particular bank,
savings and loan institution or other financial institution (whether or
not having the force of law) of any court or governmental or monetary
authority, whether in effect on the date of this Agreement or
thereafter. The obligations of the Company under this Paragraph 5(i)
shall survive the termination of this Agreement and the payment of all
Facility A Loans and all other Facility A Obligations.
5(j) Fees. The Company shall pay:
(1) To the Credit Agent and the Collateral Agent,
such fees as may from time to time be agreed upon in writing by such
Persons and the Company;
(2) To each of the Lenders, the incentive and
commitment fees described in the Fee Letter;
(3) To each of the Balance Banks, the additional
fees described in the Balance Bank Agreements;
(4) To each L/C Issuing Lender, with respect to each
Letter of Credit such issuance fees and modification fees may be
established in writing from time to time by the Company and such L/C
Issuing Lender; and
(5) To the GNMA Pool Advance Lender, fees on account
of the GNMA Pool Advance Commitment in such amounts and at such
times as may be established in writing from time to time by the
Company and the GNMA Pool Advance Lender.
5(k) Wire Transfers of Funds. Notwithstanding anything to
the contrary contained herein and in the other Credit Documents, funds
which the Credit Agent and the Lenders are transmitting by wire transfer
shall be deemed to have been sent and received upon release by the
transmitting party of such funds into the Federal Reserve Wire System.
V82606[7083]94 17
<PAGE>
6. Security Agreement; Guaranty; Subordination; Additional
Documents.
6(a) Security Agreement. As collateral security for,
among other things, the Facility A Obligations, the Company shall
execute and deliver to the Collateral Agent the Security Agreement
pursuant to which the Company shall pledge, assign and grant to the
Collateral Agent for the pro rata, pari passu benefit of the Secured
Parties, and to each of such Persons, a first priority security interest
in and lien upon the Collateral, subject to the release and
reinstatement provisions set forth in Paragraph 28 of the Security
Agreement. In addition, the Company shall execute and deliver to the
Collateral Agent such UCC-1 financing statements as the Collateral Agent
may request.
6(b) Guaranty and Subordination Agreement. As additional
support for, among other things, the Facility A Obligations, the Company
shall execute and deliver and shall cause to be executed and delivered
to the Credit Agent on behalf of the Lenders: (1) the Guaranty and
(2) the Subordination Agreement.
6(c) Further Documents. The Company agrees to execute and
deliver and to cause to be executed and delivered to the Credit Agent or
such Persons as the Credit Agent may direct from time to time such
confirmatory or supplementary security agreements, financing statements,
notices to third parties and other documents, instruments and agreements
as the Credit Agent on behalf of the Lenders may reasonably request,
which are in any of the Lenders' judgment necessary or desirable to
obtain for the Collateral Agent on behalf of the Credit Agent, the
Lenders, and the holders from time to time of Outstanding CPNs the
benefit of the Credit Documents and the Collateral.
7. Conditions Precedent.
7(a) First Credit Event. As conditions precedent to the
Effective Date and the first Credit Event hereunder:
(1) There shall have been delivered to the Credit
Agent, in form and substance and in quantities reasonably
satisfactory to the Lenders and their counsel, each of the
following:
(i) A duly executed copy of this Agreement;
(ii) Duly executed copies of the Facility A
Discount Loan Notes, and the Facility A Direct Loan Notes, the
Negotiated Loan Notes, the Swing Loan Note and the GNMA Pool
Advance Note;
(iii) Duly executed copies of the Security
Agreement accompanied by such UCC-1 financing statements
related thereto as the Collateral Agent may request, the
Guaranty, the Subordination Agreement and the Fee Letter;
V82606[7083]94 18
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(iv) Such credit applications, financial
statements, pro forma financial statements, authorizations and
information concerning the Company and its business, operations
and condition (financial and otherwise) as the Credit Agent or
any Lender may reasonably request;
(v) Certified copies of resolutions of the
Boards of Directors of the Company and the Parent approving the
execution and delivery of all documents required to be
delivered by the Company and the Parent hereunder;
(vi) Certificates of the Secretary or an
Assistant Secretary of each of the Company and the Parent
certifying the names, incumbency and true signatures of the
officers of the Company and the Parent authorized to sign the
documents required to be executed and delivered by the Company
and the Parent hereunder;
(vii) An opinion of counsel for the Company and
the Parent (which counsel may be in-house counsel) in form and
substance satisfactory to the Lenders and covering such matters
as the Lenders may reasonably request;
(viii) A certificate of an executive officer of
each of the Company and the Parent in the form of that attached
hereto as Exhibit B dated as of the date of this Agreement;
(ix) A duly completed Borrowing Base Certificate
dated as of the date of such first Credit Event and a Covenant
Compliance Certificate, dated as of the Interim Date, for each
of the Company and the Parent demonstrating in detail
satisfactory to the Lenders the Company's compliance with the
covenants set forth in Paragraphs 10(h), 10(j), 10(k), 10(l),
10(m), 10(n) and 10(o) below, and the Parent's compliance with
the financial covenants set forth in Paragraphs 11(d), 11(e),
11(f), 11(g) and 11(h) of the Guaranty;
(x) A current Schedule of Approved Investors
acceptable to the Majority Lenders, as evidenced by their
execution of an express written approval thereof; and
(xi) A duly executed copy of the Balance Bank
Agreement with each Balance Bank.
(2) All acts and conditions (including, without
limitation, the obtaining of all necessary regulatory approvals and
the making of all required filings, recordings and registrations)
required to be done and performed and to have happened precedent to
the execution, delivery and performance of the Credit Documents and
to constitute the same legal, valid and binding obligations,
enforceable in accordance with their respective terms, shall have
been done and performed and shall have happened in due and strict
compliance with all applicable laws.
V82606[7083]94 19
<PAGE>
(3) All documentation, including, without limita-
tion, documentation for corporate and legal proceedings in connec-
tion with the transactions contemplated by the Credit Documents,
shall be satisfactory in form and substance to the Lenders and their
counsel.
(4) The Company shall have delivered to each of the
Collateral Agent and the Credit Agent, respectively, a letter
acceptable to each such Person, respectively, regarding the payment
by the Company to each such Person of fees, and the Company shall
have paid all fees required under each such letter to have been paid
prior to the first Credit Event hereunder.
(5) All amounts outstanding under the Existing
Facility A Agreement and under the Existing Facility B Agreement (as
defined in the Facility B Agreement) shall have been (or shall upon
the happening of the first Credit Event hereunder be) paid in full
and all "Letters of Credit" (as defined in the Existing Facility B
Agreement) shall have been cancelled or replaced with a Letter of
Credit issued hereunder and the Existing Facility A Agreement and
Existing Facility B Agreement and any obligations of the Lenders to
make advances or issue Letters of Credit thereunder terminated;
provided, however, that it is expressly agreed and understood that
"Letters of Credit" issued under the Existing Facility B Agreement
by Lenders which have agreed to be L/C Issuing Lenders hereunder may
be continued as such and shall be deemed in all respects to be
Letters of Credit entitled to all benefits of, and subject to all
restrictions of, the Credit Documents.
7(b) All Credit Events. As conditions precedent to each
Credit Event hereunder, at and as of the date of, and after giving
effect to, such Credit Event:
(1) The representations and warranties of the
Company and the Parent contained in the Credit Documents shall be
accurate and complete in all respects as of such date;
(2) There shall not have occurred a Potential
Default or an Event of Default (other than an Event of Default under
Paragraph 11(a) below which has not been waived by one hundred
percent (100%) of the Lenders) and the Majority Lenders' written
election to cease funding Loans hereunder;
(3) There shall not have occurred an Event of
Default under Paragraph 11(a) below which has not been waived by one
hundred percent (100%) of the Lenders;
(4) Following such Credit Event, the aggregate
principal amount of Facility A Loans outstanding shall not exceed
the applicable limitations of Paragraphs 1(a), 1(b) and 1(c) above;
(5) The Company shall have delivered to the Credit
Agent a duly executed Loan Request, Interest Rate Election and
Payoff Notice requesting such Credit Event;
V82606[7083]94 20
<PAGE>
(6) If the Credit Event is the making of a Discount
Loan: (i) the Company shall have delivered a timely Pre-Funding
Notice with respect thereto; and (ii) the Balance Bank funding said
Discount Loan shall have received from each Lender the amount
payable by such Lender on account thereof pursuant to Paragraph 2(d)
above, it being expressly agreed and understood that in the event
any Lender has not delivered to such Balance Bank the amount payable
by such Lender, the Discount Loan disbursed to the Company shall be
reduced by the amount not received;
(7) If the Credit Event is the making of a
Facility A Loan the proceeds of which will be utilized to repay
CPNs, at the date the CPN or CPNs to be repaid thereby were issued,
the Depositary Agreement was in full force and effect; and
(8) If the Company has delivered a Release Request
to the Collateral Agent pursuant to Paragraph 10(a) of the Security
Agreement, the Majority Lenders have not notified the Credit Agent
in writing that they have elected to terminate the agreement of the
Lenders to continue funding Facility A Loans (if such election and
notification is permitted pursuant to said Paragraph 10(a)).
By delivering a Loan Request, Interest Rate Election and Payoff Notice
to the Credit Agent, the Company shall be deemed to have represented and
warranted the accuracy and completeness of the statements set forth in
subparagraphs (b)(1) through (b)(7) above and all information set forth
in such Loan Request, Interest Rate Election and Payoff Notice.
8. Representations and Warranties of the Company. As an
inducement to the Credit Agent, the Collateral Agent and each Lender to
enter into this Agreement, the Company represents and warrants to the
Credit Agent, the Collateral Agent and each Lender that:
8(a) Financial Condition. The financial statements,
respectively dated the Statement Date and the Interim Date, copies of
which have heretofore been furnished to each Lender, are complete and
correct and present fairly in accordance with GAAP the consolidated and
consolidating financial condition of the Company and its consolidated
Subsidiaries at such dates and the consolidated and consolidating
results of their operations and changes in financial position for the
fiscal periods then ended.
8(b) No Change. Since the Statement Date there has been
no material adverse change in the business, operations, assets or finan-
cial or other condition of the Company or the Company and its consoli-
dated Subsidiaries taken as a whole.
8(c) Corporate Existence; Compliance with Law. The Com-
pany and each of its Subsidiaries: (1) is duly organized, validly
existing and in good standing as a corporation under the laws of the
state of its incorporation, and is in good standing as a foreign
corporation in each jurisdiction where its ownership of property or
conduct of business requires such qualification and where failure to be
V82606[7083]94 21
<PAGE>
in good standing could have a material adverse effect on the Company,
any of its Subsidiaries, or their respective property and/or business or
on the ability of the Company or the Parent to pay or perform the Credit
Documents or on the Collateral; (2) has the corporate power and
authority and the legal right to own and operate its property and to
conduct business in the manner in which it does and proposes so to do;
and (3) is in compliance with all Requirements of Law and Contractual
Obligations except to the extent that failure to comply could not have a
material adverse effect on the Company, any of its Subsidiaries, or
their respective property and/or business or on the ability of the
Company or the Parent to pay or perform the Credit Documents or on the
Collateral.
8(d) Corporate Power; Authorization; Enforceable
Obligations. Each of the Company and the Parent has the corporate power
and authority and the legal right to execute, deliver and perform the
Credit Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of
the Credit Documents. The Credit Documents have been duly executed and
delivered on behalf of each of the Company and the Parent and constitute
legal, valid and binding obligations of such party enforceable against
such party in accordance with their respective terms.
8(e) No Legal Bar. The execution, delivery and perfor-
mance of the Credit Documents, the borrowing thereunder and the use of
the proceeds thereof, will not violate any Requirement of Law or any
Contractual Obligation of the Company or the Parent to the extent that
failure to comply therewith could have a material adverse effect on the
Company or its property and/or business or on the ability of the Company
or the Parent to pay or perform the Credit Documents or on the
Collateral.
8(f) No Material Litigation. Except as disclosed on
Exhibit C attached hereto, no litigation, investigation or proceeding of
or before any court, arbitrator or Governmental Authority is pending or,
to the knowledge of the Company, threatened by or against the Company or
any of its Subsidiaries or against any of such parties' properties or
revenues involving amounts, in the case of any such individual
litigation, investigation or proceeding, in excess of $10,000,000.00 or
which, regardless of the amount in controversy, is likely to be
adversely determined and which, if adversely determined, could have a
material adverse effect on the business, operations, property or
financial or other condition of the Company or any of its Subsidiaries.
8(g) Taxes. The Company and each of its Subsidiaries have
filed or caused to be filed all tax returns that are required to be
filed and have paid all taxes shown to be due and payable on said
returns or on any assessments made against them or any of their property
other than taxes which are being contested in good faith by appropriate
proceedings and as to which the Company or the applicable Subsidiary has
established adequate reserves in conformity with GAAP.
8(h) Investment Company Act. The Company is not an
"investment company" or a company "controlled" by an "investment com-
V82606[7083]94 22
<PAGE>
pany" within the meaning of the Investment Company Act of 1940, as
amended.
8(i) Subsidiaries. Exhibit D attached hereto sets forth
an accurate and complete list of all presently existing Subsidiaries of
the Company, their respective jurisdictions of incorporation and the
percentage of their capital stock owned by the Company or other
Subsidiaries. All of the issued and outstanding shares of capital stock
of the Subsidiaries have been duly authorized and issued and are fully
paid and non-assessable.
8(j) Federal Reserve Board Regulations. Neither the
Company nor any of its Subsidiaries is engaged or will engage, princi-
pally or as one of its important activities, in the business of extend-
ing credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of such terms under Regulation U.
No part of the proceeds of any Loan made hereunder will be used for
"purchasing" or "carrying" "margin stock" as so defined or for any pur-
pose which violates, or which would be inconsistent with, the provisions
of the Regulations of the Board of Governors of the Federal Reserve
System.
8(k) ERISA. The Company and each of its Subsidiaries are
in compliance in all material respects with the requirements of ERISA
and no Reportable Event has occurred under any Plan maintained by the
Parent, the Company or any of its or their Subsidiaries which is likely
to result in the termination of such Plan for purposes of Title IV of
ERISA.
8(l) Assets. The Company and each of its Subsidiaries has
good and marketable title to all property and assets reflected in the
financial statements referred to in Paragraph 8(a) above, except
property and assets sold or otherwise disposed of in the ordinary course
of business subsequent to that date. Neither the Company nor any of its
Subsidiaries has outstanding Liens on any of its properties or assets
nor are there any security agreements to which the Company or any of its
Subsidiaries is a party, or title retention agreements, whether in the
form of leases or otherwise, of any personal property except as
reflected in said financial statements referred to in Paragraph 8(a)
above or as permitted under Paragraph 10(a) below.
9. Affirmative Covenants. The Company hereby covenants and
agrees with the Credit Agent, the Collateral Agent and each Lender that,
as long as any Facility A Obligations remain unpaid or any Lender has
any obligation to make or purchase its Primary Loan Percentage Share of
Facility A Primary Loans or to make Swing Loans or GNMA Pool Advance
Loans or to issue Letters of Credit, the Company shall:
9(a) Financial Statements. Furnish or cause to be
furnished directly to the Credit Agent, the Collateral Agent and each
Lender:
(1) Within ninety (90) days after the last day of
each fiscal year of the Parent, consolidated statements of income
V82606[7083]94 23
<PAGE>
and statements of changes in cash flow for such year and a balance
sheet as of the end of such year (including therein as supplemental
information, consolidating statements of income and statements of
changes in cash flow and balance sheets as of the end of such year)
in each case presented fairly in accordance with GAAP and, in the
case of the Company, the requirements of HUD Handbook IG 4000.3 REV
and accompanied, in all cases, by an unqualified report of a firm of
independent certified public accountants acceptable to the Majority
Lenders;
(2) Within forty-five (45) days after the last day
of each calendar month: (i) consolidated and consolidating
statements of income and statements of changes in cash flow of the
Parent and its Subsidiaries for such calendar month and balance
sheets as of the last day of such calendar month presented fairly in
accordance with GAAP, in each case certified in writing as to
fairness of presentation by the chief financial officer or treasurer
of the Company and the Parent, and (ii) a Covenant Compliance
Certificate from the chief financial officer or treasurer of each of
the Company and the Parent, certifying that there does not exist an
Event of Default or Potential Default and, in addition,
demonstrating in detail satisfactory to the Majority Lenders the
Company's compliance with the financial covenants set forth in
Paragraphs 10(h), 10(j), 10(k), 10(l), 10(m), 10(n) and 10(o) below
as of and at the end of such month, and the Parent's compliance with
the financial covenants set forth in Paragraphs 11(d), 11(e), 11(f),
11(g) and 11(h) of the Guaranty, as of and at the end of such month.
(3) As soon as is available any written report per-
taining to material items in respect of the internal control matters
of the Parent or the Company submitted to any of such Persons by
their respective independent accountants in connection with each
annual or interim special audit of the financial condition of such
Persons made by such independent public accountants; and
(4) Copies of all proxy statements, financial state-
ments, and reports which the Parent sends to its stockholders, and
copies of all regular, periodic and special reports, and all
registration statements under the Securities Act of 1933, as amended
(the "Act"), which the Parent or the Company files with the
Securities and Exchange Commission or any governmental authority
which may be substituted therefor, or with any national securities
exchange; provided, however, that there shall not be required to be
delivered hereunder to the Credit Agent such copies for any Lender
of prospectuses relating to future series of offerings under
registration statements filed under Rule 415 of the Act or other
items which such Lender has indicated in writing to the Parent or
the Company from time to time need not be delivered to such Lender.
9(b) Certificates; Reports; Other Information. Furnish or
cause to be furnished directly to the Credit Agent and each Lender:
(1) No later than 6:00 p.m. (Los Angeles time) on
the second Business Day of the first and third full week of each
V82606[7083]94 24
<PAGE>
calendar month (and at such other times as the Majority Lenders,
through the Credit Agent, may reasonably request), a Borrowing Base
Certificate as of the close of business on the last day of the
immediately preceding week;
(2) Within forty-five (45) days after the last
Business Day of each calendar month, prepared as of such last
Business Day and certified by an appropriate officer of the Company,
a report covering the servicing portfolio of the Company covering
such matters as the Majority Lenders, through the Credit Agent, may
reasonably request (but which shall in any event list the aggregate
principal amount of mortgage notes serviced and the number and types
of loans evidenced by such notes, and show all loans in the
servicing portfolio more than thirty (30) days past due the due
dates set forth in such notes);
(3) Promptly, such additional financial and other
information, including, without limitation, financial statements of
the Company, the Parent, any Affiliate of the Company or the Parent,
or any Approved Investor (other than FNMA or FHLMC) and information
regarding the Collateral as any Lender, through the Credit Agent,
may from time to time reasonably request, including, without
limitation, such information as is necessary for any Lender to
participate out any of its interests in Facility A Loans, GNMA Pool
Advance Loans and Letters of Credit hereunder or to enable another
financial institution to become a signatory hereto; and
(4) Promptly upon receipt thereof by the Company,
copies of all audit reports prepared by or on behalf of FNMA, FHLMC
and GNMA.
9(c) Payment of Indebtedness. Pay, discharge or otherwise
satisfy at or before maturity or before it becomes delinquent, defaulted
or accelerated, as the case may be, all its Indebtedness, except:
(1) Indebtedness (other than Indebtedness with respect to CPNs) being
contested in good faith and for which provision is made to the
satisfaction of the Majority Lenders for the payment thereof in the
event the Company is found to be obligated to pay such Indebtedness and
which Indebtedness is thereupon promptly paid by the Company, and
(2) additional Indebtedness (other than Indebtedness with respect to
CPNs) in the aggregate not to exceed $100,000.00.
9(d) Maintenance of Existence and Properties. Maintain
all rights, privileges, licenses, approvals, franchises, properties and
assets necessary or desirable in the normal conduct of its business, and
comply with all Contractual Obligations and Requirements of Law. The
Company will at all times be a FNMA, FHLMC and GNMA-approved Seller/
Servicer and a wholly-owned Subsidiary of the Parent.
9(e) Inspection of Property; Books and Records;
Discussions. Keep proper books of record and account in which full,
true and correct entries in conformity with GAAP and all Requirements of
Law shall be made of all dealings and transactions in relation to its
business and activities, and permit representatives of each Lender (at
V82606[7083]94 25
<PAGE>
no cost or expense to the Company unless there shall have occurred and
be continuing an Event of Default) to visit and inspect any of its prop-
erties and examine and make abstracts from any of its books and records
at any reasonable time and as often as may reasonably be desired by any
of the Lenders, and to discuss the business, operations, properties and
financial and other condition of the Company and any of its Subsidiaries
with officers and employees of such parties, and with their independent
certified public accountants.
9(f) Notices. Promptly give written notice to the Credit
Agent (who shall promptly notify each of the Lenders and the Collateral
Agent thereof) of:
(1) The occurrence of any Potential Default or Event
of Default or a Negative Security Event;
(2) Any litigation or proceeding affecting the Com-
pany, any of its Subsidiaries or the Collateral involving amounts,
in the case of any such individual litigation, investigation or
proceeding, in excess of $5,000,000.00 or which, regardless of the
amount in controversy, is likely to be adversely determined and
which, if adversely determined, could have a material adverse effect
on the Collateral or the business, operations, property, or
financial or other condition of the Company or the ability of the
Company to pay and perform the Obligations;
(3) Receipt by the Company or the Parent of notice
from any rating agency concerning a potential change in any credit
rating previously accorded the Company or the Parent by such rating
agency;
(4) A material adverse change in the business, oper-
ations, property or financial or other condition of the Parent, the
Company or any of their Subsidiaries; and
(5) The Company's entering into any agreement to
sell or pledge servicing rights (other than in connection with the
acquisition financing therefor) which in the aggregate from and
after the date hereof would exceed $2,500,000,000.00 in aggregate
principal amount of the subject mortgage loans.
9(g) Expenses. Pay all reasonable out-of-pocket expenses
(including fees and disbursements of counsel) of the Credit Agent and
the Collateral Agent incident to the preparation, negotiation,
administration and amendment of the Credit Documents and, following the
occurrence of an Event of Default, of the Credit Agent, the Collateral
Agent and each of the Lenders incident to the protection of the rights
of the Lenders, the Credit Agent and the Collateral Agent under the
Credit Documents, and incident to the enforcement of payment of the
Obligations, whether by judicial proceedings or otherwise, including,
without limitation, in connection with bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar proceedings
involving the Parent or the Company or a "workout" of the Obligations.
V82606[7083]94 26
<PAGE>
The obligations of the Company under this Paragraph 9(g) shall be
effective and enforceable whether or not any Loan is advanced by any
Lender hereunder and shall survive payment of all other Obligations.
9(h) Credit Documents. Comply with and observe all terms
and conditions of the Credit Documents.
9(i) Insurance. Obtain and maintain insurance with
responsible companies in such amounts and against such risks as are
usually carried by corporations engaged in similar businesses similarly
situated, including, without limitation, errors and omissions coverage
and fidelity coverage in form and substance acceptable under FNMA or
FHLMC guidelines, and furnish the Lenders on request full information as
to all such insurance.
9(j) CPN Program. Obtain the written approval of the
Majority Lenders to any modification of the documentation relating to
the issuance of CPNs of the Company as in effect on the date of this
Agreement.
10. Negative Covenants. The Company hereby agrees that, as
long as any Facility A Obligations remain unpaid or any Lender has any
obligation to make or purchase its Primary Loan Percentage Share of
Facility A Loans or to make Swing Loans or GNMA Pool Advance Loans or to
issue Letters of Credit, the Company shall not, directly or indirectly:
10(a) Liens. Create, incur, assume or suffer to exist,
any Lien upon the Collateral except pursuant to or as permitted under
the Security Agreement or create, incur, assume or suffer to exist any
Lien upon any of its other property and assets (including servicing
rights) other than:
(1) Liens or charges for current taxes, assessments
or other governmental charges which are not delinquent or which
remain payable without penalty, or the validity of which are con-
tested in good faith by appropriate proceedings upon stay of execu-
tion of the enforcement thereof, provided the Company shall have set
aside on its books and shall maintain adequate reserves for the
payment of same in conformity with GAAP;
(2) Liens, deposits or pledges made to secure statu-
tory obligations, surety or appeal bonds, or bonds for the release
of attachments or for stay of execution, or to secure the perfor-
mance of bids, tenders, contracts (other than for the payment of
borrowed money), leases or for purposes of like general nature in
the ordinary course of the Company's business; and
(3) Liens securing Indebtedness permitted pursuant
to Paragraphs 10(c)(2) and 10(c)(6) below (but only to the extent
such Indebtedness is otherwise permitted to be secured under the
terms of the Credit Documents), 10(c)(7) below (but only to the
extent such Indebtedness is secured by property in the nature of
that referred to therein), 10(c)(8) below (but only affecting the
property referred to therein) and 10(c)(9) below (but only to the
extent expressly agreed to in writing by the Majority Lenders).
V82606[7083]94 27
<PAGE>
10(b) Mandatory Coverage. Fail to hold Hedge Contracts
covering all closed Mortgage Loans and Mortgage-Backed Securities which
are not covered by a Take-Out Commitment.
10(c) Indebtedness. Create, incur, assume or suffer to
exist, or otherwise become or be liable in respect of any Indebtedness
except:
(1) The Obligations and obligations with respect to
the CPNs;
(2) Indebtedness reflected in the financial state-
ments referred to in Paragraph 8(a) above;
(3) Subordinated Debt;
(4) Trade debt incurred in the ordinary course of
business, payable within thirty (30) days after the same has become
due or which is being contested in good faith, provided provision is
made to the satisfaction of the Majority Lenders for the eventual
payment thereof in the event it is found that such contested trade
debt is payable by the Company;
(5) Indebtedness secured by Liens permitted under
Paragraph 10(a)(1) and (2) above;
(6) Other Indebtedness the documentation for which
does not contain covenants, agreements, terms or conditions more
restrictive than the covenants, agreements, terms and conditions
contained in the Credit Documents; provided, however, that if such
Indebtedness is not a type of Indebtedness existing on the Effective
Date, the aggregate amount thereof shall not exceed $100,000,000.00;
(7) Indebtedness under short term arbitrage lines of
credit, each borrowing under which is secured by certificates of
deposit issued by the lender thereunder, A-1/P-1 commercial paper
issued by domestic U.S. corporations (other than the Company and its
Affiliates) and/or Treasury investments substantially matching said
borrowing in dollar amount and maturity;
(8) Indebtedness in an amount not to exceed
$50,000,000.00 in the aggregate outstanding secured by real property
(including fixtures and improvements thereon) owned by the Company;
and
(9) Other Indebtedness incurred with the prior
written consent of the Majority Lenders, which will not be
unreasonably withheld.
10(d) Consolidation and Merger. Liquidate or dissolve or
enter into any consolidation, merger, partnership, joint venture,
syndicate or other combination, except that the Company may be
consolidated with or merged with any corporation provided that (1) in
V82606[7083]94 28
<PAGE>
any such merger or consolidation the Company shall be the surviving or
resulting corporation and (2) at the time of and immediately after the
effectiveness of such merger or consolidation there shall not have
occurred and be continuing an Event of Default or Potential Default.
10(e) Acquisitions. Purchase or acquire or incur
liability for the purchase or acquisition of any or all of the assets or
business of any Person other than in the normal course of a mortgage
banking-related business (it being expressly agreed and understood that
the acquisition of servicing is a normal course of business activity).
10(f) Payment of Dividends. Declare or pay any dividends
upon any shares of the Company's stock now or hereafter outstanding,
except dividends payable in the capital stock of the Company, or make
any distribution of assets to its stockholders as such, whether in cash,
property or securities, if at the date of payment or distribution
(either before or after giving effect thereto) there should exist an
Event of Default or Potential Default.
10(g) Purchase or Retirement of Stock. Acquire, purchase,
redeem or retire any shares of its capital stock now or hereafter
outstanding for value.
10(h) Investments; Advances; Receivables. Make or commit
to make any advance, loan or extension of credit ("Advances") to, or
hold any receivable ("Receivable") of, or make or commit to make any
capital contribution to, or purchase any stock, bonds, notes, debentures
or other securities ("Investments") of, or make any other investment in,
any Person, except: (1) Advances constituting Mortgage Loans made in
the ordinary course of the Company's business and (2) Investments in,
Advances to, and Receivables of, any Affiliate (and Servicing Pass-
Through Ventures which are not otherwise Affiliates) not to exceed
$50,000,000.00 in the aggregate.
10(i) Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of any of its assets (other than obsolete or worn out
property), whether now owned or hereafter acquired, other than in the
ordinary course of business as presently conducted and at fair market
value (it being expressly agreed and understood that the sale or other
disposition of Mortgage Loans with or without servicing released and the
sale or other disposition of servicing rights are in the ordinary course
of business); provided, however, that in no event shall the Company
enter into any sale and leaseback transaction involving any of its
assets without the prior written consent of the Majority Lenders; and,
provided further, that the Company may sell, lease, assign, transfer or
otherwise dispose of any of its assets to a Subsidiary of the Company
(which, for the purpose of this proviso shall include any limited
partnership the general and limited partners of which are Subsidiaries
of the Company) so long as: (1) all classes of stock of, or partnership
interests in, such Subsidiary are owned, directly or indirectly, by the
Company, (2) such Subsidiary incurs no obligations for third party
indebtedness except such obligations to employees and vendors as are
necessary or desirable in the normal conduct of the business of
servicing 1-4 unit single family mortgage loans and in managing an
office building owned by such Subsidiary, and (3) any such unpaid
V82606[7083]94 29
<PAGE>
obligations as are described in subsection (2) above (other than payroll
and benefits obligations to employees) shall not exceed at any time
$50,000,000.00 in the aggregate.
10(j) Debt to Adjusted Net Worth Ratio. Permit its ratio
of Total Debt (excluding Indebtedness under repurchase agreements
relating to Mortgage-Backed Securities issued or supported by FNMA,
FHLMC or GNMA) to Adjusted Net Worth to be more than 7.5:1.0 on and as
of the last day of any calendar month.
10(k) Current Ratio. Permit its ratio of Current Assets
to Current Liabilities to be less than 1.05:1.0 on and as of the last
day of any calendar month.
10(l) Minimum Adjusted Net Worth. Permit its Adjusted Net
Worth:
(1) On and as of the last day of any calendar month
during the period commencing on the Effective Date to and including
February 28, 1994, to be less than $712,000,000.00; and
(2) On and as of the last day of any calendar month
thereafter to be less than the greater of $712,000,000.00 and
seventy five percent (75%) of its Adjusted Net Worth as of
February 28, 1994.
10(m) Minimum Net Worth. Permit its net worth determined
in accordance with GAAP:
(1) On and as of the last day of any calendar month
during the period commencing on the Effective Date to and including
February 28, 1994, to be less than $578,000,000.00; and
(2) On and as of the last day of any calendar month
thereafter to be less than the greater of $578,000,000.00 and eighty
five percent (85%) of its net worth determined in accordance with
GAAP as of February 28, 1994.
10(n) Minimum Inventory and Unencumbered Servicing
Portfolio. Permit on and as of the last day of any calendar month the
sum of:
(1) One percent (1%) of the aggregate outstanding
principal balance of the Company's unencumbered servicing
portfolio with respect to single family residential mortgage
loans (excluding from the aggregate principal balance of
servicing otherwise includable in the calculation hereof:
(i) all Company-owned residential mortgage loans, (ii) all Parent
and Affiliate-owned residential mortgage loans if the right of
the Company to service such residential mortgage loans is not
V82606[7083]94 30
<PAGE>
freely transferable without the consent of the Parent or such
Affiliate, and (iii) all residential mortgage loans subserviced
by the Company); plus
(2) The Collateral Value of the Borrowing Base
minus the Aggregate Credit Exposure,
to be less than $200,000,000.00.
10(o) Restriction on Refinance Risk Debt. Permit at any
date the aggregate dollar amount of Refinance Risk Debt which will
mature during any calendar quarter occurring during the period from the
Effective Date through the twelfth month following the Facility A
Maturity Date (but excluding Indebtedness of the Company incurred under
Master Note Agreements substantially in the form of Exhibit N to the
Glossary) to exceed $100,000,000.00.
11. Events of Default. Upon the occurrence of any of the
following events (an "Event of Default"):
11(a) The Company shall fail to make any payment on
account of that portion of the Obligations consisting of principal or
interest on Loans or L/C Drawings on the date when due; or
11(b) Any representation or warranty made or deemed made
by the Company or the Parent in any Credit Document or in connection
with any Credit Document shall be materially inaccurate or incomplete in
any respect on or as of the date made or deemed made; or
11(c) The Company shall default in the observance or
performance of any covenant or agreement contained in Paragraph 10 above
(other than those contained in Paragraphs 10(j), 10(k), 10(l), 10(m),
10(n) and 10(o)) or in the Security Agreement; or
11(d) The Parent shall fail to observe or comply with any
term or provision contained in the Guaranty (other than those contained
in Paragraphs 11(d) and 11(e)); or
11(e) The Company or the Parent shall fail to observe or
perform any other term or provision contained in the Credit Documents
and such failure shall continue for thirty (30) days; or
11(f) The Company or any of its Subsidiaries or the Parent
shall default in any payment of any Indebtedness (other than the
Obligations or as permitted under Paragraph 9(c) above) in an aggregate
amount of more than $5,000,000.00 or any other event shall occur, the
effect of which other event is to permit the holder or holders thereof,
or any trustee or agent for such holders, to cause such Indebtedness to
become due and payable prior to its stated maturity; or
11(g) (1) The Parent, the Company or any of its
Subsidiaries shall commence any case, proceeding or other action
(i) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
V82606[7083]94 31
<PAGE>
debtors, seeking to have an order for relief entered with respect to it,
or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (ii) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its
assets, or the Parent, the Company or any of its Subsidiaries shall make
a general assignment for the benefit of its creditors; or (2) there
shall be commenced against the Parent, the Company or any of its
Subsidiaries any case, proceeding or other action of a nature referred
to in clause (1) above which (i) results in the entry of an order for
relief or any such adjudication or appointment, or (ii) remains
undismissed, undischarged or unbonded for a period of sixty (60) days;
or (3) there shall be commenced against the Parent, the Company or any
of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results
in the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within sixty
(60) days from the entry thereof; or (4) the Parent, the Company or any
of its Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (1), (2) or (3) above; or (5) the Parent, the
Company or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
11(h) (1) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (2) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or nor waived, shall exist
with respect to any Plan, (3) 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 institution of
proceedings is, in the reasonable opinion of the Credit Agent, likely to
result in the termination of such Plan for purposes of Title IV of
ERISA, and, in the case of a Reportable Event, the continuance of such
Reportable Event unremedied for ten days after notice of such Reportable
Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or the
continuance of such proceedings for ten days after commencement thereof,
as the case may be, (4) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (5) any withdrawal liability to a
Multiemployer Plan shall be incurred by the Company or the Parent or any
Commonly Controlled Entity, or (6) any other event or condition shall
occur or exist; and in each case in clauses (1) through (6) above, such
event or condition, together with all other such events or conditions,
if any, could subject the Parent, the Company or any of its Subsidiaries
to any tax, penalty or other liabilities in the aggregate material in
relation to the business, operations, property or financial or other
condition of the Parent, the Company or any of its Subsidiaries; or
V82606[7083]94 32
<PAGE>
11(i) One or more judgments or decrees in amounts
aggregating $1,000,000.00 or more not fully covered by insurance
(exclusive of self-insurance (not to exceed $5,000,000.00) and
deductibles) during any consecutive twelve (12) month period shall be
entered against the Company or any of its Subsidiaries and all such
judgments or decrees shall not have been vacated, discharged or
satisfied, or stayed or bonded pending appeal, within sixty (60) days
from the entry thereof unless counsel to the Company reasonably
acceptable to the Majority Lenders has delivered to the Lenders within
such sixty (60) day period an opinion that the Company has the legal
right to have such judgment or decree vacated without the expenditure of
funds (other than for costs of proceedings) and the Company is
diligently proceeding to accomplish such vacation; or
11(j) The Parent shall notify the Credit Agent, the
Collateral Agent or any Lender of its intention to rescind or revoke the
Guaranty or the Subordination Agreement, in whole or in part, with
respect to future transactions or otherwise; or
11(k) The Parent shall cease to own one hundred percent
(100%) of the outstanding capital stock of the Company; or
11(l) The Credit Agent or the Collateral Agent receives
notice from the Paying Agent that the Company has failed to cover an
overdraft in the Commercial Paper Account on or before the close of
business of the Paying Agent in New York on the Business Day immediately
following the date on which such overdraft was created;
THEN:
(i) Automatically upon the occurrence of an Event
of Default under Paragraph 11(g) above,
(ii) At the option of any Lender upon the occurrence
of an Event of Default under Paragraph 11(a) above unless such
Event of Default is expressly waived in writing by one hundred
percent (100%) of the Lenders, and
(iii) In all other cases, at the option of the
Majority Lenders,
each Lender's obligation to make or purchase Facility A Loans, the
obligation of the GNMA Pool Advance Lender to make GNMA Pool Advance
Loans and the obligation of the L/C Issuing Lenders to issue Letters of
Credit shall terminate, the principal balance of outstanding Facility A
Loans and GNMA Pool Advance Loans and interest accrued but unpaid
thereon and all other Facility A Obligations shall become immediately
due and payable and the aggregate contingent liability of the Company to
reimburse each L/C Issuing Lender for L/C Drawings under outstanding
Letters of Credit shall be deemed immediately due and payable, without
demand upon or notice or presentment to the Company, all of which are
hereby waived. Immediately upon the occurrence of an Event of Default
and termination of the obligation of the Lenders to make or purchase
Facility A Loans, of the GNMA Pool Advance Lender to make GNMA Pool
V82606[7083]94 33
<PAGE>
Advance Loans and of the L/C Issuing Lenders to issue Letters of Credit,
the Credit Agent shall notify the Paying Agent thereof and is hereby
irrevocably authorized to instruct the Paying Agent to cease issuing
CPNs on behalf of the Company. Following the occurrence and during the
continuance of an Event of Default, the Company agrees that the Company
and the Credit Agent shall, at the request of the Majority Lenders,
implement certain procedures with respect to the Company's funding of
Wet Funded Loans, all at the Company's sole expense. Such procedures
may include, but are not limited to: a. reducing the advance rate
against Wet Funded Loans for purposes of determining the Collateral
Value of the Borrowing Base for Wet Funded Loans, b. requiring that if
(1) Wet Funded Loans are funded with wire transfers, such wire transfers
originate from accounts located at a lending office of a Lender, (2) Wet
Funded Loans are funded with drafts, such drafts be drawn on accounts
located at a lending office of a Lender, and (3) Wet Funded Loans are
funded from accounts which are not located at a lending office of a
Lender, the financial institution which holds such account enter into an
agreement with the Company and the Credit Agent which shall provide that
the Credit Agent shall have exclusive dominion and control over the
funds in such account, c. requiring the closing agents for such Wet
Funded Loans to enter into escrow or other agreements regarding the
monies used to fund such Wet Funded Loans, and d. requiring the Company
to provide the Credit Agent and the Lenders with such information
regarding the funding of Wet Funded Loans as the Majority Lenders may
reasonably request. The Company, at its expense, shall from time to
time execute and deliver to the Credit Agent all such assignments,
certificates, supplemental documents, and financing statements, and
shall do all other acts or things, as the Credit Agent may reasonably
request in order to more fully implement such procedures.
12. Agency Provisions.
12(a) Appointment. Each Lender hereby irrevocably
designates and appoints each Agent as the agent of such Lender under the
Credit Documents and each Lender hereby irrevocably authorizes each
Agent, as the agent for such Lender, to take such action on its behalf
under the provisions of the Credit Documents and to exercise such powers
and perform such duties as are expressly delegated to such Agent by the
terms of the Credit Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in the Credit Documents, no Agent shall have any
duties or responsibilities, except those expressly set forth herein or
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Credit Documents or otherwise exist
against any Agent.
12(b) Delegation of Duties. Each of the Collateral Agent
and the Credit Agent may execute any of its duties under the Credit
Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties. Neither the Collateral Agent nor the Credit Agent shall be
responsible for the negligence or misconduct of any agents or attorneys-
in-fact selected by it with reasonable care.
V82606[7083]94 34
<PAGE>
12(c) Exculpatory Provisions. No Agent nor any of their
respective officers, directors, employees, agents, counsel, attorneys-
in-fact or Affiliates shall be (1) liable to any Lender, any other
Agent, the holder of any CPN or the Company for any action taken or
omitted to be taken by it or such Person under or in connection with the
Credit Documents (except for its or such Person's own gross negligence
or willful misconduct), or (2) responsible in any manner to any of the
Lenders, the other Agent, the holder of any CPN or the Company for:
(i) any recitals, statements, representations or warranties made by the
Company or any officer thereof contained in the Credit Documents or in
any certificate, report, statement or other document referred to or
provided for in, or received by such Agent under or in connection with,
the Credit Documents (except such as are prepared by such Agent and,
then, only to the extent such Agent is responsible for verification of
the accuracy and completeness of the information contained therein or
the facts upon which such information is based as expressly provided
herein) or for the value, validity, effectiveness, genuineness,
enforceability, collectability or sufficiency of the Credit Documents or
for any failure of the Company to perform its obligations thereunder or
(ii) any action taken or omitted to be taken by the Collateral Agent
with respect to the Collateral in accordance with written instructions
given as permitted hereunder or (iii) assuring compliance of the Credit
Documents and/or the transactions contemplated by the Credit Documents
with any law or regulation binding upon such Person, it being expressly
acknowledged, agreed and understood that each such Person has obtained
independent advice satisfactory to it in all such regards. No Agent
shall be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained
in, or conditions of, the Credit Documents (other than agreements
required to be complied with by such Agent thereunder and subject to the
standards of care set forth herein with respect thereto) or to inspect
the properties, books or records of the Company. Each Agent shall be
entitled to refrain from exercising any discretionary powers or actions
under this Agreement or any other Credit Document until it shall have
received the prior written consent of one hundred percent (100%) of the
Lenders to such action.
12(d) Reliance by Agent. Each Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certification, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Company), independent accountants and
other experts selected by such Agent. The Credit Agent may deem and
treat the payee of any Facility A Direct Loan Note, Facility A Discount
Loan Note, Negotiated Loan Note, Swing Loan Note or GNMA Pool Advance
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with
the Credit Agent. Each Agent shall be fully justified in failing or
refusing to take any action under the Credit Documents unless it shall
first receive such advice or concurrence of the Majority Lenders (or all
V82606[7083]94 35
<PAGE>
Lenders, as required under the Credit Documents) or it shall first be
indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any action (other than liability and/or expense
arising out of such Agent's gross negligence or willful misconduct).
Each Agent shall in all cases be fully protected in acting, or in
refraining from acting, under the Credit Documents in accordance with a
request of the Majority Lenders (or all Lenders, if applicable) absent
gross negligence and willful misconduct on the part of such Agent in the
method in which it acts or refrains from acting in accordance therewith,
and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Lenders.
12(e) Notice of Default; Agreement to Advance. No Agent
shall be deemed to have knowledge or notice of the occurrence of any
Event of Default or Potential Default unless such Agent has received
notice from a Lender or the Company referring to the Credit Documents,
describing such Event of Default or Potential Default and stating that
such notice is a "notice of default". In the event that any Agent
receives such a notice, such Agent shall give notice thereof to the
Lenders and the other Agent. The Collateral Agent shall take such
action with respect to such Event of Default or Potential Default as
shall be reasonably directed by the Majority Lenders (or all Lenders, as
required under the Credit Documents), through the Credit Agent (subject
to the provisions of Paragraph 18 of the Security Agreement); provided,
however, that unless and until the Collateral Agent shall have received
such directions, the Collateral Agent may (but shall not be obligated
to) take such action or refrain from taking such action (in each case
consistent with the provisions of the Credit Documents), with respect to
such Event of Default or Potential Default as it shall deem advisable in
the best interest of the Lenders.
12(f) Non-Reliance on Agent and Other Lenders. Each
Lender expressly acknowledges that no Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by such
Agent hereafter taken, including any review of the affairs of the
Company, shall be deemed to constitute any representation or warranty by
such Agent to any Lender. Each Lender represents to each Agent that it
has, independently and without reliance upon such Agent or any other
Lender or their respective counsel, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and
other condition and creditworthiness of the Company and made its own
decision to extend credit hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance
upon any Agent or any other Lender or their respective counsel, and
based on such documents, information and legal advice (including,
without limitation, advice of regulatory counsel to it) as it shall deem
appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in entering into the Credit Documents and
taking or not taking action thereunder, and to make such investigation
as it deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of the
V82606[7083]94 36
<PAGE>
Company. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by an Agent hereunder, such
Agent shall not have any duty or responsibility to provide any Lender
with any legal advice or credit or other information concerning the
business, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of
such Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
12(g) Indemnification. The Company agrees to indemnify,
defend and hold harmless each Agent in its capacity as such from and
against any and all claims, obligations, penalties, actions, suits,
judgments, costs, disbursements, losses, liabilities and/or damages
(including, without limitation, attorneys' fees) of any kind whatsoever
which may at any time be imposed on, assessed against or incurred by
such Agent in any way (1) relating to or arising out of the Credit
Documents or any documents contemplated by or referred to therein or the
transactions contemplated thereby or any action taken or omitted to be
taken by such Agent in connection with the foregoing; provided, the
Company shall not be liable for any portion of any such claims,
obligations, etc., arising out of or resulting from the gross negligence
or willful misconduct of such Agent or (2) resulting from any action
taken or omitted to be taken by such Agent in accordance with written
instructions given as provided in the Credit Documents or (3) relating
to any one or more of the matters covered by Paragraph 12(c) above. The
Lenders agree to indemnify and hold harmless each Agent in its capacity
as such ratably in accordance with their Aggregate Percentage Shares to
the extent required by the Company hereunder if any Agent is not
reimbursed by the Company hereunder and without limiting the obligation
of the Company to do so. The indemnification obligations of the Company
and Lenders under this Paragraph 12(g) shall survive termination of this
Agreement and payment in full of the Obligations.
12(h) Agent in Its Individual Capacity. Any Agent and its
Affiliates may make loans to, accept deposits from and generally engage
in any kind of business with the Company as though such Agent were not
an Agent hereunder. With respect to such loans made or renewed by them
and any note issued to them hereunder, each Agent shall have the same
rights and powers under the Credit Documents as any Lender thereunder
and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include Agents in their individual
capacities.
12(i) Successor Agents. Any Agent may resign as such
under the Credit Documents upon ninety (90) days' prior written notice
to the Lenders and the Company and shall resign in the event its
Aggregate Maximum Commitment shall be less than $10,000,000.00. In
addition, in the event any Agent fails to perform its obligations under
the Credit Documents in any material manner and fails to correct its
performance within thirty (30) days of written notice of such failure of
performance given by not less than the Majority Lenders, then such Agent
may be removed upon thirty (30) days notice given by not less than the
Majority Lenders. If an Agent shall resign or be so removed, then, on
or before the effective date of such resignation or removal, the
V82606[7083]94 37
<PAGE>
Majority Lenders shall appoint a successor agent reasonably acceptable
to the Company or, if the Majority Lenders are unable to agree on the
appointment of a successor agent, such Agent shall appoint a successor
agent for the Lenders, which successor agent shall be reasonably
acceptable to the Company, whereupon such successor agent shall succeed
to the rights, powers and duties of such Agent, and the term "Collateral
Agent" or "Credit Agent", as applicable, shall mean such successor agent
effective upon its appointment, and the former Agent's rights, powers
and duties shall be terminated without any other or further act or deed
on the part of such former Agent or any of the parties to this Agreement
or any of the other Credit Documents or successors thereto. After any
Agent's resignation or removal hereunder, the provisions of this
Paragraph 12(i) shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under the Credit Documents.
12(j) Sharing of Set-Offs. If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of the
Facility A Obligations held by it or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off or otherwise)
in a greater proportion than any such payment to and collateral received
by any other Lender, if any, in respect of such other Lender's portion
of the Facility A Obligations, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders such portion of
each such other Lender's Facility A Obligations, or shall provide such
other Lenders with the benefits of such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery but without
interest. The Company agrees that each Lender so purchasing a portion
of another Lender's Facility A Obligations may exercise all rights of
payment (including, without limitation, rights of set-off) with respect
to such portion as fully as if such Lender were the direct holder of
such portion.
13. Miscellaneous Provisions.
13(a) No Assignment. The Company may not assign its
rights or obligations under the Credit Documents without the prior
written consent of one hundred percent (100%) of the Lenders. Subject
to the foregoing, all provisions contained in this Agreement or any
document or agreement referred to herein or relating hereto shall inure
to the benefit of each Lender, its successors and assigns, and shall be
binding upon the Company, its successors and assigns.
13(b) Amendment. The Credit Documents may not be amended
or terms or provisions hereof waived unless such amendment or waiver is
in writing and signed by the Majority Lenders and the Company; provided,
however, that without the prior written consent of one hundred percent
(100%) of the Lenders, no amendment or waiver shall:
(1) Waive or amend any term or provision of
Paragraphs 4(h), 4(i) or 4(j) above, or this Paragraph 13(b);
V82606[7083]94 38
<PAGE>
(2) Reduce the principal of, or interest on, the
Facility A Obligations or any amount of fees payable under this
Agreement, or extend the required payment date of principal or
interest on the Facility A Obligations or any fees;
(3) Modify the Facility A Primary Loan Credit Limit
or any Lender's Primary Loan Percentage Share thereof; provided,
however, that the Company and any Lender, acting alone, may agree to
an increase, temporary or permanent, in such Lender's Maximum
Primary Loan Commitment and Aggregate Maximum Commitment with an
effect on the Aggregate Credit Limit as a result of such increase
(and if such increase was a temporary increase, eventual decrease);
(4) Modify the definition of "Majority Lenders" or
the definition of "Negative Security Event";
(5) Extend the Facility A Maturity Date;
(6) Include any Person other than the Lenders
signatory hereto as a "Lender" hereunder except as expressly
permitted under Paragraph 14(a) below;
(7) Release any Collateral except as expressly
provided in the Credit Documents;
(8) Cancel or terminate the Guaranty; or
(9) Modify any provision in the Credit Documents
which expressly requires consent of one hundred percent (100%) of
the Lenders.
No amendment or waiver shall, unless agreed to in writing by the
affected Agent, modify the rights or duties of such Agent.
13(c) Cumulative Rights; No Waiver. The rights, powers
and remedies of the Lenders hereunder are cumulative and in addition to
all rights, powers and remedies provided under any and all agreements
between the Company and the Lenders relating hereto, at law, in equity
or otherwise. Any delay or failure by the Lenders to exercise any
right, power or remedy shall not constitute a waiver thereof by the
Lenders, and no single or partial exercise by the Lenders of any right,
power or remedy shall preclude any other or further exercise thereof or
any exercise of any other rights, powers or remedies.
13(d) Entire Agreement; Severability. This Agreement and
the documents and agreements referred to herein embody the entire
agreement and understanding between the parties hereto and supersede all
prior agreements and understandings relating to the subject matter
hereof and thereof. All waivers by the Company provided for in the
Credit Documents have been specifically negotiated by the parties with
full cognizance and understanding of their rights. If any of the
provisions of the Credit Documents shall be held invalid or
unenforceable, the Credit Documents shall be construed as if not
V82606[7083]94 39
<PAGE>
containing such provisions, and the rights and obligations of the
parties hereto shall be construed and enforced accordingly.
13(e) Survival. All representations, warranties,
covenants and agreements herein contained on the part of the Company
shall survive the termination of this Agreement and shall be effective
until the Facility A Obligations are paid and performed in full or
longer as expressly provided herein.
13(f) Notices. All notices given by any party to any of
the others shall be in writing, delivered personally, by commercial
courier service or by depositing the same in the United States mail,
registered, with postage prepaid, addressed to the party at the address
set forth on Annex II attached hereto. Any party may change the address
to which notices are to be sent by notice of such change to the other
party or parties given as provided herein.
13(g) Governing Law. This Agreement shall be deemed to be
a contract made under the laws of the State of California, and for all
purposes shall be construed in accordance with the laws of said State,
without regard to principles of conflicts of law.
13(h) Counterparts. This Agreement may be executed in
counterparts each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and
the same agreement.
14. Additional Lenders; Assignments and Participations;
Increases in Availability.
14(a) Addition of New Lender.
(1) Subject to the limitation on the Aggregate
Credit Limit and the Facility A Primary Loan Credit Limit, the
Company or any Lender may at any time propose that one or more
financial institutions (each, an "Applicant Financial Institution")
become an additional Lender hereunder; provided, however, that such
Applicant Financial Institution must agree to become concurrently a
"Lender" under the Facility B Agreement. At such time, the Company
or such Lender, as applicable, shall notify the other parties
hereto, including the Credit Agent, of the identity of such
Applicant Financial Institution and such Applicant Financial
Institution's proposed Aggregate Maximum Commitment, Primary Loan
Percentage Share, Maximum Primary Loan Commitment and, if
applicable, L/C Commitment and/or GNMA Pool Advance Commitment. The
addition of any Applicant Financial Institution shall be subject to:
(i) If such Applicant Financial Institution is
proposed for inclusion as a Lender hereunder by a Lender, the
prior written consent of the Company and the Credit Agent, and
if such Applicant Financial Institution is proposed for
inclusion as a Lender hereunder by the Company, the prior
written consent of the Credit Agent, none of which consents
shall be unreasonably withheld and which, if given, shall be
V82606[7083]94 40
<PAGE>
given in writing to the other parties hereto no later than the
tenth day following receipt by the Company of a written request
for the inclusion of such Applicant Financial Institution as a
Lender hereunder;
(ii) If such Applicant Financial Institution
will become the GNMA Pool Advance Lender and/or a L/C Issuing
Lender, such Applicant Financial Institution shall execute a
replacement GNMA Pool Advance Agreement and cooperate with the
current GNMA Pool Advance Lender and any other L/C Issuing
Lenders to effect such intent; and
(iii) Delivery of each of the items and the
occurrence of each of the events described in subparagraph (2)
below.
(2) Assuming delivery of the consent of the Company
and/or Credit Agent as required pursuant to subparagraph (1)(i)
above, the Credit Agent, the Collateral Agent, the Company and, if
such Applicant Financial Institution will be acquiring a portion of
an existing Lender's Aggregate Maximum Commitment and Maximum
Primary Loan Commitment by way of assignment from such existing
Lender, such existing Lender, shall mutually agree on the Adjustment
Date on which such Applicant Financial Institution shall become a
party hereto and a Lender hereunder. On such Adjustment Date:
(i) The Company shall deliver to the Credit
Agent, the Collateral Agent and each of the Lenders a
Commitment Schedule to be effective as of such Adjustment Date,
reflecting the Aggregate Credit Limit and the Lenders'
respective Aggregate Maximum Commitments, Primary Loan
Percentage Shares, Maximum Primary Loan Commitments and, if
applicable, L/C Commitment and GNMA Pool Advance Commitment.
(ii) No later than 12:30 p.m. (Los Angeles time)
on such Adjustment Date, such Applicant Financial Institution
shall pay to the Credit Agent an amount equal to such Applicant
Financial Institution's Primary Loan Percentage Share of
Facility A Primary Loans and Facility B Loans outstanding. The
Credit Agent shall thereupon remit to the Lenders their Primary
Loan Percentage Shares of such funds. Following such
Adjustment Date, fees and interest accrued on the Obligations
to but not including such Adjustment Date shall be payable to
the Lenders in accordance with their respective Primary Loan
Percentage Shares prior to such Adjustment Date before giving
effect to the readjustment thereof pursuant to the Commitment
Schedule provided by the Company on such Adjustment Date.
(iii) If such Applicant Financial Institution is
acquiring a portion of an existing Lender's Aggregate Maximum
Commitment and Maximum Primary Loan Commitment by way of
assignment from such existing Lender, the Credit Agent, the
Company, the assigning Lender and the Applicant Financial
Institution shall execute and deliver an Assignment Agreement,
V82606[7083]94 41
<PAGE>
or if such Applicant Financial Institution is becoming a Lender
hereunder as a result of an increase in the Aggregate Credit
Limit, the Credit Agent, the Company and the Applicant
Financial Institution shall execute and deliver an Additional
Lender Agreement, either of which Assignment Agreement or
Additional Lender Agreement shall constitute an amendment to
this Agreement to the extent necessary to reflect the inclusion
of the Applicant Financial Institution as a Lender hereunder.
(iv) The Company shall execute and deliver to
such Applicant Financial Institution a Facility A Direct Loan
Note, a Facility A Discount Loan Note, a Negotiated Loan Note
and a Facility B Loan Note and, if applicable, a GNMA Pool
Advance Note.
(v) The Applicant Financial Institution shall
pay to the Credit Agent a registration fee of $2,500.00 (said
fee covering the admission of the Applicant Financial
Institution into both this Agreement and the Facility B
Agreement).
Subject to the requirements described above, the Applicant Financial
Institution shall become a party hereto and a Lender hereunder and
under the Facility B Agreement and shall be entitled to all rights,
benefits and privileges accorded a Lender under the Credit Documents
and shall be subject to all obligations of a Lender under the Credit
Documents.
14(b) Assignments Among Existing Lenders. Any Lender may
at any time agree to assign a portion of such Lender's Aggregate Maximum
Commitment and Maximum Primary Loan Commitment to a Transferee Lender.
In such event the Lender and the Transferee Lender shall so notify the
Credit Agent, the Collateral Agent and the Company of the Adjustment
Date on which such assignment is to be effective. On such Adjustment
Date:
(1) The Company shall deliver to the Credit Agent,
the Collateral Agent and each of the Lenders a Commitment Schedule
to be effective as of such Adjustment Date, reflecting the
Aggregate Credit Limit and the Lenders' respective Aggregate
Maximum Commitments, Primary Loan Percentage Shares, and, if
applicable, L/C Commitment and GNMA Pool Advance Commitment.
(2) The Credit Agent, the Company, the assigning
Lender and the Transferee Lender shall execute and deliver an
Assignment Agreement, which shall constitute an amendment to this
Agreement to the extent necessary to reflect such transfer.
(3) No later than 12:30 p.m. (Los Angeles time) on
such Adjustment Date, the Transferee Lender shall pay to the
Credit Agent an amount equal to such Transferee Lender's Primary
Loan Percentage Share of Facility A Primary Loans and Facility B
V82606[7083]94 42
<PAGE>
Loans outstanding in excess of such Transferee Lender's previous
Primary Loan Percentage Share thereof. The Credit Agent shall
thereupon remit to the transferring Lender the amount thereof.
(4) If the Transferee Lender will become the GNMA
Pool Advance Lender and/or a L/C Issuing Lender, such Transferee
Lender shall execute a replacement GNMA Pool Advance Agreement and
cooperate with the current GNMA Pool Advance Lender and any other
L/C Issuing Lender to effect such intent.
14(c) Minimum Loan Commitment. Notwithstanding anything
to the contrary contained herein, the inclusion of any Applicant
Financial Institution as a Lender hereunder pursuant to Paragraph 14(a)
above and the assignment by a Lender of a portion of such Lender's
Aggregate Maximum Commitment and Maximum Primary Loan Commitment to a
Transferee Lender pursuant to Paragraph 14(b) above shall be subject to
the following restrictions:
(1) If an Applicant Financial Institution is
acquiring a portion of an existing Lender's Aggregate Maximum
Commitment by way of an assignment from such existing Lender, then,
subject to the provisions of subparagraphs (2) and (3) below, such
assignment of Aggregate Maximum Commitment must be in the minimum
amount of $35,000,000 (or if in a higher amount, in integral
multiples of $5,000,000.00 in excess thereof) and such existing
Lender must continue to hold an Aggregate Maximum Commitment of not
less than $35,000,000.00 following the consummation of the
contemplated assignment;
(2) If an Applicant Financial Institution is
acquiring a portion of a Managing Co-Agent's or a Co-Agent's
Aggregate Maximum Commitment by way of assignment from such Managing
Co-Agent or Co-Agent and the assignment is the initial assignment
made by such Managing Co-Agent or Co-Agent pursuant to the Credit
Documents, such assignment of Aggregate Maximum Commitment may be in
the minimum amount of $25,000,000.00 (or if in a higher amount, in
integral multiples of $5,000,000.00 in excess thereof); provided,
however, that such Applicant Financial Institution will not be
permitted to make assignments of its Aggregate Maximum Commitment
thereafter unless and until its Aggregate Maximum Commitment shall
have been increased such that any further assignment will meet the
requirements of subparagraph (1) above; and
(3) If an existing Lender is assigning a
portion of its Aggregate Maximum Commitment to a Transferee Lender,
such assignment of Aggregate Maximum Commitment is in the minimum
amount of $35,000,000.00 (or if in a higher amount, in integral
multiples of $5,000,000.00 in excess thereof) and such existing
Lender shall continue to hold an Aggregate Maximum Commitment of not
less than $35,000,000.00 following the consummation of the
contemplated assignment.
V82606[7083]94 43
<PAGE>
14(d) Sub-Participations by Lenders. Any Lender may at
any time sell participating interests in any of the Obligations held by
such Lender and its commitments hereunder; provided, however, that:
(1) No participation contemplated by this
Paragraph 14(d) shall relieve such Lender from its obligations
hereunder or under any other Credit Document;
(2) Such Lender shall remain solely responsible
for the performance of such obligations;
(3) The Company, the Credit Agent, the Collateral
Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights
and obligations under the Credit Documents;
(4) The participation agreement between such
Lender and the Person purchasing such participation interest (a
"Participant") shall provide that: (i) the participation interest
of the Participant is an undivided interest in such Lender's
Aggregate Maximum Commitment and to the extent of the
Participant's interest in such Lender's Maximum Primary Loan
Commitment is pro rata between this Agreement and the Facility B
Agreement, and (ii) the sole voting rights of the Participant are
with respect to those items on which such Lender is entitled to
vote pursuant to Paragraphs 13(b)(2), 13(b)(5), 13(b)(7) and
13(b)(8) above; and
(5) Such Lender shall not enter into participation
agreements with more than two Participants for each $25,000,000.00
of Aggregate Maximum Commitment held by such Lender.
The Company acknowledges and agrees that each Participant shall be
considered a Lender for purposes of Paragraphs 4(j), 4(k) and 4(l) and
5(i) above; provided, however, that in no event shall any Participant be
entitled to receive any payment or compensation in excess of that to
which such Participant's selling Lender would be entitled with respect
to the participation interest held by such Participant if such Lender
had not sold any participation interest to such Participant.
14(e) Federal Reserve Bank. Notwithstanding the
provisions of Paragraphs 14(a) and 14(b) above, any Lender may at any
time pledge or assign all or any portion of such Lender's rights under
this Agreement and the other Credit Documents to a Federal Reserve Bank.
14(f) Increases in Availability. From time to time the
Company and any Lender (an "Increasing Lender") may agree, with the
prior written consent of the Credit Agent, to permanently or temporarily
increase such Lender's Aggregate Maximum Commitment and Primary Loan
Percentage Share, the dollar amount of any such increase to be, subject
to the Aggregate Credit Limit limitation, in the minimum dollar amount
of $5,000,000.00 and integral multiples of $5,000,000.00 in excess
thereof. The Company and the Increasing Lender shall agree on the
Adjustment Date for said increase and, if the increase is a temporary
V82606[7083]94 44
<PAGE>
rather than permanent increase, the date on which said increase shall
terminate (the "Temporary Increase Termination Date"). The Company
shall deliver to the Credit Agent, the Collateral Agent and each of the
Lenders a Commitment Schedule to be effective as of such Adjustment
Date. On the Temporary Increase Termination Date the aggregate amount
of such Increasing Lender's Primary Loan Percentage Share of outstanding
Facility A Facility A Primary Loans and Facility B Loans held by the
Increasing Lender in excess of its Maximum Primary Loan Commitment after
giving effect to the termination of the subject increase shall, if but
only if at such Temporary Increase Termination Date there does not exist
an Event of Default, be payable in full. If at the Temporary Increase
Termination Date there exists an Event of Default, the temporary
increase of the Increasing Lender shall continue in effect and, unless
otherwise agreed by one hundred percent (100%) of the Lenders, shall be
treated thereafter as a permanent increase in said Increasing Lender's
Aggregate Maximum Commitment.
14(g) Provision of Information; Confidentiality. The
Company hereby acknowledges and agrees that in connection with the
proposed assignment or subparticipation by a Lender of its interest in
the Obligations, such Lender may disclose to prospective assignees and
Participants any and all information provided to such Lender hereunder;
provided, however, that such information shall be furnished to such
prospective assignees and Participants on a confidential basis.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
COUNTRYWIDE FUNDING CORPORATION,
a New York corporation
By _____________________________
Name ___________________________
Title __________________________
THE FIRST NATIONAL BANK OF CHICAGO,
a national banking association,
as Credit Agent
By ___________________________________
Name _________________________________
Title ________________________________
V82606[7083]94 45
<PAGE>
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, a Delaware corporation,
as Collateral Agent
By ___________________________________
Name _________________________________
Title ________________________________
ABN AMRO BANK N.V.,
LOS ANGELES INTERNATIONAL BRANCH,
as a Managing Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Managing
Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE BANK OF NEW YORK, as a Managing
Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
V82606[7083]94 46
<PAGE>
THE CHASE MANHATTAN BANK, N.A., as a
Managing Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
CREDIT LYONNAIS SAN FRANCISCO BRANCH,
as a Managing Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE FIRST NATIONAL BANK OF CHICAGO, as
a Managing Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
NATIONSBANK OF TEXAS, N.A., as a
Managing Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
BANKERS TRUST COMPANY, as a Co-Agent
and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
V82606[7083]94 47
<PAGE>
CANADIAN IMPERIAL BANK OF COMMERCE, as
a Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
CITICORP USA, INC., as a Co-Agent and
a Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY, as a
Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
BANK OF MONTREAL, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
BANK ONE, TEXAS, N.A., as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
V82606[7083]94 48
<PAGE>
BANQUE NATIONALE DE PARIS,
LOS ANGELES AGENCY, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
BANQUE PARIBAS, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
COMMERZBANK AKTIENGESELLSCHAFT
GRAND CAYMAN BRANCH, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
V82606[7083]94 49
<PAGE>
DG BANK, DEUTSCHE GENOSSENSCHAFTSBANK,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
DRESDNER BANK AG, LOS ANGELES AGENCY,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
FIRST INTERSTATE BANK OF CALIFORNIA,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
V82606[7083]94 50
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE FUJI BANK, LIMITED, LOS ANGELES
AGENCY, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
LOS ANGELES AGENCY, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
KREDIETBANK N.V., as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
V82606[7083]94 51
<PAGE>
NATIONAL WESTMINSTER BANK USA,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
PNC BANK, NATIONAL ASSOCIATION, as a
Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE SAKURA BANK, LTD., LOS ANGELES
AGENCY, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
THE SANWA BANK, LIMITED, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
SHAWMUT BANK, N.A., as a Lender
By: __________________________________
Name _________________________________
Title ________________________________
V82606[7083]94 52
<PAGE>
SOCIETE GENERALE, NEW YORK BRANCH, as
a Lender
By ___________________________________
Name _________________________________
Title ________________________________
UNION BANK OF SWITZERLAND, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH/CAYMAN ISLANDS BRANCH,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
ACKNOWLEDGED and AGREED as of the
date first written above:
COUNTRYWIDE CREDIT INDUSTRIES,
INC., a Delaware corporation
By ________________________________
Name ______________________________
Title _____________________________
V82606[7083]94 53
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT DOCUMENT
A-1 Form of Facility A Direct Loan Note
A-2 Form of Facility A Discount Loan Note
A-3 Form of Negotiated Loan Note
A-4 Form of Swing Loan Note
A-5 Form of GNMA Pool Advance Note
B Form of Officer's Certificate
C Litigation Schedule
D Schedule of Existing Subsidiaries
Annex I: Glossary
Annex II: Schedule of Notice Addresses
<PAGE>
TABLE OF CONTENTS
Page
COUNTRYWIDE FUNDING CORPORATION: MORTGAGE LOAN WAREHOUSING
AGREEMENT: FACILITY B ....................................... 1
RECITALS ..................................................... 1
AGREEMENT .................................................... 1
1. Loan Facility ....................................... 1
1(a) Facility B Loan Credit Limit .................. 1
1(b) Interest Rate Election ........................ 2
1(c) Payment of Interest ........................... 2
1(d) Funding, Conversion and Continuation Options .. 3
1(e) Inability to Determine Rate ................... 3
1(f) Funding ....................................... 4
1(g) Funding Indemnification ....................... 4
1(h) Illegality; Impracticality .................... 5
1(i) Requirements of Law; Increased Costs .......... 5
1(j) Taxes ......................................... 6
2. Miscellaneous Lending Provisions .................... 7
2(a) Use of Proceeds ............................... 7
2(b) Request for Loans; Funding of Facility B Loans 7
2(c) Notes ......................................... 9
2(d) Interest and Fee Billing and Payment .......... 9
2(e) Repayment of Principal ........................ 10
2(f) Nature and Place of Payments .................. 10
2(g) Post-Default Interest ......................... 10
2(h) Computations .................................. 10
V91510[7083]94 i
<PAGE>
Page
2(i) Prepayments ................................... 10
2(j) Disbursement of Payments Received ............. 11
2(k) Capital Requirements .......................... 11
2(l) Fees .......................................... 11
2(m) Wire Transfers of Funds ....................... 12
3. Security; Subordination; Additional Documents ....... 12
3(a) Security Agreement ............................ 12
3(b) Guaranty and Subordination Agreement .......... 12
3(c) Further Documents ............................. 12
4. Conditions Precedent ................................ 12
4(a) First Credit Event ............................ 12
4(b) All Credit Events ............................. 14
5. Representations and Warranties of the Company ....... 15
5(a) Financial Condition ........................... 15
5(b) No Change ..................................... 15
5(c) Corporate Existence; Compliance with Law ...... 15
5(d) Corporate Power; Authorization; Enforceable
Obligations ................................... 16
5(e) No Legal Bar .................................. 16
5(f) No Material Litigation ........................ 16
5(g) Taxes ......................................... 16
5(h) Investment Company Act ........................ 16
5(i) Subsidiaries .................................. 16
5(j) Federal Reserve Board Regulations ............. 17
5(k) ERISA ......................................... 17
5(l) Assets ........................................ 17
V91510[7083]94 ii
<PAGE>
Page
6. Affirmative Covenants ............................... 17
6(a) Financial Statements .......................... 17
6(b) Certificates; Reports; Other Information ...... 18
6(c) Payment of Indebtedness ....................... 19
6(d) Maintenance of Existence and Properties ....... 19
6(e) Inspection of Property; Books and Records;
Discussions ................................... 19
6(f) Notices ....................................... 19
6(g) Expenses ...................................... 20
6(h) Credit Documents .............................. 20
6(i) Insurance ..................................... 20
6(j) CPN Program ................................... 21
7. Negative Covenants .................................. 21
7(a) Liens ......................................... 21
7(b) Mandatory Coverage ............................ 21
7(c) Indebtedness .................................. 21
7(d) Consolidation and Merger ...................... 22
7(e) Acquisitions .................................. 22
7(f) Payment of Dividends .......................... 22
7(g) Purchase or Retirement of Stock ............... 23
7(h) Investments; Advances; Receivables ............ 23
7(i) Sale of Assets ................................ 23
7(j) Debt to Adjusted Net Worth Ratio .............. 23
7(k) Current Ratio ................................. 23
7(l) Minimum Adjusted Net Worth .................... 24
7(m) Minimum Net Worth ............................. 24
V91510[7083]94 iii
<PAGE>
Page
7(n) Minimum Inventory and Unencumbered Servicing
Portfolio ..................................... 24
7(o) Restriction on Refinance Risk Debt ............ 24
8. Events of Default ................................... 25
9. Agency Provisions ................................... 28
9(a) Appointment ................................... 28
9(b) Delegation of Duties .......................... 28
9(c) Exculpatory Provisions ........................ 28
9(d) Reliance by Agent ............................. 29
9(e) Notice of Default; Agreement to Advance ....... 29
9(f) Non-Reliance on Agent and Other Lenders ....... 30
9(g) Indemnification ............................... 30
9(h) Agent in Its Individual Capacity .............. 31
9(i) Successor Agents .............................. 31
9(j) Sharing of Set-Offs ........................... 31
10. Miscellaneous Provisions ............................ 32
10(a) No Assignment ................................. 32
10(b) Amendment ..................................... 32
10(c) Cumulative Rights; No Waiver .................. 33
10(d) Entire Agreement; Severability ................ 33
10(e) Survival ...................................... 33
10(f) Notices ....................................... 33
10(g) Governing Law ................................. 33
10(h) Counterparts .................................. 33
11. Additional Lenders; Assignments and Participations;
Increases in Availability ........................... 34
11(a) Addition of New Lender ........................ 34
V91510[7083]94 iv
<PAGE>
Page
11(b) Assignments Among Existing Lenders ............ 36
11(c) Minimum Loan Commitment ....................... 36
11(d) Sub-Participation by Lenders .................. 37
11(e) Federal Reserve Bank .......................... 38
11(f) Increases in Availability ..................... 38
11(g) Provision of Information; Confidentiality ..... 38
V91510[7083]94 v
<PAGE>
COUNTRYWIDE FUNDING CORPORATION:
MORTGAGE LOAN WAREHOUSING AGREEMENT: FACILITY B
THIS MORTGAGE LOAN WAREHOUSING AGREEMENT: FACILITY B (the
"Agreement") is made and dated as of the 15th day of November, 1993, by
and among the lenders signatory hereto (collectively, the "Lenders"),
THE FIRST NATIONAL BANK OF CHICAGO, a national banking association
("FNBC"), as credit agent for the Lenders (in such capacity, the "Credit
Agent"), FIRST CHICAGO NATIONAL PROCESSING CORPORATION, a Delaware
corporation, as collateral agent for the Lenders (in such capacity, the
"Collateral Agent"), ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL
BRANCH, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, THE BANK
OF NEW YORK, THE CHASE MANHATTAN BANK, N.A., CREDIT LYONNAIS SAN
FRANCISCO BRANCH, FNBC and NATIONSBANK OF TEXAS, N.A., as managing
co-agents for the Lenders (in such capacity, the "Managing Co-Agents),
BANKERS TRUST COMPANY, CANADIAN IMPERIAL BANK OF COMMERCE, CITICORP USA,
INC., THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY, as
co-agents for the Lenders (in such capacity, the "Co-Agents"), and
COUNTRYWIDE FUNDING CORPORATION, a New York corporation (the "Company").
RECITALS
A. Pursuant to that certain Mortgage Loan Warehousing
Agreement: Facility B, dated as of December 4, 1992 among certain of the
Lenders, the Collateral Agent, the Credit Agent, the Company and others
(as amended and extended from time to time to date, the "Existing
Facility B Agreement"), certain of the Lenders agreed to extend credit
to the Company on the terms and subject to the conditions set forth more
particularly therein.
B. The current parties to the Existing Facility B Agreement
desire to terminate the Existing Facility B Agreement and to replace the
credit facility evidenced thereby with this Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Loan Facility.
1(a) Facility B Loan Credit Limit. On the terms and
subject to the conditions set forth herein, the Lenders severally agree
that they shall, from time to time to but not including the Facility B
V82380[7083]94 1
<PAGE>
Maturity Date, advance their Primary Loan Percentage Share of loans (the
"Facility B Loans" or a "Facility B Loan") to the Company in amounts
such that:
(1) The aggregate amount of Facility B Loans
outstanding does not exceed at any date the lesser of:
(i) The Facility B Loan Credit Limit; and
(ii) The lesser of: a. the Aggregate Credit
Limit, and b. the Collateral Value of the Borrowing Base minus,
in each case, the sum of: (A) Facility A Loans outstanding,
(B) the amount available for drawing under Outstanding Letters
of Credit, (C) unrepaid L/C Drawings, (D) the GNMA Pool Advance
Commitment, (E) Verified Outstanding CPNs, and (F) outstanding
Funding Checks, and minus, in addition, in the case of the
Collateral Value of the Borrowing Base, the Current Refinance
Risk Debt Exposure; and
(2) The aggregate dollar amount of each Lender's Primary
Loan Percentage Share of Facility A Primary Loans and Facility B
Loans outstanding does not exceed such Lender's Maximum Primary Loan
Commitment.
In calculating the availability of Facility B Loans on any date, Loans
outstanding, Verified Outstanding CPNs and Current Refinance Risk Debt
Exposure shall not include any of such items which will be repaid with
Loans to be advanced on such date.
1(b) Interest Rate Election. The Company shall pay
interest to each Lender on such Lender's Primary Loan Percentage Share
of Facility B Loans outstanding calculated, at the election of the
Company made from time to time as permitted herein and set forth on a
duly executed Loan Request, Interest Rate Election and Payoff Notice, at
either: (1) the Alternate Base Rate, and/or (2) the Applicable
Eurodollar Rate. Each Lender's Primary Loan Percentage Share of
Facility B Loans bearing interest at the Alternate Base Rate shall be
referred to herein as "Alternate Base Rate Loans"; and each Lender's
Primary Loan Percentage Share of Facility B Loans bearing interest at
the Applicable Eurodollar Rate shall be referred to herein as
"Eurodollar Loans".
1(c) Payment of Interest. The Company shall pay to each
Lender interest on such Lender's Primary Loan Percentage Share of
Facility B Loans maintained as Alternate Base Rate Loans monthly, in
arrears, on the fifth day of each month for the period from and
including the first day of the immediately preceding month to and
including the last day of such month, and shall pay interest on such
Lender's Primary Loan Percentage Share of Facility B Loans maintained as
Eurodollar Loans on the last day of the applicable Interest Period
relating thereto, in each case as provided more specifically in
Paragraph 2(d) below.
V82380[7083]94 2
<PAGE>
1(d) Funding, Conversion and Continuation Options.
(1) The Company may elect from time to time to
convert Facility B Loans from Eurodollar Loans to Alternate Base
Rate Loans or to have Facility B Loans funded as Alternate Base Rate
Loans by giving the Credit Agent irrevocable notice of such election
as set forth on a duly executed Loan Request, Interest Rate Election
and Payoff Notice delivered on the proposed conversion or funding
date; provided, however, that any conversion of Eurodollar Loans may
only be made on the last day of the applicable Interest Period. The
Company may elect from time to time to convert Facility B Loans from
Alternate Base Rate Loans to Eurodollar Loans or to have Facility B
Loans funded as Eurodollar Loans by giving the Credit Agent at least
three Eurodollar Business Days' irrevocable notice of such election
by delivery of a duly executed Loan Request, Interest Rate Election
and Payoff Notice. Upon receipt of any such notice, the Credit
Agent shall promptly notify each of the Lenders affected thereby
thereof. No Facility B Loan shall be funded as or converted into a
Eurodollar Loan if an Event of Default or Potential Default has
occurred and is continuing on the day occurring two Business Days
prior to the date of the funding or conversion requested by the
Company.
(2) Any Eurodollar Loan may be continued as such
upon the expiration of the Interest Period applicable thereto by
giving the Credit Agent (which shall notify the Lenders) at least
three Eurodollar Business Days' prior irrevocable notice of such
election as set forth on a duly executed Loan Request, Interest Rate
Election and Payoff Notice; provided, however, that no Eurodollar
Loan may be continued as such when any Event of Default or Potential
Default has occurred and is continuing, but shall be automatically
converted to an Alternate Base Rate Loan on the last day of the then
current Interest Period applicable thereto. The Credit Agent shall
notify the Lenders and the Company promptly that such automatic
conversion will occur. If the Company shall fail to give notice as
provided above, the Company shall be deemed to have elected to
convert the affected Eurodollar Loan to an Alternate Base Rate Loan
on the last day of the Interest Period applicable thereto.
(3) Under no circumstances shall the Lenders be
required to make or maintain Eurodollar Loans under this Agreement
and the Facility A Agreement with more than an aggregate number of
eight (8) different Interest Periods.
(4) The Credit Agent shall give prompt written
notice (or notice by telephone immediately confirmed in writing) to
the Company and the Lenders of the applicable interest rate
determined by the Credit Agent.
1(e) Inability to Determine Rate. In the event that the
Credit Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that by reason of circumstances
affecting the interbank eurodollar market adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate for any given Interest
V82380[7083]94 3
<PAGE>
Period, the Credit Agent shall forthwith give telephonic notice
(promptly confirmed in writing) of such determination to each Lender and
to the Company at least two Eurodollar Business Days prior to the
proposed conversion date of an Alternate Base Rate Loan to a Eurodollar
Loan or the proposed funding or continuation date of a Facility B Loan
as a Eurodollar Loan. If such notice is given: (1) any Facility B Loan
that was to have been converted to or funded as a Eurodollar Loan shall,
subject to the provisions hereof, be continued or funded as an Alternate
Base Rate Loan, and (2) any outstanding Eurodollar Loan shall be
converted, on the last day of the then current Interest Period with
respect thereto, to an Alternate Base Rate Loan. Until such notice has
been withdrawn by the Credit Agent, the Company shall not have the right
to convert a Facility B Loan to or fund or continue a Facility B Loan as
a Eurodollar Loan.
1(f) Funding. Each Lender shall be entitled to fund all
or any portion of its Primary Loan Percentage Share of Facility B Loans
in any manner it may determine in its sole discretion, including,
without limitation, in the Grand Cayman inter-bank market, the
eurocurrency inter-bank market and within the United States, but all
calculations and transactions hereunder shall be conducted as though all
Lenders actually fund all Eurodollar Loans through the purchase of
offshore dollar deposits in the amount of their Eurodollar Loans with
maturities corresponding to the applicable Interest Periods.
1(g) Funding Indemnification. In addition to all other
payment obligations hereunder, in the event: (1) any Facility B Loan
which is outstanding as a Eurodollar Loan is prepaid prior to the last
day of the applicable Interest Period, whether following a mandatory
prepayment, application of proceeds from the sale of Collateral or
otherwise, including, without limitation, pursuant to Paragraph 11(a),
11(b) and 11(c) below, or (2) the Company shall fail to make a
conversion into or a borrowing as a Eurodollar Loan after the Company
has given notice thereof as provided in Paragraph 1(d) above, or (3) the
Company shall fail to continue any Facility B Loan which it has elected
to have continued as a Eurodollar Loan, or (4) the Company shall fail to
make any payment of principal or interest on any Facility B Loan when
due, then the Company shall immediately pay to each of the Lenders,
through the Credit Agent, an additional amount compensating such Lender
for all losses, costs and expenses incurred by such Lender in connection
therewith, including, without limitation, such as may arise out of
reemployment of funds obtained by such Lender or from fees payable to
terminate the deposits from which such funds were obtained, such losses,
costs and expenses and the method of calculation thereof being set forth
in reasonable detail in a statement delivered to the Company by such
Lender, such statement to be conclusive in the absence of manifest
error. Under no circumstances shall any Lender have any obligation to
remit monies to the Company upon prepayment of any Eurodollar Loan even
under circumstances which do not result in the necessity for the payment
by the Company of any amount hereunder. The provisions hereof shall
survive termination of this Agreement and payment of the outstanding
Facility B Loans and all other Facility B Obligations.
V82380[7083]94 4
<PAGE>
1(h) Illegality; Impracticality. Notwithstanding any
other provisions herein, if any law, regulation, treaty or directive or
any change therein or in the interpretation or application thereof,
shall or may in the opinion of any Lender make it unlawful or
impractical for such Lender to make or maintain Eurodollar Loans:
(1) the commitment of such Lender hereunder to make Eurodollar Loans
shall forthwith be cancelled and (2) such Lender's Primary Loan
Percentage Share of Facility B Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to Alternate Base Rate
Loans at the end of their respective Interest Periods or within such
earlier period as required by law. In the event of a conversion of any
Facility B Loan prior to the end of its applicable Interest Period the
Company hereby agrees promptly to pay each Lender, upon its written
demand, the amounts required pursuant to Paragraph 1(g) above, it being
agreed and understood that such conversion shall constitute a prepayment
for all purposes hereof. The provisions hereof shall survive the
termination of this Agreement and payment of the outstanding Facility B
Loans and all other Facility B Obligations.
1(i) Requirements of Law; Increased Costs. In the event
that a change subsequent to the date hereof in any applicable law,
regulation, treaty or directive or in the governmental or judicial
interpretation or application thereof, or compliance by any Lender with
any request or directive (whether or not having the force of law) issued
subsequent to the date hereof by any central bank or other governmental
authority, agency or instrumentality:
(1) Does or shall subject any Lender to any tax of
any kind whatsoever with respect to this Agreement or any Facility B
Loans made hereunder, or changes the basis of taxation of payments
to such Lender of principal, fees, interest or any other amount
payable hereunder (except for changes in the rate of tax on the
overall net income of such Lender);
(2) Does or shall impose, modify or hold applicable
any reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for
the account of, advances or loans by, or other credit extended by,
or any other acquisition of funds by, any office of such Lender
which are not otherwise included in the determination of the
Alternate Base Rate or the Eurodollar Rate; or
(3) Does or shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such
Lender of making, renewing or maintaining its Primary Loan Percentage
Share of any Facility B Loan or to reduce any amount receivable in
respect thereof then, in any such case, the Company shall promptly pay
to such Lender, upon its written demand, any additional amounts
necessary to compensate such Lender for such additional cost or reduced
amounts receivable as determined by such Lender with respect to this
Agreement or such Lender's Primary Loan Percentage Share of Facility B
Loans. If a Lender becomes entitled to claim any additional amounts
V82380[7083]94 5
<PAGE>
pursuant to this Paragraph 1(i), it shall promptly notify the Company of
the event by reason of which it has become so entitled. A certificate
as to any additional amounts payable pursuant to the foregoing sentence
submitted by a Lender to the Company shall be conclusive in the absence
of manifest error. The obligations of the Company under this Paragraph
1(i) shall survive the termination of this Agreement and the payment of
all outstanding Facility B Loans and all other Facility B Obligations.
1(j) Taxes.
(1) All payments made by the Company, the Credit
Agent and the Lenders on account of the Facility B Obligations shall
be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld
or assessed by any Governmental Authority, excluding, in the case of
the Lenders, net income taxes and franchise taxes (imposed in lieu
of net income taxes), imposed on the Lenders, as the case may be, as
a result of a present or former connection between the jurisdiction
of the government or taxing authority imposing such tax, or any
political subdivision or taxing authority thereof or therein, and
such Lender (other than a connection arising solely from such Lender
having executed, delivered or performed its obligations or received
a payment under, or enforced, the Credit Documents) (all such non-
excluded taxes, levies, imposts, duties, charges, fees, deductions
and withholdings being hereinafter called "Taxes"). If any Taxes
are required to be withheld from any amounts payable to any Lender
under the Credit Documents, the amounts so payable by the Company to
the Credit Agent for the benefit of such Lender shall be increased
to the extent necessary to yield to such Lender (after payment of
all Taxes) interest or any such other amounts payable thereunder at
the rates or in the amounts specified in the Credit Documents.
Whenever any Taxes are payable by the Company or on behalf of the
Company, as promptly as possible thereafter the Company shall send
to the Credit Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official
receipt received by the Company showing payment thereof. If the
Company fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Credit Agent the required
receipts or other required documentary evidence, the Company shall
indemnify the Credit Agent and such Lender for any incremental
taxes, interest or penalties that may become payable by the Credit
Agent and the Lenders as a result of any such failure. The
agreements in this subsection shall survive the termination of this
Agreement and the payment of all outstanding Facility B Loans and
all other Facility B Obligations. Each Lender by executing this
Agreement represents and warrants to the Company and the Credit
Agent that at the date of this Agreement no Taxes are imposed on
such Lender which would result in increased liability of the Company
to such Lender under this Paragraph 1(j)(l).
(2) Each Lender that is not incorporated under the
laws of the United States of America or a state thereof agrees that
V82380[7083]94 6
<PAGE>
it will deliver to the Company and the Credit Agent (1) two duly
completed copies of United States Internal Revenue Service Form 1001
or 4224 or successor applicable form, as the case may be, and (2) an
Internal Revenue Service Form W-8 or W-9 or successor applicable
form. Each such Lender also agrees to deliver to the Company and
the Credit Agent two further copies of the said Form 1001 or 4224
and Form W-8 or W-9, or successor applicable forms or other manner
of certification, as the case may be, on or before the date that any
such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form previously
delivered by it to the Company, and such extensions or renewals
thereof as may reasonably be requested by the Company or the Credit
Agent, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred
prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Company and
the Credit Agent. Such Lender shall certify (i) in the case of a
Form 1001 or 4224, that it is entitled to receive payments under
this Agreement without deduction or withholding of any United States
federal income taxes and (ii) in the case of a Form W-8 or W-9, that
it is entitled to an exemption from United States backup withholding
tax.
2. Miscellaneous Lending Provisions.
2(a) Use of Proceeds. The proceeds of Facility B Loans
shall be utilized by the Company solely for the purpose of originating
and/or acquiring Mortgage Loans, to repay L/C Drawings and other
Indebtedness of the Company (including Indebtedness of the Company to
the Parent permitted to be repaid by the Company to the Parent pursuant
to the terms of the Credit Documents and including CPNs) and for other
general working capital purposes.
2(b) Request for Loans; Funding of Facility B Loans.
(1) Subject to Paragraph 1(d) above, on any Business
Day that the Company desires the Lenders to fund their Primary Loan
Percentage Share of a Facility B Loan, it shall deliver a Loan
Request, Interest Rate Election and Payoff Notice therefor to the
Credit Agent no later than 10:00 a.m. (Los Angeles time) on such
date. Only one consolidated Loan Request, Interest Rate Election
and Payoff Notice requesting Facility A Loans and/or Facility B
Loans and/or GNMA Pool Advance Loans and/or Letters of Credit shall
be submitted to the Credit Agent on any date. Upon receipt of a
Loan Request, Interest Rate Election and Payoff Notice, the Credit
Agent shall notify each of the Lenders (which notification may be
telephonic and, if telephonic, shall be promptly confirmed in
writing) no later than 11:00 a.m. (Los Angeles time) on the date the
Loan Request, Interest Rate Election and Payoff Notice was delivered
to the Credit Agent of the aggregate amount of Facility B Loans and
V82380[7083]94 7
<PAGE>
each Lender's Primary Loan Percentage Share thereof to be funded on
such date.
(2) Facility B Loans shall be funded, subject to the
provisions of Paragraph 8(a) of the Security Agreement, as follows:
(i) Each Lender shall make its Primary Loan
Percentage Share of Facility B Loans as requested in a Loan
Request, Interest Rate Election and Payoff Notice available by
wiring the amount thereof in immediately available same day
(including Federal) funds, to the Credit Agent to the Pre-
Disbursement Account no later than 12:30 p.m. (Los Angeles
time) on the proposed funding date, such amounts to be held
pending disbursement as provided in subparagraph (ii) below.
(ii) On or before 11:00 a.m. (Los Angeles time)
on each proposed funding or issuance date the Credit Agent
shall transmit the Loan Request, Interest Rate Election and
Payoff Notice (and any CPN Issuance Request) received by the
Credit Agent on such date to the Collateral Agent and request
the Collateral Agent to make a Determination of Availability
pursuant to Paragraph 7 of the Security Agreement with respect
thereto. If the Collateral Agent notifies the Credit Agent
that the Collateral Value of the Borrowing Base is sufficient
to support the requested Credit Events (or a portion thereof),
the Credit Agent shall so notify the Company and shall, subject
to the additional conditions set forth in Paragraph 4(b) below,
disburse amounts held in the Pre-Disbursement Account to the
Funding Account and/or the Commercial Paper Account, as
applicable, no later than 12:45 p.m. (Los Angeles time) on the
proposed funding date. Amounts held in the Pre-Disbursement
Account which cannot be disbursed to the Company as a result of
a negative Determination of Availability or non-satisfaction of
the additional conditions set forth in Paragraph 4(b) below
shall constitute cash collateral for the Obligations, shall be
transferred to the Settlement Account prior to the opening of
business of the Credit Agent on the Business Day following the
date deposited in the Pre-Disbursement Account and disbursed to
the Company only upon a favorable Determination of Availability
and subject to the additional conditions set forth in Paragraph
4(b) below. Such amounts shall constitute "Loans" to the
Company for all purposes of the Credit Documents and shall be
payable, with interest, to the same extent as if such amounts
had been fully disbursed.
(iii) The Credit Agent may (but shall not be
obligated to) assume that each Lender has made its Primary Loan
Percentage Share of Facility B Loans available on the funding
date and may, in reliance upon such assumption, make available
to the Company on such date a corresponding amount. If and to
the extent any Lender shall not have so made its Primary Loan
Percentage Share of Facility B Loans available, such Lender and
the Company jointly and severally agree to repay to the Credit
Agent forthwith on demand such corresponding amount together
V82380[7083]94 8
<PAGE>
with interest thereon, for each day from the date such amount
is made available to the Company until the date such amount is
repaid to the Credit Agent, at, in the case of the Company, the
interest rate applicable at the time to the subject Facility B
Loan or Loans and, in the case of the Lenders, the Federal
Funds Rate. If such Lender shall repay to the Credit Agent
such corresponding amount, such amount so repaid shall
constitute such Lender's Primary Loan Percentage Share of such
Facility B Loan or Loans for all purposes of the Credit
Documents. Nothing contained herein shall affect the liability
of any Lender for its failure to make its Primary Loan
Percentage Share of Facility B Loans available to the Company
as required pursuant to this Agreement and the other Credit
Documents.
2(c) Notes. The obligation of the Company to repay the
Facility B Loans shall be evidenced by notes payable to each Lender,
each in the form of that attached hereto as Exhibit A (the "Facility B
Loan Notes").
2(d) Interest and Fee Billing and Payment. The Credit
Agent shall: (1) on or before the first Business Day of each month
notify the Company (which notification may be telephonic) of the
estimated amount of interest payable with respect to Alternate Base Rate
Loans as of the fifth day of the current month for the period from and
including the first day of the immediately preceding month to and
including the last day of such month, with the actual amount confirmed
by notification by the Credit Agent to the Company (which notification
may be telephonic and which, if telephonic, shall be promptly confirmed
in writing) given no later than 9:00 a.m. (Los Angeles time) on the due
date of payment thereof; (2) on the last day of the Interest Period for
each Eurodollar Loan notify the Company (which notification may be
telephonic and which, if telephonic, shall be promptly confirmed in
writing) of the amount of interest payable on such date on account
thereof; (3) on or before the first Business Day of the first month of
each calendar quarter notify the Company (which notification may be
telephonic) of the amount of commitment fees payable pursuant to
Paragraph 2 of the Fee Letter on the fifth day of such month for the
period from and including the first day of the first month of the
immediately preceding calendar quarter to and including the last day of
such calendar quarter, with the actual amount confirmed by notification
by the Credit Agent to the Company (which notification may be telephonic
and which, if telephonic, shall be promptly confirmed in writing) given
no later than 9:00 a.m. (Los Angeles time) on the due date of payment
thereof; and (4) from time to time upon the request of any Lender
deliver to the Company a funding indemnification billing for amounts
payable to such Lender pursuant to Paragraph 1(g) above or a billing for
amounts payable to such Lender pursuant to Paragraphs 1(i) and 1(j)
above and 2(k) below. The Company shall pay the full amount of interest
and fees of which it has been notified pursuant to subparagraphs (1) and
(3) above on the fifth day of each month, shall pay the full amount of
which it has been notified pursuant to subparagraph (2) above on the
date such notification is given and shall pay the full amount of each
V82380[7083]94 9
<PAGE>
billing delivered to it pursuant to subparagraph (4) above within five
(5) Business Days thereafter.
2(e) Repayment of Principal. Subject to the prepayment
requirements of Paragraph 2(i) below, Paragraph 6 of the Security
Agreement and the required application of proceeds from the sale or
other disposition of Mortgage Loans and Mortgage-Backed Securities as
provided in the Security Agreement, the Company shall pay the principal
amount of each Facility B Loan on or before the Facility B Maturity
Date.
2(f) Nature and Place of Payments. Except as otherwise
expressly provided in the Credit Documents, all payments made on account
of the Facility B Obligations shall be made to the Credit Agent at the
Contact Office for distribution to the Lenders, as the Company shall
direct pursuant to a Loan Request, Interest Rate Election and Payoff
Notice (but, in any event, consistent with Paragraph 8 of the Security
Agreement), without set-off or counterclaim in lawful money of the
United States of America in immediately available same day funds, and
must be received by the Credit Agent accompanied by a Loan Request,
Interest Rate Election and Payoff Notice at the Contact Office by 11:30
a.m. (Los Angeles time) on the day of payment, it being expressly agreed
and understood that if a payment is received after 11:30 a.m. (Los
Angeles time) by the Credit Agent or the Credit Agent does not receive a
Loan Request, Interest Rate Election and Payoff Notice therefor, such
payment will be considered to have been made on the next succeeding
Business Day or such later date as the Credit Agent receives the Loan
Request, Interest Rate Election and Payoff Notice therefor and interest
thereon shall be payable by the Company at the then applicable rate
during such extension. If any payment required to be made by the
Company hereunder becomes due and payable on a day other than a Business
Day, the due date thereof shall be extended to the next succeeding
Business Day and interest thereon shall be payable at the then
applicable rate during such extension. The Credit Agent is hereby
authorized to debit accounts of the Company maintained with FNBC for
amounts payable by the Company under this Agreement through the Credit
Agent and the Credit Agent will promptly notify the Company of any such
debit.
2(g) Post-Default Interest. Following the occurrence of
an Event of Default and until such Event of Default is cured or waived
as provided herein, Facility B Obligations shall bear interest at a per
annum rate equal to the Alternate Base Rate plus three percent (3%).
2(h) Computations. All computations of interest and fees
payable hereunder and under the Fee Letter shall be based upon a year of
360 days for the actual number of days elapsed. The determination by
the Credit Agreement of any interest rate hereunder shall be conclusive
and binding on the Company and the Lenders absent manifest error.
2(i) Prepayments.
(1) The Company may voluntarily prepay Facility B
Loans in whole or in part at any time.
V82380[7083]94 10
<PAGE>
(2) Facility B Loans are subject to mandatory
prepayment pursuant to Paragraph 6 of the Security Agreement and, in
addition, by application of proceeds of the sale or other
disposition of Collateral as provided in the Security Agreement.
(3) The Company shall pay in connection with any
prepayment hereunder all interest accrued but unpaid on Facility B
Loans to which such prepayment is applied pursuant to Paragraph 8 of
the Security Agreement and any amount payable on account thereof
pursuant to Paragraph 1(g) above concurrently with payment to the
Credit Agent of any principal amounts.
2(j) Disbursement of Payments Received. All amounts
received by the Credit Agent on account of the Obligations shall be
disbursed by the Credit Agent to the Lenders consistent with the
provisions of Paragraph 8 of the Security Agreement by wire transfer
prior to the cut-off deadline of the Federal Reserve Wire System on the
date of receipt if received by the Credit Agent before 11:30 a.m. (Los
Angeles time) and accompanied by a Loan Request, Interest Rate Election
and Payoff Notice (or disbursed on the day of receipt although received
later than 11:30 a.m. (Los Angeles time) with the agreement of the
Credit Agent, the Collateral Agent and any Lender) or if received later
or if the Credit Agent has not received a Loan Request, Interest Rate
Election and Payoff Notice therefor, on the next succeeding Business Day
or such later date as the Credit Agent receives the Loan Request,
Interest Rate Election and Payoff Notice relating thereto, without
interest payable by the Credit Agent.
2(k) Capital Requirements. The Company shall pay from
time to time upon demand such amounts as any Lender may determine to be
necessary to compensate such Lender for all reasonable costs which such
Lender determines are attributable to its making or maintaining its
Primary Loan Percentage Share of any Facility B Loan under this
Agreement or its obligation to make its Primary Loan Percentage Share of
any Facility B Loans hereunder, including, without limitation, reserve
requirements attributed to the unused portion of the Facility B Loan
Credit Limit, in respect of any amount of capital required to be
maintained by such Lender pursuant to any law or regulation of any
jurisdiction or any interpretation, directive or request affecting
banks, savings and loan institutions and/or financial institutions
generally notwithstanding the creditworthiness of any particular bank,
savings and loan institution or other financial institution (whether or
not having the force of law) of any court or governmental or monetary
authority, whether in effect on the date of this Agreement or
thereafter. The obligations of the Company under this Paragraph 2(k)
shall survive the termination of this Agreement and the payment of all
other Facility B Obligations.
2(l) Fees. The Company shall pay:
(1) To the Credit Agent and the Collateral Agent,
such fees as may from time to time be agreed upon in writing by such
Persons and the Company; and
V82380[7083]94 11
<PAGE>
(2) To each of the Lenders, the incentive and
commitment fees described in the Fee Letter.
2(m) Wire Transfers of Funds. Notwithstanding anything to
the contrary contained herein and in the other Credit Documents, funds
which the Credit Agent and the Lenders are transmitting by wire transfer
shall be deemed to have been sent and received upon release by the
transmitting party of such funds into the Federal Reserve Wire System.
3. Security; Subordination; Additional Documents.
3(a) Security Agreement. As collateral security for,
among other things, the Facility B Obligations, the Company shall
execute and deliver to the Collateral Agent the Security Agreement
pursuant to which the Company shall pledge, assign and grant to the
Collateral Agent for the pro rata, pari passu benefit of the Secured
Parties, and to each of such Persons, a first priority security interest
in and lien upon the Collateral, subject to the release and
reinstatement provisions set forth in Paragraph 28 of the Security
Agreement. In addition, the Company shall execute and deliver to the
Collateral Agent such UCC-1 financing statements as the Collateral Agent
may request.
3(b) Guaranty and Subordination Agreement. As additional
support for, among other things, the Facility B Obligations, the Company
shall execute and deliver and shall cause to be executed and delivered
to the Credit Agent on behalf of the Lenders: (1) the Guaranty and
(2) the Subordination Agreement.
3(c) Further Documents. The Company agrees to execute and
deliver and to cause to be executed and delivered to the Credit Agent or
such Persons as the Credit Agent may direct from time to time such
confirmatory or supplementary security agreements, financing statements,
notices to third parties and other documents, instruments and agreements
as the Credit Agent on behalf of the Lenders may reasonably request,
which are in any of the Lenders' judgment necessary or desirable to
obtain for the Collateral Agent on behalf of the Credit Agent, the
Lenders, and the holders from time to time of Outstanding CPNs the
benefit of the Credit Documents and the Collateral.
4. Conditions Precedent.
4(a) First Credit Event. As conditions precedent to the
Effective Date and the first Credit Event hereunder:
(1) There shall have been delivered to the Credit
Agent, in form and substance and in quantities reasonably
satisfactory to the Lenders and their counsel, each of the
following:
(i) A duly executed copy of this Agreement;
V82380[7083]94 12
<PAGE>
(ii) Duly executed copies of the Facility B Loan
Notes;
(iii) Duly executed copies of the Security
Agreement accompanied by such UCC-1 financing statements
related thereto as the Collateral Agent may request, the
Guaranty, the Subordination Agreement and the Fee Letter;
(iv) Such credit applications, financial
statements, pro forma financial statements, authorizations and
information concerning the Company and its business, operations
and condition (financial and otherwise) as the Credit Agent or
any Lender may reasonably request;
(v) Certified copies of resolutions of the
Boards of Directors of the Company and the Parent approving the
execution and delivery of all documents required to be
delivered by the Company and the Parent hereunder;
(vi) Certificates of the Secretary or an
Assistant Secretary of each of the Company and the Parent cer-
tifying the names, incumbency and true signatures of the
officers of the Company and the Parent authorized to sign the
documents required to be executed and delivered by the Company
and the Parent hereunder;
(vii) An opinion of counsel for the Company and
the Parent (which counsel may be in-house counsel) in form and
substance satisfactory to the Lenders and covering such matters
as the Lenders may reasonably request;
(viii) A certificate of an executive officer of
each of the Company and the Parent in the form of that attached
hereto as Exhibit B dated as of the date of this Agreement;
(ix) A duly completed Borrowing Base Certificate
dated as of the date of such first Credit Event and a Covenant
Compliance Certificate, dated as of the Interim Date, for each
of the Company and the Parent demonstrating in detail
satisfactory to the Lenders the Company's compliance with the
covenants set forth in Paragraphs 7(h), 7(j), 7(k), 7(l), 7(m),
7(n) and 7(o) below, and the Parent's compliance with the
financial covenants set forth in Paragraphs 11(d), 11(e),
11(f), 11(g) and 11(h) of the Guaranty; and
(x) A current Schedule of Approved Investors
acceptable to the Majority Lenders, as evidenced by their
execution of an express written approval thereof.
(2) All conditions precedent to the first Credit
Event under the Facility A Agreement shall have been satisfied.
(3) All acts and conditions (including, without
limitation, the obtaining of all necessary regulatory approvals and
V82380[7083]94 13
<PAGE>
the making of all required filings, recordings and registrations)
required to be done and performed and to have happened precedent to
the execution, delivery and performance of the Credit Documents and
to constitute the same legal, valid and binding obligations,
enforceable in accordance with their respective terms, shall have
been done and performed and shall have happened in due and strict
compliance with all applicable laws.
(4) All documentation, including, without limita-
tion, documentation for corporate and legal proceedings in connec-
tion with the transactions contemplated by the Credit Documents,
shall be satisfactory in form and substance to the Lenders and their
counsel.
(5) The Company shall have delivered to each of the
Collateral Agent and the Credit Agent, respectively, a letter
acceptable to each such Person, respectively, regarding the payment
by the Company to each such Person of fees, and the Company shall
have paid all fees required under each such letter to have been paid
prior to the first Credit Event hereunder.
(6) All amounts outstanding under the Existing
Facility B Agreement shall have been (or shall upon the happening of
the first Credit Event hereunder be) paid in full and the Existing
Facility B Agreement and any obligations of the Lenders to make
advances thereunder terminated.
4(b) All Credit Events. As conditions precedent to each
Credit Event hereunder, at and as of the date of, and after giving
effect to, such Credit Event:
(1) The representations and warranties of the
Company and the Parent contained in the Credit Documents shall be
accurate and complete in all respects as of such date;
(2) There shall not have occurred a Potential
Default or an Event of Default (other than an Event of Default under
Paragraph 8(a) below which has not been waived by one hundred
percent (100%) of the Lenders) and the Majority Lenders' written
election to cease funding Loans hereunder;
(3) There shall not have occurred an Event of
Default under Paragraph 8(a) below which has not been waived by one
hundred percent (100%) of the Lenders;
(4) Following such Credit Event, the aggregate
principal amount of Facility B Loans outstanding shall not exceed
the limitations of Paragraph 1(a) above;
(5) (i) The Company shall have delivered to the
Credit Agent a duly executed Loan Request, Interest Rate Election
and Payoff Notice therefor, and (ii) outstanding Facility A Primary
Loans, including Facility A Primary Loans to be funded on the date
of funding of the requested Facility B Loan, are in the aggregate
amount of the Facility A Primary Loan Credit Limit;
V82380[7083]94 14
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(6) If the Credit Event is the making of a
Facility B Loan the proceeds of which will be utilized to repay
CPNs, at the date the CPN or CPNs to be repaid thereby were issued,
the Depositary Agreement was in full force and effect; and
(7) If the Company has delivered a Release Request
to the Collateral Agent pursuant to Paragraph 10(a) of the Security
Agreement, the Majority Lenders have not notified the Credit Agent
in writing that they have elected to terminate the agreement of the
Lenders to continue funding Facility B Loans (if such election and
notification is permitted pursuant to said Paragraph 10(a)).
By delivering a Loan Request, Interest Rate Election and Payoff Notice
to the Credit Agent, the Company shall be deemed to have represented and
warranted the accuracy and completeness of the statements set forth in
subparagraphs (b)(1) through (b)(6) above and all information set forth
in such Loan Request, Interest Rate Election and Payoff Notice.
5. Representations and Warranties of the Company. As an
inducement to the Credit Agent, the Collateral Agent and each Lender to
enter into this Agreement, the Company represents and warrants to the
Credit Agent, the Collateral Agent and each Lender that:
5(a) Financial Condition. The financial statements,
respectively dated the Statement Date and the Interim Date, copies of
which have heretofore been furnished to each Lender, are complete and
correct and present fairly in accordance with GAAP the consolidated and
consolidating financial condition of the Company and its consolidated
Subsidiaries at such dates and the consolidated and consolidating
results of their operations and changes in financial position for the
fiscal periods then ended.
5(b) No Change. Since the Statement Date there has been
no material adverse change in the business, operations, assets or finan-
cial or other condition of the Company or the Company and its consoli-
dated Subsidiaries taken as a whole.
5(c) Corporate Existence; Compliance with Law. The Com-
pany and each of its Subsidiaries: (1) is duly organized, validly
existing and in good standing as a corporation under the laws of the
state of its incorporation, and is in good standing as a foreign
corporation in each jurisdiction where its ownership of property or
conduct of business requires such qualification and where failure to be
in good standing could have a material adverse effect on the Company,
any of its Subsidiaries, or their respective property and/or business or
on the ability of the Company or the Parent to pay or perform the Credit
Documents or on the Collateral; (2) has the corporate power and
authority and the legal right to own and operate its property and to
conduct business in the manner in which it does and proposes so to do;
and (3) is in compliance with all Requirements of Law and Contractual
Obligations except to the extent that failure to comply could not have a
material adverse effect on the Company, any of its Subsidiaries, or
their respective property and/or business or on the ability of the
V82380[7083]94 15
<PAGE>
Company or the Parent to pay or perform the Credit Documents or on the
Collateral.
5(d) Corporate Power; Authorization; Enforceable
Obligations. Each of the Company and the Parent has the corporate power
and authority and the legal right to execute, deliver and perform the
Credit Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of
the Credit Documents. The Credit Documents have been duly executed and
delivered on behalf of each of the Company and the Parent and constitute
legal, valid and binding obligations of such party enforceable against
such party in accordance with their respective terms.
5(e) No Legal Bar. The execution, delivery and perfor-
mance of the Credit Documents, the borrowing thereunder and the use of
the proceeds thereof, will not violate any Requirement of Law or any
Contractual Obligation of the Company or the Parent to the extent that
failure to comply therewith could have a material adverse effect on the
Company or its property and/or business or on the ability of the Company
or the Parent to pay or perform the Credit Documents or on the
Collateral.
5(f) No Material Litigation. Except as disclosed on
Exhibit C attached hereto, no litigation, investigation or proceeding of
or before any court, arbitrator or Governmental Authority is pending or,
to the knowledge of the Company, threatened by or against the Company or
any of its Subsidiaries or against any of such parties'
properties or revenues involving amounts, in the case of any such
individual litigation, investigation or proceeding, in excess of
$10,000,000.00 or which, regardless of the amount in controversy, is
likely to be adversely determined and which, if adversely determined,
could have a material adverse effect on the business, operations,
property or financial or other condition of the Company or any of its
Subsidiaries.
5(g) Taxes. The Company and each of its Subsidiaries have
filed or caused to be filed all tax returns that are required to be
filed and have paid all taxes shown to be due and payable on said
returns or on any assessments made against them or any of their property
other than taxes which are being contested in good faith by appropriate
proceedings and as to which the Company or the applicable Subsidiary has
established adequate reserves in conformity with GAAP.
5(h) Investment Company Act. The Company is not an
"investment company" or a company "controlled" by an "investment com-
pany" within the meaning of the Investment Company Act of 1940, as
amended.
5(i) Subsidiaries. Exhibit D attached hereto sets forth
an accurate and complete list of all presently existing Subsidiaries of
the Company, their respective jurisdictions of incorporation and the
percentage of their capital stock owned by the Company or other
Subsidiaries. All of the issued and outstanding shares of capital stock
of the Subsidiaries have been duly authorized and issued and are fully
paid and non-assessable.
V82380[7083]94 16
<PAGE>
5(j) Federal Reserve Board Regulations. Neither the
Company nor any of its Subsidiaries is engaged or will engage, princi-
pally or as one of its important activities, in the business of extend-
ing credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of such terms under Regulation U.
No part of the proceeds of any Loan made hereunder will be used for
"purchasing" or "carrying" "margin stock" as so defined or for any pur-
pose which violates, or which would be inconsistent with, the provisions
of the Regulations of the Board of Governors of the Federal Reserve
System.
5(k) ERISA. The Company and each of its Subsidiaries are
in compliance in all material respects with the requirements of ERISA
and no Reportable Event has occurred under any Plan maintained by the
Parent, the Company or any of its or their Subsidiaries which is likely
to result in the termination of such Plan for purposes of Title IV of
ERISA.
5(l) Assets. The Company and each of its Subsidiaries has
good and marketable title to all property and assets reflected in the
financial statements referred to in Paragraph 5(a) above, except
property and assets sold or otherwise disposed of in the ordinary course
of business subsequent to that date. Neither the Company nor any of its
Subsidiaries has outstanding Liens on any of its properties or assets
nor are there any security agreements to which the Company or any of its
Subsidiaries is a party, or title retention agreements, whether in the
form of leases or otherwise, of any personal property except as
reflected in said financial statements referred to in Paragraph 5(a)
above or as permitted under Paragraph 7(a) below.
6. Affirmative Covenants. The Company hereby covenants and
agrees with the Credit Agent, the Collateral Agent and each Lender that,
as long as any Facility B Obligations remain unpaid or any Lender has
any obligation to make its Primary Loan Percentage Share of Facility B
Loans hereunder, the Company shall:
6(a) Financial Statements. Furnish or cause to be
furnished directly to the Credit Agent, the Collateral Agent and each
Lender:
(1) Within ninety (90) days after the last day of
each fiscal year of the Parent, consolidated statements of income
and statements of changes in cash flow for such year and a balance
sheet as of the end of such year (including therein as supplemental
information, consolidating statements of income and statements of
changes in cash flow and balance sheets as of the end of such year)
in each case presented fairly in accordance with GAAP and, in the
case of the Company, the requirements of HUD Handbook IG 4000.3 REV
and accompanied, in all cases, by an unqualified report of a firm of
independent certified public accountants acceptable to the Majority
Lenders;
(2) Within forty-five (45) days after the last day
V82380[7083]94 17
<PAGE>
of each calendar month: (i) consolidated and consolidating
statements of income and statements of changes in cash flow of the
Parent and its Subsidiaries for such calendar month and balance
sheets as of the last day of such calendar month presented fairly in
accordance with GAAP, in each case certified in writing as to
fairness of presentation by the chief financial officer or treasurer
of the Company and the Parent, and (ii) a Covenant Compliance
Certificate from the chief financial officer or treasurer of each of
the Company and the Parent, certifying that there does not exist an
Event of Default or Potential Default and, in addition,
demonstrating in detail satisfactory to the Majority Lenders the
Company's compliance with the financial covenants set forth in
Paragraphs 7(h), 7(j), 7(k), 7(l), 7(m), 7(n) and 7(o) below as of
and at the end of such month, and the Parent's compliance with the
financial covenants set forth in Paragraphs 11(d), 11(e), 11(f),
11(g) and 11(h) of the Guaranty, as of and at the end of such month.
(3) As soon as is available any written report per-
taining to material items in respect of the internal control matters
of the Parent or the Company submitted to any of such Persons by
their respective independent accountants in connection with each
annual or interim special audit of the financial condition of such
Persons made by such independent public accountants; and
(4) Copies of all proxy statements, financial state-
ments, and reports which the Parent sends to its stockholders, and
copies of all regular, periodic and special reports, and all
registration statements under the Securities Act of 1933, as amended
(the "Act"), which the Parent or the Company files with the
Securities and Exchange Commission or any governmental authority
which may be substituted therefor, or with any national securities
exchange; provided, however, that there shall not be required to be
delivered hereunder to the Credit Agent such copies for any Lender
of prospectuses relating to future series of offerings under
registration statements filed under Rule 415 of the Act or other
items which such Lender has indicated in writing to the Parent or
the Company from time to time need not be delivered to such Lender.
6(b) Certificates; Reports; Other Information. Furnish or
cause to be furnished directly to the Credit Agent and each Lender:
(1) No later than 6:00 p.m. (Los Angeles time) on
the second Business Day of the first and third full week of each
calendar month (and at such other times as the Majority Lenders,
through the Credit Agent, may reasonably request), a Borrowing Base
Certificate as of the close of business on the last day of the
immediately preceding week;
(2) Within forty-five (45) days after the last
Business Day of each calendar month, prepared as of such last
Business Day and certified by an appropriate officer of the Company,
a report covering the servicing portfolio of the Company, covering
such matters as the Majority Lenders, through the Credit Agent, may
reasonably request (but which shall in any event list the aggregate
V82380[7083]94 18
<PAGE>
principal amount of mortgage notes serviced and the number and types
of loans evidenced by such notes, and show all loans in the
servicing portfolio more than thirty (30) days past due the due
dates set forth in such notes);
(3) Promptly, such additional financial and other
information, including, without limitation, financial statements of
the Company, the Parent, any Affiliate of the Company or the Parent,
or any Approved Investor (other than FNMA or FHLMC) and information
regarding the Collateral as any Lender, through the Credit Agent,
may from time to time reasonably request, including, without
limitation, such information as is necessary for any Lender to
participate out any of its interests in Facility B Loans hereunder
or to enable another financial institution to become a signatory
hereto; and
(4) Promptly upon receipt thereof by the Company,
copies of all audit reports prepared by or on behalf of FNMA, FHLMC
and GNMA.
6(c) Payment of Indebtedness. Pay, discharge or otherwise
satisfy at or before maturity or before it becomes delinquent, defaulted
or accelerated, as the case may be, all its Indebtedness, except:
(1) Indebtedness (other than Indebtedness with respect to CPNs) being
contested in good faith and for which provision is made to the
satisfaction of the Majority Lenders for the payment thereof in the
event the Company is found to be obligated to pay such Indebtedness and
which Indebtedness is thereupon promptly paid by the Company, and
(2) additional Indebtedness (other than Indebtedness with respect to
CPNs) in the aggregate not to exceed $100,000.00.
6(d) Maintenance of Existence and Properties. Maintain
all rights, privileges, licenses, approvals, franchises, properties and
assets necessary or desirable in the normal conduct of its business, and
comply with all Contractual Obligations and Requirements of Law. The
Company will at all times be a FNMA, FHLMC and GNMA-approved Seller/
Servicer and a wholly-owned Subsidiary of the Parent.
6(e) Inspection of Property; Books and Records;
Discussions. Keep proper books of record and account in which full,
true and correct entries in conformity with GAAP and all Requirements of
Law shall be made of all dealings and transactions in relation to its
business and activities, and permit representatives of each Lender (at
no cost or expense to the Company unless there shall have occurred and
be continuing an Event of Default) to visit and inspect any of its prop-
erties and examine and make abstracts from any of its books and records
at any reasonable time and as often as may reasonably be desired by any
of the Lenders, and to discuss the business, operations, properties and
financial and other condition of the Company and any of its Subsidiaries
with officers and employees of such parties, and with their independent
certified public accountants.
6(f) Notices. Promptly give written notice to the Credit
Agent (who shall promptly notify each of the Lenders and the Collateral
Agent thereof) of:
V82380[7083]94 19
<PAGE>
(1) The occurrence of any Potential Default or Event
of Default or a Negative Security Event;
(2) Any litigation or proceeding affecting the Com-
pany, any of its Subsidiaries or the Collateral involving amounts,
in the case of any such individual litigation, investigation or
proceeding, in excess of $5,000,000.00 or which, regardless of the
amount in controversy, is likely to be adversely determined and
which, if adversely determined, could have a material adverse effect
on the Collateral or the business, operations, property, or
financial or other condition of the Company or the ability of the
Company to pay and perform the Obligations;
(3) Receipt by the Company or the Parent of notice
from any rating agency concerning a potential change in any credit
rating previously accorded the Company or the Parent by such rating
agency;
(4) A material adverse change in the business, oper-
ations, property or financial or other condition of the Parent, the
Company or any of their Subsidiaries; and
(5) The Company's entering into any agreement to
sell or pledge servicing rights (other than in connection with the
acquisition financing therefor) which in the aggregate from and
after the date hereof would exceed $2,500,000,000.00 in aggregate
principal amount of the subject mortgage loans.
6(g) Expenses. Pay all reasonable out-of-pocket expenses
(including fees and disbursements of counsel) of the Credit Agent and
the Collateral Agent incident to the preparation, negotiation,
administration and amendment of the Credit Documents and, following the
occurrence of an Event of Default, of the Credit Agent, the Collateral
Agent and each of the Lenders incident to the protection of the rights
of the Lenders, the Credit Agent and the Collateral Agent under the
Credit Documents, and incident to the enforcement of payment of the
Obligations, whether by judicial proceedings or otherwise, including,
without limitation, in connection with bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar proceedings
involving the Parent or the Company or a "workout" of the Obligations.
The obligations of the Company under this Paragraph 6(g) shall be
effective and enforceable whether or not any Loan is advanced by any
Lender hereunder and shall survive payment of all other Obligations.
6(h) Credit Documents. Comply with and observe all terms
and conditions of the Credit Documents.
6(i) Insurance. Obtain and maintain insurance with
responsible companies in such amounts and against such risks as are
usually carried by corporations engaged in similar businesses similarly
situated, including, without limitation, errors and omissions coverage
and fidelity coverage in form and substance acceptable under FNMA or
FHLMC guidelines, and furnish the Lenders on request full information as
to all such insurance.
V82380[7083]94 20
<PAGE>
6(j) CPN Program. Obtain the written approval of the
Majority Lenders to any modification of the documentation relating to
the issuance of CPNs of the Company as in effect on the date of this
Agreement.
7. Negative Covenants. The Company hereby agrees that, as
long as any Facility B Obligations remain unpaid or any Lender has any
obligation to make its Primary Loan Percentage Share of Facility B Loans
hereunder, the Company shall not, directly or indirectly:
7(a) Liens. Create, incur, assume or suffer to exist, any
Lien upon the Collateral except pursuant to or as permitted under the
Security Agreement or create, incur, assume or suffer to exist any Lien
upon any of its other property and assets (including servicing rights)
other than:
(1) Liens or charges for current taxes, assessments
or other governmental charges which are not delinquent or which
remain payable without penalty, or the validity of which are con-
tested in good faith by appropriate proceedings upon stay of execu-
tion of the enforcement thereof, provided the Company shall have set
aside on its books and shall maintain adequate reserves for the
payment of same in conformity with GAAP;
(2) Liens, deposits or pledges made to secure statu-
tory obligations, surety or appeal bonds, or bonds for the release
of attachments or for stay of execution, or to secure the perfor-
mance of bids, tenders, contracts (other than for the payment of
borrowed money), leases or for purposes of like general nature in
the ordinary course of the Company's business; and
(3) Liens securing Indebtedness permitted pursuant
to Paragraphs 7(c)(2) and 7(c)(6) below (but only to the extent such
Indebtedness is otherwise permitted to be secured under the terms of
the Credit Documents) 7(c)(7) below (but only to the extent such
Indebtedness is secured by property in the nature of that referred
to therein), 7(a)(8) below (but only affecting the property referred
to therein) and 7(c)(9) below (but only to the extent expressly
agreed to in writing by the Majority Lenders).
7(b) Mandatory Coverage. Fail to hold Hedge Contracts
covering all closed Mortgage Loans and Mortgage-Backed Securities which
are not covered by a Take-Out Commitment.
7(c) Indebtedness. Create, incur, assume or suffer to
exist, or otherwise become or be liable in respect of any Indebtedness
except:
(1) The Obligations and obligations with respect to
the CPNs;
(2) Indebtedness reflected in the financial state-
ments referred to in Paragraph 5(a) above;
V82380[7083]94 21
<PAGE>
(3) Subordinated Debt;
(4) Trade debt incurred in the ordinary course of
business, payable within thirty (30) days after the same has become
due or which is being contested in good faith, provided provision is
made to the satisfaction of the Majority Lenders for the eventual
payment thereof in the event it is found that such contested trade
debt is payable by the Company;
(5) Indebtedness secured by Liens permitted under
Paragraph 7(a)(1) and (2) above;
(6) Other Indebtedness the documentation for which
does not contain covenants, agreements, terms or conditions more
restrictive than the covenants, agreements, terms and conditions
contained in the Credit Documents; provided, however, that if such
Indebtedness is not a type of Indebtedness existing on the Effective
Date, the aggregate amount thereof shall not exceed $100,000,000.00;
(7) Indebtedness under short term arbitrage lines of
credit, each borrowing under which is secured by certificates of
deposit issued by the lender thereunder, A-1/P-1 commercial paper
issued by domestic U.S. corporations (other than the Company and its
Affiliates) and/or Treasury investments substantially matching said
borrowing in dollar amount and maturity;
(8) Indebtedness in an amount not to exceed
$50,000,000.00 in the aggregate outstanding secured by real property
(including fixtures and the improvements thereon) owned by the
Company; and
(9) Other Indebtedness incurred with the prior
written consent of the Majority Lenders, which will not be
unreasonably withheld.
7(d) Consolidation and Merger. Liquidate or dissolve or
enter into any consolidation, merger, partnership, joint venture,
syndicate or other combination, except that the Company may be
consolidated with or merged with any corporation provided that (1) in
any such merger or consolidation the Company shall be the surviving or
resulting corporation and (2) at the time of and immediately after the
effectiveness of such merger or consolidation there shall not have
occurred and be continuing an Event of Default or Potential Default.
7(e) Acquisitions. Purchase or acquire or incur liability
for the purchase or acquisition of any or all of the assets or business
of any Person other than in the normal course of a mortgage banking-
related business (it being expressly agreed and understood that the
acquisition of servicing is a normal course of business activity).
7(f) Payment of Dividends. Declare or pay any dividends
upon any shares of the Company's stock now or hereafter outstanding,
except dividends payable in the capital stock of the Company, or make
V82380[7083]94 22
<PAGE>
any distribution of assets to its stockholders as such, whether in cash,
property or securities, if at the date of payment or distribution
(either before or after giving effect thereto) there should exist an
Event of Default or Potential Default.
7(g) Purchase or Retirement of Stock. Acquire, purchase,
redeem or retire any shares of its capital stock now or hereafter
outstanding for value.
7(h) Investments; Advances; Receivables. Make or commit
to make any advance, loan or extension of credit ("Advances") to, or
hold any receivable ("Receivable") of, or make or commit to make any
capital contribution to, or purchase any stock, bonds, notes, debentures
or other securities ("Investments") of, or make any other investment in,
any Person, except: (1) Advances constituting Mortgage Loans made in
the ordinary course of the Company's business and (2) Investments in,
Advances to, and Receivables of, any Affiliate (and Servicing Pass-
Through Ventures which are not otherwise Affiliates) not to exceed
$50,000,000.00 in the aggregate.
7(i) Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of any of its assets (other than obsolete or worn out
property), whether now owned or hereafter acquired, other than in the
ordinary course of business as presently conducted and at fair market
value (it being expressly agreed and understood that the sale or other
disposition of Mortgage Loans with or without servicing released and the
sale or other disposition of servicing rights are in the ordinary course
of business); provided, however, that in no event shall the Company
enter into any sale and leaseback transaction involving any of its
assets without the prior written consent of the Majority Lenders; and,
provided further, that the Company may sell, lease, assign, transfer or
otherwise dispose of any of its assets to a Subsidiary of the Company
(which, for the purpose of this proviso shall include any limited
partnership the general and limited partners of which are Subsidiaries
of the Company) so long as: (1) all classes of stock of, or partnership
interests in, such Subsidiary are owned, directly or indirectly, by the
Company, (2) such Subsidiary incurs no obligations for third party
indebtedness except such obligations to employees and vendors as are
necessary or desirable in the normal conduct of the business of
servicing 1-4 unit single family mortgage loans and in managing an
office building owned by such Subsidiary, and (3) any such unpaid
obligations as are described in subsection (2) above (other than payroll
and benefits obligations to employees) shall not exceed at any time
$50,000,000.00 in the aggregate.
7(j) Debt to Adjusted Net Worth Ratio. Permit its ratio
of Total Debt (excluding Indebtedness under repurchase agreements
relating to Mortgage-Backed Securities issued or supported by FNMA,
FHLMC or GNMA) to Adjusted Net Worth to be more than 7.5:1.0 on and as
of the last day of any calendar month.
7(k) Current Ratio. Permit its ratio of Current Assets to
Current Liabilities to be less than 1.05:1.0 on and as of the last day
of any calendar month.
V82380[7083]94 23
<PAGE>
7(l) Minimum Adjusted Net Worth. Permit its Adjusted Net
Worth:
(1) On and as of the last day of any calendar
month during the period commencing on the Effective Date to and
including February 28, 1994, to be less than $712,000,000.00; and
(2) On and as of the last day of any calendar
month thereafter, to be less than the greater of $712,000,000.00
and seventy-five percent (75%) of its Adjusted Net Worth as of
February 28, 1994.
7(m) Minimum Net Worth. Permit its net worth determined
in accordance with GAAP:
(1) On and as of the last day of any calendar
month during the period commencing on the Effective Date to and
including February 28, 1994, to be less than $578,000,000.00; and
(2) On and as of the last day of any calendar
month thereafter, to be less than the greater of $578,000,000.00
and eighty five percent (85%) of its net worth determined in
accordance with GAAP as of February 28, 1994.
7(n) Minimum Inventory and Unencumbered Servicing
Portfolio. Permit on and as of the last day of any calendar month the
sum of:
(1) One percent (1%) of the aggregate outstanding
principal balance of the Company's unencumbered servicing
portfolio with respect to single family residential mortgage
loans (excluding from the aggregate principal balance of
servicing otherwise includable in the calculation hereof:
(i) all Company-owned residential mortgage loans, (ii) all Parent
and Affiliate-owned residential mortgage loans if the right of
the Company to service such mortgage loans is not freely
transferable without the consent of the Parent or such Affiliate,
and (iii) all residential mortgage loans subserviced by the
Company); plus
(2) The Collateral Value of the Borrowing Base
minus the Aggregate Credit Exposure,
to be less than $200,000,000.00.
7(o) Restriction on Refinance Risk Debt. Permit at any
date the aggregate dollar amount of Refinance Risk Debt which will
mature during any calendar quarter occurring during the period from the
Effective Date through the twelfth month following the Facility B
Maturity Date (but excluding Indebtedness issued by the Company incurred
under Master Note Agreements substantially in the form of Exhibit N to
the Glossary) to exceed $100,000,000.00.
V82380[7083]94 24
<PAGE>
8. Events of Default. Upon the occurrence of any of the
following events (an "Event of Default"):
8(a) The Company shall fail to make any payment on account
of that portion of the Obligations consisting of principal or interest
on Loans or L/C Drawings on the date when due; or
8(b) Any representation or warranty made or deemed made by
the Company or the Parent in any Credit Document or in connection with
any Credit Document shall be materially inaccurate or incomplete in any
respect on or as of the date made or deemed made; or
8(c) The Company shall default in the observance or
performance of any covenant or agreement contained in Paragraph 7 above
(other than those contained in Paragraphs 7(j), 7(k), 7(l), 7(m), 7(n)
and 7(o)) or in the Security Agreement; or
8(d) The Parent shall fail to observe or comply with any
term or provision contained in the Guaranty (other than those contained
in Paragraphs 11(d) and 11(e)); or
8(e) The Company or the Parent shall fail to observe or
perform any other term or provision contained in the Credit Documents
and such failure shall continue for thirty (30) days; or
8(f) The Company or any of its Subsidiaries or the Parent
shall default in any payment of any Indebtedness (other than the
Obligations or as permitted under Paragraph 6(c) above) in an aggregate
amount of more than $5,000,000.00 or any other event shall occur, the
effect of which other event is to permit the holder or holders thereof,
or any trustee or agent for such holders, to cause such Indebtedness to
become due and payable prior to its stated maturity; or
8(g) (1) The Parent, the Company or any of its
Subsidiaries shall commence any case, proceeding or other action
(i) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it,
or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (ii) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of its
assets, or the Parent, the Company or any of its Subsidiaries shall make
a general assignment for the benefit of its creditors; or (2) there
shall be commenced against the Parent, the Company or any of its
Subsidiaries any case, proceeding or other action of a nature referred
to in clause (1) above which (i) results in the entry of an order for
relief or any such adjudication or appointment, or (ii) remains
undismissed, undischarged or unbonded for a period of sixty (60) days;
or (3) there shall be commenced against the Parent, the Company or any
of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results
V82380[7083]94 25
<PAGE>
in the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within sixty
(60) days from the entry thereof; or (4) the Parent, the Company or any
of its Subsidiaries shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (1), (2) or (3) above; or (5) the Parent, the
Company or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
8(h) (1) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (2) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or nor waived, shall exist
with respect to any Plan, (3) 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 institution of
proceedings is, in the reasonable opinion of the Credit Agent, likely to
result in the termination of such Plan for purposes of Title IV of
ERISA, and, in the case of a Reportable Event, the continuance of such
Reportable Event unremedied for ten days after notice of such Reportable
Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or the
continuance of such proceedings for ten days after commencement thereof,
as the case may be, (4) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (5) any withdrawal liability to a
Multiemployer Plan shall be incurred by the Company or the Parent or any
Commonly Controlled Entity, or (6) any other event or condition shall
occur or exist; and in each case in clauses (1) through (6) above, such
event or condition, together with all other such events or conditions,
if any, could subject the Parent, the Company or any of its Subsidiaries
to any tax, penalty or other liabilities in the aggregate material in
relation to the business, operations, property or financial or other
condition of the Parent, the Company or any of its Subsidiaries; or
8(i) One or more judgments or decrees in amounts
aggregating $1,000,000.00 or more not fully covered by insurance
(exclusive of self-insurance (not to exceed $5,000,000.00) and
deductibles) during any consecutive twelve (12) month period shall be
entered against the Company or any of its Subsidiaries and all such
judgments or decrees shall not have been vacated, discharged or
satisfied, or stayed or bonded pending appeal, within sixty (60) days
from the entry thereof unless counsel to the Company reasonably
acceptable to the Majority Lenders has delivered to the Lenders within
such sixty (60) day period an opinion that the Company has the legal
right to have such judgment or decree vacated without the expenditure of
funds (other than for costs of proceedings) and the Company is
diligently proceeding to accomplish such vacation; or
8(j) The Parent shall notify the Credit Agent, the
Collateral Agent or any Lender of its intention to rescind or revoke the
Guaranty or the Subordination Agreement, in whole or in part, with
respect to future transactions or otherwise; or
V82380[7083]94 26
<PAGE>
8(k) The Parent shall cease to own one hundred percent
(100%) of the outstanding capital stock of the Company; or
8(l) The Credit Agent or the Collateral Agent receives
notice from the Paying Agent that the Company has failed to cover an
overdraft in the Commercial Paper Account on or before the close of
business of the Paying Agent in New York on the Business Day immediately
following the date on which such overdraft was created;
THEN:
(i) Automatically upon the occurrence of an Event
of Default under Paragraph 8(g) above,
(ii) At the option of any Lender upon the occurrence
of an Event of Default under Paragraph 8(a) above unless such
Event of Default is expressly waived in writing by one hundred
percent (100%) of the Lenders, and
(iii) In all other cases, at the option of the
Majority Lenders,
each Lender's obligation to make Facility B Loans shall terminate, the
principal balance of outstanding Facility B Loans and interest accrued
but unpaid thereon and all other Facility B Obligations shall become
immediately due and payable without demand upon or notice or presentment
to the Company, all of which are hereby waived. Immediately upon the
occurrence of an Event of Default and termination of the obligation of
the Lenders to make Facility B Loans, the Credit Agent shall notify the
Paying Agent thereof and is hereby irrevocably authorized to instruct
the Paying Agent to cease issuing CPNs on behalf of the Company.
Following the occurrence and during the continuance of an Event of
Default, the Company agrees that the Company and the Credit Agent shall,
at the request of the Majority Lenders, implement certain procedures
with respect to the Company's funding of Wet Funded Loans, all at the
Company's sole expense. Such procedures may include, but are not
limited to: a. reducing the advance rate against Wet Funded Loans for
purposes of determining the Collateral Value of the Borrowing Base for
Wet Funded Loans, b. requiring that if: (1) Wet Funded Loans are funded
with wire transfers, such wire transfers originate from accounts located
at a lending office of a Lender, (2) Wet Funded Loans are funded with
drafts, such drafts be drawn on accounts located at a lending office of
a Lender, and (3) Wet Funded Loans are funded from accounts which are
not located at a lending office of a Lender, the financial institution
which holds such account enter into an agreement with the Company and
the Credit Agent which shall provide that the Credit Agent shall have
exclusive dominion and control over the funds in such account,
c. requiring the closing agents for such Wet Funded Loans to enter into
escrow or other agreements regarding the monies used to fund such Wet
Funded Loans, and d. requiring the Company to provide the Credit Agent
and the Lenders with such information regarding the funding of Wet
Funded Loans as the Majority Lenders may reasonably request. The
Company, at its expense, shall from time to time execute and deliver to
the Credit Agent all such assignments, certificates, supplemental
V82380[7083]94 27
<PAGE>
documents, and financing statements, and shall do all other acts or
things, as the Credit Agent may reasonably request in order to more
fully implement such procedures.
9. Agency Provisions.
9(a) Appointment. Each Lender hereby irrevocably
designates and appoints each Agent as the agent of such Lender under the
Credit Documents and each Lender hereby irrevocably authorizes each
Agent, as the agent for such Lender, to take such action on its behalf
under the provisions of the Credit Documents and to exercise such powers
and perform such duties as are expressly delegated to such Agent by the
terms of the Credit Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in the Credit Documents, no Agent shall have any
duties or responsibilities, except those expressly set forth herein or
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Credit Documents or otherwise exist
against any Agent.
9(b) Delegation of Duties. Each of the Collateral Agent
and the Credit Agent may execute any of its duties under the Credit
Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such
duties. Neither the Collateral Agent nor the Credit Agent shall be
responsible for the negligence or misconduct of any agents or attorneys-
in-fact selected by it with reasonable care.
9(c) Exculpatory Provisions. No Agent nor any of their
respective officers, directors, employees, agents, counsel, attorneys-
in-fact or Affiliates shall be (1) liable to any Lender, any other
Agent, the holder of any CPN or the Company for any action taken or
omitted to be taken by it or such Person under or in connection with the
Credit Documents (except for its or such Person's own gross negligence
or willful misconduct), or (2) responsible in any manner to any of the
Lenders, the other Agent, the holder of any CPN or the Company for:
(i) any recitals, statements, representations or warranties made by the
Company or any officer thereof contained in the Credit Documents or in
any certificate, report, statement or other document referred to or
provided for in, or received by such Agent under or in connection with,
the Credit Documents (except such as are prepared by such Agent and,
then, only to the extent such Agent is responsible for verification of
the accuracy and completeness of the information contained therein or
the facts upon which such information is based as expressly provided
herein) or for the value, validity, effectiveness, genuineness,
enforceability, collectability or sufficiency of the Credit Documents or
for any failure of the Company to perform its obligations thereunder or
(ii) any action taken or omitted to be taken by the Collateral Agent
with respect to the Collateral in accordance with written instructions
given as permitted hereunder or (iii) assuring compliance of the Credit
Documents and/or the transactions contemplated by the Credit Documents
with any law or regulation binding on such Person, it being expressly
acknowledged, agreed and understood that each such Person has obtained
V82380[7083]94 28
<PAGE>
independent advice satisfactory to it in all such respects. No Agent
shall be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained
in, or conditions of, the Credit Documents (other than agreements
required to be complied with by such Agent thereunder and subject to the
standards of care set forth herein with respect thereto) or to inspect
the properties, books or records of the Company. Each Agent shall be
entitled to refrain from exercising any discretionary powers or actions
under this Agreement or any other Credit Document until it shall have
received the prior written consent of one hundred percent (100%) of the
Lenders to such action.
9(d) Reliance by Agent. Each Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certification, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Company), independent accountants and
other experts selected by such Agent. The Credit Agent may deem and
treat the payee of any Facility B Loan Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Credit Agent. Each Agent shall
be fully justified in failing or refusing to take any action under the
Credit Documents unless it shall first receive such advice or
concurrence of the Majority Lenders (or all Lenders, as required under
the Credit Documents) or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take
any action (other than liability and/or expense arising out of such
Agent's gross negligence or willful misconduct). Each Agent shall in
all cases be fully protected in acting, or in refraining from acting,
under the Credit Documents in accordance with a request of the Majority
Lenders (or all Lenders, if applicable) absent gross negligence and
willful misconduct on the part of such Agent in the method in which it
acts or refrains from acting in accordance therewith, and such request
and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders.
9(e) Notice of Default; Agreement to Advance. No Agent
shall be deemed to have knowledge or notice of the occurrence of any
Event of Default or Potential Default unless such Agent has received
notice from a Lender or the Company referring to the Credit Documents,
describing such Event of Default or Potential Default and stating that
such notice is a "notice of default". In the event that any Agent
receives such a notice, such Agent shall give notice thereof to the
Lenders and the other Agent. The Collateral Agent shall take such
action with respect to such Event of Default or Potential Default as
shall be reasonably directed by the Majority Lenders (or all Lenders, as
required under the Credit Documents), through the Credit Agent (subject
to the provisions of Paragraph 18 of the Security Agreement); provided,
however, that unless and until the Collateral Agent shall have received
such directions, the Collateral Agent may (but shall not be obligated
V82380[7083]94 29
<PAGE>
to) take such action or refrain from taking such action (in each case
consistent with the provisions of the Credit Documents), with respect to
such Event of Default or Potential Default as it shall deem advisable in
the best interest of the Lenders.
9(f) Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that no Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by such
Agent hereafter taken, including any review of the affairs of the
Company, shall be deemed to constitute any representation or warranty by
such Agent to any Lender. Each Lender represents to each Agent that it
has, independently and without reliance upon such Agent or any other
Lender or their respective counsel, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and
other condition and creditworthiness of the Company and made its own
decision to extend credit hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance
upon any Agent or any other Lender, and based on such documents,
information and legal advice (including, without limitation, advice of
regulatory counsel to it) as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in
entering into the Credit Documents and taking or not taking action
thereunder, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and
other condition and creditworthiness of the Company. Except for
notices, reports and other documents expressly required to be furnished
to the Lenders by an Agent hereunder, such Agent shall not have any duty
or responsibility to provide any Lender with any legal advice or credit
or other information concerning the business, operations, property,
financial and other condition or creditworthiness of the Company which
may come into the possession of such Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
9(g) Indemnification. The Company agrees to indemnify,
defend and hold harmless each Agent in its capacity as such from and
against any and all claims, obligations, penalties, actions, suits,
judgments, costs, disbursements, losses, liabilities and/or damages
(including, without limitation, attorneys' fees) of any kind whatsoever
which may at any time be imposed on, assessed against or incurred by
such Agent in any way (1) relating to or arising out of the Credit
Documents or any documents contemplated by or referred to therein or the
transactions contemplated thereby or any action taken or omitted to be
taken by such Agent in connection with the foregoing; provided, the
Company shall not be liable for any portion of any such claims,
obligations, etc., arising out of or resulting from the gross negligence
or willful misconduct of such Agent or (2) resulting from any action
taken or omitted to be taken by such Agent in accordance with written
instructions given as provided in the Credit Documents or (3) relating
to any one or more of the matters covered by Paragraph 9(c) above. The
Lenders agree to indemnify and hold harmless each Agent in its capacity
as such ratably in accordance with their Aggregate Percentage Shares to
the extent required by the Company hereunder if any Agent is not
V82380[7083]94 30
<PAGE>
reimbursed by the Company hereunder and without limiting the obligation
of the Company to do so. The indemnification obligations of the Company
and Lenders under this Paragraph 9(g) shall survive termination of this
Agreement and payment in full of the Obligations.
9(h) Agent in Its Individual Capacity. Any Agent and its
Affiliates may make loans to, accept deposits from and generally engage
in any kind of business with the Company as though such Agent were not
an Agent hereunder. With respect to such loans made or renewed by them
and any note issued to them hereunder, each Agent shall have the same
rights and powers under the Credit Documents as any Lender hereunder and
may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include Agents in their individual
capacities.
9(i) Successor Agents. Any Agent may resign as such under
the Credit Documents upon ninety (90) days' prior written notice to the
Lenders and the Company and shall resign in the event its Aggregate
Maximum Commitment shall be less than $10,000,000.00. In addition, in
the event any Agent fails to perform its obligations under the Credit
Documents in any material manner and fails to correct its performance
within thirty (30) days of written notice of such failure of performance
given by not less than the Majority Lenders, then such Agent may be
removed upon thirty (30) days notice given by not less than the Majority
Lenders. If an Agent shall resign or be so removed, then, on or before
the effective date of such resignation or removal, the Majority Lenders
shall appoint a successor agent reasonably acceptable to the Company or,
if the Majority Lenders are unable to agree on the appointment of a
successor agent, such Agent shall appoint a successor agent for the
Lenders, which successor agent shall be reasonably acceptable to the
Company, whereupon such successor agent shall succeed to the rights,
powers and duties of such Agent, and the term "Collateral Agent" or
"Credit Agent", as applicable, shall mean such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties
shall be terminated without any other or further act or deed on the part
of such former Agent or any of the parties to this Agreement or any of
the other Credit Documents or successors thereto. After any Agent's
resignation or removal hereunder, the provisions of this Paragraph 9(i)
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under the Credit Documents.
9(j) Sharing of Set-Offs. If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of the
Facility B Obligations held by it or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off or otherwise)
in a greater proportion than any such payment to and collateral received
by any other Lender, if any, in respect of such other Lender's portion
of the Facility B Obligations, or interest thereon (except as expressly
permitted under Paragraph 8 of the Security Agreement), such benefitted
Lender shall purchase for cash from the other Lenders such portion of
each such other Lender's Facility B Obligations, or shall provide such
other Lenders with the benefits of such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably
V82380[7083]94 31
<PAGE>
with each of the Lenders; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery but without
interest. The Company agrees that each Lender so purchasing a portion
of another Lender's Facility B Obligations may exercise all rights of
payment (including, without limitation, rights of set-off) with respect
to such portion as fully as if such Lender were the direct holder of
such portion.
10. Miscellaneous Provisions.
10(a) No Assignment. The Company may not assign its
rights or obligations under the Credit Documents without the prior
written consent of one hundred percent (100%) of the Lenders. Subject
to the foregoing, all provisions contained in this Agreement or any
document or agreement referred to herein or relating hereto shall inure
to the benefit of each Lender, its successors and assigns, and shall be
binding upon the Company, its successors and assigns.
10(b) Amendment. The Credit Documents may not be amended
or terms or provisions hereof waived unless such amendment or waiver is
in writing and signed by the Majority Lenders and the Company; provided,
however, that without the prior written consent of one hundred percent
(100%) of the Lenders, no amendment or waiver shall:
(1) Waive or amend any term or provision of
Paragraphs 1(g), 1(h) or 1(i) above or this Paragraph 10(b);
(2) Reduce the principal of, or interest on, the
Facility B Obligations or any amount of fees payable under this
Agreement, or extend the required payment date of principal or
interest on the Facility B Obligations or any fees;
(3) Modify the Facility B Loan Credit Limit or any
Lender's Primary Loan Percentage Share thereof; provided, however,
that the Company and any Lender, acting alone, may agree to an
increase, temporary or permanent, in such Lender's Maximum Primary
Loan Commitment with an effect on the Aggregate Credit Limit as a
result of such increase (and if such increase was a temporary
increase, eventual decrease);
(4) Modify the definition of "Majority Lenders" or
the definition of "Negative Security Event";
(5) Extend the Facility B Maturity Date;
(6) Include any Person other than the Lenders
signatory hereto as a "Lender" hereunder except as expressly
permitted under Paragraph 11(a) below;
(7) Release any Collateral except as expressly
provided in the Credit Documents;
V82380[7083]94 32
<PAGE>
(8) Cancel or terminate the Guaranty; or
(9) Modify any provision in the Credit Documents
which expressly requires consent of one hundred percent (100%) of
the Lenders.
No amendment or waiver shall, unless agreed to in writing by the
affected Agent, modify the rights or duties of such Agent.
10(c) Cumulative Rights; No Waiver. The rights, powers
and remedies of the Lenders hereunder are cumulative and in addition to
all rights, powers and remedies provided under any and all agreements
between the Company and the Lenders relating hereto, at law, in equity
or otherwise. Any delay or failure by the Lenders to exercise any
right, power or remedy shall not constitute a waiver thereof by the
Lenders, and no single or partial exercise by the Lenders of any right,
power or remedy shall preclude any other or further exercise thereof or
any exercise of any other rights, powers or remedies.
10(d) Entire Agreement; Severability. This Agreement and
the documents and agreements referred to herein embody the entire
agreement and understanding between the parties hereto and supersede all
prior agreements and understandings relating to the subject matter
hereof and thereof. All waivers by the Company provided for in the
Credit Documents have been specifically negotiated by the parties with
full cognizance and understanding of their rights. If any of the
provisions of the Credit Documents shall be held invalid or
unenforceable, the Credit Documents shall be construed as if not
containing such provisions, and the rights and obligations of the
parties hereto shall be construed and enforced accordingly.
10(e) Survival. All representations, warranties,
covenants and agreements herein contained on the part of the Company
shall survive the termination of this Agreement and shall be effective
until the Facility B Obligations are paid and performed in full or
longer as expressly provided herein.
10(f) Notices. All notices given by any party to any of
the others shall be in writing, delivered personally, by commercial
courier service or by depositing the same in the United States mail,
registered, with postage prepaid, addressed to the party at the address
set forth on Annex II attached hereto. Any party may change the address
to which notices are to be sent by notice of such change to the other
party or parties given as provided herein.
10(g) Governing Law. This Agreement shall be deemed to be
a contract made under the laws of the State of California, and for all
purposes shall be construed in accordance with the laws of said State,
without regard to principles of conflicts of law.
10(h) Counterparts. This Agreement may be executed in
counterparts each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and
the same agreement.
V82380[7083]94 33
<PAGE>
11. Additional Lenders; Assignments and Participations;
Increases in Availability.
11(a) Addition of New Lender.
(1) Subject to the limitation on the Aggregate
Credit Limit and the Facility B Loan Credit Limit, the Company or
any Lender may at any time propose that one or more financial
institutions (each, an "Applicant Financial Institution") become an
additional Lender hereunder; provided, however, that such Applicant
Financial Institution must agree to become concurrently a "Lender"
under the Facility A Agreement. At such time, the Company or such
Lender, as applicable, shall notify the other parties hereto,
including the Credit Agent, of the identity of such Applicant
Financial Institution and such Applicant Financial Institution's
proposed Aggregate Maximum Commitment, Primary Loan Percentage
Share, Maximum Primary Loan Commitment and, if applicable, L/C
Commitment and/or GNMA Pool Advance Commitment. The addition of any
Applicant Financial Institution shall be subject to:
(i) If such Applicant Financial Institution is
proposed for inclusion as a Lender hereunder by a Lender, the
prior written consent of the Company and the Credit Agent, and
if such Applicant Financial Institution is proposed for
inclusion as a Lender hereunder by the Company, the prior
written consent of the Credit Agent, none of which consents
shall be unreasonably withheld and which, if given, shall be
given in writing to the other parties hereto no later than the
tenth day following receipt by the Company of a written request
for the inclusion of such Applicant Financial Institution as a
Lender hereunder;
(ii) If such Applicant Financial Institution
will become the GNMA Pool Advance Lender and/or a L/C Issuing
Lender, such Applicant Financial Institution shall execute a
replacement GNMA Pool Advance Agreement and cooperate with the
current GNMA Pool Advance Lender and any other L/C Issuing
Lenders to effect such intent; and
(iii) Delivery of each of the items and the
occurrence of each of the events described in subparagraph (2)
below.
(2) Assuming delivery of the consent of the Company
and/or Credit Agent as required pursuant to subparagraph (1)(i)
above, the Credit Agent, the Collateral Agent, the Company and, if
such Applicant Financial Institution will be acquiring a portion of
an existing Lender's Aggregate Maximum Commitment and Maximum
Primary Loan Commitment by way of assignment from such existing
Lender, such existing Lender, shall mutually agree on the Adjustment
V82380[7083]94 34
<PAGE>
Date on which such Applicant Financial Institution shall become a
party hereto and a Lender hereunder. On such Adjustment Date:
(i) The Company shall deliver to the Credit
Agent, the Collateral Agent and each of the Lenders a
Commitment Schedule to be effective as of such Adjustment Date,
reflecting the Aggregate Credit Limit and the Lenders'
respective Aggregate Maximum Commitments, Primary Loan
Percentage Shares, Maximum Primary Loan Commitments and, if
applicable, L/C Commitment and GNMA Pool Advance Commitment.
(ii) No later than 12:30 p.m. (Los Angeles time)
on such Adjustment Date, such Applicant Financial Institution
shall pay to the Credit Agent an amount equal to such Applicant
Financial Institution's Primary Loan Percentage Share of
Facility A Primary Loans and Facility B Loans outstanding. The
Credit Agent shall thereupon remit to the Lenders their Primary
Loan Percentage Shares of such funds. Following such
Adjustment Date, fees and interest accrued on the Obligations
to but not including such Adjustment Date shall be payable to
the Lenders in accordance with their respective Primary Loan
Percentage Shares prior to such Adjustment Date before giving
effect to the readjustment thereof pursuant to the Commitment
Schedule provided by the Company on such Adjustment Date.
(iii) If such Applicant Financial Institution is
acquiring a portion of an existing Lender's Aggregate Maximum
Commitment and Maximum Primary Loan Commitment by way of
assignment from such existing Lender, the Credit Agent, the
Company, the assigning Lender and the Applicant Financial
Institution shall execute and deliver an Assignment Agreement,
or if such Applicant Financial Institution is becoming a Lender
hereunder as a result of an increase in the Aggregate Credit
Limit, the Credit Agent, the Company and the Applicant
Financial Institution shall execute and deliver an Additional
Lender Agreement, either of which Assignment Agreement or
Additional Lender Agreement shall constitute an amendment to
this Agreement to the extent necessary to reflect the inclusion
of the Applicant Financial Institution as a Lender hereunder.
(iv) The Company shall execute and deliver to
such Applicant Financial Institution a Facility A Direct Loan
Note, a Facility A Discount Loan Note, a Negotiated Loan Note
and a Facility B Loan Note and, if applicable, a GNMA Pool
Advance Note.
(v) The Applicant Financial Institution shall
pay to the Credit Agent a registration fee of $2,500.00 (said
fee covering the admission of the Applicant Financial
Institution into both this Agreement and the Facility A
Agreement).
Subject to the requirements described above, the Applicant Financial
Institution shall become a party hereto and a Lender hereunder and
V82380[7083]94 35
<PAGE>
under the Facility A Agreement and shall be entitled to all rights,
benefits and privileges accorded a Lender under the Credit Documents
and shall be subject to all obligations of a Lender under the Credit
Documents.
11(b) Assignments Among Existing Lenders. Any Lender may
at any time agree to assign a portion of such Lender's Aggregate Maximum
Commitment and Maximum Primary Loan Commitment to a Transferee Lender.
In such event the Lender and the Transferee Lender shall so notify the
Credit Agent, the Collateral Agent and the Company of the Adjustment
Date on which such assignment is to be effective. On such Adjustment
Date:
(1) The Company shall deliver to the Credit Agent,
the Collateral Agent and each of the Lenders a Commitment Schedule
to be effective as of such Adjustment Date, reflecting the Aggregate
Credit Limit and the Lenders' respective Aggregate Maximum
Commitments, Primary Loan Percentage Shares, and, if applicable, L/C
Commitment and GNMA Pool Advance Commitment.
(2) The Credit Agent, the Company, the assigning
Lender and the Transferee Lender shall execute and deliver an
Assignment Agreement which shall constitute an amendment to this
Agreement to the extent necessary to reflect such transfer.
(3) No later than 12:30 p.m. (Los Angeles time) on
such Adjustment Date, the Transferee Lender shall pay to the Credit
Agent an amount equal to such Transferee Lender's Primary Loan
Percentage Share of Facility A Primary Loans and Facility B Loans
outstanding in excess of such Transferee Lender's previous Primary
Loan Percentage Share thereof. The Credit Agent shall thereupon
remit to the transferring Lender the amount thereof.
(4) If the Transferee Lender will become the GNMA
Pool Advance Lender and/or a L/C Issuing Lender, such Transferee
Lender shall execute a replacement GNMA Pool Advance Agreement and
cooperate with the current GNMA Pool Advance Lender and any other
L/C Issuing Lender to effect such intent.
11(c) Minimum Loan Commitment. Notwithstanding anything
to the contrary contained herein, the inclusion of any Applicant
Financial Institution as a Lender hereunder pursuant to Paragraph 11(a)
above and the assignment by a Lender of a portion of such Lender's
Aggregate Maximum Commitment and Maximum Primary Loan Commitment to a
Transferee Lender pursuant to Paragraph 11(b) above shall be subject to
the following restrictions:
(1) If an Applicant Financial Institution is
acquiring a portion of an existing Lender's Aggregate Maximum
Commitment by way of an assignment from such existing Lender, then,
subject to the provisions of subparagraphs (2) and (3) below, such
assignment of Aggregate Maximum Commitment must be in the minimum
amount of $35,000,000 (or if in a higher amount, in integral
multiples of $5,000,000.00 in excess thereof) and such existing
V82380[7083]94 36
<PAGE>
Lender must continue to hold an Aggregate Maximum Commitment of not
less than $35,000,000.00 following the consummation of the
contemplated assignment;
(2) If an Applicant Financial Institution is
acquiring a portion of a Managing Co-Agent's or a Co-Agent's
Aggregate Maximum Commitment by way of assignment from such Managing
Co-Agent or Co-Agent and the assignment is the initial assignment
made by such Managing Co-Agent or Co-Agent pursuant to the Credit
Documents, such assignment of Aggregate Maximum Commitment may be in
the minimum amount of $25,000,000.00 (or if in a higher amount, in
integral multiples of $5,000,000.00 in excess thereof); provided,
however, that such Applicant Financial Institution will not be
permitted to make assignments of its Aggregate Maximum Commitment
thereafter unless and until its Aggregate Maximum Commitment shall
have been increased such that any further assignment will meet the
requirements of subparagraph (1) above; and
(3) If an existing Lender is assigning a portion of
its Aggregate Maximum Commitment to a Transferee Lender, such
assignment of Aggregate Maximum Commitment is in the minimum amount
of $35,000,000.00 (or if in a higher amount, in integral multiples
of $5,000,000.00 in excess thereof) and such existing Lender shall
continue to hold an Aggregate Maximum Commitment of not less than
$35,000,000.00 following the consummation of the contemplated
assignment.
11(d) Sub-Participations by Lenders. Any Lender may at
any time sell participating interests in any of the Obligations held by
such Lender and its commitments hereunder; provided, however, that:
(1) No participation contemplated by this
Paragraph 11(d) shall relieve such Lender from its obligations
hereunder or under any other Credit Document;
(2) Such Lender shall remain solely responsible
for the performance of such obligations;
(3) The Company, the Credit Agent, the Collateral
Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights
and obligations under the Credit Documents;
(4) The participation agreement between such
Lender and the Person purchasing such participation interest (a
"Participant") shall provide that: (i) the participation interest
of the Participant is an undivided interest in such Lender's
Aggregate Maximum Commitment and is pro rata between the
Facility A Agreement and this Agreement, and (ii) the sole voting
rights of the Participant are with respect to those items on which
such Lender is entitled to vote pursuant to Paragraphs 10(b)(2),
10(b)(5), 10(b)(7) and 10(b)(8) above; and
V82380[7083]94 37
<PAGE>
(5) Such Lender shall not enter into participation
agreements with more than two Participants for each $25,000,000.00
of Aggregate Maximum Commitment held by such Lender.
The Company acknowledges and agrees that each Participant shall be
considered a Lender for purposes of Paragraphs 1(g), 1(h), 1(i) and 2(k)
above; provided, however, that in no event shall any Participant be
entitled to receive any payment or compensation in excess of that to
which such Participant's selling Lender would be entitled with respect
to the participation interest held by such Participant if such Lender
had not sold any participation interest to such Participant.
11(e) Federal Reserve Bank. Notwithstanding the
provisions of Paragraphs 11(a) and 11(b) above, any Lender may at any
time pledge or assign all or any portion of such Lender's rights under
this Agreement and the other Credit Documents to a Federal Reserve Bank.
11(f) Increases in Availability. From time to time the
Company and any Lender (an "Increasing Lender") may agree, with the
prior written consent of the Credit Agent, to permanently or temporarily
increase such Lender's Aggregate Maximum Commitment and Primary Loan
Percentage Share, the dollar amount of any such increase to be, subject
to the Aggregate Credit Limit limitation, in the minimum dollar amount
of $5,000,000.00 and integral multiples of $5,000,000.00 in excess
thereof. The Company and the Increasing Lender shall agree on the
Adjustment Date for said increase and, if the increase is a temporary
rather than permanent increase, the date on which said increase shall
terminate (the "Temporary Increase Termination Date"). The Company
shall deliver to the Credit Agent, the Collateral Agent and each of the
Lenders a Commitment Schedule to be effective as of such Adjustment
Date. On the Temporary Increase Termination Date the aggregate amount
of such Increasing Lender's Primary Loan Percentage Share of outstanding
Facility A Primary Loans and Facility B Loans held by the Increasing
Lender in excess of its Maximum Primary Loan Commitment after giving
effect to the termination of the subject increase shall, if but only if
at such Temporary Increase Termination Date there does not exist an
Event of Default, be payable in full. If at the Temporary Increase
Termination Date there exists an Event of Default, the temporary
increase of the Increasing Lender shall continue in effect and, unless
otherwise agreed by one hundred percent (100%) of the Lenders, shall be
treated thereafter as a permanent increase in said Increasing Lender's
Aggregate Maximum Commitment.
11(g) Provision of Information; Confidentiality. The
Company hereby acknowledges and agrees that in connection with the
proposed assignment or subparticipation by a Lender of its interest in
the Obligations, such Lender may disclose to prospective assignees and
Participants any and all information provided to such Lender hereunder;
provided, however, that such information shall be furnished to such
prospective assignees and Participants on a confidential basis.
V82380[7083]94 38
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
COUNTRYWIDE FUNDING CORPORATION,
a New York corporation
By _____________________________
Name ___________________________
Title __________________________
THE FIRST NATIONAL BANK OF CHICAGO,
a national banking association,
as Credit Agent
By ___________________________________
Name _________________________________
Title ________________________________
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, a Delaware corporation,
as Collateral Agent
By ___________________________________
Name _________________________________
Title ________________________________
ABN AMRO BANK N.V.,
LOS ANGELES INTERNATIONAL BRANCH,
as a Managing Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
V82380[7083]94 39
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Managing
Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE BANK OF NEW YORK, as a Managing
Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE CHASE MANHATTAN BANK, N.A., as a
Managing Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
CREDIT LYONNAIS SAN FRANCISCO BRANCH,
as a Managing Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE FIRST NATIONAL BANK OF CHICAGO, as
a Managing Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
V82380[7083]94 40
<PAGE>
NATIONSBANK OF TEXAS, N.A., as a
Managing Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
BANKERS TRUST COMPANY, as a Co-Agent
and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
CANADIAN IMPERIAL BANK OF COMMERCE, as
a Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
CITICORP USA, INC., as a Co-Agent and
a Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY, as a
Co-Agent and a Lender
By ___________________________________
Name _________________________________
Title ________________________________
V82380[7083]94 41
<PAGE>
BANK OF MONTREAL, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
BANK ONE, TEXAS, N.A., as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
BANQUE NATIONALE DE PARIS,
LOS ANGELES AGENCY, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
BANQUE PARIBAS, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
V82380[7083]94 42
<PAGE>
COMMERZBANK AKTIENGESELLSCHAFT
GRAND CAYMAN BRANCH, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
DG BANK, DEUTSCHE GENOSSENSCHAFTSBANK,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
DRESDNER BANK AG, LOS ANGELES AGENCY,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
V82380[7083]94 43
<PAGE>
FIRST INTERSTATE BANK OF CALIFORNIA,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
THE FUJI BANK, LIMITED, LOS ANGELES
AGENCY, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
V82380[7083]94 44
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
LOS ANGELES AGENCY, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
KREDIETBANK N.V., as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
NATIONAL WESTMINSTER BANK USA,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
PNC BANK, NATIONAL ASSOCIATION, as a
Lender
By ___________________________________
Name _________________________________
Title ________________________________
V82380[7083]94 45
<PAGE>
THE SAKURA BANK, LTD., LOS ANGELES
AGENCY, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
THE SANWA BANK, LIMITED, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
SHAWMUT BANK, N.A., as a Lender
By: __________________________________
Name _________________________________
Title ________________________________
SOCIETE GENERALE, NEW YORK BRANCH, as
a Lender
By ___________________________________
Name _________________________________
Title ________________________________
V82380[7083]94 46
<PAGE>
UNION BANK OF SWITZERLAND, as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
By ___________________________________
Name _________________________________
Title ________________________________
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH/CAYMAN ISLANDS BRANCH,
as a Lender
By ___________________________________
Name _________________________________
Title ________________________________
ACKNOWLEDGED and AGREED as of the
date first written above:
COUNTRYWIDE CREDIT INDUSTRIES,
INC., a Delaware corporation
By ________________________________
Name ______________________________
Title _____________________________
V82380[7083]94 47
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT DOCUMENT
A Form of Facility B Loan Note
B Form of Officer's Certificate
C Litigation Schedule
D Schedule of Existing Subsidiaries
Annex I: Glossary
Annex II: Schedule of Notice Addresses
<PAGE>
ANNEX I: GLOSSARY
For purposes of the Credit Documents (as defined herein), the
terms set forth below shall have the following meanings:
"Additional Lender Agreement" shall mean an agreement in the
form of that attached hereto as Exhibit A-1.
"Additional Required Documents" shall mean with respect to any
Mortgage Loan those items listed on Exhibit B attached hereto.
"Adjusted Net Worth" shall mean, at any date, the sum of:
(a) Tangible Net Worth, plus (b) one percent (1%) of the aggregate
outstanding principal balance of all single family (1 to 4 family)
residential mortgage loans in the Company's servicing portfolio,
excluding, however, for purposes of such calculation: (1) all
residential mortgage loans the servicing rights to which are subject to
a Lien (other than any Lien in favor of the Collateral Agent and the
Lenders under the Security Agreement and Liens securing Indebtedness of
the Company under Independent Servicing Secured Facilities other than
that portion of such servicing portfolio subject to such Lien in excess
of 100 times the related facility amount), and (2) all residential
mortgage loans subserviced by the Company.
"Adjustment Date" shall mean that date as of which an Applicant
Financial Institution becomes a "Lender" or an existing Lender takes a
portion of another existing Lender's Aggregate Maximum Commitment under
the Credit Documents, as provided therein.
"Affiliate" shall mean any Person directly or indirectly
controlling, controlled by or under direct or indirect common control
with, any other Person and, in any event in the case of the Company,
shall include Countrywide Mortgage Investments, Inc. "Control" as used
herein means the power to direct the management and policies of a
Person.
"Agents" shall mean, jointly and severally, the Collateral
Agent and the Credit Agent.
"Aggregate Credit Exposure" shall mean on any date the sum of
(a) Facility A Loans outstanding, (b) Facility B Loans outstanding,
(c) the amount available for drawing under Outstanding Letters of
Credit, (d) unrepaid L/C Drawings, (e) the GNMA Pool Advance Commitment,
(f) Verified Outstanding CPNs and (g) outstanding Funding Checks, in
each case calculated after giving effect to all Credit Events and the
issuance of CPNs to occur on such date.
"Aggregate Credit Limit" shall mean at any date the sum (not to
exceed $3,000,000,000.00) of the Facility A Primary Loan Credit Limit,
V11584[07083]94 1
<PAGE>
the Swing Loan Commitment, the Facility B Loan Credit Limit, the
aggregate L/C Commitments and the GNMA Pool Advance Commitment, with the
"Aggregate Credit Limit" as of November 15, 1993 being
$2,800,000.000.00.
"Aggregate Maximum Commitment" shall mean for any Lender at any
date such Lender's Maximum Primary Loan Commitment plus, if applicable,
for FNBC the Swing Loan Commitment, for the GNMA Pool Advance Lender the
GNMA Pool Advance Commitment and for each L/C Issuing Lender its L/C
Commitment.
"Aggregate Percentage Share" shall mean for any Lender at any
date that percentage which the dollar amount of such Lender's Aggregate
Maximum Commitment bears to the Aggregate Credit Limit or, if such
Lender shall have no Aggregate Maximum Commitment, that percentage
which: (a) the aggregate dollar amount of outstanding Loans held by
such Lender plus, if applicable, the aggregate dollar amount of
outstanding GNMA Pool Advance Loans held by such Lender plus, if
applicable, the contingent liability of such Lender under Outstanding
Letters of Credit plus, if applicable, the aggregate dollar amount of
unrepaid L/C Drawings relating to Letters of Credit issued by such
Lender, bears to (b) the aggregate dollar amount of outstanding Loans,
plus the aggregate dollar amount of outstanding GNMA Pool Advance Loans,
plus the aggregate dollar amount of Outstanding Letters of Credit, plus
the aggregate dollar amount of unrepaid L/C Drawings.
"Aggregate Primary Loan Credit Limit" shall mean at any date
the sum (not to exceed $2,695,000,000.00) of the Facility A Primary Loan
Credit Limit and the Facility B Loan Credit Limit.
"Alternate Base Rate" shall mean on any date the greater of:
(a) the Federal Funds Rate plus one half of one percent (0.50%), and (b)
the Corporate Base Rate.
"Alternate Base Rate Loans" shall mean Direct Loans, Swing
Loans and Facility B Loans during such time as they are being made
and/or maintained at a rate of interest based upon the Alternate Base
Rate.
"Applicable Eurodollar Rate" shall mean with respect to any
Eurodollar Interest Period or Discount Loan Interest Period, the rate
per annum (rounded upward, if necessary, to the next higher one one
hundredth of one percent (.01%)) calculated in accordance with the
following formula:
Applicable Eurodollar Rate = ER + PS
1-RR
where
ER = Eurodollar Rate
RR = Reserve Requirement
PS = Pricing Spread
V11584[07083]94 2
<PAGE>
"Applicable Valuation Factor" shall mean at any date the
weighted average purchase price, expressed as a percentage, of all
Eligible Mortgage Loans and Eligible Mortgage-Backed Securities included
in the computation of the Collateral Value of the Borrowing Base at such
date based upon:
(a) With respect to FHA-insured and VA-guaranteed
Mortgage Loans bearing interest at a fixed rate per annum, the Telerate
purchase price (stated as a percentage of principal amount) for one
month mandatory forward delivery commitments of GNMA I Mortgage-Backed
Securities having an interest rate equal to the average interest rate on
all such Mortgage Loans less one-half of one percent (0.50%); provided,
however, that in the absence of a quoted purchase price for GNMA I
Mortgage-Backed Securities having such an interest rate, reference shall
be made to the nearest lower rate GNMA Mortgage-Backed Securities for
which a purchase price is quoted;
(b) With respect to Eligible Mortgage Loans bearing
interest at a fixed rate per annum which conform to all FNMA or FHLMC
underwriting and other requirements, the Telerate purchase price (stated
as a percentage of principal amount) for one month mandatory forward
delivery commitments of similar conforming Mortgage Loans having an
interest rate equal to the average interest rate on all such Mortgage
Loans less one half of one percent (0.50%); provided, however, that in
the absence of a quoted purchase price for Mortgage Loans having such an
interest rate, reference shall be made to Mortgage Loans having the
nearest lower rate for which a purchase price is quoted;
(c) With respect to Eligible Mortgage Loans bearing
interest at a fixed rate per annum which conform to all FNMA or FHLMC
underwriting and other requirements except as to acceptable original
principal balance, the Telerate purchase price (stated as a percentage
of principal amount) for one month mandatory forward delivery
commitments of similar Mortgage Loans having an interest rate equal to
the average interest rate on all such Mortgage Loans less one percent
(1%); provided, however, that in the absence of a quoted purchase price
for such Mortgage Loans having such an interest rate, reference shall be
made to Mortgage Loans having the nearest lower rate for which a
purchase price is quoted;
(d) With respect to Eligible Mortgage Loans bearing
interest at a fixed rate per annum and secured by multi-family
improvements, the actual purchase prices under the related, pre-approved
Take-Out Commitments;
(e) With respect to Eligible Mortgage Loans which do not
bear interest at a fixed rate per annum and which conform to all
underwriting and other requirements of FNMA or FHLMC, or are otherwise
deliverable to FNMA, (1) one hundred (100), minus (2) the sum of:
(i) double the amount by which (y) the Telerate yield requirement quoted
on Page 7163 of Telerate (Fannie Mae ARM Yields/Net Margins for Par --
V11584[07083]94 3
<PAGE>
1-yr. 6%/2% Caps) for two month mandatory forward delivery commitments
of Mortgage Loans, exceeds (z) the note rate for such Mortgage Loans,
less (ii) .375%;
(f) With respect to Eligible Mortgage Loans which do not
bear interest at a fixed rate per annum and which conform to all
underwriting and other requirements of FNMA or FHLMC, or are otherwise
deliverable to FNMA, except as to acceptable original principal balance,
and the note rate for such Eligible Mortgage Loan is indexed off the
one-year Treasury rate:
(1) The 30-day mandatory delivery price for
1-year treasury adjustable rate mortgages quoted on Page
23082 of Telerate (RFC - OTC ARMS), plus
(2) The product of: a. the initial note rate,
less the sum of: (y) the "net rate", plus (z) .50%, and
b. the applicable "discount formula", plus
(3) The product of: a. 2.25% less the
appropriate "net margin," and b. the applicable "discount
formula";
(g) With respect to Eligible Mortgage Loans which do not
bear interest at a fixed rate per annum and which conform to all
underwriting and other requirements of FNMA or FHLMC, or are otherwise
deliverable to FNMA, except as to acceptable original principal balance,
but the note rate of such Eligible Mortgage Loan is not indexed off the
one-year Treasury rate, ninety percent (90%); and
(h) With respect to each Eligible Mortgage-Backed
Security, the purchase price for one month mandatory forward delivery
commitments of such Mortgage-Backed Security determined with reference
to the Telerate or, if no price is so quoted on the Telerate, the
average purchase price quoted by two nationally recognized dealers in
Mortgage-Backed Securities for one month forward mandatory delivery
thereof.
Notwithstanding the provisions of subparagraphs (f) and (g) above, until
such time as the Collateral Agent has notified the Lenders that it has
developed a system for accurately differentiating between Eligible
Mortgage Loans the "Fair Market Value" for which would otherwise be
determined under such subparagraphs, the respective Fair Market Values
of all such Eligible Mortgage Loans shall be determined pursuant to
subparagraph (g) above. In any case in which no price is quoted on the
Telerate, the purchase price shall be deemed to be that quoted for
similar Mortgage Loans and Mortgage-Backed Securities by any nationally
recognized reporting service for similar information acceptable to the
Collateral Agent and the Credit Agent.
V11584[07083]94 4
<PAGE>
"Applicant Financial Institution" shall mean a financial
institution proposed for inclusion as a "Lender" under the Credit
Documents by the Company or by an existing Lender thereunder.
"Approved Investor" shall mean: (a) FNMA, FHLMC or any other
Person, including, without limitation, Affiliates of the Company, pre-
approved in writing (which pre-approval may be limited in dollar amount,
by Type and otherwise) by the Majority Lenders and which approval has
not been revoked by the Majority Lenders in their sole discretion, any
such revocation notice to be given no later than ten (10) days prior to
its intended effective date, and (b) with the prior written approval of
the Collateral Agent and the Credit Agent (with notice thereof provided
to the Lenders), such other Person as the Company may propose; provided,
however, that at any date Mortgage Loans and Mortgage-Backed Securities
included in the Borrowing Base covered by a Take-Out Commitment issued
by an "Approved Investor" which is not an "Approved Investor" under
subparagraph (a) of the definition thereof may not have an aggregate
Collateral Value in excess of $100,000,000.00.
"Approved MBS Custodian" shall have the meaning given such term
in Paragraph 9(b)(2)(iii) of the Security Agreement.
"Approved Securities Offering" shall mean a proposed offering
of securities by the Company or an Affiliate of the Company secured or
otherwise supported in whole or part by Eligible Mortgage Loans and/or
Eligible Mortgage-Backed Securities, for which the following statements
are true, unless otherwise waived in writing by the Majority Lenders:
(a) The Company or the Affiliate, as applicable, has
filed and made effective a registration statement with the Securities
and Exchange Commission covering the offering of the proposed
securities;
(b) The Company or the Affiliate, as applicable, has
obtained all permits, exemptions, and licenses necessary to effect the
offering;
(c) The offering has been priced and is the subject
of a firm underwriting commitment;
(d) Such securities qualify as "mortgage-related
securities" under Section 3(a)(41) of the Securities Exchange Act of
1934, as amended; and
(e) In the reasonably anticipated course of events,
the Company or the Affiliate, as applicable, is expected to obtain a
rating in one of the two highest categories available for securities of
a like nature from the rating agency rating the securities.
"Assignment Agreement" shall mean an agreement in the form of
Exhibit A-2 attached hereto.
V11584[07083]94 5
<PAGE>
"Balance Bank" shall mean each of the Lenders which have
executed a Balance Bank Agreement with the Company and the Credit Agent,
said Lenders being thereupon designated as a "Balance Bank" on the
current Commitment Schedule.
"Balance Bank Agreement" shall mean an agreement in the form of
Exhibit C attached hereto among the Company, the Credit Agent and each
Balance Bank.
"Balance Bank Discount" shall mean with respect to each
Facility A Primary Loan which is a Discount Loan, an amount determined
by the Credit Agent with respect to such Discount Loan such that, when
the principal amount of such Discount Loan is repaid by the Company on
the last day of the Discount Loan Interest Period with respect thereto,
such principal amount will be equivalent to the proceeds of such
Discount Loan (net of the Balance Bank Discount) plus interest on such
proceeds calculated at a per annum rate equal to the Pricing Spread.
"Borrowing Base" shall mean at any date all Eligible Mortgage
Loans and Eligible Mortgage-Backed Securities which have been designated
by the Company for inclusion in the computation of the Collateral Value
of the Borrowing Base, the Required Documents for which have been
delivered to the Collateral Agent and have been reviewed and verified by
the Collateral Agent as provided in Paragraph 5 of the Security
Agreement (or, to the extent the Company is permitted to utilize
Collateral Confirmation Agreements in connection with the delivery of
Mortgage Loans to the Collateral Agent, which Mortgage Loans have been
so designated on a duly executed Collateral Confirmation Agreement).
"Borrowing Base Certificate" shall mean a certificate in the
form of that attached hereto as Exhibit D.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in Los Angeles, California, New York, New
York or Chicago, Illinois are authorized to close.
"Cash Market Position Valuation" shall have the meaning given
to such term in the definition of "Cash Position."
"Cash Position" shall mean at any date the "Cash Market
Position Valuation", which "Cash Market Position Valuation" shall
represent with respect to Take-Out Commitments and Hedge Contracts held
by the Company available to cover Mortgage Loans and Mortgage-Backed
Securities included in the computation of the Collateral Value of the
Borrowing Base on such date (and assuming that such Take-Out Commitments
and Hedge Contracts are first allocated to cover all other Mortgage
Loans and Mortgage-Backed Securities owned by the Company), the
commitment prices under such Take-Out Commitments and Hedge Contracts
less the fair market value of the applicable security.
V11584[07083]94 6
<PAGE>
"Check Funding Account" shall mean Account No. 12350-90007
maintained in the Company's name alone with Bank of America National
Trust and Savings Association at its office at 444 South Garey Avenue,
Pomona, California 91766.
"Co-Agent" shall mean each Lender with an Initial Bid
Commitment from $125,000,000.00 to but not including $150,000,000.00.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall have the meaning set forth in the Security
Agreement.
"Collateral Agent" shall mean First Chicago National Processing
Corporation and any successors assuming the position of "Collateral
Agent" under the Security Agreement and the other Credit Documents.
"Collateral Confirmation Agreement" shall mean an agreement in
the form of Exhibit E attached hereto.
"Collateral Value of the Borrowing Base" shall mean on any date
ninety-eight percent (98%) of the sum of:
(a) The Fair Market Value of each Eligible Mortgage Loan
and each Eligible Mortgage-Backed Security included in the Borrowing
Base on such date, plus
(b) The Cash Position on such date, plus
(c) The aggregate dollar amount of cash held in the
Settlement Account on such date which has been identified by the Company
to the Collateral Agent as representing the proceeds from the sale or
other disposition of specific Eligible Mortgage Loans and/or Eligible
Mortgage-Backed Securities which have therefore been deleted from the
Borrowing Base.
"Commercial Paper Account" shall mean the account described as
such in the Depositary Agreement.
"Commitment Schedule" shall mean a schedule setting forth the
current Aggregate Credit Limit, Aggregate Primary Loan Credit Limit,
Facility A Primary Loan Credit Limit, Swing Loan Commitment, Facility B
Loan Credit Limit, Aggregate Maximum Commitments, Maximum Primary Loan
Commitments, Primary Loan Percentage Shares, L/C Commitments and GNMA
Pool Advance Commitment, as applicable, of the Lenders, as the same may
be modified from time to time consistent with the Credit Documents, with
the initial Commitment Schedule being attached hereto as Schedule I.
V11584[07083]94 7
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"Commonly Controlled Entity" of a Person shall mean a Person,
whether or not incorporated, which is under common control with such
Person within the meaning of Section 414(c) of the Code.
"Consolidated Total Debt" shall mean all Indebtedness of the
Parent and the Company, excluding: (a) Subordinated Debt of the Parent,
(b) Subordinated Debt of the Company, and (c) deferred taxes of the
Company attributable to capitalization of purchased servicing rights and
excess servicing fees.
"Contact Office" shall mean the office of the Credit Agent
located at One First National Plaza, Suite 0098, Chicago, Illinois,
60670-0098.
"Contractual Obligation" as to any Person shall mean any
provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which it
or any of its property is bound.
"Corporate Base Rate" shall mean a rate per annum equal to the
corporate base rate of interest publicly announced by FNBC from time to
time, changing when and as of the date said corporate base rate changes.
"Covenant Compliance Certificate" shall mean: (a) with respect
to the Company, a certificate in the form of Exhibit F-1 attached
hereto, and (b) with respect to the Parent, a certificate in the form of
Exhibit F-2 attached hereto.
"CPN" shall mean a commercial paper note issued by the Company
pursuant to documentation approved by the Majority Lenders as required
by the Credit Documents.
"CPN Issuance Request" shall mean a request in the form of that
attached hereto as Exhibit G.
"Credit Agent" shall mean FNBC and any successors assuming the
position of "Credit Agent" under the Credit Documents.
"Credit Documents" shall mean the Facility A Agreement, the
Facility B Agreement, the Security Agreement, the Notes, the Guaranty,
the Subordination Agreement, the Fee Letter, the Balance Bank Agreements
and each other document, instrument or agreement executed by the Company
or the Parent in connection herewith or therewith, as any of the same
may be amended, extended or replaced from time to time, and with
reference to any individual "Credit Document" being deemed automatically
to be a reference to such Credit Document as so amended, extended or
replaced.
"Credit Event" shall mean the making of a Loan or a GNMA Pool
Advance Loan or the issuance of a Letter of Credit pursuant to the
Facility A Agreement or the Facility B Agreement, as applicable.
V11584[07083]94 8
<PAGE>
"Current Assets" shall mean at any date cash, government
securities, mortgage inventory, prepaid expenses, accounts receivable
and mortgage receivables which are payable within one year of the date
of calculation and determined in accordance with GAAP and shall include
in any event deferred commitment fees.
"Current Liabilities" shall mean at any date amounts payable in
money, goods or services, within one year of the date of calculation and
determined in accordance with GAAP; provided, however, that "Current
Liabilities", when determined with respect to the Company, shall
include, in any event, Single and Double Level Subordinated Parent Debt
constituting an advance from the Parent to the Company from funds of the
Parent derived by the Parent from Indebtedness of the Parent which
constitutes a "current liability" of the Parent, determined in
accordance with GAAP.
"Current Refinance Risk Debt Exposure" shall mean on any date
the difference (if a positive number) between: (a) the aggregate dollar
amount of Refinance Risk Debt which will mature (or as to which demand
may be made by the holder thereof for payment) within the one hundred
twenty (120) day period from (and including) the date of determination
of "Current Refinance Risk Debt Exposure", minus (b) the aggregate
amount available to be advanced under all Independent Servicing Secured
Facilities on the date of determination of "Current Refinance Risk Debt
Exposure."
"Custodial Agreement" shall mean an agreement substantially in
the form of that attached hereto as Exhibit H.
"Custodian Settlement Account" shall have the meaning given
such term in Paragraph 9(c) of the Security Agreement.
"Delivery Certificate" shall have the meaning given such term
in Paragraph 5 of the Security Agreement.
"Depositary Agreement" shall mean an issuing and paying
agreement with the Paying Agent governing the authentication and
issuance of CPNs, which agreement shall be substantially in the form of
that attached hereto as Exhibit I.
"Determination of Availability" shall have the meaning given
such term in Paragraph 7 of the Security Agreement.
"Direct Loan" shall mean a Facility A Primary Loan which is
interest bearing and as to which each Lender advances its Primary Loan
Percentage Share directly to the Company.
"Discount Loan" shall mean a Facility A Primary Loan which is
funded on a discounted basis by a Balance Bank with a concurrent sale to
the Lenders of their Primary Loan Percentage Share thereof.
V11584[07083]94 9
<PAGE>
"Discount Loan Funding Date" shall have the meaning given such
term in Paragraph 2(b)(1) of the Facility A Agreement.
"Discount Loan Interest Period" shall mean with respect to each
Discount Loan, the period commencing on the Discount Loan Funding Date
for such Discount Loan and ending on the twentieth day (if the Discount
Loan Funding Date was the twenty-first day of the immediately preceding
month) or fifth day (if the Discount Loan Funding Date was the sixth day
of the immediately preceding month) of the next succeeding calendar
month; provided, however, that (a) if any Discount Loan Interest Period
would otherwise end on a day that is not a Eurodollar Business Day, such
Discount Loan Interest Period shall be extended to the next succeeding
Eurodollar Business Day, and (b) any Discount Loan Interest Period that
would otherwise extend beyond the Facility A Maturity Date shall end on
the Facility A Maturity Date.
"Double Level Subordinated Parent Debt" shall mean Indebtedness
of the Company to the Parent which is subject to the Subordination
Agreement and which constituted an advance from the Parent to the
Company or investment by the Parent in the Company from funds of the
Parent obtained through Subordinated Parent Borrowings.
"Effective Date" shall mean the date each of the conditions set
forth in Paragraph 7(a) of the Facility A Agreement and Paragraph 4(a)
of the Facility B Agreement is satisfied.
"Eligible Committed Conforming Mortgage Loan" shall mean a
Mortgage Loan with respect to which each of the following is accurate
and complete (and the Company by including said Mortgage Loan in any
computation of the Collateral Value of the Borrowing Base shall be
deemed to so represent and warrant to the Credit Agent, the Collateral
Agent and the Lenders at and as of the date of such computation):
(a) Said Mortgage Loan is an Eligible Mortgage Loan;
(b) Said Mortgage Loan is insured by the FHA, guaranteed
by the VA and/or fully conforms to all underwriting and other
requirements of FNMA or FHLMC;
(c) If said Mortgage Loan is not secured by a first
priority deed of trust (or mortgage), said Mortgage Loan is secured by a
second priority deed of trust (or mortgage) and the Fair Market Value of
said Mortgage Loan when added to the Fair Market Value of all other
Eligible Mortgage Loans which are secured by second priority deeds of
trust (or mortgages) does not exceed $150,000,000.00; provided, however,
that no Mortgage Loan secured by a second priority deed of trust shall
be included in any computation of the Collateral Value of the Borrowing
Base until a methodology for determining the Fair Market Value of said
Mortgage Loan has been agreed to in writing among the Credit Agent, the
Collateral Agent, the Company and the Majority Lenders; and
V11584[07083]94 10
<PAGE>
(d) Said Mortgage Loan is covered by a Take-Out
Commitment.
"Eligible Committed Non-Conforming Mortgage Loan" shall mean a
Mortgage Loan with respect to which each of the following are accurate
and complete (and the Company by including said Mortgage Loan in any
computation of the Collateral Value of the Borrowing Base shall be
deemed to so represent and warrant to the Credit Agent, the Collateral
Agent and the Lenders at and as of the date of such computation):
(a) Said Mortgage Loan is an Eligible Mortgage Loan;
(b) Said Mortgage Loan is covered by a Take-Out
Commitment;
(c) Said Mortgage Loan conforms to the underwriting and
other requirements of FNMA or FHLMC in all material respects except as
to acceptable original principal balance;
(d) Said Mortgage Loan is secured by a first priority
deed of trust (or mortgage);
(e) The original principal balance of said Mortgage Loan
did not exceed $1,000,000.00; provided, however, that if the original
principal balance of said Mortgage Loan exceeded $600,000.00, the Fair
Market Value of said Mortgage Loan when added to the Fair Market Value
of all other Eligible Committed Non-Conforming Mortgage Loans with an
original principal balance of more than $600,000.00 included in the
Borrowing Base does not exceed five percent (5%) of the Aggregate Credit
Limit; and
(f) The Fair Market Value of said Mortgage Loan when
added to the Fair Market Value of all other Eligible Committed Non-
Conforming Mortgage Loans and all Eligible Uncommitted Non-Conforming
Mortgage Loans included in the Borrowing Base does not exceed fifty
percent (50%) of the Aggregate Credit Limit.
"Eligible Mortgage-Backed Security" shall mean a Mortgage-
Backed Security owned or issued by the Company meeting the terms of
subparagraph (a) or (b) of the definition of a "Mortgage-Backed
Security" with respect to which the following statements shall be
accurate and complete (and the Company by including said Mortgage-Backed
Security in any computation of the Collateral Value of the Borrowing
Base shall be deemed to so represent and warrant to the Credit Agent,
the Collateral Agent and the Lenders at and as of the date of such
computation):
(a) Said Mortgage-Backed Security is a binding and valid
obligation of the obligor thereon, in full force and effect and
enforceable in accordance with its terms;
V11584[07083]94 11
<PAGE>
(b) Said Mortgage-Backed Security is free of any default
and from any rescission, cancellation or avoidance, and all right
thereof, whether by operation of law or otherwise;
(c) Said Mortgage-Backed Security has either been
deposited with and is held by the Collateral Agent under the Security
Agreement or an Approved MBS Custodian under a Custodial Agreement,
properly endorsed in blank for transfer or, if uncertificated, the
Collateral Agent or Approved MBS Custodian has caused an appropriate
notation to be made on the records of the appropriate Federal Reserve
Bank or such other records as is necessary to perfect the Lien of the
Collateral Agent for the benefit of the Secured Parties, therein; or, if
said Mortgage-Backed Security has been withdrawn from the possession of
the Collateral Agent on terms and subject to conditions set forth in the
Security Agreement, and if said Mortgage-Backed Security was shipped by
the Collateral Agent directly to a permanent investor for purchase, the
full purchase price therefor has been received by the Credit Agent (or
said Mortgage-Backed Security returned to the Collateral Agent) within
ten (10) days from the date of shipment by the Collateral Agent;
(d) At all times said Mortgage-Backed Security will be
free and clear of all liens, encumbrances, charges, rights and interests
of any kind, except in favor of the Collateral Agent for the benefit of
the Secured Parties;
(e) Said Mortgage-Backed Security has not been included
in the Borrowing Base for a period of time in excess of one hundred
eighty (180) days and, if said Mortgage-Backed Security has been
included in the Borrowing Base for a period of time in excess of ninety
(90) days, the Fair Market Value of said Mortgage-Backed Security when
added to the Fair Market Value of all other Mortgage-Backed Securities
and Mortgage Loans included in the Borrowing Base for a period of time
in excess of ninety (90) days, does not exceed $100,000,000.00;
(f) Said Mortgage-Backed Security is covered by a Take-
Out Commitment or Hedge Contract which is in full force and effect and
the Company and, in the case of the Take-Out Commitment, the Mortgage-
Backed Security are in full compliance therewith; and
(g) The Collateral Agent, upon the written request of the
Majority Lenders given through the Credit Agent at any time and from
time to time, in their sole discretion, has not declared said Mortgage-
Backed Security for whatever reason, to be ineligible for inclusion in
the Borrowing Base.
"Eligible Mortgage Loan" shall mean a Mortgage Loan conforming
to the requirements of one Type of Mortgage Loan with respect to which
each of the following statements shall be accurate and complete (and the
Company by including said Mortgage Loan in any computation of the
Collateral Value of the Borrowing Base shall be deemed to so represent
V11584[07083]94 12
<PAGE>
and warrant to the Credit Agent, the Collateral Agent and the Lenders at
and as of the date of such computation):
(a) Said Mortgage Loan is a binding and valid obligation
of the Obligor thereon, in full force and effect and enforceable in
accordance with its terms;
(b) Said Mortgage Loan is genuine, in all respects as
appearing on its face or as represented in the books and records of the
Company, and all information set forth therein is true and correct, and
the proceeds of said Mortgage Loan have been fully disbursed (or will be
fully disbursed upon the closing and recordation thereof);
(c) Said Mortgage Loan is free of any default of any
party thereto (including the Company), counterclaims, offsets and
defenses and from any rescission, cancellation or avoidance, and all
right thereof, whether by operation of law or otherwise;
(d) No payment under said Mortgage Loan is more than
sixty (60) days past due the payment due date set forth in the
underlying promissory note and deed of trust (or mortgage);
(e) Said Mortgage Loan contains the entire agreement of
the parties thereto with respect to the subject matter thereof, has not
been modified or amended in any respect and is free of concessions or
understandings with the Obligor thereon of any kind not expressed in
writing therein;
(f) Said Mortgage Loan is in all respects as required by
and in accordance with all applicable laws and regulations governing the
same, including, without limitation, the federal Consumer Credit
Protection Act and the regulations promulgated thereunder and all
applicable usury laws and restrictions, and all notices, disclosures and
other statements or information required by law or regulation to be
given, and any other act required by law or regulation to be performed,
in connection with said Mortgage Loan have been given and performed as
required;
(g) All advance payments and other deposits on said
Mortgage Loan have been paid in cash, and no part of said sums has been
loaned, directly or indirectly, by the Company to the Obligor thereon,
and other than as disclosed to the Collateral Agent in writing there
have been no prepayments on said Mortgage Loan;
(h) At all times said Mortgage Loan (with the exception
of the subject Property) will be owned by the Company free and clear of
all liens, encumbrances, charges, rights and interests of any kind,
except pursuant to the Security Agreement;
(i) The Property covered by said Mortgage Loan is insured
against loss or damage by fire and all other hazards normally included
V11584[07083]94 13
<PAGE>
within standard extended coverage in accordance with the provisions of
said Mortgage Loan with the Company named as loss payee thereon;
(j) The Property covered by said Mortgage Loan is free
and clear of all Liens except in favor of the Company (which has
assigned any and all such Liens to the Collateral Agent for the benefit
of the Secured Parties), subject only to Liens junior, subordinate and
inferior to the Lien of the Company and (1) the Lien of current real
property taxes and assessments not yet due and payable; (2) covenants,
conditions and restrictions, rights of way, easements and other matters
of the public record, as of the date of recording, being acceptable to
mortgage lending institutions generally and specifically referred to in
a lender's title insurance policy delivered to the originator of said
Mortgage Loan and (i) referred to or otherwise considered in the
appraisal made for the originator of said Mortgage Loan or (ii) which do
not materially adversely affect the appraised value of the Property as
set forth in such appraisal; (3) other matters to which like properties
are commonly subject which do not materially interfere with the benefits
of the security intended to be provided by said Mortgage Loan or the
use, enjoyment, value or marketability of the related Property; and
(4) if but only if said Mortgage Loan is an Eligible Committed
Conforming Mortgage Loan, a single prior deed of trust (or mortgage);
(k) If said Mortgage Loan has been withdrawn from the
possession of the Collateral Agent on terms and subject to conditions
set forth in the Security Agreement:
(1) If said Mortgage Loan was withdrawn by the
Company for purposes of correcting clerical or other non-substantial
documentation problems, the promissory note relating to said
Mortgage Loan was returned to the Collateral Agent within ten (10)
days from the date of withdrawal of said Mortgage Loan and the Fair
Market Value of said Mortgage Loan when added to the Fair Market
Value of all other Mortgage Loans included in the Borrowing Base
which have been similarly released to the Company does not exceed
$1,000,000.00;
(2) If said Mortgage Loan was shipped by the
Collateral Agent directly to a permanent investor for purchase, the
full purchase price therefor has been received by the Credit Agent
(or said Mortgage Loan returned to the Collateral Agent) within
forty five (45) days from the date of shipment by the Collateral
Agent (or, if said Mortgage Loan is being purchased in connection
with a bond program, within sixty (60) days from the date of
shipment by the Collateral Agent); and
(3) If said Mortgage Loan was shipped by the
Collateral Agent directly to a custodian or trustee for purposes of
formation of a pool supporting a Mortgage-Backed Security, (i) such
Mortgage-Backed Security is issued and sold and the purchase price
therefor has been received by the Credit Agent, (ii) such Mortgage-
V11584[07083]94 14
<PAGE>
Backed Security is held by an Approved MBS Custodian for the pro
rata, pari passu benefit of the Secured Parties, or (iii) said
Mortgage Loan is returned to the Collateral Agent, in each case
within sixty (60) days from the date of shipment by the Collateral
Agent;
(l) Unless said Mortgage Loan is an Eligible Uncommitted
Conforming Mortgage Loan or an Eligible Uncommitted Non-Conforming
Mortgage Loan, said Mortgage Loan is covered by a Take-Out Commitment
which is in full force and effect and the Company and said Mortgage Loan
are in full compliance therewith;
(m) If said Mortgage Loan is an Eligible Uncommitted
Conforming Mortgage Loan or an Eligible Uncommitted Non-Conforming
Mortgage Loan, said Mortgage Loan is hedged pursuant to a Hedge
Contract;
(n) The date of the promissory note relating to said
Mortgage Loan is no earlier than ninety (90) days prior to the date said
Mortgage Loan is first included in the Borrowing Base; provided,
however, that said Mortgage Loan may constitute an Eligible Mortgage
Loan notwithstanding that the date of the promissory note is earlier
than ninety (90) days prior to the date said Mortgage Loan is first
included in the Borrowing Base if, but only if, the Fair Market Value of
said Mortgage Loan when added to the Fair Market Value of all other
Mortgage Loans with such earlier dates included in the Borrowing Base
does not exceed $75,000,000.00;
(o) If said Mortgage Loan is FHA insured or VA
guaranteed, such insurance or guaranty is in full force and effect (or
there is in effect a binding commitment to issue such insurance or
guaranty);
(p) The Property securing said Mortgage Loan is located
in the continental United States, Alaska or Hawaii;
(q) If the improvements on the Property do not consist of
a one-to-four family residence, said Mortgage Loan is includable in the
Borrowing Base as an Eligible Committed Conforming Mortgage Loan, the
Approved Investor holding the related Take-Out Commitment has pre-
approved said Mortgage Loan in writing with a copy of such pre-approval
having been provided to the Collateral Agent and the Fair Market Value
of said Mortgage Loan when added to the Fair Market Value of all other
similar Mortgage Loans included in the Borrowing Base does not exceed
$25,000,000.00;
(r) The Required Documents for said Mortgage Loan have
been delivered to the Collateral Agent prior to the inclusion of said
Mortgage Loan in the Borrowing Base and, if the Collateral Agent has so
requested in writing, the Additional Required Documents have also been
delivered to the Collateral Agent; provided, however, that even if such
V11584[07083]94 15
<PAGE>
items have not been so delivered to the Collateral Agent, said Mortgage
Loan may still qualify as an "Eligible Mortgage Loan" if:
(1) The Collateral Agent has received a Collateral
Confirmation Agreement relating to said Mortgage Loan at or prior to
10:00 a.m. (Los Angeles time) on the date said Mortgage Loan is
first included in the Borrowing Base,
(2) Such items are delivered to the Collateral Agent
within seven (7) calendar days after said Mortgage Loan is first
included in the Borrowing Base, and
(3) The Fair Market Value of said Mortgage Loan,
when added to the sum of: (i) the Fair Market Value of all other
closed and recorded Mortgage Loans for which the Collateral Agent
has not received the Required Documents, plus (ii) the Fair Market
Value of all Mortgage Loans included in the Borrowing Base which are
not closed and recorded and for which the Collateral Agent has not
received such items, does not exceed: a. thirty-five percent (35%)
of the Aggregate Credit Limit during the period from the fifth
Business Day immediately preceding the end of each calendar month
through the fifth Business Day of the next succeeding month, or
b. twenty percent (20%) of the Aggregate Credit Limit at any other
date;
(s) Said Mortgage Loan is not subject to any servicing
arrangement with any Person other than the Company nor are any servicing
rights relating to said Mortgage Loan subject to any Lien or negative
pledge in favor of any Person other than as permitted under the Credit
Documents;
(t) Said Mortgage Loan has not been included in the
Borrowing Base for a period of time in excess of one hundred eighty
(180) days and, if said Mortgage Loan has been included in the Borrowing
Base for a period of time in excess of ninety (90) days, the Fair Market
Value of said Mortgage Loan, when added to the Fair Market Value of all
other Mortgage Loans and Mortgage-Backed Securities included in the
Borrowing Base for a period of time in excess of ninety (90) days, does
not exceed $100,000,000.00;
(u) The appraisal obtained by the Company in connection
with the origination of said Mortgage Loan satisfies all appraisal
requirements for similar loans originated by federally insured
depositary institutions;
(v) The Collateral Agent, upon the written request of the
Majority Lenders, given at any time and from time to time, in their sole
discretion, has not declared said Mortgage Loan, for whatever reason, to
be ineligible for inclusion in the Borrowing Base; and
V11584[07083]94 16
<PAGE>
(w) If said Mortgage Loan was not closed and recorded at
the date said Mortgage Loan was first included in the Borrowing Base:
(1) said Mortgage Loan was closed and recorded no later than the second
Business Day immediately following the date first included in the
Borrowing Base, and (2) the Fair Market Value of said Mortgage Loan when
added to the sum of: (i) the Fair Market Value of all other Mortgage
Loans included in the Borrowing Base which are not closed and recorded,
plus (ii) the Fair Market Value of all Mortgage Loans which are closed
and recorded but for which the Collateral Agent has not received the
Required Documents, does not exceed: a. thirty-five percent (35%) of the
Aggregate Credit Limit during the period from the fifth Business Day
immediately preceding the end of each calendar month through the fifth
Business Day of the next succeeding month; or b. twenty percent (20%) of
the Aggregate Credit Limit at any other date.
In determining the eligibility of any Mortgage Loan, any of the
requirements for eligibility (other than the requirements contained in
subparagraphs (h), (i), (l) and (o) above) may be waived by the
Collateral Agent (with the consent of the Credit Agent), with notice of
such waiver to be given to all Lenders in the next collateral report
provided to the Lenders pursuant to Paragraph 11(b) of the Security
Agreement (if such waiver is in force on the date of such collateral
report); provided, however, that any Mortgage Loan which is accepted by
the Collateral Agent as an Eligible Mortgage Loan pursuant to such
waiver (an "Eligible Waiver Mortgage Loan") shall cease to be an
Eligible Waiver Mortgage Loan upon written notice of the retraction of
such waiver given to the Company by the Collateral Agent or the Majority
Lenders (through the Collateral Agent) unless at the time of giving such
notice the deficiency which originally required such waiver has been
cured and such Eligible Waiver Mortgage Loan meets all other
requirements for an Eligible Mortgage Loan; and, provided further, that
the Fair Market Value of any Mortgage Loan accepted as an Eligible
Waiver Mortgage Loan, when added to the Fair Market Values of all other
Eligible Waiver Mortgage Loans included in the computation of the
Collateral Value of the Borrowing Base at any date, shall not exceed
$25,000,000.00.
"Eligible Uncommitted Conforming Mortgage Loan" shall mean a
Mortgage Loan with respect to which each of the following are accurate
and complete (and the Company by including said Mortgage Loan in any
computation of the Collateral Value of the Borrowing Base shall be
deemed to so represent and warrant to the Credit Agent, the Collateral
Agent and the Lenders at and as of the date of such computation):
(a) Said Mortgage Loan is an Eligible Mortgage Loan;
(b) Said Mortgage Loan is insured by the FHA, guaranteed
by the VA and/or fully conforms to all underwriting and other
requirements of FNMA or FHLMC;
V11584[07083]94 17
<PAGE>
(c) Said Mortgage Loan is secured by a first priority
deed of trust (or mortgage); and
(d) The Fair Market Value of said Mortgage Loan when
added to the Fair Market Value of all other Eligible Uncommitted
Conforming Mortgage Loans and all Eligible Uncommitted Non-Conforming
Mortgage Loans included in the Borrowing Base does not exceed
$150,000,000.00.
"Eligible Uncommitted Non-Conforming Mortgage Loan" shall mean
a Mortgage Loan with respect to which each of the following are accurate
and complete (and the Company by including said Mortgage Loan in any
computation of the Collateral Value of the Borrowing Base shall be
deemed to so represent and warrant to the Credit Agent, the Collateral
Agent and the Lenders at and as of the date of such computation):
(a) Said Mortgage Loan is an Eligible Mortgage Loan;
(b) Said Mortgage Loan conforms to the underwriting and
other requirements of FNMA or FHLMC in all material respects except as
to acceptable original principal balance;
(c) Said Mortgage Loan is secured by a first priority
deed of trust (or mortgage);
(d) The original principal balance of said Mortgage Loan
did not exceed $600,000.00;
(e) The Fair Market Value of said Mortgage Loan when
added to the Fair Market Value of all other Eligible Uncommitted Non-
Conforming Mortgage Loans included in the Borrowing Base does not exceed
$100,000,000.00;
(f) The Fair Market Value of said Mortgage Loan when
added to the Fair Market Value of all other Eligible Uncommitted Non-
Conforming Mortgage Loans and all Eligible Committed Non-Conforming
Mortgage Loans included in the Borrowing Base does not exceed fifty
percent (50%) of the Aggregate Credit Limit; and
(g) The Fair Market Value of said Mortgage Loan when
added to the Fair Market Value of all other Eligible Uncommitted Non-
Conforming Mortgage Loans and all Eligible Uncommitted Conforming
Mortgage Loans included in the Borrowing Base does not exceed
$150,000,000.00.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may from time to time be supplemented or amended.
"Eurodollar Business Day" shall mean a Business Day upon which
commercial banks in London, England are open for domestic and
international business.
V11584[07083]94 18
<PAGE>
"Eurodollar Interest Period" shall mean the period of time
commencing on the date as of which the Company has elected certain Loans
to be Eurodollar Loans and ending 1, 2 or 3 months thereafter (as
designated by the Company in the related Loan Request, Interest Rate
Election and Payoff Notice); provided, however, that (a) any Eurodollar
Interest Period which would otherwise end on a day which is not a
Eurodollar Business Day shall be extended to the next succeeding
Eurodollar Business Day unless by such extension it would fall in
another calendar month, in which case such Eurodollar Interest Period
shall end on the immediately preceding Eurodollar Business Day; (b) any
Eurodollar Interest Period which begins on a day for which there is no
numerically corresponding day in the calendar month during which such
Eurodollar Interest Period is to end shall, subject to the provisions of
clause (a) hereof, end on the last day of such calendar month; and
(c) no Eurodollar Interest Period shall extend beyond, in the case of a
Facility A Loan, the Facility A Maturity Date and, in the case of a
Facility B Loan, the Facility B Maturity Date.
"Eurodollar Loans" shall mean Direct Loans, Swing Loans and
Facility B Loans at such time as they are made and/or being maintained
at a rate of interest based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean with respect to any Eurodollar
Interest Period or Discount Loan Interest Period, the rate per annum
equal to the rate set forth at Telerate Page 3750 at approximately
11:00 a.m. London time two Eurodollar Business Days prior to the first
day of the proposed Eurodollar Interest Period for deposits in dollars
in an amount equal to the aggregate amount of Loans proposed to be
subject to such rate during such Eurodollar Interest Period and for a
period of time equal to such Eurodollar Interest Period; provided,
however, that if such information is not available on Telerate the
"Eurodollar Rate" shall be determined from information supplied to the
Credit Agent by a nationally recognized reporting service for similar
information acceptable to the Credit Agent.
"Event of Default" shall have the meaning set forth in
Paragraph 11 of the Facility A Agreement or Paragraph 8 of the Facility
B Agreement, as applicable.
"Excess Collateral" shall have the meaning given such term in
Paragraph 10(b) of the Security Agreement.
"Facility A Agreement" shall mean that certain Mortgage Loan
Warehousing Agreement: Facility A, dated as of November 15, 1993 among
the Lenders, the Credit Agent, the Collateral Agent and the Company, as
the same may be amended, extended or replaced from time to time.
"Facility A Direct Loan Notes" shall have the meaning given
such term in Paragraph 5(c) of the Facility A Agreement.
"Facility A Discount Loan Notes" shall have the meaning given
such term in Paragraph 5(c) of the Facility A Agreement.
V11584[07083]94 19
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"Facility A Loans" shall mean, collectively, all Facility A
Primary Loans, Negotiated Loans and Swing Loans.
"Facility A Maturity Date" shall mean the earlier of: (a) the
second anniversary date of the date of the Facility A Agreement (or if
such date is not a Business Day, the immediately preceding Business
Day), and (b) November 15, 1995, as either such date may be extended
from time to time in writing by one hundred percent (100%) of the
Lenders, in their sole discretion; provided, however, that the Company
may request in writing an extension of such date not less than ninety
(90) days prior thereto and the Lenders must respond within thirty (30)
days prior to the then current expiration date indicating whether one
hundred percent (100%) of the Lenders, in their sole discretion, desire
to extend such maturity date (failure to so respond by the Lenders being
deemed to constitute the refusal of the Lenders to grant such an
extension).
"Facility A Obligations" shall mean the Obligations arising
under and with respect to the Facility A Agreement.
"Facility A Primary Loans" shall have the meaning given such
term in Paragraph 1(a) of the Facility A Agreement.
"Facility A Primary Loan Credit Limit" shall mean
$1,761,666,666.67, as such amount may be increased or reduced from time
to time by written agreement of the Company and one hundred percent
(100%) of the Lenders; provided, however, that the Facility A Primary
Loan Credit Limit may be increased up to $1,895,000,000.00 in the event
any Lender or Lenders agree with the Company to increase such Lender's
or Lenders' Maximum Primary Loan Commitment and/or through the inclusion
as a "Lender" under the Credit Documents of an additional financial
institution or institutions approved as provided therein.
"Facility B Agreement" shall mean that certain Mortgage Loan
Warehousing Agreement: Facility B, dated as of November 15, 1993 among
the Lenders, the Credit Agent, the Collateral Agent and the Company, as
the same may be amended, extended or replaced from time to time.
"Facility B Loan Credit Limit" shall mean $933,333,333.33, as
such amount may be increased or reduced from time to time by written
agreement of the Company and one hundred percent (100%) of the Lenders;
provided, however, that the Facility B Loan Credit Limit may be
increased up to $1,000,000,000.00 in the event any Lender or Lenders
agree with the Company to increase such Lender's or Lenders' Aggregate
Maximum Commitment and/or through the inclusion as a "Lender" under the
Credit Documents of an additional financial institution or institutions
approved as provided therein.
"Facility B Loan Notes" shall have the meaning given such term
in Paragraph 2(c) of the Facility B Agreement.
V11584[07083]94 20
<PAGE>
"Facility B Loans" shall have the meaning given such term in
Paragraph 1(a) of the Facility B Agreement.
"Facility B Maturity Date" shall mean the earlier of: (a) the
last Business Day immediately preceding the first anniversary date of
the date of the Facility B Agreement (or if such date is not a Business
Day, the immediately preceding Business Day), and (b) November 14, 1994,
as either such date may be extended from time to time in writing by one
hundred percent (100%) of the Lenders, in their sole discretion;
provided, however, that the Company may request in writing an extension
of such date not less than ninety (90) days prior thereto and the
Lenders must respond within thirty (30) days prior to the then current
expiration date indicating whether one hundred percent (100%) of the
Lenders, in their sole discretion, desire to extend such maturity date
(failure to so respond by the Lenders being deemed to constitute the
refusal of the Lenders to grant such an extension).
"Facility B Obligations" shall mean the Obligations arising
under and with respect to the Facility B Agreement.
"Fair Market Value" shall mean at any date with respect to the
Borrowing Base, that amount calculated by multiplying the aggregate
original principal balances of all Eligible Mortgage Loans (other than
Eligible Mortgage Loans where the underlying promissory notes have dates
which are later than three (3) months prior to the date said Mortgage
Loans were first included in the Borrowing Base, in which case the
aggregate current outstanding principal balances of such Mortgage Loans
shall be used in calculating "Fair Market Value") and Eligible Mortgage-
Backed Securities included in the calculation of the Collateral Value of
the Borrowing Base at such date by the Applicable Valuation Factor.
"Federal Funds Rate" shall mean for any day the weighted
average of the rates on overnight Federal funds transactions with the
members of the Federal Reserve System arranged by Federal funds brokers,
as published for such day (or if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New
York, or if such rate is not so published for any day which is a
Business Day, the average of quotations for such day on such
transactions received by the Credit Agent from three Federal funds
brokers of recognized standing selected by the Credit Agent.
"Fee Letter" shall mean a letter duly executed by the Company
and the Lenders in the form of that attached hereto as Exhibit J.
"FHA" shall mean the Federal Housing Administration and any
successor agency.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation
and any successor agency.
"FNBC" shall mean The First National Bank of Chicago.
V11584[07083]94 21
<PAGE>
"FNMA" shall mean the Federal National Mortgage Association and
any successor agency.
"Funding Account" shall mean Account No. 52-47233 maintained in
the Company's name alone with the Credit Agent at the Contact Office.
"Funding Check" shall mean a check issued by or on behalf of
the Company the proceeds of which will be used to close the origination
of a Mortgage Loan designated for inclusion in the Borrowing Base and
which check has not been presented for payment and cleared.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"GNMA" shall mean the Government National Mortgage Association
and any successor agency.
"GNMA Pool Advance Agreement" shall mean such agreement as GNMA
may require be executed between the Company and the GNMA Pool Advance
Lender setting forth the obligations of the GNMA Pool Advance Lender to
fund advances on behalf of the Company to GNMA, the current form of such
agreement, between the Company and FNBC, as the current GNMA Pool
Advance Lender, being attached hereto as Exhibit K.
"GNMA Pool Advance Commitment" shall mean $5,000,000.00, as
such amount may be increased or reduced as provided in the GNMA Pool
Advance Agreement.
"GNMA Pool Advance Lender" shall mean one of the Lenders, with
the initial GNMA Pool Advance Lender being FNBC.
"GNMA Pool Advance Loan" shall have the meaning given such term
in Paragraph 1(e) of the Facility A Agreement.
"GNMA Pool Advance Note" shall have the meaning given such term
in Paragraph 5(c) of the Facility A Agreement.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or administra-
tive functions of or pertaining to government.
"Guaranty" shall mean a guaranty duly executed by the Parent in
the form of that attached hereto as Exhibit L.
"Hedge Contract" shall mean a contract (excluding any such
contract relating to servicing rights of the Company) to buy or sell an
instrument on the futures market or the futures options market or an
option or financial future purchased over the counter for future deliv-
ery of such instrument, each of the above issued in accordance with the
requirements of the Company's Hedging Program.
V11584[07083]94 22
<PAGE>
"Hedging Program" shall mean a program for hedging interest
rate risks by the Company, which program shall provide, without
limitation, that all Hedge Contracts will be placed with registered
broker-dealers, futures commission merchants or clearing houses, if
applicable, with whom the Company has written, assignable agreements.
"Indebtedness" of any Person shall mean all items of
indebtedness which, in accordance with GAAP, would be included in
determining liabilities as shown on the liability side of a statement of
condition of such Person as of the date as of which indebtedness is to
be determined, including, without limitation, all obligations for money
borrowed and capitalized lease obligations, and shall also include all
indebtedness and liabilities of others assumed or guaranteed by such
Person or in respect of which such Person is secondarily or contingently
liable (other than by endorsement of instruments in the course of
collection) whether by reason of any agreement to acquire such
indebtedness or to supply or advance sums or otherwise.
"Independent Servicing Secured Facility" shall mean any credit
facility provided to the Company secured by identified servicing
contracts, the terms and conditions for which credit facility have been
pre-approved in writing by the Majority Lenders and the proceeds of
which are utilized either for the purpose of repaying other non-
revolving outstanding term Indebtedness of the Company or acquiring
servicing rights.
"Initial Bid Commitment" shall mean for any Lender that amount
for which it commits in writing to extend credit to the Company under
the Credit Documents prior to October 15, 1993, regardless of the
Aggregate Maximum Commitment ultimately allocated to such Lender.
"Interest Period" shall mean, as the context requires, a
Discount Loan Interest Period, a Eurodollar Interest Period and/or a
Negotiated Loan Interest Period.
"Interim Date" shall mean August 31, 1993.
"L/C Commitment" shall mean for any L/C Issuing Lender at any
date the maximum dollar face amount of Letters of Credit which such L/C
Issuing Lender has agreed to issue under the Facility A Agreement, as
set forth on the Commitment Schedule attached hereto as Schedule I, as
such amount may be increased or decreased with the consent of the
Company and such L/C Issuing Lender; provided, however, that in no event
may the sum of all L/C Commitments exceed $50,000,000.00.
"L/C Drawing" shall mean any drawing under a Letter of Credit.
"L/C Issuing Lender" shall mean one or more of the Lenders
which have agreed with the Company to act in such capacity.
V11584[07083]94 23
<PAGE>
"Lender Discount" shall mean with respect to each Discount
Loan, an amount determined by the Credit Agent with respect to such
Discount Loan such that, when the principal amount of such Discount Loan
is repaid by the Company on the last day of the Discount Loan Interest
Period with respect thereto, such principal amount will be equivalent to
the proceeds of such Discount Loan (net of the Lender Discount) plus
interest on such net proceeds calculated at a rate per annum equal to
the Applicable Eurodollar Rate in respect of such Discount Loan for such
Discount Loan Interest Period.
"Lenders" shall mean, collectively and severally, the "Lenders"
under (and as defined in the introductory paragraph of) the Facility A
Agreement and the Facility B Agreement, it being acknowledged and agreed
that as long as both the Facility A Agreement and the Facility B
Agreement are in effect, as a condition to becoming a "Lender" under
either such agreement one must become a "Lender" under the other
agreement.
"Letter of Credit" shall have the meaning given such term in
Paragraph 1(d) of the Facility A Agreement.
"Lien" shall mean any security interest, mortgage, pledge,
lien, claim, charge or encumbrance (including any conditional sale or
other title retention agreement), any lease in the nature thereof, and
the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction.
"Loan" shall mean a Facility A Primary Loan, a Negotiated Loan,
a Swing Loan or a Facility B Loan, as applicable, and "Loans" shall mean
all such loans, collectively and severally.
"Loan Request, Interest Rate Election and Payoff Notice" shall
mean a written request, election and notice in form satisfactory to the
Credit Agent.
"Loan-to-Value Ratio" shall mean with respect to any Mortgage
Loan the ratio of the principal amount of such Mortgage Loan outstanding
at the origination thereof divided by the lesser of (a) the most recent
selling price of the Property, and (b) the appraised value of the
Property.
"Majority Lenders" shall mean at any date those Lenders holding
not less than sixty two percent (62%) of the Aggregate Percentage
Shares.
"Managing Co-Agent" shall mean each Lender with an Initial Bid
Commitment of $150,000,000.00 or more.
"Maximum Primary Loan Commitment" shall mean for any Lender at
any date that amount set forth on the Commitment Schedule attached
hereto as Schedule I as such Lender's "Maximum Primary Loan Commitment,"
V11584[07083]94 24
<PAGE>
as such amount may be increased or decreased as provided in the Credit
Documents.
"MBSCC" shall have the meaning given such term in Paragraph
1(d) of the Facility A Agreement.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage-Backed Securities" shall mean (a) securities
(including, without limitation, participation certificates) guaranteed
by GNMA that represent interests in a pool of mortgages, deeds of trusts
or other instruments creating a Lien on Property which is improved by a
completed single family dwelling (one-to-four family units),
(b) securities (including participation certificates) issued by FNMA or
FHLMC that represent interests in such a pool, (c) securities issued
under Approved Securities Offerings, and (d) privately-placed securities
representing undivided interests in or otherwise supported by such a
pool.
"Mortgage Loan" shall mean a residential real estate secured
loan, including, without limitation: (a) a promissory note and related
deed of trust (or mortgage) and/or security agreements; (b) all
guaranties and insurance policies, including, without limitation, all
mortgage and title insurance policies and all fire and extended coverage
insurance policies and rights of the owner of such mortgage loan to
return premiums or payments with respect thereto; and (c) all right,
title and interest of the owner of such mortgage loan in the Property
covered by said deed of trust (or mortgage).
"Multiemployer Plan" as to any Person shall mean a Plan of such
Person which is a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
"Negative Security Event" shall mean any of the following:
(a) There shall occur an Event of Default or Potential
Default; or
(b) Unless such occurrence shall be waived in writing by the
Majority Lenders:
(1) The Company's long term unsecured debt rating shall
cease to be both "A-" or higher with S&P and "A3" or higher with
Moody's; or
(2) The Company's ratio of Total Debt (excluding
Indebtedness under repurchase agreements relating to Mortgage-Backed
Securities issued or supported by FNMA, FHLMC or GNMA) to Adjusted
Net Worth, calculated monthly on a three month rolling average
basis, shall be more than 6.0:1.0; or
V11584[07083]94 25
<PAGE>
(3) The Company shall have or incur secured Indebtedness
reflected on the balance sheet of the Company other than: (i)
Indebtedness under repurchase agreements relating to Mortgage-Backed
Securities issued or supported by FNMA, FHLMC or GNMA and gestation
repurchase agreements entered into by the Company in the ordinary
course of the Company's business and (ii) Indebtedness permitted
under Paragraphs 10(c)(5) and 10(c)(8) of the Facility A Agreement
and Paragraphs 7(c)(5) and 7(c)(8) of the Facility B Agreement; or
(c) The Company shall have on and as of the last day of each
calendar month Total Debt in excess of the sum of: (1) the book value,
determined in accordance with GAAP, of all Mortgage Loans owned by the
Company, plus (2) one percent (1%) of the aggregate outstanding
principal balance of the Company's unencumbered servicing portfolio with
respect to residential mortgage loans (excluding from the aggregate
principal balance of servicing otherwise includable in the calculation:
(i) all Company-owned residential mortgage loans, (ii) all Parent and
Affiliate-owned residential mortgage loans if the right of the Company
to service such mortgage loans is not freely transferable without the
consent of the Parent or such Affiliate, and (iii) all residential
mortgage loans subserviced by the Company).
"Negotiated Loan" shall have the meaning given such term in
Paragraph 1(b) of the Facility A Agreement.
"Negotiated Loan Interest Period" shall mean as to any
Negotiated Loan the period of time from the date such Negotiated Loan is
advanced until the principal amount thereof is payable in full, as
agreed by the Company and the Lender which makes such Negotiated Loan;
provided, however, that in no event shall any Negotiated Loan Interest
Period extend beyond the Facility A Maturity Date.
"Negotiated Loan Interest Rate" shall mean as to any Negotiated
Loan such fixed rate per annum as the Company and the Lender which
agreed to advance such Negotiated Loan have agreed.
"Negotiated Loan Notes" shall have the meaning given such term
in Paragraph 5(c) of the Facility A Agreement.
"Non-Refinance Risk Debt" shall mean Indebtedness of the
Company and the Parent described on Exhibit M attached hereto, as said
Exhibit M may be amended from time to time by the Company and the
Majority Lenders.
"Notes" shall mean, collectively and severally, the Facility A
Direct Loan Notes, the Facility A Discount Loan Notes, the Negotiated
Loan Notes, the Swing Loan Note, the Facility B Loan Notes and the GNMA
Pool Advance Note.
"Obligations" shall mean any and all debts, obligations and
liabilities of the Company to the Lenders and the Agents (whether now
V11584[07083]94 26
<PAGE>
existing or hereafter arising, voluntary or involuntary, whether or not
jointly owed with others, direct or indirect, absolute or contingent,
liquidated or unliquidated, and whether or not from time to time
decreased or extinguished and later increased, created or incurred),
arising out of or related to the Credit Documents.
"Obligor" shall mean the individual or individuals obligated to
pay the indebtedness which is the subject of a Mortgage Loan.
"Other Warehouse Debt" shall mean:
(a) Indebtedness secured by Mortgage-Backed Securities
pursuant to repurchase agreements with securities dealers of recognized
national standing;
(b) Indebtedness incurred under Approved Securities
Offerings;
(c) Indebtedness incurred by the Company under
reimbursement and analogous agreements entered into by the Company with
financial institutions which agree to provide letters of credit, surety
bonds or other forms of credit enhancement for the CPNs; and
(d) Indebtedness under gestation repurchase agreements;
provided, however, that if the aggregate amount of such Indebtedness at
any date outstanding under gestation repurchase agreements which are
either uncommitted or have a committed term of less than three (3)
months remaining at such date plus the aggregate dollar amount of Loans
outstanding, the GNMA Pool Advance Commitment, Verified Outstanding
CPNs, Outstanding Letters of Credit and unrepaid L/C Drawings exceeds
the Aggregate Credit Limit plus $500,000,000.00, that portion of such
Indebtedness representing the excess shall not be considered "Other
Warehouse Debt."
"Outstanding CPN" shall mean each CPN issued at any time under
the Depositary Agreement which has not been presented for payment and
for which payment has not been made in full.
"Outstanding Letter of Credit" shall mean a Letter of Credit
issued under the Facility A Agreement which has not expired unutilized
or been drawn upon in its full face amount.
"Parent" shall mean Countrywide Credit Industries, Inc., a
Delaware corporation.
"Parent Notes" shall mean all promissory notes or other
Indebtedness issued by the Parent pursuant to (a) either of those
certain Form S-3 Registration Statements filed on behalf of the Parent
with the Securities and Exchange Commission on January 20, 1988, and
July 25, 1989, respectively, as the same may be amended, extended or
supplemented from time to time, and (b) those certain Master Note
V11584[07083]94 27
<PAGE>
Agreements each substantially in the form of that attached hereto as
Exhibit N.
"Participant" shall mean a Person to whom has been sold an
undivided participation interest in the Obligations as permitted under
the Credit Documents.
"Paying Agent" shall mean such Person acceptable to the Company
and the Majority Lenders as shall agree to act as issuing and paying
agent under the Depositary Agreement with respect to the CPNs, the
current such Person being FNBC.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor agency.
"Person" shall mean any corporation, natural person, firm,
joint venture, partnership, trust, unincorporated organization,
government or any department or agency of any government.
"Plan" shall mean as to any Person, any pension plan that is
covered by Title IV of ERISA and in respect of which such Person or a
Commonly Controlled Entity of such Person is an "employer" as defined in
Section 3(5) of ERISA.
"Potential Default" shall mean an event which but for the lapse
of time or the giving of notice, or both, would constitute an Event of
Default.
"Pre-Disbursement Account" shall mean Account No. 7521-7653
maintained in the Credit Agent's name with FNBC at the Contact Office.
"Pre-Funding Notice" shall mean a notice in the form of
Exhibit O attached hereto.
"Pricing Spread" shall be determined for each Eurodollar
Interest Period and each Discount Loan Interest Period on the first
Business Day of such Interest Period as follows: If on such day the
Company's long term unsecured debt rating is: (a) at least "A" with S&P
and "A2" with Moody's, the Pricing Spread shall be 0.75, (b) at least
"A-" with S&P and "A3" with Moody's, the Pricing Spread shall be 0.875;
(c) at least "A-" with S&P or "A3" with Moody's, the Pricing Spread
shall be 1.00; and (d) below "A-" with S&P and "A3" with Moody's, the
Pricing Spread shall be 1.25; provided, however, that if on any day for
whatever reason the Company's long term unsecured debt rating is not
available from S&P or Moody's or is not otherwise determinable
hereunder, the Pricing Spread shall be deemed to be 1.25.
"Primary Loan Percentage Share" shall mean for any Lender at
any date that percentage which the dollar amount of such Lender's
V11584[07083]94 28
<PAGE>
Maximum Primary Loan Commitment bears to the Aggregate Primary Loan
Credit Limit.
"Proceeds" shall mean whatever is receivable or received when
Collateral or proceeds are sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and
includes, without limitation, all rights to payment, including return
premiums, with respect to any insurance relating thereto.
"Property" shall mean the real property, including the
improvements thereon, and the personal property (tangible and
intangible) which are encumbered pursuant to a Mortgage Loan.
"Qualifying Balances" shall have the meaning with respect to
each Balance Bank given such term in Annex I to the Balance Bank
Agreement between the Company and such Balance Bank.
"Reference Banks" shall mean FNBC, Bank of America National
Trust and Savings Association and Bankers Trust Company or such other
three of the Lenders as the Company may designate by written notice
given to the Credit Agent no more frequently than once during any
consecutive six (6) month period.
"Refinance Risk Debt" shall mean at any date Consolidated Total
Debt minus the sum of: (a) Warehouse-Related Debt, and (b) Non-Refinance
Risk Debt at such date.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System from time to time in effect and
shall include any successor or other regulation of said Board of
Governors relating to reserve requirements applicable to member banks of
the Federal Reserve System.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System (12 C.F.R. { 221), as the same
may from time to time be amended, supplemented or superseded.
"Release Request" shall mean a request in the form of that
attached hereto as Exhibit P.
"Reportable Event" shall mean any of the events set forth in
Section 4043(b) of ERISA.
"Requested CPNs" shall mean as of any date the aggregate dollar
amount of CPNs, if any, listed on the CPN Issuance Request delivered by
the Company to the Collateral Agent on the immediately preceding
Business Day.
"Required Documents" shall mean with respect to any Mortgage
Loan those items listed on Exhibit Q attached hereto.
V11584[07083]94 29
<PAGE>
"Requirements 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 a final and binding determination of an arbitrator or a
determination of 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.
"Reserve Requirement" shall mean with respect to an Interest
Period for a Eurodollar Loan or a Discount Loan, the maximum aggregate
reserve requirement (including all basic, supplemental, marginal and
other reserves and taking into account any transitional adjustments)
which is imposed under Regulation D on eurocurrency liabilities.
"S&P" shall mean Standard & Poor's Corporation.
"Secured Obligations" shall have the meaning given such term in
Paragraph 3 of the Security Agreement.
"Secured Parties" shall have the meaning given such term in
Paragraph 1 of the Security Agreement.
"Security Agreement" shall mean a Security and Collateral
Agency Agreement in the form of that attached hereto as Exhibit R, as
the same may be amended, extended or replaced from time to time.
"Security Rate" shall mean for any Mortgage Loan: (a) the rate
of interest on the underlying promissory note at the date first included
in the Borrowing Base, minus (b) three eighths of one percent (0.375%).
"Servicing Pass-Through Venture" shall mean any corporation,
partnership, joint venture, trust or other entity legally separate from
the Company and formed for the purpose of acquiring (either from the
Company or from unaffiliated parties) the right to service mortgage
loans for a fee and selling or pledging all or any portion of the
related servicing fee income to finance all or part of the acquisition
of such servicing rights.
"Settlement Account" shall mean Account No. 19-13433 maintained
in the Credit Agent's name at the Contact Office.
"Single Employer Plan" shall mean as to any Person any Plan of
such Person which is not a Multiemployer Plan.
"Single Level Subordinated Parent Debt" shall mean Indebtedness
of the Company to the Parent which although subject to the Subordination
Agreement (and therefore constituting Subordinated Debt) is not Double
Level Subordinated Parent Debt.
"Statement Date" shall mean February 28, 1993.
V11584[07083]94 30
<PAGE>
"Subordinated Debt" shall mean Indebtedness of the Company
subordinated to the Obligations in the manner and to the extent required
by the Majority Lenders pursuant to written subordination agreements
satisfactory in form and substance to the Majority Lenders.
"Subordinated Parent Borrowings" shall mean Indebtedness of the
Parent subordinated to other Indebtedness of the Parent to the extent
satisfactory to the Majority Lenders, it being expressly agreed and
understood that Indebtedness of the Parent under the Parent Notes does
not constitute Subordinated Parent Borrowings.
"Subordination Agreement" shall mean a subordination agreement
in the form of Exhibit S attached hereto, as the same may be amended,
extended or replaced from time to time.
"Subsidiary" shall mean any corporation more than fifty percent
(50%) of the stock of which having by the terms thereof ordinary voting
power to vote for the election of directors, managers or trustees of
such corporation (irrespective of whether or not at the time stock of
any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) shall, at
the time as of which any determination is being made, be owned, either
directly and/or through Subsidiaries.
"Swing Loan" shall have the meaning given such term in
Paragraph 1(c) of the Facility A Agreement.
"Swing Loan Commitment" shall mean $50,000,000.00, as such
amount may be increased, subject to the limitation on the Aggregate
Credit Limit, upon the agreement of the Company and FNBC.
"Swing Loan Note" shall have the meaning given such term in
Paragraph 5(c) of the Facility A Agreement.
"Take-Out Commitment" with respect to any Mortgage Loan or
Mortgage-Backed Security shall mean: (a) a bona fide current, unused
and unexpired commitment issued in favor of and held by the Company made
by an Approved Investor, under which said Approved Investor agrees,
prior to the expiration thereof, upon the satisfaction of certain terms
and conditions therein, to purchase such Mortgage-Backed Security or
Mortgage Loan (or a security secured or otherwise supported by a pool of
residential mortgage loans to include such Mortgage Loan) at a specified
price, which commitment is not subject to any term or condition which is
not customary in commitments of like nature or which, in the reasonably
anticipated course of events, cannot be fully complied with prior to the
expiration thereof; or (b) if a Mortgage Loan is designated to secure or
otherwise support an Approved Securities Offering, a firm underwriting
agreement in full force and effect with an Approved Investor.
"Tangible Net Worth" shall mean the excess of total assets of
the Company over Total Debt determined in accordance with GAAP,
V11584[07083]94 31
<PAGE>
excluding, however, from the determination of total assets all assets
(other than deferred commitment fees) which would be classified as
intangible assets under GAAP, including, without limitation, purchased
and capitalized value of servicing rights, excess servicing fees,
goodwill (whether representing the excess cost over book value of assets
acquired or otherwise), patents, trademarks, trade names, copyrights,
franchises and deferred charges (including, without limitation,
unamortized debt discount and expense, organization costs and research
and product development costs).
"Taxes" shall have the meaning given such term in Paragraph
4(k) of the Facility A Agreement and Paragraph 1(j) of the Facility B
Agreement, as applicable.
"Total Debt" shall mean all Indebtedness of the Company and its
Subsidiaries excluding Subordinated Debt (other than Single Level
Subordinated Parent Debt) and deferred taxes of the Company attributable
to capitalization of purchased servicing rights and excess servicing
fees.
"Transferee Lender" shall mean an existing Lender to which
another existing Lender transfers a portion of its Aggregate Maximum
Commitment.
"Type" for any Mortgage Loan shall mean an Eligible Committed
Conforming Mortgage Loan, an Eligible Committed Non-Conforming Mortgage
Loan, an Eligible Uncommitted Conforming Mortgage Loan, an Eligible
Uncommitted Non-Conforming Mortgage Loan or any other classification of
Mortgage Loans as to which one hundred percent (100%) of the Lenders
have established in writing, in their sole discretion, the criteria for
inclusion of such Mortgage Loans in the calculation of the Collateral
Value of the Borrowing Base, including, without limitation, the
aggregate dollar amount includable, the permissible period of time
includable and the characteristics of such Mortgage Loans.
"VA" shall mean the Veterans Administration and any successor
agency.
"Verified Outstanding CPNs" shall mean at any date the
aggregate dollar amount of Outstanding CPNs at the opening of business
of the Paying Agent on such date less the aggregate dollar amount of
CPNs which by their terms will mature on such date and plus the
aggregate dollar amount of Requested CPNs, all as determined by the
Collateral Agent in its reasonable discretion based upon information
supplied to the Collateral Agent by the Paying Agent and the Company as
provided herein and in the Depositary Agreement.
"Warehouse-Related Debt" shall mean at any date the sum of:
(a) Loans outstanding, (b) the GNMA Pool Advance Commitment, (c)
Verified Outstanding CPNs, (d) Outstanding Letters of Credit, (e)
V11584[07083]94 32
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unrepaid L/C Drawings, and (f) Other Warehouse Debt outstanding at such
date.
"Warehouse-Related MBS" shall have the meaning given such term
in Paragraph 9(b)(2) of the Security Agreement.
"Wet Funded Loans" shall mean on any date Mortgage Loans the
Required Documents for which have not been received by the Collateral
Agent.
V11584[07083]94 33
<PAGE>
EXHIBIT R
TO GLOSSARY
FORM OF
SECURITY AND COLLATERAL AGENCY AGREEMENT
THIS SECURITY AND COLLATERAL AGENCY AGREEMENT (the "Security
Agreement") is made and dated as of the 15th day of November, 1993, by
and among COUNTRYWIDE FUNDING CORPORATION, a New York corporation (the
"Company"), THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, acting in its capacity as credit agent for the lenders from
time to time participating in the Credit Agreements (as defined
below)(in such capacity, the "Credit Agent"), and FIRST CHICAGO NATIONAL
PROCESSING CORPORATION, a Delaware corporation, as collateral agent for
the Secured Parties (as defined below) (in such capacity, "Collateral
Agent").
RECITALS
A. Pursuant to that certain Mortgage Loan Warehousing
Agreement: Facility A and that certain Mortgage Loan Warehousing
Agreement: Facility B, each dated as of December 4, 1992 among the
Company, the lenders named therein, the Credit Agent, the Collateral
Agent and others (as amended and extended to date, the "Existing
Warehousing Agreements") the lenders party thereto agreed to extend
credit to the Company on the terms and subject to the conditions set
forth therein, including, without limitation, that the Company execute
and deliver that certain Security and Collateral Agency Agreement dated
concurrently with the Existing Warehousing Agreements (the "Existing
Security Agreement").
B. The current parties to the Existing Warehousing Agreements
have agreed to terminate the Existing Warehousing Agreements and to
replace the credit facilities evidenced thereby with two new credit
facilities, the first evidenced by that certain Mortgage Loan
Warehousing Agreement: Facility A and the second evidenced by that
certain Mortgage Loan Warehousing Agreement: Facility B, each dated
concurrently herewith (jointly and as amended, extended and replaced
from time to time, the "Credit Agreements"), each Credit Agreement being
by and among the Company, the Credit Agent, the Collateral Agent, the
Managing Co-Agents, the Co-Agents and the Lenders participating therein
(and as the term "Lenders" and capitalized terms not otherwise defined
herein are defined in the Glossary attached to the Credit Agreements as
Annex I).
C. As a condition precedent to the effectiveness of the
Credit Documents, the Company is required to execute and deliver to the
Collateral Agent this Security Agreement in replacement of and
substitution for the Existing Security Agreement.
V84037[7083]94 1
<PAGE>
NOW, THEREFORE, in consideration of the above Recitals and for
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Appointment of Collateral Agent. By executing and
delivering the Credit Agreements or otherwise becoming a "Lender"
thereunder, the Credit Agent and the Lenders hereby appoint the
Collateral Agent to act as secured party, agent, bailee and custodian
for the exclusive benefit of itself, the Credit Agent, the Lenders and
the holders from time to time of Outstanding CPNs (collectively and
severally, the "Secured Parties"), with respect to the Collateral (as
defined below). The Collateral Agent hereby accepts such appointment
and agrees to maintain and hold all Collateral at any time delivered to
it as secured party, agent, bailee and custodian for the exclusive
benefit of Secured Parties. The Collateral Agent acknowledges and
agrees that the Collateral Agent is acting and will act with respect to
the Collateral for the exclusive benefit of Secured Parties and is not,
and shall not at any time in the future be, subject with respect to the
Collateral, in any manner or to any extent, to the direction or control
of the Company except as expressly permitted hereunder and under the
other Credit Documents. The Collateral Agent agrees to act in
accordance with this Security Agreement and in accordance with any
written instructions properly delivered pursuant hereto. Under no
circumstances shall the Collateral Agent deliver possession of
Collateral to the Company except in accordance with the express terms of
this Security Agreement or otherwise upon the written instruction of the
Majority Lenders.
2. Delivery of Collateral. From time to time, the Company
shall deliver Collateral or cause Collateral to be delivered to the
Collateral Agent hereunder. Delivery of Collateral consisting of
Mortgage Loans and Mortgage-Backed Securities shall be effected by
delivery of the Required Documents therefor or, in the case of Wet
Funded Loans, by the delivery of a Collateral Confirmation Agreement
covering such Mortgage Loans (and subsequent delivery of the Required
Documents therefor as permitted under subparagraph (r) of the definition
of "Eligible Mortgage Loan"). The Collateral Agent's responsibility to
review such Collateral is limited to the review steps described on
Exhibit 1 hereto, said review of Collateral delivered on any Business
Day to be completed before the opening of business of the Collateral
Agent on the next succeeding Business Day. It is expressly acknowledged
and agreed that any Mortgage Loan initially included in the calculation
of the Collateral Value of the Borrowing Base pursuant to a Collateral
Confirmation Agreement the Required Documents for which are delivered on
a given Business Day may, in the Collateral Agent's sole discretion, be
included by the Collateral Agent in any Determination of Availability or
other calculation including the Collateral Value of the Borrowing Base
V84037[7083]94 2
<PAGE>
or the Fair Market Value of the Borrowing Base on such Business Day
prior to reviewing the same hereunder on the assumption that such
Mortgage Loan is an Eligible Mortgage Loan, and provided that such
Required Documents are reviewed in accordance with the steps described
on Exhibit 1 hereto before the opening of business of the Collateral
Agent on the next succeeding Business Day. All Collateral at any time
delivered to the Collateral Agent hereunder shall be held by the
Collateral Agent in a fire resistant vault, drawer or other suitable
depositary maintained and controlled solely by the Collateral Agent,
conspicuously marked to show the interest therein of the Secured Parties
and not commingled with any other assets or property of, or held by, the
Collateral Agent.
3. Grant of Security Interest. The Company hereby pledges
and grants to the Collateral Agent for the pro rata, pari passu benefit
of the Secured Parties, subject to the release and reinstatement
provisions of Paragraph 28 below but in any event effective
automatically and immediately upon the occurrence of a Negative Security
Event, a security interest in the property described in Paragraph 4
below (collectively and severally, the "Collateral"), to secure payment
and performance of the Obligations and the obligations of the Company to
repay Outstanding CPNs to the holders thereof (collectively and
severally, the "Secured Obligations").
4. Collateral. The Collateral shall consist of all now
existing and hereafter arising right, title and interest of the Company
in, under and to each of the following:
(a) All Mortgage Loans, now owned or hereafter acquired
by the Company, including, without limitation, the promissory notes or
other instruments or agreements evidencing the indebtedness of Obligors
thereon, all mortgages, deeds to secure debt, trust deeds and security
agreements related thereto, all rights to payment thereunder, all rights
in the Properties securing payment of the indebtedness of the Obligors
thereon, all rights under documents related thereto, such as guaranties
and insurance policies (issued by governmental agencies or otherwise),
including, without limitation, mortgage and title insurance policies,
fire and extended coverage insurance policies (including the right to
any return premiums) and FHA insurance and VA guaranties, and all rights
in cash deposits consisting of impounds, insurance premiums or other
funds held on account thereof;
(b) All Mortgage-Backed Securities, including, without
limitation, all Warehouse-Related MBSs, now owned or hereafter acquired
by the Company, all right to the payment of monies and non-cash
distributions on account thereof and all new, substituted and additional
securities at any time issued with respect thereto;
(c) All rights of the Company (but not its obligations)
under all Take-Out Commitments and Hedge Contracts, now existing or
hereafter arising, covering any part of the foregoing Collateral, all
V84037[7083]94 3
<PAGE>
rights to deliver Mortgage Loans and Mortgage-Backed Securities to
permanent investors and other purchasers pursuant thereto and all
proceeds resulting from the disposition of such Collateral pursuant
thereto;
(d) All now existing and hereafter established accounts
maintained with broker-dealers by the Company for the purpose of
carrying out transactions under Hedge Contracts and other futures and
futures options transactions involving Mortgage Loans and Mortgage-
Backed Securities;
(e) All now existing and hereafter arising rights to ser-
vice, administer and/or collect Mortgage Loans and Mortgage-Backed
Securities included in the computation of the Collateral Value of the
Borrowing Base at any date (it being acknowledged and agreed that prior
to the occurrence of an Event of Default and acceleration of the
Obligations, the security interest in such servicing rights granted
hereunder shall be automatically terminated without need for further
action upon the sale, transfer or other disposition of the related
Mortgage Loan or Mortgage-Backed Security in accordance with the
provisions of the Credit Documents), and all rights to the payment of
money on account of such servicing, administration and/or collection
activities;
(f) All now existing and hereafter arising accounts, con-
tract rights and general intangibles constituting or relating to any of
the foregoing Collateral;
(g) All now existing and hereafter acquired files, docu-
ments, instruments, surveys, certificates, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records and other
books, records, information and data of the Company relating to the
foregoing Collateral (including all information, records, data,
programs, tapes, discs, and cards necessary or helpful in the
administration or servicing of the foregoing Collateral);
(h) The Pre-Disbursement Account, the Funding Account,
the Check Funding Account, the Commercial Paper Account, the Settlement
Account and each Custodian Settlement Account (as defined below) and any
and all funds at any time held in any such accounts; and
(i) All products and Proceeds of the foregoing
Collateral.
5. Collateral Agent's Review of Collateral. Each delivery of
Mortgage Loans and Mortgage-Backed Securities to the Collateral Agent
shall be accompanied by a certificate in form acceptable to the
Collateral Agent (the "Delivery Certificate"). Upon any receipt of
V84037[7083]94 4
<PAGE>
Required Documents for any such item of Collateral, the Collateral Agent
shall review the same and verify that:
(a) All Required Documents relating to such item of
Collateral appear regular on their face and are in the Collateral
Agent's possession; and
(b) The statements set forth on Exhibit 1 hereto are
accurate and complete in all respects.
Such verification for Collateral delivered during any period covered by
a collateral report referred to in Paragraph 11(b) below shall be set
forth in such report. If the Collateral Agent notes any exception in
the review described in subparagraph (a) or (b) above or questions, in
its reasonable discretion, the genuineness, regularity, propriety, or
accuracy of any item of Collateral, the Collateral Agent shall so note
in its next collateral report delivered to Lenders. In the event that
the Company had been requested to deliver the Additional Required
Documents with respect to any Mortgage Loan, the Collateral Agent shall
review and verify such Additional Required Documents consistent with the
obligations of the Collateral Agent above.
6. Borrowing Base Conformity; Mark-to-Market Requirement.
(a) In support of its obligation to repay the Secured
Obligations, the Company shall cause to be maintained with the
Collateral Agent a Borrowing Base consisting of Eligible Mortgage Loans
and Eligible Mortgage-Backed Securities:
(1) On each date, with a Collateral Value not less
than the Aggregate Credit Exposure on such date; and
(2) On each date prior to the delivery by the
Company of the initial Release Request pursuant to Paragraph 10(a)
below, with a Fair Market Value not less than eighty nine percent
(89%) of the Aggregate Credit Exposure on such date; and
(3) On the date of delivery by the Company of the
initial Release Request pursuant to Paragraph 10(a) below and on
each date thereafter until otherwise agreed in writing by the
Majority Lenders, with a Fair Market Value not less than one hundred
five percent (105%) of the Aggregate Credit Exposure on such date.
(b) In the event on any day the Aggregate Credit Exposure
exceeds the Collateral Value of the Borrowing Base, as determined by the
Collateral Agent at the request of the Credit Agent on behalf of the
Majority Lenders or by the Collateral Agent in the course of making a
Determination of Availability pursuant to Paragraph 7 below, the
Collateral Agent shall promptly so notify the Credit Agent which shall
promptly so notify the Lenders and, upon telephonic demand of the Credit
Agent made upon the written request of any Lender (which request may be
V84037[7083]94 5
<PAGE>
made by facsimile transmission), the Company shall pay to the Credit
Agent for the account of the Lenders on or before 9:00 a.m. (Los Angeles
time) on the Business Day following such demand the full amount of such
excess.
(c) In addition to all other payment obligations of the
Company hereunder and under the other Credit Documents, on or before
9:00 a.m. (Los Angeles time) on the Business Day following telephonic
demand by the Credit Agent given at the request of any Lender from time
to time, the Company shall repay Loans outstanding in the amount by
which the Aggregate Credit Exposure exceeds the Fair Market Value of the
Borrowing Base in violation of, as applicable, subparagraphs (a)(2) or
(a)(3) above.
(d) If, but only if, at such time as the Company shall be
required to make payments under this Paragraph 6 there shall not have
occurred and be continuing an Event of Default or Potential Default, in
lieu of making the payments required hereunder the Company may deliver
to the the Collateral Agent additional Eligible Mortgage Loans and
Eligible Mortgage-Backed Securities such that the Company shall be in
compliance with the requirement of subparagraphs (a), (b) and (c) above.
7. Determination of Availability; Calculation Assumptions.
(a) Upon the request of the Credit Agent made on or
before 10:45 a.m. (Los Angeles time) on any Business Day upon which the
Company has delivered to the Credit Agent a Loan Request, Interest Rate
Election and Payoff Notice, the Collateral Agent shall compute the
Collateral Value of the Borrowing Base and notify the Credit Agent, no
later than 11:15 a.m. (Los Angeles time) on such date of the dollar
amount by which the Collateral Value of the Borrowing Base exceeds (or
is less than) the Aggregate Credit Exposure on such date before
effecting the credit extensions and repayments contemplated by such Loan
Request, Interest Rate Election and Payoff Notice (a "Determination of
Availability").
(b) In connection with the proposed issuance of any CPN,
the Credit Agent shall transmit to the Collateral Agent no later than
8:45 a.m. (Los Angeles time) on the proposed issuance date therefor
(which shall be a Business Day), any CPN Issuance Request received by
the Credit Agent from the Company setting forth the aggregate dollar
amount of all CPNs proposed to be issued on such date, including thereon
all Outstanding CPNs to be extended or reissued on such date. The
Collateral Agent shall promptly thereupon make a Determination of
Availability and shall telecopy to the Paying Agent on or before
9:45 a.m. (Los Angeles time) on such date a copy of such CPN Issuance
Request indicating that portion, if any, of the Requested CPNs approved
for issuance hereunder, such amount being that aggregate dollar amount,
if any, of Requested CPNs which if issued would not cause the Collateral
Value of the Borrowing Base to be less than the Aggregate Credit
Exposure.
V84037[7083]94 6
<PAGE>
(c) In making any Determination of Availability or other
calculation involving a determination of the Collateral Value of the
Borrowing Base or the Fair Market Value of the Borrowing Base, the
Collateral Agent shall be permitted to rely, without independent
investigation of the correctness thereof, on:
(1) The most recent information supplied by the
Company to the Collateral Agent through the Credit Agent pursuant to
Paragraph 11(a)(2) below with respect to Funding Checks outstanding,
Verified Outstanding CPNs and Current Refinance Risk Debt;
(2) With respect to a determination as to whether or
not a Mortgage Loan or Mortgage-Backed Security is at any time
covered by a Take-Out Commitment or Hedge Contract or the cost or
acquisition price therefor, information supplied by the Company to
the Collateral Agent on the related Delivery Certificate;
(3) With respect to a determination as to whether
amounts received in the Settlement Account represent the purchase
price paid for a specific Mortgage Loan or Mortgage-Backed Security
and, consequently, whether such Mortgage Loan or Mortgage-Backed
Security should be removed from any such calculation, information
supplied by the Company to the Collateral Agent in writing;
(4) With respect to a determination of the "Cash
Market Position," the "Cash Market Position Valuation" as shown on
the most recent Final Position Status/Analyses Report delivered to
the Collateral Agent pursuant to Paragraph 11(a)(1)(i) below; and
(5) Until the occurrence of an Event of Default and
acceleration of the Obligations, with respect to any determination
of the "Applicable Valuation Factor" during each period commencing
on the third Business Day of each week to and including the second
Business Day of the next week, the Telerate information provided by
the Company to the Collateral Agent pursuant to Paragraph
11(a)(2)(ii) below on the first Business Day of the week during
which such period commenced; provided, however, in the event
following the occurrence of an Event of Default and acceleration of
the Obligations the Majority Lenders direct that the Collateral
Agent cease to rely on such Telerate information supplied by the
Company, the Collateral Agent may determine the "Applicable
Valuation Factor" and "Fair Market Value" for the applicable period
based upon information supplied to the Collateral Agent on the date
such information would otherwise have been supplied by the Company
by a nationally recognized reporting service for similar information
acceptable to the Collateral Agent and the Credit Agent.
8. Allocation of Payments Received. All amounts received by
the Credit Agent on account of the Obligations, including, without
V84037[7083]94 7
<PAGE>
limitation, all amounts credited to the Settlement Account from the sale
or other disposition of the Collateral shall be allocated as follows:
(a) Prior to the occurrence of an Event of Default and
acceleration of the Obligations, amounts held in the Settlement Account
shall be allocated among the Lenders on account of the Obligations as
the Company shall direct in a Loan Request, Interest Rate Election and
Payoff Notice delivered to the Credit Agent, provided only that any
allocation among the Lenders holding their Primary Loan Percentages
Share of outstanding Facility A Primary Loans and/or Facility B Loans be
pro rata in accordance with such Primary Loan Percentage Shares. Each
of the Lenders, by executing the Credit Documents to which it is a
party, irrevocably authorizes the Credit Agent prior to the occurrence
of an Event of Default and acceleration of the Obligations, to disburse
directly to the Funding Account on account of such Lender's funding
obligations, if any, under the Loan Request, Interest Rate Election and
Payoff Notice relating to such funding (or to the Credit Agent for the
account of the Balance Banks on account of such Lender's obligation to
purchase its Loan Percentage Share of any Discount Loan), that portion
of the funds otherwise to be disbursed to such Lender on account of the
Obligations on such date. In the event funds which would otherwise have
been so disbursed to a Lender on a proposed funding date are
insufficient to cover such Lender's funding and purchase obligations on
such date, such Lender shall be obligated to fund the balance into the
Pre-Disbursement Account and to the Credit Agent for the account of the
Balance Banks as otherwise provided in the Credit Documents. In the
event funds which have been directed to be disbursed to such Lender on a
proposed funding date are in excess of such Lender's funding and
purchase obligations on such date, the excess shall be disbursed to such
Lender by the Credit Agent as provided in the Credit Documents. Funds
disbursed to the Pre-Disbursement Account or to the Credit Agent for the
account of the Balance Banks shall be credited by such Lender against
the Obligations held by such Lender to which the Company has directed
such funds be applied under the related Loan Request, Interest Rate
Election and Payoff Notice to the fullest extent as if actually
disbursed to such Lender.
(b) Following the occurrence of an Event of Default and
acceleration of the Obligations all amounts received by the Credit Agent
or the Collateral Agent on account of the Obligations shall be disbursed
as follows:
(1) Amounts received on account of the sale or other
disposition of Collateral shall be distributed in the following
order: (i) first, among the Lenders and the Paying Agent, for the
pro rata and pari passu benefit of the holders of Outstanding CPNs,
and the Lenders on account of the Obligations until the Outstanding
CPNs and all such Obligations have been paid in full; and (ii) then,
to the Credit Agent and the Collateral Agent with respect to
remaining Obligations held by them in their capacities as Agents,
such distribution to be pro rata and pari passu.
V84037[7083]94 8
<PAGE>
(2) All other amounts received shall be distributed
in the following order: (i) first, among the Lenders, pro rata and
pari passu, on account of the Obligations until such Obligations
have been paid in full; and (ii) then, to the Credit Agent and the
Collateral Agent with respect to remaining Obligations held by them
in their capacities as Agents, such distribution to be pro rata and
pari passu.
9. Handling of Collateral; Settlement Account.
(a) Prior to the occurrence of an Event of Default or
Potential Default, from time to time until otherwise notified by the
Majority Lenders (by telephone, telegraph or otherwise), the Collateral
Agent is hereby authorized to release documentation relating to Mortgage
Loans to the Company against a trust receipt executed by the Company in
the form of Exhibit 2 hereto. The Company and the Collateral Agent will
comply with the trust receipt procedures specified on Exhibit 3 hereto.
The Company hereby represents and warrants that any request by the
Company for release of Collateral under this subparagraph (a) shall be
solely for the purposes of correcting clerical or other non-substantial
documentation problems in preparation of returning such Collateral to
the Collateral Agent for ultimate sale or exchange and that the Company
has requested such release in compliance with all terms and conditions
of such release set forth herein and in the Credit Agreements,
including, without limitation, subparagraph (k)(1) of the definition of
Eligible Mortgage Loan.
(b) Prior to the occurrence of an Event of Default or
Potential Default, upon delivery by the Company to the Collateral Agent
of a shipping request in the form of that attached hereto as Exhibit 4,
the Collateral Agent will transmit Mortgage Loans and/or Mortgage-Backed
Securities held by it as directed by the Company as follows:
(1) If the transmittal is of documentation for
Mortgage Loans and/or Mortgage-Backed Securities in the possession
of the Collateral Agent in connection with the sale thereof to a
permanent investor or sale under a repurchase facility, such
transmittal will be under cover of a transmittal letter in the form
of that attached hereto as Exhibit 5A (or such other form as may be
required under any government program pursuant to which the relevant
Mortgage Loans and/or Mortgage-Backed Securities are being shipped).
(2) If the transmittal is of documentation for
Mortgage Loans and/or Mortgage-Backed Securities in connection with
the shipment to a custodian or trustee in connection with the
formation of a mortgage pool supporting a Mortgage-Backed Security
(any such Mortgage-Backed Security secured or otherwise supported by
any such Mortgage Loan and/or Mortgage-Backed Security being
referred to herein as a "Warehouse-Related MBS"), such transmittal
will be under cover of a transmittal letter in the form of that
V84037[7083]94 9
<PAGE>
attached hereto as Exhibit 5B (or such other form as may be required
under any government program pursuant to which such Warehouse-
Related MBS is being issued), and, in addition, will be conditioned
upon the facts that:
(i) If the Warehouse-Related MBS is being
issued under a government program, there has been delivered to
the transfer agent for the Warehouse-Related MBS such form as
may be required under the government program pursuant to which
such Warehouse-Related MBS is being issued (which form shall
name the Collateral Agent or an Approved MBS Custodian (as
defined below) as the subscriber and the Person to whom the
Warehouse-Related MBS is to be delivered);
(ii) If the Warehouse-Related MBS is being
issued pursuant to a program other than a government program,
there has been delivered to and acknowledged by the trustee and
collateral agent or custodian for the underlying mortgage pool
a letter in form acceptable to the Collateral Agent and the
Majority Lenders;
(iii) The Person to whom such Warehouse-Related
MBS is to be delivered by the transfer agent or trustee is a. a
Person which has agreed to hold such Warehouse-Related MBS and
the proceeds of any sale or other disposition thereof as
custodian, agent and bailee for the benefit of Lenders pursuant
to a Custodial Agreement, and b. the Credit Agent, the
Collateral Agent or an Affiliate thereof or such other Person
as is approved by the Majority Lenders (any Person acting in
such capacity being referred to herein as an "Approved MBS
Custodian"); and
(iv) There has been delivered to the Approved
MBS Custodian a letter in the form of that attached to the
Custodial Agreement as Exhibit A.
In no event shall the Collateral Agent have any obligation to obtain
written acknowledgement of receipt from the addressee of any transmittal
letter or other communication sent by the Collateral Agent hereunder.
(c) All amounts payable on account of the sale of
Mortgage Loans (including, but not limited to a sale pursuant to a
repurchase agreement) will be instructed to be paid directly by the
purchaser to the Settlement Account, or in the case of Mortgage-Backed
Securities delivered to an Approved MBS Custodian, to a demand deposit
account maintained with such Approved MBS Custodian (a "Custodian
Settlement Account") and, thereafter, to the Settlement Account as
provided in the applicable Custodial Agreement. Pursuant to Paragraph 3
above the Company has granted a security interest in and lien upon the
Settlement Account and in all Custodian Settlement Accounts and in any
and all amounts at any time held therein as collateral security for the
V84037[7083]94 10
<PAGE>
Secured Obligations. This Paragraph 9(c) shall constitute notice to the
Collateral Agent and any Approved MBS Custodian of such security
interest pursuant to Section 9302(1)(g) of the California Uniform
Commercial Code and any other law or regulation requiring such notice.
This Paragraph 9(c) shall further constitute irrevocable notice to the
Collateral Agent and any Approved MBS Custodian that the accounts
referred to in Paragraph 4(h) above are "no access" accounts to the
Company and the Collateral Agent except to the extent expressly
permitted hereunder and under the Credit Agreements. The Collateral
Agent shall hold such security interest in and lien upon the accounts
referred to in Paragraph 4(h) above and all funds at any time held
therein for the benefit of Lenders with all rights of a secured party
under the California Uniform Commercial Code.
(d) Prior to the occurrence of an Event of Default or
Potential Default, the Collateral Agent and any Approved MBS Custodian
shall take such steps as they may be reasonably directed from time to
time by the Company in writing which are not inconsistent with the
provisions of this Security Agreement and the Credit Agreements and
which the Company deems necessary to enable the Company to perform and
comply with Take-Out Commitments and with other agreements for the sale
or other disposition in whole or in part of Mortgage Loans and Mortgage-
Backed Securities.
(e) As long as no Event of Default or Potential Default
has occurred and is continuing and if, but only if, such action is not
inconsistent with the express provisions of this Security Agreement and
the Credit Agreements and would not create an Event of Default or
Potential Default, the Company may engage in the residential mortgage
banking business and, in connection therewith, may: originate, acquire
and service Mortgage Loans; receive payments on Mortgage Loans from the
Obligors thereon and impounds and fees in connection therewith; retain,
use and apply fees and payments made on account of the Mortgage Loans by
the Obligors thereunder; disburse from impound accounts; in the ordinary
course of the Company's business, create, use, destroy and transfer
records, files and other items described in Paragraph 4(g) above; sell
or otherwise dispose of Mortgage Loans not included in the Borrowing
Base, with or without servicing rights; pledge Mortgage Loans to the
extent permitted under the Credit Documents; sell servicing rights; and
enter into, exercise rights under, perform, modify, waive and cancel any
Take-Out Commitments.
(f) Following the occurrence of an Event of Default or
Potential Default, the Collateral Agent shall not, and shall incur no
liability to the Company or any other Person for refusing to, release
any item of Collateral to the Company or any other Person (other than
under existing Take-Out Commitments) without the express prior written
consent and at the direction of the Majority Lenders.
V84037[7083]94 11
<PAGE>
10. Release of Collateral.
(a) No later than the close of business of the Collateral
Agent on the second Business Day following the delivery by the Company
to the Collateral Agent (with a copy concurrently delivered to the
Credit Agent and each of the Lenders) of a Release Request, which
Release Request may be delivered only twice prior to the payment in full
of the Secured Obligations and termination of the Credit Agreements, but
which delivery may be made following the occurrence of an Event of
Default, the Collateral Agent shall, unless prohibited by law or
judicial process binding upon the Collateral Agent, unconditionally
release Excess Collateral (as defined below) from the Lien of the
Collateral Agent and the Secured Parties hereunder. If at the date a
Release Request is delivered to the Collateral Agent or on the second
Business Day thereafter there exists an Event of Default or Potential
Default under either of the Credit Agreements, the Majority Lenders may
elect to cease funding Loans under the Credit Agreements by written
notice to such effect given to the Company through the Credit Agent
within fifteen (15) days following such delivery.
(b) For purposes of this Paragraph 10, the term "Excess
Collateral" shall mean at any date Mortgage Loans and Mortgage-Backed
Securities included as Collateral hereunder at such date which, if
released, would not result in a failure of the Company to be in
compliance with the requirements of Paragraph 6 above. The Collateral
Agent may, in its sole discretion, select those Mortgage Loans and
Mortgage-Backed Securities which it will release pursuant to
subparagraph (a) above, it being expressly acknowledged and agreed by
the Company that the Collateral Agent intends to retain a Lien hereunder
on Mortgage Loans and Mortgage-Backed Securities which it and the Credit
Agent deem of the highest value. Without limiting the generality of the
foregoing, the Collateral Agent will not take into consideration any
proportionate sub-limits on Types of Eligible Mortgage Loans to which
the Lenders have agreed in the Credit Documents (e.g., the Collateral
Agent may designate all Wet Funded Loans for release and retain all
Eligible Committed Conforming Mortgage Loans). The Collateral Agent and
the Credit Agent will from time to time establish with the Lenders the
general parameters of the approach to such selection process which they
anticipate following but the Collateral Agent and the Credit Agent
reserve the right to act in their sole discretion in making such
selection and shall have no liability to the Company, the Parent, the
Lenders or any other Person in connection with any actual selection and
subsequent release other than such as constitutes gross negligence or
willful misconduct on their part.
11. Reports.
(a) The Company shall deliver to the Collateral Agent:
(1) No later than 9:00 a.m. (Los Angeles time) on
the first Business Day of each week: (i) a copy of the "Final
V84037[7083]94 12
<PAGE>
Position Status/Analysis Report" of the Company as of the close of
business on the last day of the immediately preceding week, and (ii)
Telerate information required to compute "Applicable Valuation
Factor"; and
(2) No later than 8:30 a.m. (Los Angeles time) on
each Business Day, a certificate as to Funding Checks outstanding,
Verified Outstanding CPNs and Current Refinance Risk Debt Exposure
as of the opening of business of the Company on such Business Day.
(b) The Collateral Agent shall deliver to the Company and
Lenders: (1) on or before the tenth and the twenty-fifth day of each
month, a collateral report in the form of that attached hereto as
Exhibit 6 with respect to the status of the Borrowing Base as of the
date of the most recent Borrowing Base Certificate provided by the
Company pursuant to the Credit Agreements, and (2) from time to time,
such other reports and information as the Majority Lenders may from time
to time reasonably request. In preparing any such reports the
Collateral Agent shall be entitled to rely, without independent
investigation (other than the review steps described on Exhibit 1
hereto), on information supplied to the Collateral Agent by the Company.
12. No Reliance. The Collateral Agent shall not be
responsible to any Secured Party for any recitals, statements,
representations or warranties contained herein or in any other Credit
Document; or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, accuracy, completeness or sufficiency of
this Security Agreement or any other Credit Document or instruments
executed and delivered, or which could have been executed or delivered,
in connection with this Security Agreement or the other Credit
Documents, including, without limitation, the attachment, creation,
effectiveness or perfection of the security interest granted or
purported to be granted hereunder in and to the Collateral. The
Collateral Agent shall be entitled to refrain from exercising any
discretionary powers or actions under this Security Agreement or any
other Credit Document until the Collateral Agent shall have received the
prior written consent of one hundred percent (100%) of the Lenders to
such action.
13. Costs and Expenses. The Collateral Agent shall notify the
Company of all extraordinary costs and expenses (including, without
limitation, expenses of legal counsel to the Collateral Agent) of the
Collateral Agent arising out of the Collateral Agent's performance of
this Security Agreement, and such extraordinary costs and expenses shall
be paid promptly by the Company or, if already paid by the Collateral
Agent, the Company promptly shall reimburse the Collateral Agent
therefor.
14. Availability of Documents. Lenders and their agents,
accountants, attorneys and auditors will be permitted during normal
business hours at any time and from time to time upon reasonable notice
V84037[7083]94 13
<PAGE>
to examine (to the extent permitted by applicable law) the files,
documents, records and other papers in the possession or under the
control of the Collateral Agent relating to any or all Collateral and to
make copies thereof. Prior to the occurrence of an Event of Default,
any such activity will be at the cost and expense of the Lender
conducting such activity; following the occurrence of an Event of
Default, all costs and expenses associated with the exercise by Lenders
of their rights under this Paragraph 14 shall be promptly paid by the
Company upon demand of any Lender made through the Credit Agent.
15. Representations and Warranties. The Company hereby
represents and warrants that: (a) the Company is the sole owner of the
Collateral (or, in the case of after-acquired Collateral, at the time
the Company acquires rights in the Collateral, will be the sole owner
thereof); (b) except for security interests in favor of the Collateral
Agent for the benefit of the Secured Parties hereunder, no Person has
(or, in the case of after-acquired Collateral, at the time the Company
acquires rights therein, will have) any right, title, claim or interest
(by way of Lien or otherwise) in, against or to the Collateral; (c) all
information heretofore, herein or hereafter supplied to the Collateral
Agent by or on behalf of the Company with respect to the Collateral is
or will be accurate and complete; and (d) each Mortgage Loan and
Mortgage-Backed Security which is included in the computation of the
Collateral Value of the Borrowing Base at any date is an Eligible
Mortgage Loan or Eligible Mortgage-Backed Security, as applicable and
the Collateral Agent has a valid and perfected first priority security
interest therein for the benefit of the Secured Parties (except to the
extent such Lien has been released pursuant to Paragraph 28 below and
until there has occurred a Negative Security Event).
16. Covenants of the Company. The Company hereby agrees:
(a) following the occurrence of a Negative Security Event, to procure,
execute and deliver from time to time any endorsements, assignments,
financing statements and other writings deemed necessary or appropriate
by the Collateral Agent to perfect, maintain and protect its security
interest hereunder and the priority thereof and to deliver promptly to
the Collateral Agent all originals of Collateral or Proceeds consisting
of chattel paper or instruments; (b) not to surrender or lose possession
of (other than to the Collateral Agent), sell, encumber, or otherwise
dispose of or transfer, any Collateral or right or interest therein
other than shipment of Mortgage Loans and Mortgage-Backed Securities
under Take-Out Commitments and as otherwise permitted under Paragraph 9
above; (c) at all times upon the request of the Collateral Agent, to
account fully for and promptly to deliver to the Collateral Agent, in
the form received, all Collateral or Proceeds received, endorsed to the
Collateral Agent as appropriate and accompanied by such assignments and
powers, duly executed, as the Collateral Agent shall request, and until
so delivered all Collateral and Proceeds shall be held in trust for the
Collateral Agent, separate from all other property of the Company and
identified as the property of the Collateral Agent; (d) at any
reasonable time, upon demand by the Collateral Agent, to exhibit to and
V84037[7083]94 14
<PAGE>
allow inspection by the Collateral Agent (or Persons designated by the
Collateral Agent) of the Collateral and the records concerning the
Collateral; (e) to keep the records concerning the Collateral at the
location(s) set forth in Paragraph 24 below and not to remove the
records from such location(s) without the prior written consent of the
Collateral Agent; (f) at the request of the Collateral Agent, to place
on each of its records pertaining to the Collateral a legend, in form
and content satisfactory to the Collateral Agent, indicating that such
Collateral has been assigned to the Collateral Agent; (g) not to modify,
compromise, extend, rescind or cancel any deed of trust, mortgage, note
or other document, instrument or agreement connected with any Mortgage
Loan or any document relating thereto or connected therewith or consent
to a postponement of strict compliance on the part of any party thereto
with any term or provision thereof; (h) to keep the Collateral insured
against loss, damage, theft, and other risks customarily covered by
insurance, and such other risks as the Collateral Agent may request;
(i) to do all acts that a prudent investor would deem necessary or
desirable to maintain, preserve and protect the Collateral; (j) not
knowingly to use or permit any Collateral to be used unlawfully or in
violation of any provision of this Security Agreement or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Collateral; (k) to pay (or require to be paid) prior to their becoming
delinquent all taxes, assessments, insurance premiums, charges,
encumbrances and liens now or hereafter imposed upon or affecting any
Collateral; (l) to notify the Collateral Agent before any such change
shall occur of any change in the Company's name, identity or structure
through merger, consolidation or otherwise; (m) to appear in and defend,
at the Company's cost and expense, any action or proceeding which may
affect its title to or, following the occurrence of a Negative Security
Event, the Collateral Agent's interest for the benefit of the Secured
Parties in the Collateral; (n) to keep accurate and complete records of
the Collateral and to provide the Collateral Agent with such records and
such reports and information relating to the Collateral as the
Collateral Agent may request from time to time; and (o) to comply with
all laws, regulations and ordinances relating to the possession,
operation, maintenance and control of the Collateral.
17. Collection of Collateral Payments.
(a) The Company shall, at its sole cost and expense,
endeavor to obtain payment, when due and payable, of all sums due or to
become due with respect to any Collateral ("Collateral Payments" or a
"Collateral Payment"), including, without limitation, the taking of such
action with respect thereto as the Collateral Agent may request, or, in
the absence of such request, as the Company may reasonably deem
advisable; provided, however, that the Company shall not, without the
prior written consent of the Collateral Agent, grant or agree to any
rebate, refund, compromise or extension with respect to any Collateral
Payment or accept any prepayment on account thereof. Upon the request
of the Collateral Agent following the occurrence of an Event of Default,
the Company will notify and direct any party who is or might become
V84037[7083]94 15
<PAGE>
obligated to make any Collateral Payment, to make payment thereof to the
Collateral Agent (or to the Company in care of the Collateral Agent) at
such address as the Collateral Agent may designate. The Company will
reimburse the Collateral Agent promptly upon demand for all out-of-
pocket costs and expenses, including reasonable attorneys' fees and
litigation expenses, incurred by the Collateral Agent in seeking to
collect any Collateral Payment.
(b) If there shall occur an Event of Default or Potential
Default, upon the request of the Collateral Agent the Company will,
forthwith upon receipt, transmit and deliver to the Collateral Agent, in
the form received, all cash, checks, drafts and other instruments for
the payment of money (properly endorsed where required so that such
items may be collected by the Collateral Agent) which may be received by
the Company at any time as payment on account of any Collateral Payment
and if such request shall be made, until delivery to the Collateral
Agent, such items will be held in trust for the Collateral Agent and
will not be commingled by the Company with any of its other funds or
property. Thereafter, the Collateral Agent is hereby authorized and
empowered to endorse the name of the Company on any check, draft or
other instrument for the payment of money received by the Collateral
Agent on account of any Collateral Payment if the Collateral Agent
believes such endorsement is necessary or desirable for purposes of
collection.
(c) The Company hereby agrees to indemnify, defend and
save harmless the Collateral Agent and its agents, officers, employees
and representatives from and against all reasonable liabilities and
expenses on account of any adverse claim asserted against the Collateral
Agent relating to any moneys received by the Collateral Agent on account
of any Collateral Payment (other than as a direct result of the gross
negligence or willful misconduct of the Collateral Agent) and such
obligation of the Company shall continue in effect after and
notwithstanding the discharge of the Secured Obligations and the release
of the security interest granted in Paragraph 3 above.
18. Authorized Action by Collateral Agent. The Company hereby
irrevocably appoints the Collateral Agent as its attorney-in-fact to do
(but the Collateral Agent shall not be obligated to and shall incur no
liability to the Company or any third party for failure so to do) at any
time and from time to time following the occurrence of an Event of
Default at the request and direction, given after the occurrence of an
Event of Default, of the Majority Lenders (which request and direction
must be in writing if so requested by the Collateral Agent), any act
which the Company is obligated by this Security Agreement to do, and to
exercise such rights and powers as the Company might exercise with
respect to the Collateral, including, without limitation, the right to
(a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums
and property now or hereafter payable on or on account of the
Collateral; (b) enter into any extension, reorganization, deposit,
V84037[7083]94 16
<PAGE>
merger, consolidation or other agreement pertaining to, or deposit,
surrender, accept, hold or apply other property in exchange for the
Collateral; (c) insure, process and preserve the Collateral;
(d) transfer the Collateral to the Collateral Agent's own or its
nominee's name; and (e) make any compromise or settlement, and take any
other action it deems advisable with respect to the Collateral.
Notwithstanding anything contained herein, in no event shall the
Collateral Agent be required to make any presentment, demand or protest,
or give any notice and the Collateral Agent need not take any action to
preserve any rights against any prior party or any other person in
connection with the Secured Obligations or with respect to the
Collateral.
19. Default and Remedies. Upon the occurrence of an Event of
Default and following the acceleration of the Obligations, the
Collateral Agent shall at the request and direction of the Majority
Lenders (which request and direction must be in writing if so requested
by the Collateral Agent), without notice to or demand upon the Company:
(a) foreclose or otherwise enforce the Collateral Agent's security
interest for the benefit of the Secured Parties in the Collateral in any
manner permitted by law or provided for hereunder; (b) sell or otherwise
dispose of the Collateral or any part thereof at one or more public or
private sales, whether or not such Collateral is present at the place of
sale, for cash or credit or future delivery and without assumption of
any credit risk, on such terms and in such manner as the Collateral
Agent may determine; (c) require the Company to assemble the Collateral
and/or books and records relating thereto and make such available to the
Collateral Agent at a place to be designated by the Collateral Agent;
(d) enter onto property where any Collateral or books and records
relating thereto are located and take possession thereof with or without
judicial process; and (e) prior to the disposition of the Collateral,
prepare it for disposition in any manner and to the extent the
Collateral Agent deems appropriate. Upon any sale or other disposition
pursuant to this Security Agreement, the Collateral Agent shall have the
right to deliver, assign and transfer to the purchaser thereof the
Collateral or portion thereof so sold or disposed of and all proceeds
thereof shall be promptly transmitted to the Credit Agent for allocation
to the Secured Parties as provided above. Each purchaser at any such
sale or other disposition shall hold the Collateral free from any claim
or right of whatever kind, including any equity or right of redemption
of the Company, and the Company specifically waives (to the extent
permitted by law) all rights of redemption, stay or appraisal which it
has or may have under any rule of law or statute now existing or
hereafter adopted.
20. Cumulative Rights. The rights, powers and remedies of the
Collateral Agent and the Secured Parties under this Security Agreement
shall be in addition to all rights, powers and remedies given to the
Collateral Agent and the Secured Parties by virtue of any statute or
rule of law, the other Credit Documents or any other agreement, all of
V84037[7083]94 17
<PAGE>
which rights, powers and remedies shall be cumulative and may be
exercised successively or concurrently without impairing the Collateral
Agent's and the Secured Parties' security interest in the Collateral.
21. Binding Upon Successors. All rights of the Collateral
Agent and the Secured Parties under this Security Agreement shall inure
to the benefit of the Collateral Agent and the Secured Parties and their
successors and assigns, and all obligations of the Company shall bind
its successors and assigns.
22. Entire Agreement; Severability. This Security Agreement
contains the entire security agreement and collateral agency agreement
with respect to the Collateral among Secured Parties and the Company.
All waivers by the Company provided for in this Security Agreement have
been specifically negotiated by the parties with full cognizance and
understanding of their rights. If any of the provisions of this
Security Agreement shall be held invalid or unenforceable, this Security
Agreement shall be construed as if not containing such provisions, and
the rights and obligations of the parties hereto shall be construed and
enforced accordingly.
23. Choice of Law. This Security Agreement shall be construed
in accordance with and governed by the laws of the State of California
and, where applicable and except as otherwise defined herein, terms used
herein shall have the meanings given them in the California Uniform
Commercial Code.
24. Place of Business; Records. The Company represents and
warrants that its chief place of business is at the address set forth
beneath its signature below, and that its books and records concerning
the Collateral are kept at its chief place of business.
25. Notice. Any written notice, consent or other communica-
tion provided for in this Security Agreement shall be delivered or sent
as provided in the Credit Agreements.
26. Acknowledgment by Holders of CPNs. It is expressly
acknowledged and agreed by the holders from time to time of Outstanding
CPNs, such acknowledgment and agreement being conclusively deemed to
have been given by any such holder's purchase or acceptance thereof that
Outstanding CPNs held by it are entitled to the benefits of this
Security Agreement and the Collateral hereunder, that this Security
Agreement and the Credit Agreements may be amended and otherwise
modified and/or provisions waived from time to time as permitted
hereunder and thereunder without consultation with and without the
consent of any such holder (other than an amendment which would deny
such holder its status as a "Secured Party" hereunder, which amendment
must be consented to in writing by such holder).
V84037[7083]94 18
<PAGE>
27. Execution in Counterparts. This Security Agreement may be
executed in counterparts each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute
one and the same agreement.
28. Conditional Release of Lien; Reinstatement of Lien.
(a) In the event the Company's long term unsecured debt
rating shall become "A-" or higher with S&P and "A3" or higher with
Moody's, upon the request of the Company and subject to the conditions
precedent set forth below, the Collateral Agent shall release the
Collateral from the Lien in favor of the Collateral Agent for the
benefit of the Secured Parties hereunder and, as evidence of such
release of Lien, shall execute and deliver to the Company a confirmation
of such release in the form of that attached hereto as Exhibit 7 and
such UCC-2 financing statements as are necessary to terminate all
existing UCC-1 financing statements covering the Collateral filed by the
Collateral Agent on behalf of the Secured Parties, it being expressly
acknowledged and agreed by the Collateral Agent and the other Secured
Parties that upon achievement by the Company of such long term unsecured
debt ratings the credit facilities evidenced by the Credit Agreements
and all obligations thereunder are intended to be and become unsecured
Obligations. Following the effective date of the release of Lien
contemplated hereby, the Collateral Agent will utilize a trust receipt
in the form of that attached hereto as Exhibit 8 and letters in the
forms of those attached hereto as Exhibit 9A and Exhibit 9B in releasing
Collateral to the Company and shipping Collateral pursuant to Paragraph
9 above in lieu of the trust receipt form attached hereto as Exhibit 2
and the letters attached hereto as Exhibit 5A and Exhibit 5B,
respectively. Concurrently with the release of Lien contemplated
hereby, the sublimits on Eligible Committed Non-Conforming Mortgage
Loans and Eligible Uncommitted Non-Conforming Mortgage Loans includible
in the computation of the Collateral Value of the Borrowing Base shall
no longer apply. As conditions precedent to the release of Lien
contemplated hereby:
(1) There shall not exist an Event of Default or
Potential Default;
(2) The Collateral Agent shall have received
evidence satisfactory to it that there are no Outstanding CPNs which
are entitled to the benefits of this Security Agreement and that any
CPNs to be issued in the future by the Company will be issued on an
unsecured basis;
(3) Immediately prior to and immediately following
the release of Lien contemplated hereby, there shall not exist a
Negative Security Event; and
(4) The Company shall have executed and
conditionally delivered to the Collateral Agent new UCC-1 financing
V84037[7083]94 19
<PAGE>
statements in form and substance acceptable to the Collateral Agent
accompanied by the Company's irrevocable written authorization for
the Collateral Agent to file such UCC-1 financing statements upon
the occurrence of a Negative Security Event.
Nothing contained in this Paragraph 28(a) shall in any manner or to any
extent affect the obligations of the Company hereunder and under the
other Credit Documents to maintain with the Collateral Agent Eligible
Mortgage Loans and Eligible Mortgage-Backed Securities with the
Collateral Value and Fair Market Value required under the Credit
Documents, it being expressly acknowledged and agreed by the Company
that the release of Lien contemplated hereby shall not affect the terms
and provisions of the Credit Documents except to the extent that so long
as no Negative Security Event shall occur the Obligations shall not
thereafter be secured by the Collateral.
(b) If following the release of Lien contemplated by
subparagraph (a) above there shall occur a Negative Security Event:
(1) The Company shall automatically be deemed to
pledge and grant to the Collateral Agent and hereby does grant to
the Collateral Agent effective upon the occurrence of such Negative
Security Event, for the pro rata and pari passu benefit of the
Secured Parties, a security interest in the Collateral, including,
without limitation, all Collateral then in the possession of the
Collateral Agent as collateral security for the Secured Obligations;
(2) The Collateral Agent shall no later than five
Business Days following receipt of notification from the Credit
Agent of such Negative Security Event: (i) record the UCC-1
financing statements previously delivered to it pursuant to
subparagraph (a)(4) above, (ii) commence to utilize the trust
receipt in the form of that attached hereto as Exhibit 2 and the
letters in the forms of those attached hereto as Exhibit 5A and
Exhibit 5B in releasing Collateral to the Company and shipping
Collateral pursuant to Paragraph 9 above;
(3) The Company shall take such action as is
necessary to be in conformity with the sublimits originally
applicable to Eligible Committed Non-Conforming Mortgage Loans and
Eligible Uncommitted Non-Conforming Mortgage Loans no later than the
sixtieth day following the occurrence of such Negative Security
Event; and
(4) The Company shall take such other actions and
execute and deliver such additional documents, instruments and
agreements as the Credit Agent, the Collateral Agent and the
Majority Lenders shall request to obtain for the Secured Parties the
benefit of the Collateral.
V84037[7083]94 20
<PAGE>
The reinstatement of the Lien of the Collateral Agent on the Collateral
following a Negative Security Event shall in no manner affect the
rights, powers and remedies of the Collateral Agent, the Credit Agent
and the Lenders otherwise available under the Credit Documents,
including, without limitation, the right to accelerate the Obligations
and to refuse to make further Loans under the Credit Agreements in the
event there exists an Event of Default.
(c) On and as of the date of this Security Agreement the
Company's long term unsecured debt rating entitles it to request that
the Collateral Agent release the Lien in favor of the Secured Parties
hereunder pursuant to subparagraph (a) above. In addition, all
additional conditions precedent to such release set forth in said
subparagraph (a) other than the condition precedent set forth in
subparagraph (2) thereof have been satisfied. It is anticipated that
the remaining additional condition precedent to such release will be
satisfied by December 17, 1993, at which date the Company will request
the Collateral Agent to execute and deliver a confirmation of release of
Lien in the form of that attached hereto as Exhibit 7. By executing and
delivering the Facility A Agreement and the Facility B Agreement, each
of the Lenders hereby agrees that effective as of the Effective Date the
sublimits on Eligible Committed Non-Conforming Mortgage Loans and
Eligible Uncommitted Non-Conforming Mortgage Loans includible in the
computation of the Collateral Value of the Borrowing Base shall be
waived, notwithstanding that the Lien in favor of the Collateral Agent
is not required to be released; provided, however, that if all
conditions precedent to the release of Lien have not been satisfied on
or before December 17, 1993, such waiver shall be terminated, in which
case the Company shall take such action as is necessary to be in
conformity with the sublimits originally applicable to Eligible
Committed Non-Conforming Mortgage Loans and Eligible Uncommitted Non-
Conforming Mortgage Loans no later than February 15, 1994.
. EXECUTED the day and year first above written.
COUNTRYWIDE FUNDING CORPORATION,
a New York corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
Address: 155 North Lake Avenue
Pasadena, California 91109-7137
Attn: Stanford L. Kurland
V84037[7083]94 21
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association, as
Credit Agent
By: _________________________________
Name:________________________________
Title:_______________________________
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, a Delaware corporation,
as Collateral Agent
By: _________________________________
Name: _______________________________
Title: ______________________________
V84037[7083]94 22
<PAGE>
EXHIBIT L
TO GLOSSARY
FORM OF
GUARANTY
THIS GUARANTY (the "Guaranty") is made and dated as of the 15th
day of November, 1993 by COUNTRYWIDE CREDIT INDUSTRIES, INC., a Delaware
corporation ("Guarantor").
RECITALS
A. Pursuant to that certain Mortgage Loan Warehousing
Agreement: Facility A and that certain Mortgage Loan Warehousing
Agreement: Facility B, each dated as of December 4, 1992 among the
Company, the lenders named therein, the Credit Agent, the Collateral
Agent and others (as amended and extended to date, the "Existing
Warehousing Agreements") the lenders party thereto agreed to extend
credit to COUNTRYWIDE FUNDING CORPORATION, a New York corporation
("Borrower"), on the terms and subject to the conditions set forth
therein, including, without limitation, that the Guarantor execute and
deliver that certain Guaranty dated concurrently with the Existing
Warehousing Agreements (the "Existing Guaranty").
B. The current parties to the Existing Warehousing Agreements
have agreed to terminate the Existing Warehousing Agreements and to
replace the credit facilities evidenced thereby with two new credit
facilities, the first evidenced by that certain Mortgage Loan
Warehousing Agreement: Facility A and the second evidenced by that
certain Mortgage Loan Warehousing Agreement: Facility B, each dated
concurrently herewith (jointly and as amended, extended and replaced,
the "Credit Agreements"), each Credit Agreement being by and among the
Borrower, the Credit Agent, the Collateral Agent, the Managing Co-
Agents, the Co-Agents and the Lenders participating therein (with
capitalized terms not otherwise defined herein used as defined in the
Glossary attached to the Credit Agreements as Annex I).
C. As a condition precedent to the effectiveness of the
Credit Documents, the Guarantor is required to execute and deliver to
the Collateral Agent for the benefit of the Lenders this Guaranty in
replacement of and substitution for the Existing Guaranty.
NOW, THEREFORE, in consideration of the above Recitals and for
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Guarantor hereby agrees as follows:
V12887[7083]94 1 7-JAN-94 13:09:00
<PAGE>
AGREEMENT
1. Guarantor hereby irrevocably and unconditionally
guarantees the payment when due, upon maturity, acceleration or
otherwise, of the Obligations, whether heretofore, now, or hereafter
made, incurred or created, whether voluntary or involuntary and however
arising, absolute or contingent, liquidated or unliquidated, determined
or undetermined, whether or not such Obligations are from time to time
reduced, or extinguished and thereafter increased or incurred, whether
Borrower may be liable individually or jointly with others, whether or
not recovery upon such Obligations may be or hereafter become barred by
any statute of limitations, and whether or not such Obligations may be
or hereafter become otherwise invalid or unenforceable.
2. Guarantor irrevocably and unconditionally guarantees the
payment of the Obligations whether or not due or payable by Borrower
upon: (a) the dissolution, insolvency or business failure of, or any
assignment for benefit of creditors by, or commencement of any
bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceedings by or against, Borrower or Guarantor, or (b) the
appointment of a receiver for, or the attachment, restraint of or making
or levying of any order of court or legal process affecting, the
property of Borrower or Guarantor, and unconditionally promises to pay
such Obligations to Collateral Agent for the benefit of Lenders, or
order, on demand, in lawful money of the United States.
3. The liability of Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Obligations,
whether executed by Guarantor or by any other party, and the liability
of Guarantor hereunder is not affected or impaired by (a) any direction
of application of payment by Borrower or by any other party, or (b) any
other guaranty, undertaking or maximum liability of Guarantor or of any
other party as to the Obligations, or (c) any payment on or in reduction
of any such other guaranty or undertaking, or (d) any revocation or
release of any obligations of any other guarantor of the Obligations, or
(e) any dissolution, termination or increase, decrease or change in
personnel of Guarantor, or (f) any payment made to Lenders, Credit Agent
or Collateral Agent on the Obligations which any of such Persons repay
to Borrower pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and Guarantor
waives any right to the deferral or modification of Guarantor's
obligations hereunder by reason of any such proceeding.
4. (a) The obligations of Guarantor hereunder are indepen-
dent of the Obligations of Borrower, and a separate action or actions
may be brought and prosecuted against Guarantor whether or not action is
brought against Borrower and whether or not Borrower be joined in any
such action or actions. Guarantor waives, to the fullest extent per-
mitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by Borrower
or other circumstance which operates to toll any statute of limitations
V12887[7083]94 2 7-JAN-94 13:09:00
<PAGE>
as to Borrower shall operate to toll the statute of limitations as to
Guarantor.
(b) All payments made by Guarantor under this Guaranty
shall be made without set-off or counterclaim and free and clear of and
without deductions for any present or future taxes, fees, withholdings
or conditions of any nature ("Taxes"). Guarantor shall pay any such
Taxes, including Taxes on any amounts so paid, and will promptly furnish
each Lender with copies of any tax receipts or such other evidence of
payment as Lenders or Credit Agent may require.
5. Guarantor authorizes Lenders, Credit Agent and Collateral
Agent (whether or not after termination of this Guaranty), without
notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to (a) renew, compromise, extend, increase,
accelerate or otherwise change the time for payment of, or otherwise
change the terms of, Obligations or any part thereof, including increase
or decrease of the rate of interest thereon; (b) take and hold security
for the payment of this Guaranty or the Obligations and exchange,
enforce, waive and release any such security; (c) apply such security
and direct the order or manner of sale thereof as Lenders, Credit Agent,
and Collateral Agent in their discretion may determine; and (d) release
or substitute any one or more endorsers, guarantors, Borrower or other
obligors. Lenders, Credit Agent and Collateral Agent may without notice
to or the further consent of Borrower or Guarantor assign this Guaranty
in whole or in part to any person acquiring an interest in the
Obligations.
6. It is not necessary for Lenders, Credit Agent or
Collateral Agent to inquire into the capacity or power of Borrower or
the officers acting or purporting to act on its behalf, and Obligations
made or created in reliance upon the professed exercise of such powers
shall be guaranteed hereunder.
7. Guarantor waives any right to require Lenders, Credit
Agent or Collateral Agent to (a) proceed against Borrower or any other
party; (b) proceed against or exhaust any security held from Borrower;
or (c) pursue any other remedy in Lenders' power whatsoever. Guarantor
waives any personal defense based on or arising out of any personal
defense of Borrower other than payment in full of the Obligations,
including, without limitation, any defense based on or arising out of
the disability of Borrower, or the invalidity or unenforceability of the
Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of Borrower other than payment in full of the
Obligations. Lenders, Credit Agent and Collateral Agent may, at their
election, foreclose on any security held for the Obligations by one or
more judicial or nonjudicial sales, or exercise any other right or
remedy Lenders, Credit Agent and Collateral Agent may have against
Borrower, or any security, without affecting or impairing in any way the
liability of Guarantor hereunder except to the extent the Obligations
V12887[7083]94 3 7-JAN-94 13:09:00
<PAGE>
have been paid. Guarantor waives any defense arising out of any such
election, even though such election operates to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of
Guarantor against Borrower or any security. Guarantor hereby waives any
claim or other rights which Guarantor may now have or may hereafter
acquire against the Borrower or any other guarantor of all or any of the
Obligations that arise from the existence or performance of the
Guarantor's obligations under this Guaranty or any other of the Credit
Documents (as such claims and rights being referred to as the
"Guarantor's Conditional Rights"), including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution, or
indemnification, or any right to participate in any claim or remedy
which the Lenders, Credit Agent or Collateral Agent have against the
Borrower or any collateral which the Lenders, Credit Agent and
Collateral Agent now have or hereafter acquire for the Obligations,
whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, by any payment made hereunder or
otherwise, including, without limitation, the right to take or receive
from the Borrower, directly or indirectly, in cash or other property or
setoff or in any other manner, payment or security on account of such
claim or other rights. If, notwithstanding the foregoing provisions,
any amount shall be paid to the Guarantor on account of the Guarantor's
Conditional Rights and either (a) such amount is paid to the Guarantor
at any time when the Obligations shall not have been paid or performed
in full, or (b) regardless of when such amount is paid to the Guarantor
any payment made by Borrower to the Lenders, Credit Agent or Collateral
Agent is at any time determined to be a preferential payment, then such
amount paid to the Guarantor shall be deemed to be held in trust for the
benefit of the Lenders, Credit Agent or Collateral Agent and shall
forthwith be paid to the Lenders, Credit Agent or Collateral Agent to be
credited and applied upon the Obligations, whether matured or unmatured,
in such order and manner as the Lenders, Credit Agent or Collateral
Agent shall determine. To the extent that any of the provisions of this
Paragraph shall not be enforceable, the Guarantor agrees that until such
time as the Obligations have been paid and performed in full and the
period of time has expired during which any payment made by the Borrower
or the Guarantor to the Lenders, Credit Agent or Collateral Agent may be
determined to be a preferential payment, the Guarantor's Conditional
Rights to the extent not validly waived shall be subordinate to the
Lender's, Credit Agent's or Collateral Agent's right to full payment and
performance of the Obligations and the Guarantor shall not seek to
enforce the Guarantor's Conditional Rights during such period.
Guarantor waives all presentments, demands for performance, protests and
notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this
Guaranty, and notices of the existence, creation or incurring of new or
additional Obligations. Guarantor assumes all responsibility for being
and keeping itself informed of Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the
risks which Guarantor assumes and incurs hereunder, and agrees that
V12887[7083]94 4 7-JAN-94 13:09:00
<PAGE>
neither Lenders, Credit Agent nor Collateral Agent shall have any duty
to advise Guarantor of information known to any of them regarding such
circumstances or risks.
8. In addition to the Obligations, Guarantor agrees to pay
reasonable attorneys' fees and all other costs and expenses incurred by
Lenders, Credit Agent and Collateral Agent in enforcing this Guaranty in
any action or proceeding arising out of, or relating to, this Guaranty.
This Guaranty and the liability and obligations of Guarantor hereunder
are binding upon Guarantor and its successors and assigns, and this
Guaranty inures to the benefit of and is enforceable by Lenders, Credit
Agent and Collateral Agent and their successors, transferees, and
assigns.
9. No right or power of Lenders, Credit Agent or Collateral
Agent hereunder shall be deemed to have been waived by any act or
conduct on the part of such Persons, or by any neglect to exercise such
right or power, or by any delay in so doing; and every right or power
shall continue in full force and effect until specifically waived or
released by an instrument in writing executed by Lenders, Credit Agent
and Collateral Agent.
10. Guarantor agrees to execute any and all further documents,
instruments and agreements as Credit Agent from time to time reasonably
requests to evidence Guarantor's obligations hereunder.
11. Guarantor hereby represents and warrants and agrees that:
(a) Guarantor: (1) is duly organized, validly existing
and in good standing as a corporation under the laws of the state of its
incorporation and is in good standing as a foreign corporation in each
jurisdiction where its ownership of property or conduct of business
requires such qualification and where failure to so be in good standing
could have a material adverse effect on Borrower or its property and/or
business or on Guarantor's ability to pay or perform the Obligations or
its obligations hereunder, (2) has the corporate power and authority and
the legal right to own and operate its property and to conduct business
in the manner in which it does and proposes so to do, (3) is in
compliance with all Requirements of Law and Contractual Obligations to
the extent that failure to comply could have a material adverse effect
on Guarantor or its property and/or business or on the ability to pay or
perform the Obligations or its obligations hereunder, and (4) has
reviewed and approved the Credit Documents.
(b) Guarantor has the corporate power and authority and
the legal right to execute, deliver and perform the Credit Documents to
which it is a party and has taken all necessary corporate action to
authorize the execution, delivery and performance of such Credit
Documents. The Credit Documents to which Guarantor is a party have been
duly executed and delivered on behalf of Guarantor and constitute legal,
V12887[7083]94 5 7-JAN-94 13:09:00
<PAGE>
valid and binding obligations of Guarantor enforceable against Guarantor
in accordance with their respective terms.
(c) The execution, delivery and performance by Guarantor
of the Credit Documents to which Guarantor is a party will not violate
any Requirement of Law or any Contractual Obligation of Guarantor to the
extent that failure to comply could have a material adverse effect on
Guarantor or its property and/or business or on the ability to pay or
perform the Obligations or its obligations hereunder.
(d) Guarantor shall not permit its consolidated ratio of
Current Assets to Current Liabilities to be less than 1.05:1 on and as
of the last day of any calendar month.
(e) Guarantor shall not permit its consolidated net worth
determined in accordance with GAAP (but in any event including the
Preferred Stock (as defined below) as equity):
(1) On and as of the last day of any calendar month
during the period commencing on the Effective Date to and including
February 28, 1994, to be less than $612,000,000.00; and
(2) On and as of the last day of any calendar month
thereafter, to be less than the greater of $612,000,000.00 and
eighty five percent (85%) of its net worth determined in accordance
with GAAP as of February 28, 1994.
(f) Guarantor shall not issue or permit to be outstanding
at any date Parent Notes under the Guarantor's Master Note Program (as
described in the Credit Agreements) in an amount in excess of
$30,000,000.00.
(g) Guarantor will not permit Indebtedness constituting
"Medium Term Notes" (as such term is defined in the documentation
constituting Parent Notes) in an amount greater than $35,000,000.00 to
mature in any one month.
(h) Guarantor will not declare or pay any dividends upon
any shares of Guarantor's stock now or hereafter outstanding, except
dividends payable in the capital stock or stock rights of Guarantor, or
make any distribution of assets to its stockholders including, without
limitation, pursuant to any stock repurchase, whether in cash, property
or securities; provided, however, that if at the date of such payment or
distribution (both before and after giving effect thereto) there shall
not exist an Event of Default or Potential Default:
(1) Guarantor may pay dividends and make other
distributions not later than 120 days after the end of any fiscal
quarter or year, as applicable, in an aggregate amount which does
not exceed, when combined with all prior dividends and other
distributions, other than Excluded Dividends (as defined below), if
V12887[7083]94 6 7-JAN-94 13:09:00
<PAGE>
any, applicable to such fiscal year to date, the greater of: (i)
after tax net income of Guarantor determined in accordance with GAAP
for such fiscal year to the date of the most recently ended fiscal
quarter of such fiscal year, and (ii) the aggregate dollar amount of
dividends and other distributions, other than Excluded Dividends,
paid during the immediately preceding year;
(2) Guarantor may pay dividends ("Excluded
Dividends") at a rate not to exceed 12% on its Convertible Preferred
Stock issued pursuant to the Form S-3 Registration Statement (Reg.
No. 33-34718) (the "Preferred Stock"); and
(3) Guarantor may redeem some or all of the Preferred
Stock pursuant to Section 8 of the Certificate of Designation of
$23.75 Convertible Preferred Stock of the Guarantor substantially in
the form filed as Exhibit 4.1 to Amendment No. 1 to the Registration
Statement.
12. This Guaranty shall be deemed to be made under and shall
be governed by the laws of the State of California.
13. If any of the provisions of this Guaranty shall contravene
or be held invalid under the laws of any jurisdiction, this Guaranty
shall be construed as if not containing those provisions and the rights
and obligations of the parties hereto shall be construed and enforced
accordingly.
Executed as of the day and year first above written.
COUNTRYWIDE CREDIT INDUSTRIES, INC.,
a Delaware corporation
By: __________________________________
Title:____________________________
Address: 155 North Lake Avenue
Pasadena, California 91101
Attn: Stanford L. Kurland
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