|
|
Completing our largest acquisition, by adding Schuler Homes, Inc. to the Horton family in February 2002;
|
|
|
Signing record new sales contracts, amounting to $6.9 billion (31,491 homes), a 53% increase over our 2001 record of $4.5 billion (22,179 homes);
|
|
|
Earning record revenues of $6.7 billion (29,761 homes delivered), a 51% increase over our 2001 record of $4.5 billion (21,371 homes delivered);
|
|
|
Earning record net income of $404.7 million, a 57% increase over our fiscal 2001 record of $257.0 million;
|
|
|
Earning record diluted earnings per share of $2.87, a 29% increase over our 2001 record of $2.23;
|
|
|
Holding a record year-end sales backlog of $2.8 billion (12,697 homes), up 46% over our 2001 year-end record of $1.9 billion (9,263 homes);
|
|
|
Attaining a record level of stockholders equity of $2.3 billion, up 82% from the 2001 level of $1.3 billion; and
|
|
|
Achieving a return on beginning stockholders equity of 32% and on average stockholders equity of 22%.
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2002
OR
|
|||
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period
from
to
Commission File number
1-14122
|
Delaware
|
75-2386963
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
1901 Ascension Blvd., Suite 100
Arlington, Texas
|
76006
|
|
(Address of principal executive offices)
|
(Zip Code)
|
|
(817) 856-8200
|
||
(Registrants telephone number, including area code)
|
Title of each class
|
Name of each exchange on which registered
|
|
Common Stock, par value $.01 per share
|
The New York Stock Exchange
|
|
8
3
/
8
% Senior Notes due 2004
|
The New York Stock Exchange
|
|
10% Senior Notes due 2006
|
The New York Stock Exchange
|
|
8% Senior Notes due 2009
|
The New York Stock Exchange
|
|
10
1
/
2
% Senior Notes due 2005
|
The New York Stock Exchange
|
|
9
3
/
4
% Senior Subordinated Notes due 2010
|
The New York Stock Exchange
|
|
9
3
/
8
% Senior Subordinated Notes due 2011
|
The New York Stock Exchange
|
|
Zero Coupon Convertible Senior Notes due 2021
|
The New York Stock Exchange
|
|
7
7
/
8
% Senior Notes due 2011
|
The New York Stock Exchange
|
|
9% Senior Notes due 2008
|
The New York Stock Exchange
|
|
9
3
/
8
% Senior Notes due 2009
|
The New York Stock Exchange
|
|
10
1
/
2
% Senior Subordinated Notes due 2011
|
The New York Stock Exchange
|
|
8% Senior Notes due 2012
|
The New York Stock Exchange
|
Years Entered
|
Markets
|
|
1987
|
Phoenix
|
|
1988
|
Atlanta, Orlando
|
|
1989
|
Charlotte
|
|
1990
|
Houston
|
|
1991
|
Maryland-D.C., Virginia-D.C.
|
|
1992
|
Chicago, Raleigh/Durham
|
|
1993
|
Austin, Los Angeles, Salt Lake City, San Diego
|
|
1994
|
Minneapolis/St. Paul, Las Vegas, San Antonio
|
|
1995
|
Birmingham, Denver, Greensboro, Miami/West Palm Beach
|
|
1996
|
Albuquerque
|
|
1997
|
Greenville, New Jersey, Tucson
|
|
1998
|
Charleston, Hilton Head, Jacksonville, Killeen, Myrtle Beach, Portland, Sacramento
|
|
1999
|
Columbia
|
|
2000
|
Ventura County
|
|
2001
|
Fort Myers/Naples
|
|
2002
|
Colorado Springs, Fort Collins, Hawaii, Inland Empire (Southern California), Oakland, Orange County, San Francisco, Seattle/Tacoma
|
|
|
Established land positions and inventories;
|
|
|
Existing relationships with land owners, developers, subcontractors and suppliers;
|
|
|
Brand name recognition; and
|
|
|
Proven product acceptance by home buyers in the market.
|
|
|
Site selection, which involves
|
|
|
A feasibility study;
|
|
|
Soil and environmental reviews;
|
|
|
Review of existing zoning and other governmental requirements; and
|
|
|
Review of the need for and extent of offsite work required to meet local building codes;
|
|
|
Negotiating lot option or similar contracts;
|
|
|
Overseeing land development;
|
|
|
Planning its homebuilding schedule;
|
|
|
Selecting building plans and architectural schemes;
|
|
|
Obtaining all necessary building approvals; and
|
|
|
Developing a marketing plan.
|
|
|
Financing;
|
|
|
Cash management;
|
|
|
Risk management;
|
|
|
Accounting and management reporting;
|
|
|
Administration of payroll and employee benefits;
|
|
|
Final approval of land and lot acquisitions;
|
|
|
Capital allocation; and
|
|
|
Oversight of inventory levels.
|
Geographic Region
|
Markets
|
|
Mid-Atlantic
|
Charleston, Charlotte, Columbia, Greensboro, Greenville, Hilton Head, Maryland-D.C., Myrtle Beach, New Jersey, Raleigh/Durham, Virginia-D.C.
|
|
Midwest
|
Chicago, Minneapolis/St. Paul
|
|
Southeast
|
Atlanta, Birmingham, Fort Myers/Naples, Jacksonville, Miami/West Palm Beach, Orlando
|
|
Southwest
|
Albuquerque, Austin, Dallas, Fort Worth, Houston, Killeen, Phoenix, San Antonio, Tucson
|
|
West
|
Colorado Springs, Denver, Fort Collins, Hawaii, Inland Empire (Southern California), Las Vegas, Los Angeles, Oakland, Orange County, Portland, Sacramento,
Salt Lake City, San Francisco, San Diego, Seattle/Tacoma, Ventura County
|
|
|
Regional economic conditions;
|
|
|
Job growth;
|
|
|
Land availability;
|
|
|
Local land development process;
|
|
|
Consumer tastes;
|
|
|
Competition; and
|
|
|
Secondary home sales activity.
|
Year Ended September 30,
|
|||||||||
2000
|
2001
|
2002
|
|||||||
(In millions)
|
|||||||||
Mid-Atlantic
|
$
|
614.5
|
$
|
615.6
|
$
|
639.5
|
|||
Midwest
|
|
451.0
|
|
457.6
|
|
493.8
|
|||
Southeast
|
|
491.5
|
|
518.2
|
|
634.2
|
|||
Southwest
|
|
1,176.7
|
|
1,489.5
|
|
2,003.9
|
|||
West
|
|
870.5
|
|
1,302.7
|
|
2,853.8
|
|||
|
|
|
|
|
|
||||
Total
|
$
|
3,604.2
|
$
|
4,383.6
|
$
|
6,625.2
|
|||
|
|
|
|
|
|
Finished lots we own
|
21,330
|
|
Lots under development we own
|
59,005
|
|
|
||
Total lots owned
|
80,335
|
|
Lots available under lot option and similar contracts
|
70,428
|
|
|
||
Total land/lot positions
|
150,763
|
|
|
|
|
Generally commencing construction of homes under contract only after receipt of a satisfactory down payment and, where applicable, the buyers receipt of
mortgage approval;
|
|
|
Limiting the number of speculative homes (homes started without an executed sales contract) built in each subdivision;
|
|
|
Closely monitoring local market and demographic trends, housing preferences and related economic developments, such as new job opportunities, local growth
initiatives and personal income trends;
|
|
|
Utilizing lot option contracts, where possible; and
|
|
|
Limiting the size of acquired land parcels to smaller tracts of land.
|
Year Ended September 30,
|
||||||||||||
2001
|
2002
|
|||||||||||
HIGH
|
LOW
|
HIGH
|
LOW
|
|||||||||
Quarter Ended December 31
|
$
|
15.61
|
$
|
9.16
|
$
|
22.33
|
$
|
13.25
|
||||
Quarter Ended March 31
|
|
16.21
|
|
11.93
|
|
29.17
|
|
19.83
|
||||
Quarter Ended June 30
|
|
17.33
|
|
12.83
|
|
27.50
|
|
21.85
|
||||
Quarter Ended September 30
|
|
20.00
|
|
11.67
|
|
26.85
|
|
18.30
|
Year Ended September 30,
|
|||||||||||||||
1998
|
1999
|
2000
|
2001
|
2002
|
|||||||||||
(In millions, except per share data)
|
|||||||||||||||
Income Statement Data:
(1)(2)
|
|||||||||||||||
Revenues
|
$
|
2,176.9
|
$
|
3,156.2
|
$
|
3,653.7
|
$
|
4,455.5
|
$
|
6,738.8
|
|||||
Homebuilding revenues
|
|
2,155.0
|
|
3,119.0
|
|
3,604.2
|
|
4,383.6
|
|
6,625.2
|
|||||
Income before cumulative effect of change in accounting principle
|
|
93.4
|
|
159.8
|
|
191.7
|
|
254.9
|
|
404.7
|
|||||
Income before cumulative effect of change in accounting principle per share:
(3)(4)
|
|||||||||||||||
Basic
|
|
0.96
|
|
1.40
|
|
1.70
|
|
2.24
|
|
3.01
|
|||||
Diluted
|
|
0.86
|
|
1.38
|
|
1.69
|
|
2.21
|
|
2.87
|
|||||
Cash dividends declared per common share
|
|
.09
|
|
.11
|
|
.15
|
|
.19
|
|
.23
|
|||||
As of September 30,
|
|||||||||||||||
1998
|
1999
|
2000
|
2001
|
2002
|
|||||||||||
(In millions)
|
|||||||||||||||
Balance Sheet Data:
(1)(2)
|
|||||||||||||||
Inventories
|
$
|
1,358.0
|
$
|
1,866.1
|
$
|
2,191.0
|
$
|
2,804.4
|
$
|
4,343.1
|
|||||
Total Assets
|
|
1,667.8
|
|
2,361.8
|
|
2,694.6
|
|
3,652.2
|
|
6,017.5
|
|||||
Notes Payable
|
|
854.5
|
|
1,190.6
|
|
1,344.4
|
|
1,884.3
|
|
2,878.3
|
|||||
Stockholders Equity
|
|
549.4
|
|
797.6
|
|
969.6
|
|
1,250.2
|
|
2,269.9
|
(1)
|
|
See Note C to the audited financial statements for details concerning acquisitions by the Company.
|
(2)
|
|
On February 21, 2002, D.R. Horton, Inc. and Schuler Homes, Inc. consummated a merger pursuant to which Schuler Homes was merged with and into D.R. Horton, with
D.R. Horton the surviving corporation. The total merger consideration consisted of the issuance of 20,079,532 shares of D.R. Horton common stock, valued at $30.93 per share; the payment of $168.7 million in cash; the assumption of $802.2 million of
Schulers debt, $238.2 million of which was paid at closing; the assumption of trade payables and other liabilities amounting to $227.6 million; and the assumption of $10.8 million of obligations to the Schuler entities minority interest
holders.
|
(3)
|
|
In fiscal 1998, net income includes the net effect of a $7.1 million, net of tax, provision for costs associated with the merger with Continental. The earnings
per share effects were $0.07 basic and $0.06 diluted.
|
(4)
|
|
All basic and diluted per share amounts have been restated to reflect the effects of the 9% stock dividend of September 29, 2000, the 11% stock dividend of
March 23, 2001 and the three-for-two stock split (effected as a 50% stock dividend) of April 9, 2002.
|
Mid-Atlantic
|
Charleston, Charlotte, Columbia, Greensboro, Greenville, Hilton Head, Maryland-D.C., Myrtle Beach, New Jersey, Raleigh/Durham and Virginia-D.C.
|
|
Midwest
|
Chicago and Minneapolis/St. Paul
|
|
Southeast
|
Atlanta, Birmingham, Fort Myers/Naples, Jacksonville, Miami/West Palm Beach and Orlando
|
|
Southwest
|
Albuquerque, Austin, Dallas, Fort Worth, Houston, Killeen, Phoenix, San Antonio and Tucson
|
|
West
|
Colorado Springs, Denver, Fort Collins, Hawaii, Inland Empire (Southern California), Las Vegas, Los Angeles, Oakland, Orange County, Portland, Sacramento, Salt
Lake City, San Francisco, San Diego, Seattle/Tacoma and Ventura County
|
Percentages of Homebuilding Revenues
|
|||||||||
Year Ended September 30,
|
|||||||||
2000
|
2001
|
2002
|
|||||||
Costs and expenses:
|
|||||||||
Cost of sales
|
81.6
|
%
|
80.4
|
%
|
81.0
|
%
|
|||
Selling, general and administrative expense
|
10.0
|
|
9.9
|
|
9.8
|
|
|||
Interest expense
|
0.3
|
|
0.2
|
|
0.1
|
|
|||
|
|
|
|
|
|
||||
Total costs and expenses
|
91.9
|
|
90.5
|
|
90.9
|
|
|||
Other (income)/expense
|
(0.1
|
)
|
0.8
|
|
0.2
|
|
|||
|
|
|
|
|
|
||||
Income before income taxes
|
8.2
|
%
|
8.7
|
%
|
8.9
|
%
|
|||
|
|
|
|
|
|
Year Ended September 30,
|
|||||||||||||||
2000
|
2001
|
2002
|
|||||||||||||
Homes Closed
|
%
|
Homes Closed
|
%
|
Homes Closed
|
%
|
||||||||||
Mid-Atlantic
|
3,042
|
15.9
|
%
|
2,757
|
12.9
|
%
|
2,950
|
9.9
|
%
|
||||||
Midwest
|
1,951
|
10.2
|
%
|
1,833
|
8.6
|
%
|
1,911
|
6.4
|
%
|
||||||
Southeast
|
2,755
|
14.4
|
%
|
2,882
|
13.5
|
%
|
3,513
|
11.8
|
%
|
||||||
Southwest
|
7,721
|
40.3
|
%
|
8,902
|
41.6
|
%
|
11,859
|
39.9
|
%
|
||||||
West
|
3,675
|
19.2
|
%
|
4,997
|
23.4
|
%
|
9,528
|
32.0
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|||||||
19,144
|
100.0
|
%
|
21,371
|
100.0
|
%
|
29,761
|
100.0
|
%
|
|||||||
|
|
|
|
|
|
|
|
|
Year Ended September 30,
|
|||||||||||||||
2000
|
2001
|
2002
|
|||||||||||||
Homes
Sold
|
$
|
Homes
Sold
|
$
|
Homes
Sold
|
$
|
||||||||||
($ in millions)
|
|||||||||||||||
Mid-Atlantic
|
2,774
|
$
|
576.2
|
2,756
|
$
|
590.0
|
3,381
|
$
|
700.2
|
||||||
Midwest
|
1,717
|
|
418.7
|
1,851
|
|
481.3
|
1,909
|
|
464.4
|
||||||
Southeast
|
2,906
|
|
501.8
|
3,007
|
|
530.8
|
3,718
|
|
617.0
|
||||||
Southwest
|
7,829
|
|
1,243.2
|
9,233
|
|
1,536.4
|
12,743
|
|
2,131.5
|
||||||
West
|
3,997
|
|
936.5
|
5,332
|
|
1,364.1
|
9,740
|
|
2,972.8
|
||||||
|
|
|
|
|
|
|
|
|
|||||||
19,223
|
$
|
3,676.4
|
22,179
|
$
|
4,502.6
|
31,491
|
$
|
6,885.9
|
|||||||
|
|
|
|
|
|
|
|
|
September 30,
|
|||||||||||||||
2000
|
2001
|
2002
|
|||||||||||||
Homes
|
$
|
Homes
|
$
|
Homes
|
$
|
||||||||||
($ in millions)
|
|||||||||||||||
Mid-Atlantic
|
823
|
$
|
207.6
|
822
|
$
|
190.3
|
1,253
|
$
|
264.8
|
||||||
Midwest
|
900
|
|
225.4
|
918
|
|
262.8
|
916
|
|
238.5
|
||||||
Southeast
|
987
|
|
177.8
|
1,464
|
|
253.6
|
1,669
|
|
274.7
|
||||||
Southwest
|
3,189
|
|
551.5
|
4,235
|
|
738.0
|
5,186
|
|
887.8
|
||||||
West
|
1,489
|
|
374.6
|
1,824
|
|
489.1
|
3,673
|
|
1,159.4
|
||||||
|
|
|
|
|
|
|
|
|
|||||||
7,388
|
$
|
1,536.9
|
9,263
|
$
|
1,933.8
|
12,697
|
$
|
2,825.2
|
|||||||
|
|
|
|
|
|
|
|
|
Year Ended September 30,
|
||||||||||||
2000
|
2001
|
2002
|
||||||||||
Financial Services:
|
($ in thousands)
|
|||||||||||
Number of loans originated
|
|
9,151
|
|
|
13,347
|
|
|
20,421
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Loan origination fees
|
$
|
9,981
|
|
$
|
14,748
|
|
$
|
22,336
|
|
|||
Sale of servicing rights and gains from sale of mortgages
|
|
21,271
|
|
|
32,905
|
|
|
55,045
|
|
|||
Other revenues
|
|
4,529
|
|
|
7,711
|
|
|
11,182
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Total mortgage banking revenues
|
|
35,781
|
|
|
55,364
|
|
|
88,563
|
|
|||
Title policy premiums, net
|
|
13,741
|
|
|
16,598
|
|
|
25,029
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Total revenues
|
|
49,522
|
|
|
71,962
|
|
|
113,592
|
|
|||
General and administrative expenses
|
|
35,470
|
|
|
47,387
|
|
|
67,771
|
|
|||
Interest expense
|
|
5,616
|
|
|
5,288
|
|
|
5,505
|
|
|||
Interest/other (income)
|
|
(6,257
|
)
|
|
(7,669
|
)
|
|
(16,107
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Income before income taxes
|
$
|
14,693
|
|
$
|
26,956
|
|
$
|
56,423
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
General Economic, Real Estate and Other Conditions
The homebuilding industry is cyclical and is significantly affected by changes in general and
local economic conditions, such as employment levels, availability of financing for home buyers, interest rates, consumer confidence and housing demand. Any oversupply of alternatives to new homes, such as rental properties and used homes, could
depress new home prices and reduce our margins on the sale of new homes. Homebuilders are also subject to risks related to the availability and cost of land suitable for homebuilding, the availability and cost of materials and labor, adverse weather
conditions which can cause delays in construction schedules and cost overruns.
|
|
|
Increases in Interest Rates or Decreases in Mortgage Availability
Virtually all of our customers finance their homes through lenders providing
mortgage financing. Any future increases in interest rates or decreases in the availability of mortgage financing could depress the market for new homes by making our homes less affordable.
|
|
|
Governmental Regulations and Environmental Matters
We are subject to extensive and complex regulations that affect the development and homebuilding
process, including zoning, density and building standards. Such regulations often provide broad discretion to the administering governmental authorities. This can delay or increase the costs of development or homebuilding. Laws and regulations
relating to the protection of the environment can cause delays, increased costs of compliance and prohibitions or restrictions of development and homebuilding activity in environmentally sensitive areas.
|
|
|
Substantial Debt
We have a significant amount of debt. The amount of our debt could limit our ability to obtain future financing for working
capital, capital expenditures, acquisitions, debt service requirements or other requirements. It could also limit our flexibility in planning for, or reacting to, changes in our business and make us more vulnerable in the event of a downturn in our
business or in general economic conditions.
|
|
|
Competitive Conditions
The homebuilding industry is very competitive. In each of the markets we serve, we compete with other homebuilders for home
buyers, desirable properties, financing, raw materials and skilled labor. Competitive conditions in the homebuilding industry could result in difficulty in acquiring suitable land at acceptable prices, the need for increased selling incentives,
lower sales or delays in construction.
|
|
|
Availability of Capital
Our ability to grow our business and operations profitably is substantially dependent upon our ability to obtain capital
from the sale of equity or debt or additional bank borrowings. Increases in interest rates, changes in our debt ratings by the national credit rating agencies, concerns by potential investors about the market or the economy, changing lending
objectives of financial institutions, or further consolidation of financial institutions that lend to the homebuilding industry could increase our costs of borrowing or reduce the availability of funds necessary for us to achieve our strategic
growth objectives. Moreover, the indentures for our outstanding debt contain provisions that may restrict the debt we may incur in the future.
|
|
|
Growth Strategies
Since 1993, we have acquired many homebuilding companies. Although we are currently focusing on internal growth, we may make
strategic acquisitions of homebuilding companies in the future. Successful strategic acquisitions require the integration of operations and management and other efforts to realize the benefits that may be available. Although we believe that we have
been successful in doing so in the past, we can give no assurance that, when we resume our acquisition activity, we will be able to successfully identify, acquire and integrate strategic acquisitions in the future. Moreover, we may not be able to
implement successfully our operating and growth strategies within our existing markets.
|
Year Ended September 30,
|
||||||||||||||||||||||||||||||||
($ in millions)
|
||||||||||||||||||||||||||||||||
2003
|
2004
|
2005
|
2006
|
2007
|
Thereafter
|
Total
|
Fair market value @ 9/30/02
|
|||||||||||||||||||||||||
Debt:
|
||||||||||||||||||||||||||||||||
Fixed rate
|
$
|
42.1
|
|
$
|
158.7
|
|
$
|
212.2
|
|
$
|
150.0
|
|
$
|
|
|
$
|
2,047.1
|
|
$
|
2,610.1
|
|
$
|
2,423.0
|
|
||||||||
Average interest rate
|
|
6.72
|
%
|
|
8.70
|
%
|
|
10.67
|
%
|
|
10.19
|
%
|
|
|
|
|
8.15
|
%
|
|
8.50
|
%
|
|
|
|
||||||||
Variable rate
|
$
|
410.7
|
|
$
|
9.7
|
|
$
|
|
|
$
|
6.1
|
|
$
|
|
|
$
|
|
|
$
|
426.5
|
|
$
|
426.5
|
|
||||||||
Average interest rate
|
|
2.88
|
%
|
|
3.63
|
%
|
|
|
|
|
5.75
|
%
|
|
|
|
|
|
|
|
2.94
|
%
|
|
|
|
||||||||
Interest Rate Swaps:
|
||||||||||||||||||||||||||||||||
Variable to fixed
|
$
|
200.0
|
|
$
|
200.0
|
|
$
|
200.0
|
|
$
|
200.0
|
|
$
|
200.0
|
|
$
|
200.0
|
|
$
|
|
|
$
|
(22.6
|
)
|
||||||||
Average pay rate
|
|
5.10
|
%
|
|
5.10
|
%
|
|
5.10
|
%
|
|
5.10
|
%
|
|
5.10
|
%
|
|
5.02
|
%
|
|
|
|
|
|
|
||||||||
Average receive rate
|
90-day LIBOR
|
Page
|
||
Report of Independent Auditors
|
25
|
|
Consolidated Balance Sheets, September 30, 2001 and 2002
|
26
|
|
Consolidated Statements of Income for the three years ended September 30, 2002
|
27
|
|
Consolidated Statements of Stockholders Equity for the three years ended September 30, 2002
|
28
|
|
Consolidated Statements of Cash Flows for the three years ended September 30, 2002
|
29
|
|
Notes to Consolidated Financial Statements
|
30
|
As of September 30,
|
|||||||
2001
|
2002
|
||||||
(In thousands)
|
|||||||
ASSETS
|
|||||||
Homebuilding:
|
|||||||
Cash
|
$
|
232,305
|
$
|
92,106
|
|
||
Inventories:
|
|||||||
Finished homes and construction in progress
|
|
1,424,101
|
|
2,035,221
|
|
||
Residential lotsdeveloped and under development
|
|
1,377,452
|
|
2,297,545
|
|
||
Land held for development
|
|
2,824
|
|
10,303
|
|
||
|
|
|
|
|
|||
|
2,804,377
|
|
4,343,069
|
|
|||
Property and equipment (net)
|
|
53,096
|
|
71,895
|
|
||
Earnest money deposits and other assets
|
|
181,659
|
|
430,415
|
|
||
Excess of cost over net assets acquired
|
|
136,223
|
|
579,230
|
|
||
|
|
|
|
|
|||
|
3,407,660
|
|
5,516,715
|
|
|||
|
|
|
|
|
|||
Financial Services:
|
|||||||
Cash
|
|
6,975
|
|
12,238
|
|
||
Mortgage loans held for sale
|
|
222,818
|
|
464,088
|
|
||
Other assets
|
|
14,737
|
|
24,486
|
|
||
|
|
|
|
|
|||
|
244,530
|
|
500,812
|
|
|||
|
|
|
|
|
|||
$
|
3,652,190
|
$
|
6,017,527
|
|
|||
|
|
|
|
|
|||
LIABILITIES
|
|||||||
Homebuilding:
|
|||||||
Accounts payable and other liabilities
|
$
|
498,576
|
$
|
834,048
|
|
||
Notes payable
|
|
1,701,689
|
|
2,486,976
|
|
||
|
|
|
|
|
|||
|
2,200,265
|
|
3,321,024
|
|
|||
|
|
|
|
|
|||
Financial Services:
|
|||||||
Accounts payable and other liabilities
|
|
10,173
|
|
14,340
|
|
||
Notes payable to financial institutions
|
|
182,641
|
|
391,355
|
|
||
|
|
|
|
|
|||
|
192,814
|
|
405,695
|
|
|||
|
|
|
|
|
|||
|
2,393,079
|
|
3,726,719
|
|
|||
|
|
|
|
|
|||
Minority interests
|
|
8,864
|
|
20,945
|
|
||
|
|
|
|
|
|||
STOCKHOLDERS EQUITY
|
|||||||
Preferred stock, $.10 par value, 30,000,000 shares authorized, no shares issued
|
|
|
|
|
|
||
Common stock, $.01 par value, 200,000,000 shares authorized, 76,901,511 shares at September 30, 2001 and 146,505,091
shares at September 30, 2002, issued and outstanding
|
|
769
|
|
1,465
|
|
||
Additional capital
|
|
704,842
|
|
1,349,630
|
|
||
Unearned compensation
|
|
|
|
(4,453
|
)
|
||
Retained earnings
|
|
544,636
|
|
923,221
|
|
||
|
|
|
|
|
|||
|
1,250,247
|
|
2,269,863
|
|
|||
|
|
|
|
|
|||
$
|
3,652,190
|
$
|
6,017,527
|
|
|||
|
|
|
|
|
Year Ended September 30,
|
||||||||||||
2000
|
2001
|
2002
|
||||||||||
(In thousands, except per share data)
|
||||||||||||
Homebuilding:
|
||||||||||||
Revenues:
|
||||||||||||
Home sales
|
$
|
3,496,091
|
|
$
|
4,289,826
|
|
$
|
6,529,607
|
|
|||
Land/lot sales
|
|
108,082
|
|
|
93,726
|
|
|
95,632
|
|
|||
|
|
|
|
|
|
|
|
|
||||
|
3,604,173
|
|
|
4,383,552
|
|
|
6,625,239
|
|
||||
Cost of sales:
|
||||||||||||
Home sales
|
|
2,846,407
|
|
|
3,450,805
|
|
|
5,282,138
|
|
|||
Land/lot sales
|
|
94,702
|
|
|
76,337
|
|
|
82,290
|
|
|||
|
|
|
|
|
|
|
|
|
||||
|
2,941,109
|
|
|
3,527,142
|
|
|
5,364,428
|
|
||||
Gross profit:
|
||||||||||||
Home sales
|
|
649,684
|
|
|
839,021
|
|
|
1,247,469
|
|
|||
Land/lot sales
|
|
13,380
|
|
|
17,389
|
|
|
13,342
|
|
|||
|
|
|
|
|
|
|
|
|
||||
|
663,064
|
|
|
856,410
|
|
|
1,260,811
|
|
||||
Selling, general and administrative expense
|
|
360,404
|
|
|
432,013
|
|
|
646,769
|
|
|||
Interest expense
|
|
10,227
|
|
|
8,809
|
|
|
6,012
|
|
|||
Other (income) expense
|
|
(2,098
|
)
|
|
34,747
|
|
|
16,946
|
|
|||
|
|
|
|
|
|
|
|
|
||||
|
294,531
|
|
|
380,841
|
|
|
591,084
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Financial Services:
|
||||||||||||
Revenues
|
|
49,522
|
|
|
71,962
|
|
|
113,592
|
|
|||
General and administrative expense
|
|
35,470
|
|
|
47,387
|
|
|
67,771
|
|
|||
Interest expense
|
|
5,616
|
|
|
5,288
|
|
|
5,505
|
|
|||
Other (income)
|
|
(6,257
|
)
|
|
(7,669
|
)
|
|
(16,107
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
|
14,693
|
|
|
26,956
|
|
|
56,423
|
|
||||
|
|
|
|
|
|
|
|
|
||||
INCOME BEFORE INCOME TAXES
|
|
309,224
|
|
|
407,797
|
|
|
647,507
|
|
|||
Provision for income taxes
|
|
117,505
|
|
|
152,924
|
|
|
242,815
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Income before cumulative effect of change in accounting principle
|
|
191,719
|
|
|
254,873
|
|
|
404,692
|
|
|||
Cumulative effect of change in accounting principle, net of income taxes of $1,282
|
|
|
|
|
2,136
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||
NET INCOME
|
$
|
191,719
|
|
$
|
257,009
|
|
$
|
404,692
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Basic earnings per common share:
|
||||||||||||
Income before cumulative effect of change in accounting principle
|
$
|
1.70
|
|
$
|
2.24
|
|
$
|
3.01
|
|
|||
Cumulative effect of change in accounting principle, net of income taxes
|
|
|
|
|
0.02
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Net Income
|
$
|
1.70
|
|
$
|
2.26
|
|
$
|
3.01
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Earnings per common share assuming dilution:
|
||||||||||||
Income before cumulative effect of change in accounting principle
|
$
|
1.69
|
|
$
|
2.21
|
|
$
|
2.87
|
|
|||
Cumulative effect of change in accounting principle, net of income taxes
|
|
|
|
|
0.02
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Net Income
|
$
|
1.69
|
|
$
|
2.23
|
|
$
|
2.87
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Cash dividends per share
|
$
|
0.15
|
|
$
|
0.19
|
|
$
|
0.23
|
|
|||
|
|
|
|
|
|
|
|
|
Common Stock
|
Additional Capital
|
Unearned Compensation
|
Retained Earnings
|
Treasury Stock
|
Total Stockholders Equity
|
||||||||||||||||||
(In thousands, except common stock share data)
|
|||||||||||||||||||||||
Balances at October 1, 1999 (64,267,073 shares)
|
$
|
643
|
$
|
419,259
|
|
$
|
|
|
$
|
400,111
|
|
$
|
(22,404
|
)
|
$
|
797,609
|
|
||||||
Net income
|
|
|
|
|
|
|
|
|
|
191,719
|
|
|
|
|
|
191,719
|
|
||||||
Issuances under D.R. Horton, Inc. employee employee benefit plans (34,750 shares)
|
|
|
|
380
|
|
|
|
|
|
|
|
|
|
|
|
380
|
|
||||||
Exercise of stock options
(200,305 shares) |
|
2
|
|
3,684
|
|
|
|
|
|
|
|
|
|
|
|
3,686
|
|
||||||
Purchase of treasury stock
(1,104,900 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
(14,543
|
)
|
|
(14,543
|
)
|
||||||
Cash dividends declared ($.15 per share)
|
|
|
|
|
|
|
|
|
|
(9,288
|
)
|
|
|
|
|
(9,288
|
)
|
||||||
9% stock dividend (5,571,982 shares)
|
|
56
|
|
113,822
|
|
|
|
|
|
(113,878
|
)
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balances at September 30, 2000 (70,074,110 shares)
|
$
|
701
|
$
|
537,145
|
|
$
|
|
|
$
|
468,664
|
|
$
|
(36,947
|
)
|
$
|
969,563
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
|
257,009
|
|
|
|
|
|
257,009
|
|
||||||
Issuances under D.R. Horton, Inc. employee benefit plans (7,450 shares)
|
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
125
|
|
||||||
Exercise of stock options
(917,098 shares) |
|
9
|
|
12,269
|
|
|
|
|
|
|
|
|
|
|
|
12,278
|
|
||||||
Cash dividends declared ($.19 per share)
|
|
|
|
|
|
|
|
|
|
(13,728
|
)
|
|
|
|
|
(13,728
|
)
|
||||||
Stock issued as partial consideration for acquisition (1,012,925 shares)
|
|
10
|
|
24,990
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
||||||
11% stock dividend (4,889,928 shares)
|
|
49
|
|
130,313
|
|
|
|
|
|
(167,309
|
)
|
|
36,947
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balances at September 30, 2001 (76,901,511 shares)
|
$
|
769
|
$
|
704,842
|
|
$
|
|
|
$
|
544,636
|
|
$
|
|
|
$
|
1,250,247
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
|
404,692
|
|
|
|
|
|
404,692
|
|
||||||
Issuances under D.R. Horton, Inc. employee benefit plans
(18,460 shares) |
|
|
|
420
|
|
|
|
|
|
|
|
|
|
|
|
420
|
|
||||||
Exercise of stock options
(756,235 shares) |
|
8
|
|
13,559
|
|
|
|
|
|
|
|
|
|
|
|
13,567
|
|
||||||
Fair value of unvested stock options issued in connection with an acquisition
|
|
|
|
10,437
|
|
|
(6,009
|
)
|
|
|
|
|
|
|
|
4,428
|
|
||||||
Amortization of unvested stock options issued in connection with an acquisition over remaining vesting
period
|
|
|
|
|
|
|
1,556
|
|
|
|
|
|
|
|
|
1,556
|
|
||||||
Cash dividends declared ($.23 per share)
|
|
|
|
|
|
|
|
|
|
(26,107
|
)
|
|
|
|
|
(26,107
|
)
|
||||||
Stock issued as partial consideration for acquisition (20,079,532 shares)
|
|
201
|
|
620,859
|
|
|
|
|
|
|
|
|
|
|
|
621,060
|
|
||||||
Three-for-two stock split (48,749,353 shares)
|
|
487
|
|
(487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balances at September 30, 2002 (146,505,091 shares)
|
$
|
1,465
|
$
|
1,349,630
|
|
$
|
(4,453
|
)
|
$
|
923,221
|
|
$
|
|
|
$
|
2,269,863
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30,
|
||||||||||||
2000
|
2001
|
2002
|
||||||||||
(In thousands)
|
||||||||||||
OPERATING ACTIVITIES
|
||||||||||||
Net income
|
$
|
191,719
|
|
$
|
257,009
|
|
$
|
404,692
|
|
|||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||||||
Depreciation and amortization
|
|
21,960
|
|
|
31,184
|
|
|
32,806
|
|
|||
Amortization of debt premiums and fees
|
|
2,532
|
|
|
4,878
|
|
|
7,839
|
|
|||
Changes in operating assets and liabilities:
|
||||||||||||
Increase in inventories
|
|
(299,931
|
)
|
|
(333,142
|
)
|
|
(244,216
|
)
|
|||
Increase in earnest money deposits and other assets
|
|
(21,126
|
)
|
|
(14,617
|
)
|
|
(92,300
|
)
|
|||
Increase in mortgage loans held for sale
|
|
(5,795
|
)
|
|
(103,237
|
)
|
|
(241,270
|
)
|
|||
Increase in accounts payable and other liabilities
|
|
3,093
|
|
|
102,641
|
|
|
41,852
|
|
|||
|
|
|
|
|
|
|
|
|
||||
NET CASH USED IN OPERATING ACTIVITIES
|
|
(107,548
|
)
|
|
(55,284
|
)
|
|
(90,597
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
INVESTING ACTIVITIES
|
||||||||||||
Net purchases of property and equipment
|
|
(15,789
|
)
|
|
(33,368
|
)
|
|
(39,818
|
)
|
|||
Net (investments in) distributions from venture capital entities
|
|
(29,032
|
)
|
|
(1,988
|
)
|
|
486
|
|
|||
Net cash paid for acquisitions
|
|
(11,559
|
)
|
|
(61,897
|
)
|
|
(153,761
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
NET CASH USED IN INVESTING ACTIVITIES
|
|
(56,380
|
)
|
|
(97,253
|
)
|
|
(193,093
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
FINANCING ACTIVITIES
|
||||||||||||
Proceeds from notes payable
|
|
745,000
|
|
|
1,258,824
|
|
|
3,138,100
|
|
|||
Repayment of notes payable
|
|
(963,695
|
)
|
|
(1,530,211
|
)
|
|
(3,223,535
|
)
|
|||
Issuance of senior and senior subordinated notes payable
|
|
346,345
|
|
|
592,004
|
|
|
247,928
|
|
|||
Repurchase of treasury stock
|
|
(14,543
|
)
|
|
|
|
|
|
|
|||
Proceeds from stock associated with certain employee benefit plans
|
|
4,066
|
|
|
12,403
|
|
|
12,368
|
|
|||
Cash dividends paid
|
|
(9,288
|
)
|
|
(13,728
|
)
|
|
(26,107
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
107,885
|
|
|
319,292
|
|
|
148,754
|
|
|||
|
|
|
|
|
|
|
|
|
||||
INCREASE (DECREASE) IN CASH
|
|
(56,043
|
)
|
|
166,755
|
|
|
(134,936
|
)
|
|||
Cash at beginning of year
|
|
128,568
|
|
|
72,525
|
|
|
239,280
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Cash at end of year
|
$
|
72,525
|
|
$
|
239,280
|
|
$
|
104,344
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Supplemental cash flow information:
|
||||||||||||
Interest paid, net of amounts capitalized
|
$
|
14,718
|
|
$
|
14,127
|
|
$
|
9,669
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Income taxes paid
|
$
|
126,964
|
|
$
|
116,458
|
|
$
|
302,419
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Supplemental disclosures of noncash activities:
|
||||||||||||
Notes payable assumed related to acquisitions
|
$
|
|
|
$
|
128,013
|
|
$
|
802,205
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Issuance of common stock related to acquisitions
|
$
|
|
|
$
|
25,000
|
|
$
|
621,060
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Notes payable issued for inventory
|
$
|
24,992
|
|
$
|
79,934
|
|
$
|
36,775
|
|
|||
|
|
|
|
|
|
|
|
|
As of September 30,
|
||||||
2000
|
2001
|
|||||
(In thousands, except per share data)
|
||||||
Net income, as previously reported
|
$
|
191,719
|
$
|
257,009
|
||
Amortization of goodwill, net of income taxes of $3,113 and $3,588, respectively
|
|
5,080
|
|
5,979
|
||
|
|
|
|
|||
Net income, as adjusted
|
$
|
196,799
|
$
|
262,988
|
||
|
|
|
|
|||
Net income per share, as adjusted:
|
||||||
Basic
|
$
|
1.75
|
$
|
2.32
|
||
|
|
|
|
|||
Diluted
|
$
|
1.73
|
$
|
2.28
|
||
|
|
|
|
Year Ended September 30,
|
||||||||||||
2000
|
2001
|
2002
|
||||||||||
Capitalized interest, beginning of year
|
$
|
41,525
|
|
$
|
66,092
|
|
$
|
96,910
|
|
|||
Interest incurredhomebuilding
|
|
104,360
|
|
|
131,028
|
|
|
198,780
|
|
|||
Interest expensed
|
||||||||||||
Directlyhomebuilding
|
|
(10,227
|
)
|
|
(8,809
|
)
|
|
(6,012
|
)
|
|||
Amortized to cost of sales
|
|
(69,566
|
)
|
|
(91,401
|
)
|
|
(136,142
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
Capitalized interest, end of year
|
$
|
66,092
|
|
$
|
96,910
|
|
$
|
153,536
|
|
|||
|
|
|
|
|
|
|
|
|
Year Ended September 30,
|
|||||||||
2000
|
2001
|
2002
|
|||||||
Numerator:
|
|||||||||
Net income
|
$
|
191,719
|
$
|
257,009
|
$
|
404,692
|
|||
Effect of dilutive securities:
|
|||||||||
Interest expense and amortization of issuance costs associated with zero coupon convertible senior notes, net of
applicable income taxes
|
|
|
|
|
|
2,096
|
|||
|
|
|
|
|
|
||||
Numerator for diluted earnings per share after assumed conversions
|
$
|
191,719
|
$
|
257,009
|
$
|
406,788
|
|||
|
|
|
|
|
|
||||
Denominator:
|
|||||||||
Denominator for basic earnings per shareweighted average shares
|
|
112,602
|
|
113,515
|
|
134,252
|
|||
Effect of dilutive securities:
|
|||||||||
Zero coupon convertible senior notes
|
|
|
|
|
|
5,000
|
|||
Employee stock options
|
|
981
|
|
1,915
|
|
2,387
|
|||
|
|
|
|
|
|
||||
Denominator for diluted earnings per shareadjusted weighted average shares and assumed conversions
|
|
113,583
|
|
115,430
|
|
141,639
|
|||
|
|
|
|
|
|
As of September 30,
|
||||||
2001
|
2002
|
|||||
Homebuilding:
|
||||||
Unsecured:
|
||||||
Revolving credit facility due 2006
|
$
|
|
$
|
|
||
8
3
/
8
% Senior notes due 2004, net
|
|
148,943
|
|
149,339
|
||
10
1
/
2
% Senior notes due 2005, net
|
|
199,439
|
|
199,559
|
||
10% Senior notes due 2006, net
|
|
147,600
|
|
147,802
|
||
9% Senior notes due 2008, net
|
|
|
|
102,427
|
||
8% Senior notes due 2009, net
|
|
383,257
|
|
383,438
|
||
9
3
/
8
% Senior notes due 2009, net
|
|
|
|
246,057
|
||
9
3
/
4
% Senior subordinated notes due 2010, net
|
|
148,917
|
|
148,994
|
||
9
3
/
8
% Senior subordinated notes due 2011, net
|
|
199,688
|
|
199,710
|
||
7
7
/
8
% Senior notes due 2011, net
|
|
198,319
|
|
198,437
|
||
10
1
/
2
% Senior subordinated notes due 2011, net
|
|
|
|
153,284
|
||
8
1
/
2
% Senior notes due 2012, net
|
|
|
|
247,995
|
||
Zero coupon convertible senior notes due 2021, net
|
|
202,509
|
|
209,144
|
||
Other secured
|
|
73,017
|
|
100,790
|
||
|
|
|
|
|||
$
|
1,701,689
|
$
|
2,486,976
|
|||
|
|
|
|
|||
Financial Services:
|
||||||
Mortgage warehouse facility due 2003
|
$
|
182,641
|
$
|
242,355
|
||
Commercial paper conduit facility due 2005
|
|
|
|
149,000
|
||
|
|
|
|
|||
$
|
182,641
|
$
|
391,355
|
|||
|
|
|
|
Company Acquired
|
Date Acquired
|
Consideration
|
|||
Fortress-Florida
|
May 2001
|
$
|
53.0 million
|
||
Emerald Builders
|
July 2001
|
$
|
193.6 million
|
||
Schuler Homes, Inc.
|
February 2002
|
$
|
1,830.3 million
|
Year Ended September 30,
|
||||||
2001
|
2002
|
|||||
(In thousands,
except per
share data)
|
||||||
Revenues
|
$
|
6,236,040
|
$
|
7,313,833
|
||
|
|
|
|
|||
Income before cumulative effect of change in accounting principle
|
|
339,736
|
|
436,684
|
||
Cumulative effect of change in accounting principle, net of income taxes
|
|
2,136
|
|
|
||
|
|
|
|
|||
Net income
|
$
|
341,872
|
$
|
436,684
|
||
|
|
|
|
|||
Basic earnings per common share:
|
||||||
Income before cumulative effect of change in accounting principle
|
$
|
2.35
|
$
|
2.99
|
||
Cumulative effect of change in accounting principle, net of income taxes
|
|
0.01
|
|
|
||
|
|
|
|
|||
Net income
|
$
|
2.36
|
$
|
2.99
|
||
|
|
|
|
|||
Diluted earnings per common share:
|
||||||
Income before cumulative effect of change in accounting principle
|
$
|
2.33
|
$
|
2.86
|
||
Cumulative effect of change in accounting principle, net of income taxes
|
|
0.01
|
|
|
||
|
|
|
|
|||
Net income
|
$
|
2.34
|
$
|
2.86
|
||
|
|
|
|
Year ended September 30,
|
||||||||||||
2000
|
2001
|
2002
|
||||||||||
Current provision:
|
||||||||||||
Federal
|
$
|
109,584
|
|
$
|
161,721
|
|
$
|
248,823
|
|
|||
State
|
|
11,862
|
|
|
16,504
|
|
|
26,668
|
|
|||
|
|
|
|
|
|
|
|
|
||||
|
121,446
|
|
|
178,225
|
|
|
275,491
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Deferred provision (benefit):
|
||||||||||||
Federal
|
|
(1,912
|
)
|
|
(21,919
|
)
|
|
(29,869
|
)
|
|||
State
|
|
(2,029
|
)
|
|
(2,100
|
)
|
|
(2,807
|
)
|
|||
|
|
|
|
|
|
|
|
|
||||
|
(3,941
|
)
|
|
(24,019
|
)
|
|
(32,676
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||
Total provision for income taxes
|
|
117,505
|
|
|
154,206
|
|
|
242,815
|
|
|||
Provision for cumulative effect of change in accounting principle
|
|
|
|
|
(1,282
|
)
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
||||
Provision for income taxes before cumulative effect of change in accounting principle
|
$
|
117,505
|
|
$
|
152,924
|
|
$
|
242,815
|
|
|||
|
|
|
|
|
|
|
|
|
September 30,
|
||||||
2001
|
2002
|
|||||
Deferred tax assets:
|
||||||
Capitalization of inventory costs
|
$
|
36,752
|
$
|
56,997
|
||
Warranty cost and other accruals
|
|
17,053
|
|
35,611
|
||
Fair value adjustment of Schuler notes
|
|
|
|
13,693
|
||
Change in value of interest rate swaps
|
|
3,973
|
|
8,663
|
||
Venture capital investment valuation allowances
|
|
6,908
|
|
5,253
|
||
Other
|
|
7,503
|
|
13,958
|
||
|
|
|
|
|||
Total deferred tax assets
|
|
72,189
|
|
134,175
|
||
Deferred tax liabilities
|
|
20,534
|
|
30,427
|
||
|
|
|
|
|||
Net deferred tax assets
|
$
|
51,655
|
$
|
103,748
|
||
|
|
|
|
Year ended September 30,
|
|||||||||
2000
|
2001
|
2002
|
|||||||
Income taxes at federal statutory rate
|
$
|
108,228
|
$
|
142,729
|
$
|
226,627
|
|||
Increase in tax resulting from:
|
|||||||||
State income taxes, net
|
|
7,838
|
|
9,602
|
|
15,756
|
|||
Other
|
|
1,439
|
|
593
|
|
432
|
|||
|
|
|
|
|
|
||||
Provision for income taxes before cumulative effect of change in accounting principle
|
$
|
117,505
|
$
|
152,924
|
$
|
242,815
|
|||
|
|
|
|
|
|
2000
|
2001
|
2002
|
||||||||||||||||
Options
|
Weighted Average Exercise Price
|
Options
|
Weighted Average Exercise Price
|
Options
|
Weighted Average Exercise Price
|
|||||||||||||
Stock Options
|
||||||||||||||||||
Outstanding at beginning of year
|
4,141,820
|
|
$
|
13.44
|
4,133,373
|
|
$
|
12.42
|
4,340,494
|
|
$
|
12.53
|
||||||
Stock dividends/split
|
345,664
|
|
|
|
493,210
|
|
|
|
2,116,892
|
|
|
|
||||||
Granted
|
592,500
|
|
|
13.63
|
933,680
|
|
|
16.69
|
3,263,474
|
|
|
20.52
|
||||||
Exercised
|
(200,305
|
)
|
|
9.11
|
(917,098
|
)
|
|
8.09
|
(756,235
|
)
|
|
9.12
|
||||||
Canceled
|
(746,306
|
)
|
|
14.20
|
(302,671
|
)
|
|
16.83
|
(178,435
|
)
|
|
13.46
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Outstanding at end of year
|
4,133,373
|
|
$
|
12.42
|
4,340,494
|
|
$
|
12.53
|
8,786,190
|
|
$
|
12.76
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Exercisable at end of year
|
1,408,631
|
|
$
|
9.33
|
1,016,529
|
|
$
|
10.20
|
1,739,237
|
|
$
|
7.84
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
Exercisable
|
|||||||||||||
Exercise Price Range
|
Options
|
Weighted Average Exercise Price
|
Weighted Average Maturity (Years)
|
Options
|
Weighted Average Exercise Price
|
Weighted Average Maturity (Years)
|
||||||||
Less than $9
|
2,895,214
|
$
|
6.13
|
4.7
|
1,066,269
|
$
|
5.60
|
3.8
|
||||||
$9$18
|
3,163,982
|
|
10.94
|
7.0
|
671,174
|
|
11.33
|
6.5
|
||||||
More than $18
|
2,726,994
|
|
21.90
|
9.8
|
1,794
|
|
28.71
|
1.5
|
||||||
|
|
|
|
|
|
|
|
|||||||
Total
|
8,786,190
|
$
|
12.76
|
7.1
|
1,739,237
|
$
|
7.84
|
4.8
|
||||||
|
|
|
|
|
|
|
|
2000
|
2001
|
2002
|
|||||||
Risk free interest rate
|
6.00
|
%
|
5.83
|
%
|
4.66
|
%
|
|||
Expected life (in years)
|
7.0
|
|
7.0
|
|
7.0
|
|
|||
Expected volatility
|
48.80
|
%
|
49.50
|
%
|
61.20
|
%
|
|||
Expected dividend yield
|
1.10
|
%
|
1.26
|
%
|
1.05
|
%
|
September 30, 2001
|
September 30, 2002
|
|||||||||||||||
Carrying Value
|
Estimated Fair Value
|
Carrying Value
|
Estimated Fair Value
|
|||||||||||||
HOMEBUILDING:
|
||||||||||||||||
Liabilities
|
||||||||||||||||
8% Senior notes
|
$
|
383,257
|
|
$
|
350,350
|
|
$
|
383,438
|
|
$
|
373,450
|
|
||||
8
3
/
8
% Senior notes
|
|
148,943
|
|
|
147,000
|
|
|
149,339
|
|
|
151,500
|
|
||||
9
3
/
4
% Senior subordinated notes
|
|
148,917
|
|
|
139,500
|
|
|
148,994
|
|
|
145,500
|
|
||||
10% Senior notes
|
|
147,600
|
|
|
150,011
|
|
|
147,802
|
|
|
151,497
|
|
||||
10
1
/
2
% Senior notes
|
|
199,439
|
|
|
202,000
|
|
|
199,559
|
|
|
209,500
|
|
||||
9
3
/
8
% Senior subordinated notes
|
|
199,688
|
|
|
185,000
|
|
|
199,710
|
|
|
194,000
|
|
||||
Zero coupon convertible senior notes
|
|
202,509
|
|
|
196,388
|
|
|
209,144
|
|
|
227,715
|
|
||||
7
7
/
8
% Senior notes
|
|
198,319
|
|
|
176,000
|
|
|
198,437
|
|
|
190,000
|
|
||||
9% Senior notes
|
|
|
|
|
|
|
|
102,427
|
|
|
99,000
|
|
||||
9
3
/
8
% Senior notes
|
|
|
|
|
|
|
|
246,057
|
|
|
227,950
|
|
||||
10
1
/
2
% Senior subordinated notes
|
|
|
|
|
|
|
|
153,284
|
|
|
144,775
|
|
||||
8
1
/
2
% Senior notes
|
|
|
|
|
|
|
|
247,995
|
|
|
242,500
|
|
||||
Interest rate swaps
|
|
10,389
|
|
|
10,389
|
|
|
22,648
|
|
|
22,648
|
|
||||
FINANCIAL SERVICES:
|
||||||||||||||||
Assets
|
||||||||||||||||
Mortgage loans held for sale
|
|
222,818
|
|
|
222,818
|
|
|
464,088
|
|
|
464,088
|
|
||||
Loan delivery and forward commitments
|
|
(1,500
|
)
|
|
(1,500
|
)
|
|
(2,168
|
)
|
|
(2,168
|
)
|
||||
Interest rate lock commitments
|
|
1,600
|
|
|
1,600
|
|
|
2,357
|
|
|
2,357
|
|
2003
|
$
|
8,633
|
|
2004
|
|
8,617
|
|
2005
|
|
7,101
|
|
2006
|
|
5,953
|
|
2007
|
|
4,536
|
|
Thereafter
|
|
6,319
|
|
|
|
||
$
|
41,159
|
||
|
|
Non-Guarantor Subsidiaries
|
||||||||||||||||||||||
D.R. Horton, Inc.
|
Guarantor Subsidiaries
|
Financial Services
|
Other
|
Intercompany Eliminations
|
Total
|
|||||||||||||||||
(In thousands)
|
||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||
Homebuilding:
|
||||||||||||||||||||||
Cash
|
$
|
|
|
$
|
80,273
|
$
|
|
$
|
11,833
|
|
$
|
|
|
$
|
92,106
|
|
||||||
Advances to and investments in unconsolidated subsidiaries
|
|
4,126,233
|
|
|
260,725
|
|
|
|
68
|
|
|
(4,387,026
|
)
|
|
|
|
||||||
Inventories
|
|
689,111
|
|
|
3,566,280
|
|
|
|
88,048
|
|
|
(370
|
)
|
|
4,343,069
|
|
||||||
Property & equipment (net)
|
|
10,826
|
|
|
55,424
|
|
|
|
5,645
|
|
|
|
|
|
71,895
|
|
||||||
Earnest money deposits & other assets
|
|
209,990
|
|
|
212,685
|
|
|
|
12,408
|
|
|
(4,668
|
)
|
|
430,415
|
|
||||||
Excess of cost over net assets acquired
|
|
|
|
|
579,230
|
|
|
|
|
|
|
|
|
|
579,230
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
5,036,160
|
|
|
4,754,617
|
|
|
|
118,002
|
|
|
(4,392,064
|
)
|
|
5,516,715
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Financial services:
|
||||||||||||||||||||||
Cash
|
|
|
|
|
|
|
12,238
|
|
|
|
|
|
|
|
12,238
|
|
||||||
Mortgage loans held for sale
|
|
|
|
|
|
|
464,088
|
|
|
|
|
|
|
|
464,088
|
|
||||||
Other assets
|
|
|
|
|
|
|
24,486
|
|
|
|
|
|
|
|
24,486
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
500,812
|
|
|
|
|
|
|
|
500,812
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Assets
|
$
|
5,036,160
|
|
$
|
4,754,617
|
$
|
500,812
|
$
|
118,002
|
|
$
|
(4,392,064
|
)
|
$
|
6,017,527
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
LIABILITIES & EQUITY
|
||||||||||||||||||||||
Homebuilding:
|
||||||||||||||||||||||
Accounts payable and other liabilities
|
$
|
341,405
|
|
$
|
483,252
|
$
|
|
$
|
9,415
|
|
$
|
(24
|
)
|
$
|
834,048
|
|
||||||
Advances from parent/unconsolidated subsidiaries
|
|
|
|
|
3,019,521
|
|
|
|
50,370
|
|
|
(3,069,891
|
)
|
|
|
|
||||||
Notes payable
|
|
2,424,892
|
|
|
30,491
|
|
|
|
36,237
|
|
|
(4,644
|
)
|
|
2,486,976
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
2,766,297
|
|
|
3,533,264
|
|
|
|
96,022
|
|
|
(3,074,559
|
)
|
|
3,321,024
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Financial services:
|
||||||||||||||||||||||
Accounts payable and other liabilities
|
|
|
|
|
|
|
14,340
|
|
|
|
|
|
|
|
14,340
|
|
||||||
Advances from parent/unconsolidated subsidiaries
|
|
|
|
|
|
|
25,386
|
|
|
|
|
(25,386
|
)
|
|
|
|
||||||
Notes payable
|
|
|
|
|
|
|
391,355
|
|
|
|
|
|
|
|
391,355
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
431,081
|
|
|
|
|
(25,386
|
)
|
|
405,695
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Liabilities
|
|
2,766,297
|
|
|
3,533,264
|
|
431,081
|
|
96,022
|
|
|
(3,099,945
|
)
|
|
3,726,719
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Minority interests
|
|
|
|
|
|
|
26
|
|
20,919
|
|
|
|
|
|
20,945
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common stock
|
|
1,465
|
|
|
45
|
|
6
|
|
6,155
|
|
|
(6,206
|
)
|
|
1,465
|
|
||||||
Additional capital
|
|
1,349,630
|
|
|
350,347
|
|
2,885
|
|
29,379
|
|
|
(382,611
|
)
|
|
1,349,630
|
|
||||||
Unearned compensation
|
|
(4,453
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(4,453
|
)
|
||||||
Retained earnings
|
|
923,221
|
|
|
870,961
|
|
66,814
|
|
(34,473
|
)
|
|
(903,302
|
)
|
|
923,221
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
2,269,863
|
|
|
1,221,353
|
|
69,705
|
|
1,061
|
|
|
(1,292,119
|
)
|
|
2,269,863
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Liabilities & Equity
|
$
|
5,036,160
|
|
$
|
4,754,617
|
$
|
500,812
|
$
|
118,002
|
|
$
|
(4,392,064
|
)
|
$
|
6,017,527
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonguarantor Subsidiaries
|
||||||||||||||||||||
D.R. Horton, Inc.
|
Guarantor Subsidiaries
|
Financial Services
|
Other
|
Intercompany Eliminations
|
Total
|
|||||||||||||||
(In thousands)
|
||||||||||||||||||||
ASSETS
|
||||||||||||||||||||
Homebuilding:
|
||||||||||||||||||||
Cash
|
$
|
|
$
|
230,481
|
$
|
|
$
|
1,824
|
|
$
|
|
|
$
|
232,305
|
||||||
Advances to and investments in unconsolidated subsidiaries
|
|
2,493,783
|
|
74,241
|
|
|
|
|
|
|
(2,568,024
|
)
|
|
|
||||||
Inventories
|
|
564,593
|
|
2,212,933
|
|
|
|
27,230
|
|
|
(379
|
)
|
|
2,804,377
|
||||||
Property & equipment (net)
|
|
8,114
|
|
39,823
|
|
|
|
5,159
|
|
|
|
|
|
53,096
|
||||||
Earnest money deposits & other assets
|
|
39,978
|
|
140,436
|
|
|
|
10,793
|
|
|
(9,548
|
)
|
|
181,659
|
||||||
Excess of cost over net assets acquired
|
|
|
|
136,223
|
|
|
|
|
|
|
|
|
|
136,223
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
3,106,468
|
|
2,834,137
|
|
|
|
45,006
|
|
|
(2,577,951
|
)
|
|
3,407,660
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Financial services:
|
||||||||||||||||||||
Cash
|
|
|
|
|
|
6,975
|
|
|
|
|
|
|
|
6,975
|
||||||
Mortgage loans held for sale
|
|
|
|
|
|
222,818
|
|
|
|
|
|
|
|
222,818
|
||||||
Other assets
|
|
|
|
|
|
14,737
|
|
|
|
|
|
|
|
14,737
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
244,530
|
|
|
|
|
|
|
|
244,530
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Assets
|
$
|
3,106,468
|
$
|
2,834,137
|
$
|
244,530
|
$
|
45,006
|
|
$
|
(2,577,951
|
)
|
$
|
3,652,190
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
LIABILITIES & EQUITY
|
||||||||||||||||||||
Homebuilding:
|
||||||||||||||||||||
Accounts payable and other liabilities
|
$
|
191,596
|
$
|
304,486
|
$
|
|
$
|
2,552
|
|
$
|
(58
|
)
|
$
|
498,576
|
||||||
Advances from parent/unconsolidated subsidiaries
|
|
|
|
1,944,796
|
|
|
|
28,367
|
|
|
(1,973,163
|
)
|
|
|
||||||
Notes payable
|
|
1,664,625
|
|
37,064
|
|
|
|
9,489
|
|
|
(9,489
|
)
|
|
1,701,689
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
1,856,221
|
|
2,286,346
|
|
|
|
40,408
|
|
|
(1,982,710
|
)
|
|
2,200,265
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Financial services:
|
||||||||||||||||||||
Accounts payable and other liabilities
|
|
|
|
|
|
10,173
|
|
|
|
|
|
|
|
10,173
|
||||||
Advances from parent/unconsolidated subsidiaries
|
|
|
|
|
|
13,748
|
|
|
|
|
(13,748
|
)
|
|
|
||||||
Notes payable
|
|
|
|
|
|
182,641
|
|
|
|
|
|
|
|
182,641
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
206,562
|
|
|
|
|
(13,748
|
)
|
|
192,814
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Liabilities
|
|
1,856,221
|
|
2,286,346
|
|
206,562
|
|
40,408
|
|
|
(1,996,458
|
)
|
|
2,393,079
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Minority interests
|
|
|
|
|
|
10
|
|
8,854
|
|
|
|
|
|
8,864
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common stock
|
|
769
|
|
1
|
|
6
|
|
6,155
|
|
|
(6,162
|
)
|
|
769
|
||||||
Additional capital
|
|
704,842
|
|
84,612
|
|
2,299
|
|
10,129
|
|
|
(97,040
|
)
|
|
704,842
|
||||||
Retained earnings
|
|
544,636
|
|
463,178
|
|
35,653
|
|
(20,540
|
)
|
|
(478,291
|
)
|
|
544,636
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
1,250,247
|
|
547,791
|
|
37,958
|
|
(4,256
|
)
|
|
(581,493
|
)
|
|
1,250,247
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Liabilities & Equity
|
$
|
3,106,468
|
$
|
2,834,137
|
$
|
244,530
|
$
|
45,006
|
|
$
|
(2,577,951
|
)
|
$
|
3,652,190
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.R. Horton, Inc.
|
Guarantor Subsidiaries
|
Nonguarantor Subsidiaries
|
Intercompany Eliminations
|
Total
|
|||||||||||||||||||
Financial Services
|
Other
|
||||||||||||||||||||||
(In thousands)
|
|||||||||||||||||||||||
Homebuilding:
|
|||||||||||||||||||||||
Revenues:
|
|||||||||||||||||||||||
Home sales
|
$
|
959,427
|
|
$
|
5,496,151
|
|
$
|
|
|
$
|
74,029
|
$
|
|
|
$
|
6,529,607
|
|
||||||
Land/lot sales
|
|
6,792
|
|
|
77,300
|
|
|
|
|
|
11,540
|
|
|
|
|
95,632
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
966,219
|
|
|
5,573,451
|
|
|
|
|
|
85,569
|
|
|
|
|
6,625,239
|
|
|||||||
Cost of sales:
|
|||||||||||||||||||||||
Home sales
|
|
742,850
|
|
|
4,482,625
|
|
|
|
|
|
57,004
|
|
(341
|
)
|
|
5,282,138
|
|
||||||
Land/lot sales
|
|
6,205
|
|
|
65,549
|
|
|
|
|
|
10,536
|
|
|
|
|
82,290
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
749,055
|
|
|
4,548,174
|
|
|
|
|
|
67,540
|
|
(341
|
)
|
|
5,364,428
|
|
|||||||
Gross profit:
|
|||||||||||||||||||||||
Home sales
|
|
216,577
|
|
|
1,013,526
|
|
|
|
|
|
17,025
|
|
341
|
|
|
1,247,469
|
|
||||||
Land/lot sales
|
|
587
|
|
|
11,751
|
|
|
|
|
|
1,004
|
|
|
|
|
13,342
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
217,164
|
|
|
1,025,277
|
|
|
|
|
|
18,029
|
|
341
|
|
|
1,260,811
|
|
|||||||
Selling, general & administrative expense
|
|
180,112
|
|
|
451,597
|
|
|
|
|
|
7,648
|
|
7,412
|
|
|
646,769
|
|
||||||
Interest expense
|
|
3,905
|
|
|
611
|
|
|
|
|
|
1,506
|
|
(10
|
)
|
|
6,012
|
|
||||||
Other (income) expense
|
|
(614,360
|
)
|
|
(3,330
|
)
|
|
|
|
|
7,104
|
|
627,532
|
|
|
16,946
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
647,507
|
|
|
576,399
|
|
|
|
|
|
1,771
|
|
(634,593
|
)
|
|
591,084
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Financial services:
|
|||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
113,592
|
|
|
|
|
|
|
|
113,592
|
|
||||||
General and administrative expense
|
|
|
|
|
|
|
|
75,183
|
|
|
|
|
(7,412
|
)
|
|
67,771
|
|
||||||
Interest expense
|
|
|
|
|
|
|
|
5,505
|
|
|
|
|
|
|
|
5,505
|
|
||||||
Other (income)
|
|
|
|
|
|
|
|
(16,107
|
)
|
|
|
|
|
|
|
(16,107
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
49,011
|
|
|
|
|
7,412
|
|
|
56,423
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Income before income taxes
|
|
647,507
|
|
|
576,399
|
|
|
49,011
|
|
|
1,771
|
|
(627,181
|
)
|
|
647,507
|
|
||||||
Provision for income taxes
|
|
242,815
|
|
|
216,149
|
|
|
18,379
|
|
|
665
|
|
(235,193
|
)
|
|
242,815
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
$
|
404,692
|
|
$
|
360,250
|
|
$
|
30,632
|
|
$
|
1,106
|
$
|
(391,988
|
)
|
$
|
404,692
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.R. Horton, Inc.
|
Guarantor Subsidiaries
|
Nonguarantor Subsidiaries
|
Intercompany Eliminations
|
Total
|
||||||||||||||||||||
Financial Services
|
Other
|
|||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Homebuilding:
|
||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Homes sales
|
$
|
715,702
|
|
$
|
3,549,644
|
|
$
|
|
|
$
|
24,480
|
|
$
|
|
|
$
|
4,289,826
|
|
||||||
Land/lot sales
|
|
28,509
|
|
|
65,217
|
|
|
|
|
|
|
|
|
|
|
|
93,726
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
744,211
|
|
|
3,614,861
|
|
|
|
|
|
24,480
|
|
|
|
|
|
4,383,552
|
|
|||||||
Cost of sales:
|
||||||||||||||||||||||||
Home sales
|
|
581,341
|
|
|
2,851,674
|
|
|
|
|
|
18,379
|
|
|
(589
|
)
|
|
3,450,805
|
|
||||||
Land/lot sales
|
|
27,166
|
|
|
49,171
|
|
|
|
|
|
|
|
|
|
|
|
76,337
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
608,507
|
|
|
2,900,845
|
|
|
|
|
|
18,379
|
|
|
(589
|
)
|
|
3,527,142
|
|
|||||||
Gross profit:
|
||||||||||||||||||||||||
Home sales
|
|
134,361
|
|
|
697,970
|
|
|
|
|
|
6,101
|
|
|
589
|
|
|
839,021
|
|
||||||
Land/lot sales
|
|
1,343
|
|
|
16,046
|
|
|
|
|
|
|
|
|
|
|
|
17,389
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
135,704
|
|
|
714,016
|
|
|
|
|
|
6,101
|
|
|
589
|
|
|
856,410
|
|
|||||||
Selling, general & administrative expense
|
|
94,557
|
|
|
325,592
|
|
|
|
|
|
7,384
|
|
|
4,480
|
|
|
432,013
|
|
||||||
Interest expense
|
|
8,624
|
|
|
179
|
|
|
|
|
|
193
|
|
|
(187
|
)
|
|
8,809
|
|
||||||
Other (income) expense
|
|
(375,274
|
)
|
|
(2,380
|
)
|
|
|
|
|
22,268
|
|
|
390,133
|
|
|
34,747
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
407,797
|
|
|
390,625
|
|
|
|
|
|
(23,744
|
)
|
|
(393,837
|
)
|
|
380,841
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Financial services:
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
71,962
|
|
|
|
|
|
|
|
|
71,962
|
|
||||||
General and administrative expense
|
|
|
|
|
|
|
|
51,867
|
|
|
|
|
|
(4,480
|
)
|
|
47,387
|
|
||||||
Interest expense
|
|
|
|
|
|
|
|
5,288
|
|
|
|
|
|
|
|
|
5,288
|
|
||||||
Other (income)
|
|
|
|
|
|
|
|
(7,669
|
)
|
|
|
|
|
|
|
|
(7,669
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
22,476
|
|
|
|
|
|
4,480
|
|
|
26,956
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Income before income taxes
|
|
407,797
|
|
|
390,625
|
|
|
22,476
|
|
|
(23,744
|
)
|
|
(389,357
|
)
|
|
407,797
|
|
||||||
Provision for income taxes
|
|
152,924
|
|
|
146,484
|
|
|
8,429
|
|
|
(8,904
|
)
|
|
(146,009
|
)
|
|
152,924
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Income before cumulative effect of change in accounting principle
|
|
254,873
|
|
|
244,141
|
|
|
14,047
|
|
|
(14,840
|
)
|
|
(243,348
|
)
|
|
254,873
|
|
||||||
Cumulative effect of change in accounting principle
|
|
2,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,136
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
$
|
257,009
|
|
$
|
244,141
|
|
$
|
14,047
|
|
$
|
(14,840
|
)
|
$
|
(243,348
|
)
|
$
|
257,009
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.R. Horton, Inc.
|
Guarantor Subsidiaries
|
Nonguarantor Subsidiaries
|
Intercompany Eliminations
|
Total
|
||||||||||||||||||||
Financial Services
|
Other
|
|||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Homebuilding:
|
||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||
Homes sales
|
$
|
548,963
|
|
$
|
2,910,190
|
|
$
|
|
|
$
|
36,938
|
|
$
|
|
|
$
|
3,496,091
|
|
||||||
Land/lot sales
|
|
15,860
|
|
|
92,222
|
|
|
|
|
|
|
|
|
|
|
|
108,082
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
564,823
|
|
|
3,002,412
|
|
|
|
|
|
36,938
|
|
|
|
|
|
3,604,173
|
|
|||||||
Cost of sales:
|
||||||||||||||||||||||||
Home sales
|
|
458,640
|
|
|
2,359,624
|
|
|
|
|
|
28,838
|
|
|
(695
|
)
|
|
2,846,407
|
|
||||||
Land/lot sales
|
|
19,590
|
|
|
75,112
|
|
|
|
|
|
|
|
|
|
|
|
94,702
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
478,230
|
|
|
2,434,736
|
|
|
|
|
|
28,838
|
|
|
(695
|
)
|
|
2,941,109
|
|
|||||||
Gross profit:
|
||||||||||||||||||||||||
Home sales
|
|
90,323
|
|
|
550,566
|
|
|
|
|
|
8,100
|
|
|
695
|
|
|
649,684
|
|
||||||
Land/lot sales
|
|
(3,730
|
)
|
|
17,110
|
|
|
|
|
|
|
|
|
|
|
|
13,380
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
86,593
|
|
|
567,676
|
|
|
|
|
|
8,100
|
|
|
695
|
|
|
663,064
|
|
|||||||
Selling, general & administrative expense
|
|
84,679
|
|
|
265,615
|
|
|
|
|
|
7,102
|
|
|
3,008
|
|
|
360,404
|
|
||||||
Interest expense
|
|
10,067
|
|
|
159
|
|
|
|
|
|
599
|
|
|
(598
|
)
|
|
10,227
|
|
||||||
Other (income)/expense
|
|
(317,377
|
)
|
|
(3,241
|
)
|
|
|
|
|
1,373
|
|
|
317,147
|
|
|
(2,098
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
309,224
|
|
|
305,143
|
|
|
|
|
|
(974
|
)
|
|
(318,862
|
)
|
|
294,531
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Financial services:
|
||||||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
49,522
|
|
|
|
|
|
|
|
|
49,522
|
|
||||||
General and administrative expense
|
|
|
|
|
|
|
|
38,477
|
|
|
|
|
|
(3,007
|
)
|
|
35,470
|
|
||||||
Interest expense
|
|
|
|
|
|
|
|
5,616
|
|
|
|
|
|
|
|
|
5,616
|
|
||||||
Other (income)
|
|
|
|
|
|
|
|
(6,257
|
)
|
|
|
|
|
|
|
|
(6,257
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
11,686
|
|
|
|
|
|
3,007
|
|
|
14,693
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Income before income taxes
|
|
309,224
|
|
|
305,143
|
|
|
11,686
|
|
|
(974
|
)
|
|
(315,855
|
)
|
|
309,224
|
|
||||||
Provision for income taxes
|
|
117,505
|
|
|
115,954
|
|
|
4,441
|
|
|
(370
|
)
|
|
(120,025
|
)
|
|
117,505
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
$
|
191,719
|
|
$
|
189,189
|
|
$
|
7,245
|
|
$
|
(604
|
)
|
$
|
(195,830
|
)
|
$
|
191,719
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.R. Horton, Inc.
|
Guarantor Subsidiaries
|
Nonguarantor Subsidiaries
|
Intercompany Eliminations
|
Total
|
||||||||||||||||||||
Financial Services
|
Other
|
|||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
OPERATING ACTIVITIES
|
||||||||||||||||||||||||
Net income
|
$
|
404,692
|
|
$
|
360,250
|
|
$
|
30,632
|
|
$
|
1,106
|
|
$
|
(391,988
|
)
|
$
|
404,692
|
|
||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||||||||||||||||||
Depreciation and amortization
|
|
4,686
|
|
|
25,992
|
|
|
1,560
|
|
|
568
|
|
|
|
|
|
32,806
|
|
||||||
Amortization of debt premiums and fees
|
|
7,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,839
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||||||||||||||||||
Increase in inventories
|
|
(123,389
|
)
|
|
(73,686
|
)
|
|
|
|
|
(47,132
|
)
|
|
(9
|
)
|
|
(244,216
|
)
|
||||||
(Increase) decrease in earnest money deposits and other assets
|
|
(100,009
|
)
|
|
23,504
|
|
|
(8,814
|
)
|
|
(2,101
|
)
|
|
(4,880
|
)
|
|
(92,300
|
)
|
||||||
Increase in mortgage loans held for sale
|
|
|
|
|
|
|
|
(241,270
|
)
|
|
|
|
|
|
|
|
(241,270
|
)
|
||||||
Increase (decrease) in accounts payable and other liabilities
|
|
78,339
|
|
|
(59,632
|
)
|
|
4,183
|
|
|
18,928
|
|
|
34
|
|
|
41,852
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash provided by (used in) operating activities
|
|
272,158
|
|
|
276,428
|
|
|
(213,709
|
)
|
|
(28,631
|
)
|
|
(396,843
|
)
|
|
(90,597
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
INVESTING ACTIVITIES
|
||||||||||||||||||||||||
Net purchases of property and equipment
|
|
(5,842
|
)
|
|
(30,427
|
)
|
|
(2,495
|
)
|
|
(1,054
|
)
|
|
|
|
|
(39,818
|
)
|
||||||
Distributions from venture capital entities
|
|
|
|
|
|
|
|
|
|
|
486
|
|
|
|
|
|
486
|
|
||||||
Net cash paid for acquisitions
|
|
|
|
|
(153,761
|
)
|
|
|
|
|
|
|
|
|
|
|
(153,761
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash used in investing activities
|
|
(5,842
|
)
|
|
(184,188
|
)
|
|
(2,495
|
)
|
|
(568
|
)
|
|
|
|
|
(193,093
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
FINANCING ACTIVITIES
|
||||||||||||||||||||||||
Net change in notes payable
|
|
215,060
|
|
|
(257,637
|
)
|
|
208,714
|
|
|
(8,489
|
)
|
|
4,845
|
|
|
162,493
|
|
||||||
Increase (decrease) in intercompany payables
|
|
(467,637
|
)
|
|
339,074
|
|
|
12,753
|
|
|
47,697
|
|
|
68,113
|
|
|
|
|
||||||
Proceeds from stock associated with certain employee benefit plans
|
|
12,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,368
|
|
||||||
Cash dividends/distributions paid
|
|
(26,107
|
)
|
|
(323,885
|
)
|
|
|
|
|
|
|
|
323,885
|
|
|
(26,107
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash (used in) provided by financing activities
|
|
(266,316
|
)
|
|
(242,448
|
)
|
|
221,467
|
|
|
39,208
|
|
|
396,843
|
|
|
148,754
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Increase (decrease) in cash
|
|
|
|
|
(150,208
|
)
|
|
5,263
|
|
|
10,009
|
|
|
|
|
|
(134,936
|
)
|
||||||
Cash at beginning of year
|
|
|
|
|
230,481
|
|
|
6,975
|
|
|
1,824
|
|
|
|
|
|
239,280
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash at end of year
|
$
|
|
|
$
|
80,273
|
|
$
|
12,238
|
|
$
|
11,833
|
|
$
|
|
|
$
|
104,344
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.R. Horton, Inc.
|
Guarantor Subsidiaries
|
Nonguarantor Subsidiaries
|
Intercompany Eliminations
|
Total
|
||||||||||||||||||||
Financial Services
|
Other
|
|||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
OPERATING ACTIVITIES
|
||||||||||||||||||||||||
Net income
|
$
|
257,009
|
|
$
|
244,141
|
|
$
|
14,047
|
|
$
|
(14,840
|
)
|
$
|
(243,348
|
)
|
$
|
257,009
|
|
||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||||||||||||||||||
Depreciation and amortization
|
|
3,417
|
|
|
25,935
|
|
|
1,338
|
|
|
494
|
|
|
|
|
|
31,184
|
|
||||||
Amortization of debt premiums and fees
|
|
4,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,878
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||||||||||||||||||
(Increase) decrease in inventories
|
|
(124,424
|
)
|
|
(202,693
|
)
|
|
|
|
|
(6,404
|
)
|
|
379
|
|
|
(333,142
|
)
|
||||||
(Increase) decrease in earnest money deposits and other assets
|
|
11,968
|
|
|
(49,837
|
)
|
|
(6,264
|
)
|
|
19,968
|
|
|
9,548
|
|
|
(14,617
|
)
|
||||||
Increase in mortgage loans held for sale
|
|
|
|
|
|
|
|
(103,237
|
)
|
|
|
|
|
|
|
|
(103,237
|
)
|
||||||
Increase (decrease) in accounts payable and other liabilities
|
|
64,287
|
|
|
29,572
|
|
|
5,215
|
|
|
3,625
|
|
|
(58
|
)
|
|
102,641
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash provided by (used in) operating activities
|
|
217,135
|
|
|
47,118
|
|
|
(88,901
|
)
|
|
2,843
|
|
|
(233,479
|
)
|
|
(55,284
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
INVESTING ACTIVITIES
|
||||||||||||||||||||||||
Net purchases of property and equipment
|
|
(8,500
|
)
|
|
(22,218
|
)
|
|
(2,280
|
)
|
|
(370
|
)
|
|
|
|
|
(33,368
|
)
|
||||||
Net investments in venture capital entities
|
|
|
|
|
|
|
|
|
|
|
(1,988
|
)
|
|
|
|
|
(1,988
|
)
|
||||||
Net cash paid for acquisitions
|
|
|
|
|
(61,897
|
)
|
|
|
|
|
|
|
|
|
|
|
(61,897
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash used in investing activities
|
|
(8,500
|
)
|
|
(84,115
|
)
|
|
(2,280
|
)
|
|
(2,358
|
)
|
|
|
|
|
(97,253
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
FINANCING ACTIVITIES
|
||||||||||||||||||||||||
Net change in notes payable
|
|
389,704
|
|
|
(152,911
|
)
|
|
83,824
|
|
|
9,489
|
|
|
(9,489
|
)
|
|
320,617
|
|
||||||
Increase (decrease) in intercompany payables
|
|
(617,411
|
)
|
|
601,540
|
|
|
8,105
|
|
|
(9,202
|
)
|
|
16,968
|
|
|
|
|
||||||
Proceeds from stock associated with certain employee benefit plans
|
|
12,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,403
|
|
||||||
Cash dividends/distributions paid
|
|
(13,728
|
)
|
|
(221,500
|
)
|
|
(4,500
|
)
|
|
|
|
|
226,000
|
|
|
(13,728
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash (used in) provided by financing activities
|
|
(229,032
|
)
|
|
227,129
|
|
|
87,429
|
|
|
287
|
|
|
233,479
|
|
|
319,292
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Increase (decrease) in cash
|
|
(20,397
|
)
|
|
190,132
|
|
|
(3,752
|
)
|
|
772
|
|
|
|
|
|
166,755
|
|
||||||
Cash at beginning of year
|
|
20,397
|
|
|
40,349
|
|
|
10,727
|
|
|
1,052
|
|
|
|
|
|
72,525
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash at end of year
|
$
|
|
|
$
|
230,481
|
|
$
|
6,975
|
|
$
|
1,824
|
|
$
|
|
|
$
|
239,280
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.R. Horton, Inc.
|
Guarantor Subsidiaries
|
Nonguarantor
Subsidiaries
|
Intercompany Eliminations
|
Total
|
||||||||||||||||||||
Financial Services
|
Other
|
|||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
OPERATING ACTIVITIES
|
||||||||||||||||||||||||
Net income
|
$
|
191,719
|
|
$
|
189,189
|
|
$
|
7,245
|
|
$
|
(604
|
)
|
$
|
(195,830
|
)
|
$
|
191,719
|
|
||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||||||||||||||||||
Depreciation and amortization
|
|
1,535
|
|
|
18,527
|
|
|
1,141
|
|
|
757
|
|
|
|
|
|
21,960
|
|
||||||
Amortization of debt premiums and fees
|
|
2,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,532
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||||||||||||||||||
(Increase) decrease in inventories
|
|
(71,419
|
)
|
|
(226,433
|
)
|
|
|
|
|
(2,181
|
)
|
|
102
|
|
|
(299,931
|
)
|
||||||
Increase in earnest money deposits and other assets
|
|
(6,372
|
)
|
|
(11,800
|
)
|
|
(530
|
)
|
|
(1,487
|
)
|
|
(937
|
)
|
|
(21,126
|
)
|
||||||
Increase in mortgage loans held for sale
|
|
|
|
|
|
|
|
(5,795
|
)
|
|
|
|
|
|
|
|
(5,795
|
)
|
||||||
Increase (decrease) in accounts payable and other liabilities
|
|
10,262
|
|
|
16,349
|
|
|
978
|
|
|
949
|
|
|
(25,445
|
)
|
|
3,093
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash provided by (used in) operating activities
|
|
128,257
|
|
|
(14,168
|
)
|
|
3,039
|
|
|
(2,566
|
)
|
|
(222,110
|
)
|
|
(107,548
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
INVESTING ACTIVITIES
|
||||||||||||||||||||||||
Net purchases of property and equipment
|
|
(2,143
|
)
|
|
(12,309
|
)
|
|
(1,106
|
)
|
|
(231
|
)
|
|
|
|
|
(15,789
|
)
|
||||||
Net investments in venture capital entities
|
|
|
|
|
|
|
|
|
|
|
(29,032
|
)
|
|
|
|
|
(29,032
|
)
|
||||||
Net cash paid for acquisitions
|
|
|
|
|
(11,633
|
)
|
|
74
|
|
|
|
|
|
|
|
|
(11,559
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash used in investing activities
|
|
(2,143
|
)
|
|
(23,942
|
)
|
|
(1,032
|
)
|
|
(29,263
|
)
|
|
|
|
|
(56,380
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
FINANCING ACTIVITIES
|
||||||||||||||||||||||||
Net change in notes payable
|
|
141,552
|
|
|
(8,371
|
)
|
|
(5,533
|
)
|
|
(4,844
|
)
|
|
4,846
|
|
|
127,650
|
|
||||||
Increase (decrease) in intercompany payables
|
|
(294,281
|
)
|
|
221,156
|
|
|
8,593
|
|
|
35,762
|
|
|
28,770
|
|
|
|
|
||||||
Repurchase of treasury stock
|
|
(14,543
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14,543
|
)
|
||||||
Proceeds from stock associated with certain employee benefit plans
|
|
4,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,066
|
|
||||||
Cash dividends/distributions paid
|
|
(9,288
|
)
|
|
(187,794
|
)
|
|
(700
|
)
|
|
|
|
|
188,494
|
|
|
(9,288
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash (used in) provided by financing activities
|
|
(172,494
|
)
|
|
24,991
|
|
|
2,360
|
|
|
30,918
|
|
|
222,110
|
|
|
107,885
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Increase (decrease) in cash
|
|
(46,380
|
)
|
|
(13,119
|
)
|
|
4,367
|
|
|
(911
|
)
|
|
|
|
|
(56,043
|
)
|
||||||
Cash at beginning of year
|
|
66,777
|
|
|
53,468
|
|
|
6,360
|
|
|
1,963
|
|
|
|
|
|
128,568
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cash at end of year
|
$
|
20,397
|
|
$
|
40,349
|
|
$
|
10,727
|
|
$
|
1,052
|
|
$
|
|
|
$
|
72,525
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2002
|
||||||||||||
Three Months Ended
|
||||||||||||
September 30
|
June 30
|
March 31
|
December 31
|
|||||||||
Revenues
(1)
|
$
|
2,170,397
|
$
|
1,808,479
|
$
|
1,600,065
|
$
|
1,159,890
|
||||
Gross profit
|
|
413,866
|
|
337,627
|
|
281,155
|
|
228,163
|
||||
Net income
|
|
136,393
|
|
105,940
|
|
88,931
|
|
73,428
|
||||
Basic earnings per common share
(2)
|
|
0.93
|
|
0.72
|
|
0.69
|
|
0.64
|
||||
Diluted earnings per common share
(2)
|
|
0.92
|
|
0.67
|
|
0.64
|
|
0.62
|
Fiscal 2001
|
||||||||||||
Three Months Ended
|
||||||||||||
September 30
|
June 30
|
March 31
|
December 31
|
|||||||||
Revenues
|
$
|
1,540,034
|
$
|
1,120,981
|
$
|
906,836
|
$
|
887,663
|
||||
Gross profit
|
|
288,028
|
|
219,159
|
|
179,000
|
|
170,223
|
||||
Income before cumulative effect of change in accounting principle
|
|
86,764
|
|
68,803
|
|
51,581
|
|
47,725
|
||||
Net income
|
|
86,764
|
|
68,803
|
|
51,581
|
|
49,861
|
||||
Basic earnings before cumulative effect of change in accounting principle per common share
(2)
|
|
0.75
|
|
0.61
|
|
0.46
|
|
0.42
|
||||
Diluted earnings before cumulative effect of change in accounting principle per common share
(2)
|
|
0.74
|
|
0.60
|
|
0.45
|
|
0.42
|
(1)
|
|
Revenues from the acquired Schuler operations were $475.4 million in the three months ended September 30, 2002, $352.4 million in the three months ended
June 30, 2002, and $418.8 million in the three months ended March 31, 2002.
|
(2)
|
|
All basic and diluted share amounts presented above have been restated to reflect the effects of the three-for-two stock split (effected as a 50% stock
dividend) of April 9, 2002 and the 11% stock dividend of March 23, 2001.
|
(a)
|
(b)
|
(c)
|
||||||
Plan Category
|
Number of shares to
be issued upon
exercise of
outstanding
options,
warrants and rights
|
Weighted-average
exercise price of
outstanding
options,
warrants
and rights
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
|
|||||
Equity compensation plans approved by stockholders
|
8,786,190
|
$
|
12.76
|
10,486,228
|
(1)
|
|||
Equity compensation plans not approved by stockholders
|
|
|
n/a
|
|
|
|||
Total
|
8,786,190
|
$
|
12.76
|
10,486,228
|
(1)
|
(1)
|
|
Includes 8,960,270 shares reserved for issuance under the Companys Employee Stock Purchase Plan. Under this Employee Stock Purchase Plan, employees of the
Company purchased 7,450 shares of common stock in 2001 and 18,460 shares of common stock in 2002.
|
(a)
|
|
The following documents are filed as part of this report:
|
Exhibit Number
|
Exhibit
|
|
2.1
|
Agreement and Plan of Merger, dated as of December 18, 1997, by and between the Registrant and Continental Homes Holding Corp. The Registrant agrees to
furnish supplementally a copy of omitted schedules to the Commission upon request (1)
|
|
2.2
|
Agreement and Plan of Merger, dated as of October 22, 2001, as amended on November 8, 2001, by and between the Registrant and Schuler Homes, Inc. The
Registrant agrees to furnish supplementally a copy of omitted schedules to the Commission upon request (2)
|
|
3.1
|
Amended and Restated Certificate of Incorporation, as amended (3)
|
|
3.2
|
Amended and Restated Bylaws (4)
|
|
4.1
|
See Exhibits 3.1 and 3.2
|
|
4.2
|
Indenture, dated as of June 9, 1997, among the Registrant, the guarantors named therein and American Stock Transfer & Trust Company, as Trustee
(5)
|
|
4.3
|
First Supplemental Indenture, dated as of June 9, 1997, among the Registrant, the guarantors named therein and American Stock Transfer & Trust Company,
as Trustee (6)
|
|
4.4
|
Second Supplemental Indenture, dated as of September 30, 1997, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as Trustee (7)
|
|
4.5
|
Third Supplemental Indenture, dated as of April 17, 1998, among the Registrant, the guarantors named therein and American Stock Transfer & Trust Company,
as Trustee (8)
|
|
4.6
|
Fourth Supplemental Indenture, dated as of April 20, 1998, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as Trustee (9)
|
|
4.7
|
Fifth Supplemental Indenture, dated as of August 31, 1998, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as Trustee (10)
|
|
4.8
|
Sixth Supplemental Indenture, dated as of February 4, 1999, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as Trustee (11)
|
|
4.9
|
Seventh Supplemental Indenture, dated as of August 31, 1999, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as Trustee (12)
|
|
4.10
|
Eighth Supplemental Indenture, dated as of March 21, 2000, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as Trustee (13)
|
|
4.11
|
Ninth Supplemental Indenture, dated as of March 31, 2000, among the Registrant, the guarantors named therein and American Stock Transfer & Trust Company,
as Trustee (14)
|
|
4.12
|
Tenth Supplemental Indenture, dated as of June 5, 2000, among the Registrant, the guarantors named therein and American Stock Transfer & Trust Company,
as Trustee (15)
|
Exhibit Number
|
Exhibit
|
|
4.13
|
Eleventh Supplemental Indenture, dated as of May 11, 2001, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as Trustee (16)
|
|
4.14
|
Twelfth Supplemental Indenture, dated as of May 21, 2001, among the Registrant, the guarantors named therein and American Stock Transfer & Trust Company,
as Trustee (17)
|
|
4.15
|
Thirteenth Supplemental Indenture, dated as of August 15, 2001, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as Trustee (18)
|
|
4.16
|
Fourteenth Supplemental Indenture, dated as of February 21, 2002, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as trustee, relating to the 8.375% Senior Notes due 2004, 10.5% Senior Notes due 2005, 8% Senior Notes due 2009, 7.875% Senior Notes due 2011 and Zero Coupon Convertible Senior Notes due 2021 (62)
|
|
4.17
|
Indenture, dated as of September 11, 2000, among the Registrant, the guarantors named therein and American Stock Transfer & Trust Company, as Trustee
(19)
|
|
4.18
|
First Supplemental Indenture, dated as of September 11, 2000, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as Trustee (20)
|
|
4.19
|
Second Supplemental Indenture, dated as of March 12, 2001, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as Trustee (21)
|
|
4.20
|
Third Supplemental Indenture, dated as of May 21, 2001, among the Registrant, the guarantors named therein and American Stock Transfer & Trust Company,
as Trustee (22)
|
|
4.21
|
Fourth Supplemental Indenture, dated as of February 21, 2002, among the Registrant, the guarantors named therein and American Stock Transfer & Trust
Company, as trustee, relating to the 9.75% Senior Subordinated Notes due 2010 and 9.375% Senior Subordinated Notes due 2011 (63)
|
|
4.22
|
Indenture, dated as of April 15, 1996, between Continental Homes Holding Corp. (Continental) and First Union National Bank, as Trustee
(23)
|
|
4.23
|
First Supplemental Indenture, dated as of April 20, 1998, among the Registrant, the guarantors named therein and First Union National Bank, as Trustee
(24)
|
|
4.24
|
Second Supplemental Indenture, dated as of August 31, 1998, among the Registrant, the guarantors named therein and First Union National Bank, as Trustee
(25)
|
|
4.25
|
Third Supplemental Indenture, dated as of August 31, 1999, among the Registrant, the guarantors named therein and First Union National Bank, as Trustee
(26)
|
|
4.26
|
Fourth Supplemental Indenture, dated as of May 21, 2001, among the Registrant, the guarantors named therein and First Union National Bank, as Trustee
(27)
|
|
4.27
|
Fifth Supplemental Indenture, dated as of February 21, 2002, among the Registrant, the guarantors named therein and First Union National Bank, as trustee,
relating to the 10% Senior Notes due 2006 (64)
|
|
4.28
|
Indenture, dated as of May 6, 1998, among Schuler Residential, Inc. (formerly known as Schuler Homes, Inc.), the guarantors named therein and BNY Western
Trust Company, as successor in interest to U.S. Trust Company of California, N.A., as trustee, relating to the 9% Senior Notes due 2008 (50)
|
|
4.29
|
First Supplemental Indenture, dated as of February 26, 1999, among Schuler Residential, Inc. (formerly known as Schuler Homes, Inc.), the guarantors named
therein and BNY Western Trust Company, as successor in interest to U.S. Trust Company of California, N.A., as trustee, relating to the 9% Senior Notes due 2008 (51)
|
|
4.30
|
Second Supplemental Indenture, dated as of July 15, 1999, among Schuler Residential, Inc. (formerly known as Schuler Homes, Inc.), the guarantors named
therein and BNY Western Trust Company, as successor in interest to U.S. Trust Company of California, N.A., as trustee, relating to the 9% Senior Notes due 2008 (52)
|
Exhibit Number
|
Exhibit
|
|
4.31
|
Third Supplemental Indenture, dated as of June 27, 2000, among Schuler Residential, Inc. (formerly known as Schuler Homes, Inc.), the guarantors named
therein and BNY Western Trust Company, as successor in interest to U.S. Trust Company of California, N.A., as trustee, relating to the 9% Senior Notes due 2008 (53)
|
|
4.32
|
Fourth Supplemental Indenture, dated as of October 20, 2000, among Schuler Residential, Inc. (formerly known as Schuler Homes, Inc.), the guarantors named
therein and BNY Western Trust Company, as successor in interest to U.S. Trust Company of California, N.A., as trustee, relating to the 9% Senior Notes due 2008 (54)
|
|
4.33
|
Fifth Supplemental Indenture, dated as of June 21, 2001, among Schuler Residential, Inc. (formerly known as Schuler Homes, Inc.), Schuler Homes, Inc., the
guarantors named therein and BNY Western Trust Company, as successor in interest to U.S. Trust Company of California, N.A., as trustee, relating to the 9% Senior Notes due 2008 (55)
|
|
4.34
|
Sixth Supplemental Indenture, dated as of October 4, 2001, among Schuler Homes, Inc., the guarantors named therein and BNY Western Trust Company, as
successor in interest to U.S. Trust Company of California, N.A., as trustee, relating to the 9% Senior Notes due 2008 (56)
|
|
4.35
|
Seventh Supplemental Indenture, dated as of February 21, 2002, among the Registrant, the guarantors named therein and BNY Western Trust Company, as successor
in interest to U.S. Trust Company of California, N.A., as trustee, relating to the 9% Senior Notes due 2008 (57)
|
|
4.36
|
Indenture, dated as of June 28, 2001, among Schuler Homes, Inc., the guarantors named therein and U.S. Bank, N.A., as successor by merger to U.S. Bank Trust
National Association, as trustee, relating to the 9.375% Senior Notes due 2009 (58)
|
|
4.37
|
First Supplemental Indenture, dated as of February 21, 2002, among the Registrant, the guarantors named therein and U.S. Bank, N.A., as successor by merger
to U.S. Bank Trust National Association, as trustee, relating to the 9.375% Senior Notes due 2009 (59)
|
|
4.38
|
Indenture, dated as of June 28, 2001, among Schuler Homes, Inc., the guarantors named therein and U.S. Bank, N.A., as successor by merger to U.S. Bank Trust
National Association, as trustee, relating to the 10.5% Senior Subordinated Notes due 2011 (60)
|
|
4.39
|
First Supplemental Indenture, dated as of February 21, 2002, among the Registrant, the guarantors named therein and U.S. Bank, N.A., as successor by merger
to U.S. Bank Trust National Association, as trustee, relating to the 10.5% Senior Subordinated Notes due 2011 (61)
|
|
4.40
|
Indenture, dated as of April 11, 2002, among the Registrant, the guarantors named therein and American Stock Transfer & Trust Company, as trustee,
relating to senior debt securities of the Registrant (65)
|
|
4.41
|
First Supplemental Indenture, dated as of April 11, 2002, among the Registrant, the guarantors named therein and American Stock Transfer & Trust Company,
as trustee, relating to the 8.5% Senior Notes due 2012 (66)
|
|
4.42
|
Registration Rights Agreement, dated as of April 11, 2002, among the Registrant, the guarantors named therein and Salomon Smith Barney Inc. Banc of America
Securities LLC, Credit Lyonnais Securities (USA) Inc. and Fleet Securities, Inc., relating to the 8.5% Senior Notes due 2012 (67)
|
|
10.1
|
Form of Indemnification Agreement between the Registrant and each of its directors and executive officers and schedules of substantially identical documents
(28)
|
|
10.2
|
D.R. Horton, Inc. 1991 Stock Incentive Plan, as amended and restated (29)(30)
|
|
10.2a
|
Amendment No. 1 to 1991 Stock Incentive Plan, as amended and restated (30)(31)
|
|
10.3
|
Form of Non-Qualified Stock Option Agreement (Term Vesting)(30)(32)
|
Exhibit Number
|
Exhibit
|
|
10.4
|
Form of Non-Qualified Stock Option Agreement (Performance Vesting)(30) (33)
|
|
10.5
|
Form of Incentive Stock Option Agreement (Term Vesting)(30)(33)
|
|
10.6
|
Form of Incentive Stock Option Agreement (Performance Vesting)(30)(33)
|
|
10.7
|
Form of Restricted Stock Agreement (Term Vesting)(30)(33)
|
|
10.8
|
Form of Restricted Stock Agreement (Performance Vesting)(30)(33)
|
|
10.9
|
Form of Stock Appreciation Right Agreement (Term Vesting)(30)(33)
|
|
10.10
|
Form of Stock Appreciation Right Agreement (Performance Vesting)(30)(33)
|
|
10.11
|
Form of Stock Appreciation Right Notification (Tandem)(30)(33)
|
|
10.12
|
Form of Performance Share Notification (30)(33)
|
|
10.13
|
Form of Performance Unit Notification (30)(33)
|
|
10.14
|
D.R. Horton, Inc. Supplemental Executive Retirement Plan No. 1 (30)(34)
|
|
10.15
|
D.R. Horton, Inc. Supplemental Executive Retirement Trust No. 1 (30)(34)
|
|
10.16
|
D.R. Horton, Inc. Supplemental Executive Retirement Plan No. 2 (30)(34)
|
|
10.17
|
Continental Homes Holding Corp. 1988 Stock Incentive Plan (as amended and restated June 20, 1997)(30)(35)
|
|
10.18
|
Restated Continental Homes Holding Corp. 1986 Stock Incentive Plan, and the First Amendment thereto dated June 17, 1987(30)(36)
|
|
10.19
|
Form of Stock Option Agreement pursuant to Continentals 1986 and 1988 Stock Incentive Plans (30)(37)
|
|
10.20
|
The D.R. Horton, Inc. 2000 Incentive Bonus Plan (30)(38)
|
|
10.21
|
First Amendment to Non-Qualified Stock Option Agreements, dated as of March 15, 2000, between the Registrant and Richard Beckwitt (30)(39)
|
|
10.22
|
Letter Agreement concerning partial bonus under Incentive Bonus Plan, dated March 15, 2000, between the Registrant and Richard Beckwitt (30)(40)
|
|
10.23
|
Limited Partnership Agreement of Encore Venture Partners II (Texas), L.P., dated as of March 21, 2000, among GP-Encore, Inc. (formerly, Encore I, Inc.),
Encore II, Inc., EVP Capital, L.P. (formerly, Encore Capital (Texas), L.P.) and Richard Beckwitt (30)(41)
|
|
10.24
|
Agreement for Termination of, and Withdrawal from, Partnership, dated as of June 30, 2001, among Encore Venture Partners II (Texas), L.P., EVP Capital, L.P.,
Encore Management, LLC, Richard Beckwitt, GP-Encore, Inc. and Encore II, Inc. (30)(69)
|
|
10.25
|
Summary of Advisory Arrangement for Richard Beckwitt (30)(70)
|
|
10.26
|
Amended and Restated Master Loan and Inter-Creditor Agreement dated as of July 1, 1999, among D.R. Horton, Inc., as Borrower; NationsBank, N.A., Fleet
National Bank, Bank United, Comerica Bank, Credit Lyonnais New York Branch, Société Générale, Southwest Agency, The First National Bank of Chicago, PNC Bank, National Association, Amsouth Bank, Bank One, Arizona, NA,
First American Bank Texas, SSB, Harris Trust and Savings Bank, Sanwa Bank California, Norwest Bank Arizona, National Association, Wachovia Mortgage Company and Summit Bank, as Banks; and NationsBank, N.A., as Administrative Agent (43)
|
|
10.27
|
Credit Agreement dated as of August 13, 1999, among CH Mortgage Company I, Ltd., as Borrower; U.S. Bank National Association, Residential Funding
Corporation, Hibernia Bank, First Union National Bank, and National City Bank of Kentucky, as Lenders and U.S. Bank National Association, as Agent (44)
|
Exhibit Number
|
Exhibit
|
|
10.28
|
Revolving Credit Agreement, dated as of January 31, 2002, among the Registrant, the lenders named therein, and Bank of America, N.A., a national banking
association, as Administrative Agent and Letter of Credit Issuer (45)
|
|
10.29
|
Indemnification Agreement by and between the Registrant and James K. Schuler, director (46)
|
|
10.30
|
Employment Agreement by and between the Registrant and James K. Schuler dated October 22, 2001 (30)(47)
|
|
10.31
|
Form of Incentive Stock Option Agreement for replacement incentive stock options granted to former employees of Schuler Homes, Inc. pursuant to the D.R.
Horton, Inc. 1991 Stock Incentive Plan, as amended and restated (30)(48)
|
|
10.32
|
Form of Non-Qualified Stock Option Agreement for replacement non-qualified stock options granted to former employees of Schuler Homes, Inc. pursuant to the
D.R. Horton, Inc. 1991 Stock Incentive Plan, as amended and restated (30)(49)
|
|
10.33
|
D.R. Horton, Inc. Deferred Compensation Plan, effective as of June 15, 2002 (30)(68)
|
|
10.34
|
Grantor Trust Agreement, dated June 21, 2002 by and between the Registrant and Wachovia Bank, National Association, as trustee (*)
|
|
10.35
|
First Amendment to Credit Agreement, dated as of August 14, 2000, among CH Mortgage Company I, Ltd., as Borrower; U.S. Bank National Association, as agent
and Lenders referred to therein (*)
|
|
10.36
|
Second Amendment to Credit Agreement and Second Amendment to Pledge and Security Agreement, dated as of August 10, 2001, among CH Mortgage Company I, Ltd.,
as Borrower; U.S. Bank National Association, as agent and Lenders referred to therein (*)
|
|
10.37
|
Third Amendment to Credit Agreement, dated as of February 22, 2002, among CH Mortgage Company I, Ltd., as Borrower; U.S. Bank National Association, as agent
and Lenders referred to therein (*)
|
|
10.38
|
Fourth Amendment to Credit Agreement, dated as of August 12, 2002, among CH Mortgage Company I, Ltd., as Borrower; U.S. Bank National Association, as agent
and Lenders referred to therein (*)
|
|
10.39
|
Fifth Amendment to Credit Agreement, dated as of September 25, 2002, among CH Mortgage Company I, Ltd., as Borrower; U.S. Bank National Association, as agent
and Lenders referred to therein (*)
|
|
10.40
|
Sixth Amendment to Credit Agreement, dated as of October 18, 2002, among CH Mortgage Company I, Ltd., as Borrower; U.S. Bank National Association, as agent
and Lenders referred to therein (*)
|
|
10.41
|
Loan Agreement, dated July 9, 2002, among CH Funding LLC, Atlantic Asset Securitization Corp., Credit Lyonnais New York Branch and CH Mortgage Company I,
Ltd. (*)
|
|
10.42
|
Omnibus Amendment, dated August 26, 2002, to Loan Agreement dated July 9, 2002, among CH Mortgage Company I, Ltd., CH Funding LLC, Atlantic Asset
Securitization Corp., Credit Lyonnais New York Branch and U.S. Bank National Association (*)
|
|
10.43
|
Second Omnibus Amendment, dated November 25, 2002, to Loan Agreement dated July 9, 2002, among CH Mortgage Company I, Ltd., CH Funding LLC, Atlantic Asset
Securitization Corp., Credit Lyonnais New York Branch and U.S. Bank National Association (*)
|
|
21.1
|
Subsidiaries of D.R. Horton, Inc. (*)
|
|
23.1
|
Consent of Ernst & Young LLP, Fort Worth, Texas (*)
|
(1)
|
|
Incorporated by reference from Exhibit 2.1 to the Registrants Registration Statement on Form S-4 (Registration No. 333-44279), filed with the Commission
on January 15, 1998.
|
(2)
|
|
Incorporated by reference from Exhibit 2.1 to the Registrants Current Report on Form 8-K, dated October 22, 2001, filed with the Commission on
October 24, 2001; and Exhibit 2.2 to the Registrants Current Report on Form 8-K, dated November 8, 2001, filed with the Commission on November 8, 2001.
|
(3)
|
|
Incorporated by reference from Exhibit 4.2 to the Registrants registration statement (No. 333-76175) on Form S-3, filed with the Commission on April 13,
1999.
|
(4)
|
|
Incorporated by reference from Exhibit 3.1 to the Registrants Quarterly Report on Form 10-Q for the quarter ended December 31, 1998, filed with the
Commission on February 16, 1999.
|
(5)
|
|
Incorporated by reference from Exhibit 4.1(a) to the Registrants Registration Statement on Form S-3 (No. 333-27521), filed with the Commission on May
21, 1997.
|
(6)
|
|
Incorporated by reference from Exhibit 4.1 to the Registrants Form 8-K/A dated June 6, 1997, filed with the Commission on June 9, 1997.
|
(7)
|
|
Incorporated by reference from Exhibit 4.4 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 1997, filed with the
Commission on December 8, 1997.
|
(8)
|
|
Incorporated by reference from Exhibit 4.3 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, filed with Commission on
May 14, 1998.
|
(9)
|
|
Incorporated by reference from Exhibit 4.4 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, filed with Commission on
May 14, 1998.
|
(10)
|
|
Incorporated by reference from Exhibit 4.7 to the Registrants Annual Report on Form 10-K for the year ended September 30, 1998, filed with the Commission
on December 10, 1998.
|
(11)
|
|
Incorporated by reference from Exhibit 4.1 to the Registrants Current Report on Form 8-K, dated February 2, 1999, filed with the Commission on
February 2, 1999.
|
(12)
|
|
Incorporated by reference from Exhibit 4.9 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 1999, filed with the
Commission on December 10, 1999.
|
(13)
|
|
Incorporated by reference from Exhibit 4.1 to the Registrants Current Report on Form 8-K, filed with the Commission on March 17, 2000.
|
(14)
|
|
Incorporated by reference from Exhibit 4.5 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, filed with the
Commission on May 12, 2000.
|
(15)
|
|
Incorporated by reference from Exhibit 4.1 to the Registrants Current Report on Form 8-K, filed with the Commission on June 6, 2000.
|
(16)
|
|
Incorporated by reference from Exhibit 4.1(a) to the Registrants Current Report on Form 8-K, filed with the Commission on May 14, 2001.
|
(17)
|
|
Incorporated by reference from Exhibit 4.5 to the Registrants Quarterly Report on Form 10-Q, filed with the Commission on August 14, 2001.
|
(18)
|
|
Incorporated by reference from Exhibit 4.1(a) to the Registrants Current Report on Form 8-K, filed with the Commission on August 14, 2001.
|
(19)
|
|
Incorporated by reference from Exhibit 4.1(a) to the Registrants Current Report on Form 8-K, filed with the Commission on September 11, 2000.
|
(20)
|
|
Incorporated by reference from Exhibit 4.1(b) to the Registrants Current Report on Form 8-K, filed with the Commission on September 11, 2000.
|
(21)
|
|
Incorporated by reference from Exhibit 4.1(a) to the Registrants Current Report on Form 8-K, filed with the Commission on March 8, 2001.
|
(22)
|
|
Incorporated by reference from Exhibit 4.2 to the Registrants Quarterly Report on Form 10-Q, for the quarter ended June 30, 2001, filed with the
Commission on August 14, 2001.
|
(23)
|
|
Incorporated by reference from Exhibit 4.1 to Continentals Annual Report on Form 10-K for the year ended May 31, 1996, filed with the Commission on August
23, 1996. The Commission file number for Continental is 1-10700.
|
(24)
|
|
Incorporated by reference from Exhibit 4.5 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, filed with Commission on
May 14, 1998.
|
(25)
|
|
Incorporated by reference from Exhibit 4.10 to the Registrants Annual Report on Form 10-K for the year ended September 30, 1998, filed with Commission on
December 10, 1998.
|
(26)
|
|
Incorporated by reference from Exhibit 4.13 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 1999, filed with
Commission on December 10, 1999.
|
(27)
|
|
Incorporated by reference from Exhibit 4.7 to the Registrants Quarterly Report on Form 10-Q, for the quarter ended June 30, 2001, filed with the
Commission on August 14, 2001.
|
(28)
|
|
Incorporated by reference from Exhibit 10.1 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 1995, filed with the
Commission on November 22, 1995 (file number 1-14122); Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed with the Commission on August 6, 1998; and Exhibit 10.4 to the Registrants
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, filed with the Commission on May 15, 2001.
|
(29)
|
|
Incorporated herein by reference from Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, dated August 13,
2002 and filed with the SEC on August 13, 2002.
|
(30)
|
|
Management contract or compensatory plan arrangement.
|
(31)
|
|
Incorporated herein by reference from Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, dated August 13,
2002 and filed with the SEC on August 13, 2002.
|
(32)
|
|
Incorporated by reference from Exhibit 10.3 to the Registrants Registration Statement on Form S-1 (Registration No. 3-81856), filed with the Commission on
July 22, 1994.
|
(33)
|
|
Incorporated by reference from the Registrants Annual Report on Form 10-K for the fiscal year ended December 31, 1992, filed with the Commission on March
29, 1993.
|
(34)
|
|
Incorporated by reference from the Registrants Transitional Report on Form 10-K for the period from January 1, 1993 to September 30, 1993, filed with the
Commission on December 28, 1993 (file number 1-14122).
|
(35)
|
|
Incorporated by reference from Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed with the
Commission on August 6, 1998.
|
(36)
|
|
Incorporated by reference from Exhibit 10.4 to the Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed with the
Commission on August 6, 1998.
|
(37)
|
|
Incorporated by reference from Exhibit 10.5 to the Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1998, filed with the
Commission on August 6, 1998.
|
(38)
|
|
Incorporated by reference from Exhibit A to the Registrants Proxy Statement, filed with the Commission on December 10, 1999.
|
(39)
|
|
Incorporated by reference from Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, filed with the
commission on May 12, 2000.
|
(40)
|
|
Incorporated by reference from Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, filed with the
Commission on May 12, 2000.
|
(41)
|
|
Incorporated by reference from Exhibit 10.4 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, filed with the
Commission on May 12, 2000.
|
(42)
|
|
Reserved.
|
(43)
|
|
Incorporated by reference from Exhibit 10.21 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 1999, filed with the
Commission on December 10, 1999.
|
(44)
|
|
Incorporated by reference from Exhibit 10.22 to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 1999, filed with the
Commission on December 10, 1999.
|
(45)
|
|
Incorporated herein by reference from Exhibit 10.1 to the Registrants Current Report on Form 8-K, dated January 31, 2002, filed with the SEC on February
1, 2002.
|
(46)
|
|
Incorporated herein by reference from Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(47)
|
|
Incorporated herein by reference from Exhibit 10.8 to the Registrants Registration Statement on Form S-4 (Registration No. 333-73888), filed with the SEC
on November 21, 2001.
|
(48)
|
|
Incorporated herein by reference from Exhibit 10.4 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(49)
|
|
Incorporated herein by reference from Exhibit 10.5 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(50)
|
|
Incorporated herein by reference from Exhibit 4.4 to Schuler Residential, Inc.s Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
The Commission file number for Schuler Residential, Inc. is 0-19891.
|
(51)
|
|
Incorporated herein by reference from Exhibit 1.07 to Schuler Homes, Inc.s Registration Statement on Form 8-A filed with the SEC on June 22, 2001.
The Commission file number for Schuler Homes, Inc. is 0-32461.
|
(52)
|
|
Incorporated herein by reference from Exhibit 1.08 to Schuler Homes, Inc.s Registration Statement on Form 8-A filed with the SEC on June 22, 2001.
The Commission file number for Schuler Homes, Inc. is 0-32461.
|
(53)
|
|
Incorporated herein by reference from Exhibit 1.09 to Schuler Homes, Inc.s Registration Statement on Form 8-A filed with the SEC on June 22, 2001.
The Commission file number for Schuler Homes, Inc. is 0-32461.
|
(54)
|
|
Incorporated herein by reference from Exhibit 1.10 to Schuler Homes, Inc.s Registration Statement on Form 8-A filed with the SEC on June 22, 2001.
The Commission file number for Schuler Homes, Inc. is 0-32461.
|
(55)
|
|
Incorporsated herein by reference from Exhibit 1.11 to Schuler Homes, Inc.s Registration Statement on Form 8-A filed with the SEC on June 22, 2001.
The Commission file number for Schuler Homes, Inc. is 0-32461.
|
(56)
|
|
Incorporated herein by reference from Exhibit 4.7 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(57)
|
|
Incorporated herein by reference from Exhibit 4.8 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(58)
|
|
Incorporated herein by reference from Exhibit 4.8 to Schuler Homes, Inc.s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001. The
Commission file number for Schuler Homes, Inc. is 0-32461.
|
(59)
|
|
Incorporated herein by reference from Exhibit 4.10 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(60)
|
|
Incorporated herein by reference from Exhibit 4.10 to Schuler Homes, Inc.s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001. The
Commission file number for Schuler Homes, Inc. is 0-32461.
|
(61)
|
|
Incorporated herein by reference from Exhibit 4.12 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(62)
|
|
Incorporated herein by reference from Exhibit 4.13 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(63)
|
|
Incorporated herein by reference from Exhibit 4.14 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(64)
|
|
Incorporated herein by reference from Exhibit 4.15 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(65)
|
|
Incorporated herein by reference from Exhibit 4.16 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(66)
|
|
Incorporated herein by reference from Exhibit 4.17 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(67)
|
|
Incorporated herein by reference from Exhibit 4.18 to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, dated May 15,
2002 and filed with the SEC on May 15, 2002.
|
(68)
|
|
Incorporated herein by reference from Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, dated August 13,
2002 and filed with the SEC on August 13, 2002.
|
(69)
|
|
Incorporated herein by reference from Exhibit 10.24 to the Registrants Annual Report on Form 10-K for the year ended September 30, 2001.
|
(70)
|
|
Incorporated herein by reference from Exhibit 10.25 to the Registrants Annual Report on Form 10-K for the year ended September 30, 2001.
|
(b)
|
|
The following reports were filed on Form 8-K by the Registrant during the quarter ended September 30, 2002:
|
Date: December 13, 2002
|
D.R. HORTON, INC
|
|||
By
|
/s/ D
ONALD
J.
T
OMNITZ
|
|||
Donald J. Tomnitz,
Vice Chairman,
Chief Executive Officer and President
|
Signature
|
Title
|
Date
|
||
/s/ D
ONALD
R.
H
ORTON
|
Chairman of the Board
|
December 13, 2002
|
||
Donald R. Horton
|
||||
/s/ D
ONALD
J.
T
OMNITZ
Donald J. Tomnitz
|
Vice Chairman, Chief Executive Officer, President, and Director (Principal Executive Officer)
|
December 13, 2002
|
||
/s/ S
AMUEL
R.
F
ULLER
Samuel R. Fuller
|
Executive Vice President, Treasurer, Chief Financial Officer and Director (Principal Financial Officer and Principal
Accounting Officer)
|
December 13, 2002
|
||
/s/ B
RADLEY
S.
A
NDERSON
Bradley S. Anderson
|
Director
|
December 13, 2002
|
||
/s/ R
ICHARD
B
ECKWITT
Richard Beckwitt
|
Director
|
December 13, 2002
|
||
/s/ R
ICHARD
I.
G
ALLAND
Richard I. Galland
|
Director
|
December 13, 2002
|
||
/s/ R
ICHARD
L.
H
ORTON
Richard L. Horton
|
Director
|
December 13, 2002
|
||
/s/ T
ERRILL
J.
H
ORTON
Terrill J. Horton
|
Director
|
December 13, 2002
|
||
/s/ F
RANCINE
I.
N
EFF
Francine I. Neff
|
Director
|
December 13, 2002
|
||
/s/ J
AMES
K.
S
CHULER
James K. Schuler
|
Senior Vice President, Director
|
December 13, 2002
|
||
/s/ S
COTT
J.
S
TONE
Scott J. Stone
|
Vice President, Director
|
December 13, 2002
|
1.
|
|
I have reviewed this annual report on Form 10-K of D.R. Horton, Inc.;
|
2.
|
|
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|
3.
|
|
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
|
4.
|
|
The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|
a)
|
|
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
|
b)
|
|
evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and
|
c)
|
|
presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
|
5.
|
|
The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the equivalent functions):
|
a)
|
|
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
|
b)
|
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
|
6.
|
|
The registrants other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|
Date: December 13, 2002
|
/s/ Donald J. Tomnitz
|
|
D
ONALD
J. T
OMNITZ
|
||
Vice Chairman, Chief Executive
Officer and President
|
1.
|
|
I have reviewed this annual report on Form 10-K of D.R. Horton, Inc.;
|
2.
|
|
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|
3.
|
|
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
|
4.
|
|
The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|
a)
|
|
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
|
b)
|
|
evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and
|
c)
|
|
presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
|
5.
|
|
The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the equivalent functions):
|
a)
|
|
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
|
b)
|
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
|
6.
|
|
The registrants other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|
Date: December 13, 2002
|
/s/ Samuel R. Fuller
|
|
Samuel R. Fuller
|
||
Executive Vice President, Treasurer and
Chief Financial Officer
|
THE BOARD OF DIRECTORS
Donald R.
Horton
Chairman
Donald J. Tomnitz
Vice Chairman,President and
Chief Executive Officer
Samuel R. Fuller
Executive Vice President, Treasurer and
Chief Financial Officer
Bradley S. Anderson
Senior Vice President of CB Richard
Ellis, Inc. (1) (2)
Richard Beckwitt
Principal of EVP Capital, L.P.
Richard I. Galland
Former Chief Executive Officer and
Chairman of Fina, Inc. (1) (2)
Richard L. Horton
Former Vice PresidentDallas/Fort Worth
East Division
Terrill J. Horton
Former Vice PresidentDallas/Fort Worth
North Division
Francine I. Neff
Former Treasurer of the United States (1) (2)
(1) Audit Committee Member
(2) Compensation Committee Member
|
James K. Schuler
PresidentWest Region
Scott J. Stone
PresidentAtlanta Division
Transfer Agent and Registrar
American
Stock Transfer & Trust Co.
New York, NY
(800) 937-5449
Investor Relations
Stacey H.
Dwyer
D.R. Horton, Inc.
1901 Ascension Blvd., Suite 100
Arlington, Texas 76006
(817) 856-8200
Annual Meeting
January 30, 2003
At the Corporate Offices of
D.R. Horton, Inc.
1901
Ascension Blvd., Suite 100
Arlington, Texas 76006
Public Debt
Ratings
Senior:
BB+ Fitch Ratings
BB Standard & Poors Corporation
Ba1 Moodys Investors Service
Senior Subordinated:
BB- Fitch Ratings
B+ Standard & Poors Corporation
Ba2 Moodys Investors Service
|
EXHIBIT 10.34
GRANTOR TRUST AGREEMENT
This Grantor Trust Agreement (the "Trust Agreement") is made this 21st day of June, 2002 by and between D.R. Horton, Inc. a Delaware corporation ("the Company") and WACHOVIA BANK, NATIONAL ASSOCIATION ("the Trustee"), but to be effective as of June 15, 2002.
Recitals
(a) WHEREAS, the Company has adopted the nonqualified deferred compensation Plans and Agreements (the "Arrangements") as listed in Attachment A;
(b) WHEREAS, the Company has incurred or expects to incur liability under the terms of such Arrangements with respect to the individuals participating in such Arrangements (the "Participants and Beneficiaries");
(c) WHEREAS, the Company hereby establishes a Trust (the "Trust") and shall contribute to the Trust assets that shall be held therein, subject to the claims of the Company's creditors in the event of the Company's Insolvency, as herein defined, until paid to Participants and their Beneficiaries in such manner and at such times as specified in the Arrangements and in this Trust Agreement;
(d) WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Arrangements as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974; and
(e) WHEREAS, it is the intention of the Company to make contributions to the Trust to provide itself with a source of funds (the "Fund") to assist it in satisfying its liabilities under the Arrangements.
NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of The Trust
(a) The Trust is intended to be a Grantor Trust, of which the Company is the Grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly.
(b) The Company shall be considered a Grantor for the purposes of the Trust.
(c) The Trust hereby established is revocable by the Company; it shall become irrevocable upon a Change in Control, as defined herein.
(d) The Company hereby deposits with the Trustee in the Trust one-thousand dollars and zero cents ($1,000.00) which shall become the principal of the Trust to be held, administered and disposed of by the Trustee as provided in this Trust Agreement.
(e) The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Participants and general creditors as herein set forth. In particular, no part of the Trust shall be used for any purpose other than (i) providing benefits to Participants and Beneficiaries under the Arrangements, (ii) defraying reasonable expenses of administration, and (iii) payments to creditors under Section 3, until all such payments required by this Trust Agreement have been made. Participants and their Beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Arrangements and this Trust Agreement shall be unsecured contractual rights of Participants and their Beneficiaries against the Company. Any assets held by the Trust will be subject to the claims of the general creditors of the Company under federal and state law in the event the Company is Insolvent, as defined in Section 3(a) herein. Nothing herein shall be deemed to create a fiduciary relationship between the Participants and Beneficiaries, on the one hand, and the Trustee, Company, or Committee, on the other hand.
(f) The Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property acceptable to the Trustee in the Trust to augment the principal to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. Prior to a Change in Control, neither the Trustee nor any Participant or Beneficiary shall have any right to compel additional deposits.
(g) Upon a Potential Change in Control, as defined herein, the Company shall, as soon as possible, but in no event longer than thirty (30) days following the occurrence of a Potential Change in Control, make a contribution to the Trust in an amount that is sufficient (taking into account the Trust assets, if any, resulting from prior contributions) to fund the Trust in an amount equal to no less than 100% but no more than 120% of the amount necessary to pay each Participant or Beneficiary the benefits to which Participants or their Beneficiaries would be entitled pursuant to the terms of the Arrangements (whether or not immediately payable) as of the date on which the Potential Change in Control occurred, assuming, for purposes of such computation, the Participants were all to retire with 100% vesting as of such date.
(h) In the event a Change in Control, as defined herein, does not occur within two years of a Potential Change in Control, the Company shall have the right to recover any amounts contributed to and remaining on hand in the Trust pursuant to Section 1(g).
(i) Upon a Change in Control, the Company shall, as soon as possible, but in no event longer than thirty (30) days following the occurrence of a Change in Control, make an irrevocable contribution to the Trust in an amount that is sufficient (taking into account the Trust assets, if any, resulting from prior contributions) to fund the Trust in an amount equal to no less than 100% but no more than 120% of the amount necessary to pay each Participant or Beneficiary the benefits to which Participants or their Beneficiaries would be entitled pursuant to the terms of the Arrangements (whether or not immediately payable) as of the date on which the Change in Control occurred, assuming, for purposes of such computation, that the Participants were all to retire on that date with 100% vesting. The Company shall also fund an expense reserve for the Trustee in the amount of $125,000.00.
Section 2. Payments to Participants and Their Beneficiaries
(a) Prior to a Change in Control, distributions from the Trust shall be made by the Trustee to Participants and Beneficiaries at the direction of the Company. Prior to a Change in Control, the entitlement of a Participant or his or her Beneficiaries to benefits under the Arrangements shall be determined by the Committee appointed by the Company under the Arrangements, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Arrangements.
(b) The Company may make payment of benefits directly to Participants or their Beneficiaries as they become due under the terms of the Arrangements. The Company shall notify the Trustee of its decision to make payment of benefits directly prior to the time amounts are payable to Participants or their Beneficiaries. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Arrangements, the Company shall make the balance of each such payment as it falls due in accordance with the Arrangements. The Trustee shall notify the Company where principal and earnings are not sufficient. Nothing in this Agreement shall relieve the Company of its liabilities to pay benefits due under the Arrangements except to the extent such liabilities are met by application of assets of the Trust.
(c) After a Potential Change in Control and before a Change in Control, the Company shall deliver to the Trustee a schedule of benefits due under the Arrangements. After a Change in Control, the Trustee shall pay benefits due in accordance with such schedule. After a Change in Control, the Committee appointed by the Company shall continue to make the determination of benefits due to Participants or their Beneficiaries and shall provide the Trustee with an updated schedule of benefits due; provided however, that (i) the amount due cannot be less than the amount shown on the pre Change in Control schedule of benefits unless the Participant or Beneficiary so consents (unless the decrease in the amount due is due to previous payments made to the Participant or Beneficiary, or the Participant's or Beneficiary's Plan account balance having declined due to a decrease in the investments deemed allocated to his account), and (ii) a Participant or their Beneficiaries may make application to the Trustee for an independent decision as to the amount or form of their benefits due under the Arrangements. In making any determination required or permitted to be made by the Trustee under this Section, the
Trustee shall, in each such case, reach its own independent determination, in its absolute and sole discretion, as to the Participant's or Beneficiary's entitlement to a payment hereunder. In making its determination, the Trustee may consult with and make such inquiries of such persons, including the Participant or Beneficiary, the Company, legal counsel, actuaries or other persons, as the Trustee may reasonably deem necessary. Any reasonable costs incurred by the Trustee in arriving at its determination shall be reimbursed by the Company and, to the extent not paid by the Company within a reasonable time, shall be charged to the Trust. The Company waives any right to contest any amount paid over by the Trustee hereunder pursuant to a good faith determination made by the Trustee notwithstanding any claim by or on behalf of the Company (absent a manifest abuse of discretion by the Trustee) that such payments should not be made.
(d) The Trustee agrees that it will not itself institute any action at law or at equity, whether in the nature of an accounting, interpleading action, request for a declaratory judgment or otherwise, requesting a court or administrative or quasi-judicial body to make the determination required to be made by the Trustee under this Section 2 in the place and stead of the Trustee. The Trustee may (and, if necessary or appropriate, shall) institute an action to collect a contribution due the Trust following a Change in Control or in the event that after a Change in Control the Trust should ever experience a short-fall in the amount of assets necessary to make payments pursuant to the terms of the Arrangements.
(e) In the event any Participant or his or her Beneficiary is determined to be subject to federal income tax on any amount to the credit of his or her account under any Arrangement prior to the time of payment hereunder, whether or not due to the establishment of or contributions to this Trust, a portion of such taxable amount equal to the federal, state and local taxes (excluding any interest or penalties) owed on such taxable amount, shall be distributed by the Trustee as soon thereafter as practicable to such Participant or Beneficiary. After a Change in Control, to the extent the Trust would thereby become underfunded, the Company shall promptly reimburse the Trust for any such distribution in an amount certified by the Trustee to be needed for the Participant's benefits. For these purposes, a Participant or Beneficiary shall be deemed to pay state and local taxes at the highest marginal rate of taxation in the state in which the Participant resides or is employed (or both) where a tax is imposed and federal income taxes at the highest marginal rate of taxation, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Such distributions shall be at the direction of the Company or the Trustee, or upon proper application of the Participant or Beneficiary; provided that the actual amount of the distribution shall be determined by the Company prior to a Change in Control and the Trustee following a Change in Control. An amount to the credit of a Participant's Account shall be determined to be subject to federal income tax upon the earliest of: (a) a final determination by the United States Internal Revenue Service addressed to the Participant or his Beneficiary which is not appealed to the courts; (b) a final determination by the United States Tax Court or any other federal court affirming any such determination by the Internal Revenue Service; or (c) an opinion by the Company's tax counsel, addressed to the Company and the Trustee, to the effect that by reason of Treasury Regulations,
amendments to the Internal Revenue Code, published Internal Revenue
Service rulings, court decisions or other substantial precedent, amounts
to the credit of Participants hereunderare subject to federal income tax
prior to payment. The Company shall decide at its sole expense whether or
not to defend any tax claims described herein which are asserted by the
Internal Revenue Service against any Participant or Beneficiary,
including attorney fees and cost of appeal, and shall have the sole
authority to determine whether or not to appeal any determination made by
the Service or by a lower court. The Company also agrees to reimburse any
Participant or Beneficiary for any interest or penalties in respect of
tax claims hereunder upon receipt of documentation of same, unless due to
the Participant's or Beneficiary's own gross negligence or willful
neglect. Any distributions from the Fund to a Participant or Beneficiary
under this Section 2(e) shall be applied in accordance with the
provisions of the Arrangement to reduce the Company liabilities to such
Participant and/or Beneficiary under the Arrangement. Any reduction in
accordance with the foregoing sentence and the Arrangements shall be
determined by the Company prior to a Change in Control. Following a
Change in Control, the Company shall continue to make such determination
subject to the right of a Participant to petition the Trustee under
Section 2(c).
(f) At the direction of the Company, the Trustee shall be responsible for withholding federal and state tax required by law from any payment under the Arrangements that is made from the Trust to any Participant or Beneficiary. Withholding amounts shall be set forth on the payment schedule.
Section 3. Trustee Responsibility Regarding Payments To The Trust Beneficiary When The Company Is Insolvent
(a) The Trustee shall cease payment of benefits to Participants and their Beneficiaries if the Company is Insolvent. The Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) the Company is unable to pay its debts as they become due, or (ii) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, the principal and income of the Trust shall be subject to claims of general creditors of the Company under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive Officer of the Company shall have the duty to inform the Trustee in writing that the Company is Insolvent. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinue payment of benefits to Participants or their Beneficiaries.
(2) Unless the Trustee has actual knowledge that the Company is Insolvent, or has received notice from the Company or a person claiming to be a creditor alleging that
the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. The Trustee may in all events rely on such evidence concerning the Company's solvency as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the Company's solvency.
(3) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to Participants or their Beneficiaries and shall hold the assets of the Trust for the benefit of the Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Participants or their Beneficiaries to pursue their rights as general creditors of the Company with respect to benefits due under the Arrangements or otherwise.
(4) The Trustee shall resume the payment of benefits to Participants or their Beneficiaries in accordance with Section 2 of this Trust Agreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants or their Beneficiaries under the terms of the Arrangements for the period of such discontinuance, less the aggregate amount of any payments made to Participants or their Beneficiaries by the Company in lieu of the payments provided for hereunder during any such period of discontinuance.
Section 4. Payments When a Short-Fall of The Trust Assets Occurs
(a) If there are not sufficient assets for the payment of current and expected future benefits pursuant to Section 2 or Section 3(c) hereof and the Company does not otherwise make such payments within a reasonable time after demand from the Trustee, the Trustee shall allocate the Trust assets among the Participants or their Beneficiaries in the following order of priority:
(1) vested Participants (regardless of whether they are actively employed) and their Beneficiaries; and
(2) non-vested Participants (regardless of whether they are actively employed) and their Beneficiaries
(b) Within each category, assets shall be allocated pro-rata with respect to the total present value of benefits expected for each Participant or Beneficiary within the category, and payments to each Participant or Beneficiary shall be made to the extent of the assets allocated to each Participant or Beneficiary.
(c) Upon receipt of a contribution from the Company necessary to make up for a short-fall in the payments due, the Trustee shall resume payments to all the Participants and Beneficiaries under the Arrangements. Following a Change in Control, the Trustee shall have the right and duty to compel contributions to the Trust from the Company to make-up for any short-fall.
Section 5. Payments to the Company
Except as provided in Section 3 hereof, after the Trust has become irrevocable, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust assets before all payment of benefits have been made to Participants and their Beneficiaries pursuant to the terms of the Arrangements.
Section 6. Investment Authority
(a) The Trustee shall not be liable in discharging its duties hereunder, including without limitation its duty to invest and reinvest the Fund, if it acts for the exclusive benefit of the Participants and their Beneficiaries, in good faith and as a prudent person familiar with such matters, would act in accomplishing a similar task and in accordance with the terms of this Trust Agreement and any applicable federal or state laws, rules or regulations, and in accordance with its fiduciary duties as Trustee.
(b) Subject to investment guidelines agreed to in writing from time to time by the Company and the Trustee prior to a Change in Control, the Trustee shall have the power in investing and reinvesting the Fund in its sole discretion:
(1) To invest and reinvest in any readily marketable common and preferred stocks, bonds, notes, debentures (including convertible stocks and securities but not including any stock or security of the Trustee or the Company other than a de minimis amount held in a collective or mutual fund), certificates of deposit or demand or time deposits (including any such deposits with the Trustee), shares of investment companies and mutual funds, and publicly traded REITs, partnerships, limited liability companies, and limited liability partnerships, without being limited to the classes or property in which the Trustees are authorized to invest by any law or any rule of court of any state and without regard to the proportion any such property may bear to the entire amount of the Fund;
(2) To invest and reinvest all or any portion of the Fund collectively through the medium of any proprietary mutual fund that may be established and maintained by the Trustee;
(3) To commingle for investment purposes all or any portion of the Fund with assets of any other similar trust or trusts established by the Company with the Trustee for the purpose of safeguarding deferred compensation or retirement income benefits of its employees and/or directors;
(4) To retain any property at any time received by the Trustee;
(5) To sell or exchange any property held by it at public or private sale, for cash or on credit, to grant and exercise options for the purchase or exchange thereof, to exercise all conversion or subscription rights pertaining to any such property and to enter into any covenant or agreement to purchase any property in the future;
(6) To participate in any plan of reorganization, consolidation, merger, combination, liquidation or other similar plan relating to property held by it and to consent to or oppose any such plan or any action thereunder or any contract, lease, mortgage, purchase, sale or other action by any person;
(7) To deposit any property held by it with any protective, reorganization or similar committee, to delegate discretionary power thereto, and to pay part of the expenses and compensation thereof any assessments levied with respect to any such property to deposited;
(8) To extend the time of payment of any obligation held by it;
(9) To hold uninvested any moneys received by it, without liability for interest thereon, but only in anticipation of payments due for investments, reinvestments, expenses or disbursements;
(10) To exercise all voting or other rights with respect to any property held by it and to grant proxies, discretionary or otherwise;
(11) With the Company's prior consent, for the purposes of the Trust, to borrow money from others, to issue its promissory note or notes therefor, and to secure the repayment thereof by pledging any property held by it;
(12) To employ suitable contractors and counsel, who may be counsel to the Company or to the Trustee, and to pay their reasonable expenses and compensation from the Fund to the extent not paid by the Company, provided that the Trustee shall provide prior notice to the Company of retention of counsel, and provided further that prior to a Change in Control, or Potential Change in Control, the Company must consent to any counsel being paid by the Company or from the Trust (such consent not to be unreasonably withheld);
(13) To register investments in its own name or in the name of a nominee; to hold any investment in bearer form; and to combine certificates representing securities with certificates of the same issue held by it in other fiduciary capacities or to deposit or to arrange for the deposit of such securities with any depository, even though, when so deposited, such securities may be held in the name of the nominee of such depository with other securities deposited therewith by other persons, or to
deposit or to arrange for the deposit of any securities issued or guaranteed by the United States government, or any agency or instrumentality thereof, including securities evidenced by book entries rather than by certificates, with the United States Department of the Treasury or a Federal Reserve Bank, even though, when so deposited, such securities may not be held separate from securities deposited therein by other persons; provided, however, that no securities held in the Fund shall be deposited with the United States Department of the Treasury or a Federal Reserve Bank or other depository in the same account as any individual property of the Trustee, and provided, further, that the books and records of the Trustee shall at all times show that all such securities are part of the Trust Fund;
(14) To settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trust, respectively, to commence or defend suits or legal proceedings to protect any interest of the Trust, and to represent the Trust in all suits or legal proceedings in any court or before any other body or tribunal, in each case, prior to a Change in Control, with the Company's consent; provided, however, that the Trustee shall not be required to take any such action unless it shall have been indemnified by the Company to its reasonable satisfaction against liability or expenses it might incur therefrom;
(15) To hold and retain policies of life insurance, annuity contracts, and other property of any kind which policies are contributed to the Trust by the Company or any subsidiary of the Company or are purchased by the Trustee at the Company's or Committee's direction;
(16) To hold any other class of assets which may be contributed by the Company and that is deemed acceptable by the Trustee, unless expressly prohibited herein;
(17) To loan any securities at any time held by it to brokers or dealers upon such security as may be deemed advisable, and during the terms of any such loan to permit the loaned securities to be transferred into the name of and voted by the borrower or others; and
(18) Generally, to do all acts, whether or not expressly authorized, that the Trustee may deem necessary or desirable for the protection of the Fund.
(c) Prior to a Potential Change in Control or Change in Control, the Company shall have the right, subject to this Section, to direct the Trustee with respect to investments.
(1) The Company may at any time direct the Trustee to segregate all or a portion of the Fund in a separate investment account or accounts and may appoint one or more investment managers and/or an investment committee established by the Company to direct the investment and reinvestment of each such investment account or accounts. In such event, the Company shall notify the Trustee of the appointment of each such investment manager and/or investment committee. No
such investment manager shall be related, directly or indirectly, to the Company, but members of the investment committee may be employees of the Company.
(2) Thereafter (until a Potential Change in Control or Change in Control), the Trustee shall make every sale or investment with respect to such investment account as directed in writing by the investment manager or investment committee. It shall be the duty of the Trustee to act strictly in accordance with each direction. The Trustee shall be under no duty to question any such direction of the investment manager or investment committee, to review any securities or other property held in such investment account or accounts acquired by it pursuant to such directions or to make any recommendations to the investment managers or investment committee with respect to such securities or other property.
(3) Notwithstanding the foregoing, the Trustee, without obtaining prior approval or direction from an investment manager or investment committee, shall invest cash balances held by it from time to time in short term cash equivalents including, but not limited to, through the medium of any short term common, collective or commingled trust fund established and maintained by the Trustee subject to the instrument establishing such trust fund, U.S. Treasury Bills, commercial paper (including such forms of commercial paper as may be available through the Trustee's Trust Department), certificates of deposit (including certificates issued by the Trustee in its separate corporate capacity), and similar type securities, with a maturity not to exceed one year; and, furthermore, sell such short term investments as may be necessary to carry out the instructions of an investment manager or investment committee regarding more permanent type investment and directed distributions.
(4) The Trustee shall neither be liable nor responsible for any loss resulting to the Fund by reason of any sale or purchase of an investment directed by an investment manager or investment committee nor by reason of the failure to take any action with respect to any investment which was acquired pursuant to any such direction in the absence of further directions of such investment manager or investment committee.
(5) Notwithstanding anything in this Agreement to the contrary, the Trustee shall be indemnified and saved harmless by the Company from and against any and all personal liability to which the Trustee may be subjected by carrying out any directions of an investment manager or investment committee issued pursuant hereto or for failure to act in the absence of directions of the investment manager or investment committee including all expenses reasonably incurred in its defense in the event the Company fails to provide such defense; provided, however, the Trustee shall not be so indemnified if it participates knowingly in, or knowingly undertakes to conceal, an act or omission of an investment manager or investment committee, having actual knowledge that such act or omission is a breach of a fiduciary duty; provided further, however, that the Trustee shall not be deemed to
have knowingly participated in or knowingly undertaken to conceal an act or omission of an investment manager or investment committee with knowledge that such act or omission was a breach of fiduciary duty by merely complying with directions of an investment manager or investment committee or for failure to act in the absence of directions of an investment manager or investment committee. The Trustee may rely upon any order, certificate, notice, direction or other documentary confirmation purporting to have been issued by the investment manager or investment committee which the Trustee believes to be genuine and to have been issued by the investment manager or investment committee. The Trustee shall not be charged with knowledge of the termination of the appointment of any investment manager or investment committee until it receives written notice thereof from the Company.
(d) Following a Potential Change in Control or Change in Control, the Trustee shall have the sole and absolute discretion in the management of the Trust assets and shall have all the powers set forth under Section 6(b). In investing the Trust assets, the Trustee shall consider:
(1) the needs of the Arrangements;
(2) the need for matching of the Trust assets with the liabilities of the Arrangements; and
(3) the duty of the Trustee to act solely in the best interests of the Participants and their Beneficiaries.
(e) The Trustee shall have the right, in its sole discretion, to delegate its investment responsibility to an investment manager who may be an affiliate of the Trustee. In the event the Trustee shall exercise this right, the Trustee shall remain, at all times responsible for the acts of an investment manager. Upon direction by the Company or Committee, the Trustee shall have the right to purchase an insurance policy or an annuity to fund the benefits of the Arrangements.
(f) The Company shall have the right at any time, and from time to time in its sole discretion, to substitute assets (other than securities issued by the Trustee or the Company) of equal fair market value for any asset held by the Trust. This right is exercisable by the Company in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity; provided, however, that, following a Potential Change in Control or Change in Control, no such substitution shall be permitted unless the Trustee determines that the fair market values of the substituted assets are equal.
Section 7. Insurance Contracts
(a) To the extent that the Trustee is directed by the Company prior to a Change in Control to invest part or all of the Trust Fund in insurance contracts, the type and amount thereof shall
be specified by the Company. The Trustee shall be under no duty to make inquiry as to the propriety of the type or amount so specified.
(b) Each insurance contract issued shall provide that the Trustee shall be the owner thereof with the power to exercise all rights, privileges, options and elections granted by or permitted under such contract or under the rules of the insurer. The exercise by the Trustee of any incidents of ownership under any contract shall, prior to a Change in Control, be subject to the direction of the Company. After a Change in Control, the Trustee shall have all such rights.
(c) The Trustee shall have no power to name a beneficiary of the policy other than the Trust or the individual Participant to whom it relates, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against an insurance policy held in the Trust Fund.
(d) No insurer shall be deemed to be a party to the Trust and an insurer's obligations shall be measured and determined solely by the terms of contracts and other agreements executed by the insurer.
Section 8. Disposition of Income
(a) Prior to a Change in Control or Potential Change in Control, all income received by the Trust, net of expenses and taxes, may be returned to the Company or accumulated and reinvested within the Trust at the direction of the Company.
(b) Following a Change in Control or Potential Change in Control, all income received by the Trust, net of expenses and taxes payable by the Trust, shall be accumulated and reinvested within the Trust.
Section 9. Accounting by The Trustee
The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between the Company and the Trustee. Within forty-five (45) days following the close of each calendar year and within forty-five (45) days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. The Company may approve such account by an instrument in writing delivered to the Trustee. In the absence of the Company's filing with the Trustee objections to any such account within eighteen (18) months
after its receipt, the Company shall be deemed to have so approved such account. In such case, or upon the written approval by the Company of any such account, the Trustee shall, to the extent permitted by law, be discharged from all liability to the Company for its acts or failures to act described by such account. The foregoing, however, shall not preclude the Trustee from having its accounting settled by a court of competent jurisdiction. The Trustee shall be entitled to hold and to commingle the assets of the Trust in one Fund for investment purposes but at the direction of the Company prior to a Change in Control, the Trustee shall create one or more sub-accounts.
Section 10. Responsibility of The Trustee
(a) The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by the Company which is contemplated by, and in conformity with, the terms of the Arrangements or this Trust and is given in writing by the Company. In the event of a dispute between the Company and a party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute, subject, however to Section 2(d) hereof.
(b) The Company shall indemnify the Trustee against and hold the Trustee harmless from, any and all loss, damage, penalty, liability, cost and expense, including without limitation, reasonable attorneys' fees and disbursements, that may be incurred by, imposed upon, or asserted against the Trustee by reason of any claim, regulatory proceeding or litigation arising out of the Trustee's actions or omissions under this Agreement or other applicable law, unless resulting from the negligence, breach of duty, violation of law, breach of this Agreement, or misconduct of Trustee. The Trustee shall indemnify the Company, Committee, the Arrangements, and Trust against and hold those parties harmless from, any and all loss, damage, penalty, liability, cost and expense, including without limitation, reasonable attorneys' fees and disbursements, that may be incurred by, imposed upon, or asserted against any such indemnified party by reason of any claim, regulatory proceeding or litigation arising out of Trustee's negligence, bad faith, breach of duty, failure to perform any of its duties hereunder, or violation of applicable law, unless resulting from the negligence, breach of duty, violation of law, breach of this Agreement, or misconduct of the Company, the Committee, or the Arrangements. After a Change in Control, to the extent the Company fails to make any payment on account of an indemnity provided in this paragraph 10(b), in a reasonable timely manner, the Trustee may obtain payment from the Trust. After a Change in Control, if the Trustee undertakes or defends any litigation arising in connection with this Trust or to protect a Participant's or Beneficiary's rights under the Arrangements, the Company agrees to indemnify the Trustee against the Trustee's costs, reasonable expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. After a Change in Control, if the Company does not pay such costs, expenses and liabilities in a reasonable timely manner, the Trustee may obtain payment from the Trust. This provision shall survive the termination of the Trust.
(c) Prior to a Change in Control, the Trustee may consult with legal counsel (who may also be counsel for the Company generally) with respect to any of its duties or obligations hereunder. Following a Change in Control the Trustee shall select independent legal counsel and may consult with counsel or other persons with respect to its duties and with respect to the rights of Participants or their Beneficiaries under the Arrangements.
(d) The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder and may rely on any determinations made by such agents and information provided to it by the Company.
(e) The Trustee shall have, without exclusion, all powers conferred on the Trustee by applicable law, unless expressly provided otherwise herein.
(f) Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.
(g) At the Company's request, the Trustee shall timely file any federal, state or local tax and informational returns, and withhold and pay over any taxes, required to be filed and/or withheld and paid with respect to the Trust provided that the Company provides the Trustee, in a timely manner, with any information necessary for such filings which is not in the Trustee's possession.
Section 11. Compensation and Expenses of The Trustee
The Trustee's compensation shall be as agreed in writing from time to time by the Company and the Trustee. The Company shall pay all administrative expenses and the Trustee's fees and shall promptly reimburse the Trustee for any agreed upon fees and expenses of its agents. If not so paid, the agreed upon fees and expenses shall be paid from the Trust. A current fee schedule is set forth in Attachment B.
Section 12. Resignation and Removal of The Trustee
(a) Prior to a Change in Control, the Trustee may resign at any time by written notice to the Company, which shall be effective sixty (60) days after receipt of such notice unless the Company and the Trustee agree otherwise. Following a Change in Control, the Trustee may resign only after the appointment of a successor Trustee.
(b) The Trustee may be removed by the Company on sixty days (60) days notice or upon shorter notice accepted by the Trustee prior to a Change in Control. Subsequent to a Change in Control, the Trustee may only be removed by the Company with the consent of a
majority of the Participants (with weighted voting as measured by their relative account balances).
(c) If the Trustee resigns within two years after a Change in Control, as defined herein, the Company may appoint a successor Trustee, which satisfies the requirements of Section 13, with the consent of a majority of the Participants (with weighted voting as measured by their relative account balances). Absent such consent, the Company, or if the Company fails to act within a reasonable period of time following such resignation, the Trustee, shall apply to a court of competent jurisdiction for the appointment of a successor Trustee which satisfies the requirements of Section 13 or for instructions.
(d) Upon resignation or removal of the Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed within sixty (60) days after receipt of notice of resignation, removal or transfer, unless the Company extends the time limit.
(e) If the Trustee resigns or is removed, a successor shall be appointed by the Company, in accordance with Section 13 hereof, by the effective date of resignation or removal under paragraph(s) (a) or (b) of this section. If no such appointment has been made, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.
Section 13. Appointment of Successor
(a) If the Trustee resigns or is removed in accordance with Section 12 hereof, the Company may appoint, subject to Section 12, any third party national banking association with a market capitalization exceeding $100,000,000 to replace the Trustee upon resignation or removal. The successor Trustee shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust. The former Trustee shall execute any instrument necessary or reasonably requested by the Company or the successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of any prior
Trustee and may retain or dispose of existing Trust assets, subject to
Section 8 and 9 hereof. The successor Trustee shall not be responsible
for and the Company shall indemnify and defend the successor Trustee from
any claim or liability resulting from any action or inaction of any prior
Trustee or from any other past event, or any condition existing at the
time it becomes successor Trustee.
Section 14. Amendment or Termination
(a) This Trust Agreement may be amended by a written instrument executed by the Trustee and the Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Arrangements or shall make the Trust revocable after it has become irrevocable
in accordance with Section 1 hereof, or otherwise adversely affect the rights of any Participant or Beneficiary.
(b) Following a Change in Control, the Trust shall not terminate until the date on which Participants and their Beneficiaries have received all of the benefits due to them under the terms and conditions of the Arrangements.
(c) Upon written approval of all Participants or Beneficiaries entitled to payment of benefits pursuant to the terms of the Arrangements, the Company may terminate this Trust prior to the time all benefit payments under the Arrangements have been made. All assets in the Trust at termination shall be returned to the Company.
(d) This Trust Agreement may not be amended by the Company following a Potential Change in Control or Change in Control without the written consent of a majority of the Participants (with weighted voting as measured by their relative account balances).
Section 15. Change in Control
(a) For purposes of this Trust, the following terms shall be defined as set forth below:
(1) Potential Change in Control shall mean:
(i) the purchase or other acquisition by any
person, entity or group of persons, within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of
1934 ("Act"), or any comparable successor provisions, other
than the trustee of any other trust or plan maintained for
the benefit of employees of the Company, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the Act) of 20 percent or more of either the
outstanding shares of common stock or the combined voting
power of the Company's then outstanding voting securities
entitled to vote generally;
(ii) the announcement by any person of an intention to take actions which might reasonably result in a business combination between the Company and an entity which has a market capitalization equal to or greater than 80% of the Company;
(iii) the issuance of a proxy statement by the Company with respect to an election of directors for which there is proposed one or more directors who are not recommended by the Board of Directors of the Company or its nominating committee, where the election of such proposed director or directors would result in the individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") ceasing for any reason to constitute at least an 80% majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Security Exchange Act of 1934 (the "Act")) shall be considered as though such person were a member of the Incumbent Board; or
(iv) submission to the Incumbent Board of nominations which, if approved, would change the Executive Officer configuration of the Company (at the Executive Vice President level and above) by 50% or more.
(2) "Change in Control" means the occurrence of any of the following events:
(i) A merger, consolidation or reorganization of the Company into or with another corporation or other legal person if the stockholders of the Company, immediately before such merger, consolidation or reorganization, do not, immediately following such merger, consolidation or reorganization, then own directly or indirectly, more than 50% of the combined voting power of the then-outstanding voting securities of the corporation or other legal person resulting from such merger, consolidation or reorganization in substantially the same proportion as their ownership of Voting Securities (as hereinafter defined) immediately prior to such merger, consolidation or reorganization;
(ii) The Company sells all or substantially all of its assets to another corporation or other legal person, or there is a complete liquidation or dissolution of the Company;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1
(or any successor schedule, form or report), each as
promulgated pursuant to the Securities Exchange Act of
1934, as amended (the "Act"), disclosing that any person
(as the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Act) has become the beneficial
owner (as the term "beneficial owner" is defined under Rule
13d-3 or any successor rule or regulation promulgated under
the Act) of securities representing 20% or more of the
combined voting power of the then-outstanding voting
securities of the Company ("Voting Securities") (computed
in accordance with the standards for the computation of
total percentage ownership for the purposes of Schedule 13D
or Schedule 14D-1 (or any successor schedule, form or
report)); or
(iv) The Company files a report or proxy statement with the Securities and Exchange Commission pursuant to the Act disclosing in response to Form
8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of the Company has occurred or will occur in the future pursuant to any then-existing contract or transaction.
Notwithstanding the provisions set forth in (iii) or (iv) above, a "Change in Control" shall not be deemed to have occurred for purposes hereof solely because (i) the Company, (ii) any business entity 80% or more owned or controlled by the Company ("Affiliate"), or (iii) any employee stock ownership plan or any other employee benefit plan of the Company or any Affiliate either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) under the Act disclosing beneficial ownership by it of Voting Securities, whether in excess of 20% or otherwise, or because the Company reports that a change in control of the Company has occurred or will occur in the future by reason of such beneficial ownership. For purposes of calculating beneficial ownership pursuant to this subsection, any Voting Securities held by Donald R. Horton as of the date hereof or received by Donald R. Horton in connection with any merger involving the Company and any affiliate of the Company shall not be included in the calculation of beneficial ownership.
For purposes of this Section 15(a), the Incumbent Board, by a majority vote, shall have the power to determine on the basis of information known to them (a) the number of shares beneficially owned by any person, entity or group; (b) whether there exists an agreement, arrangement or understanding with another as to matters referred to in this Section 15(a); and (c) such other matters with respect to which a determination is necessary under this Section 15(a).
(3) Majority of Participants shall mean participants whose vested account balance within the Trust exceed 50% of the Trust Assets.
(b) The General Counsel of the Company shall have the specific authority to determine whether a Potential Change in Control or Change in Control has transpired under the guidance of Section 15(a) and shall be required to give the Trustee notice of a Change in Control or a Potential Change in Control. The Trustee shall be entitled to rely upon such notice, but if the Trustee receives notice of a Change in Control or Potential Change in Control from another source, the Trustee shall make its own independent determination.
Section 16. Miscellaneous
(a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof.
(b) The Company hereby represents and warrants that all of the Arrangements have been established, maintained and administered in accordance with all applicable laws, including without limitation, ERISA. The Company hereby indemnifies and agrees to hold the
Trustee harmless from all liabilities, including attorney's fees, relating to or arising out of the establishment, maintenance and administration of the Arrangements. To the extent the Company does not pay any of such liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust.
(c) Benefits payable to Participants and their Beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process.
(d) This Trust Agreement shall be governed by and construed in accordance with the laws of North Carolina.
(e) Nothing herein shall effect the employment relationship of Participants and the Company, give any Participant a right to employment, or prevent the Company from terminating them.
(f) This Agreement shall be binding upon and inure to the benefit of any successor to the Company or its business as the result of merger, consolidation, reorganization, transfer of assets or otherwise and any subsequent successor thereto. In the event of any such merger, consolidation, reorganization, transfer of assets or other similar transaction, the successor to the Company or its business or any subsequent successor thereto shall promptly notify the Trustee in writing of its successorship. In no event shall any such transaction described herein suspend or delay the rights of Participants or Beneficiaries to receive benefits hereunder.
IN WITNESS WHEREOF, this Grantor Trust Agreement has been executed on behalf of the parties hereto on the day and year first above written.
D.R. HORTON, INC. WACHOVIA BANK, NATIONAL ASSOCIATION, as TRUSTEE By: /s/ Samuel R. Fuller By: /s/ John N. Smith ------------------------------------ ------------------------------- Its: Executive Vice President, Treasurer & Its: Senior Vice President CFO ATTEST: ATTEST: By: /s/ Paul Buchschacher By: /s/ Mary H. Jones ------------------------------------ ------------------------------- Its: Vice President and Corporate Counsel Its: /s/ Vice President |
Attachment A
The following Arrangements are covered by this Trust: D.R. Horton Deferred Compensation Plan
Attachment B
Trustee Fee Schedule
EXHIBIT 10.35
FIRST AMENDMENT TO
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment") dated as of August 14, 2000 between CH Mortgage Company I, Ltd., a Texas limited partnership ("Borrower"), U.S. Bank National Association, as agent ("Agent") and Lenders referred to below ("Lenders").
WITNESSETH THAT:
WHEREAS, the Borrower, the Lenders and the Agent are parties to a Credit Agreement dated as of August 13, 1999 (the "Credit Agreement"), pursuant to which the Lenders provide the Borrower with a revolving mortgage warehousing credit facility;
WHEREAS, the Borrower and the Lenders have agreed to amend the Credit Agreement upon the terms and conditions herein set forth;
NOW, THEREFORE, for value received, the receipt and sufficiency of which are hereby acknowledged, the Borrower and the Lenders agree as follows:
1. Certain Defined Terms. Each capitalized term used herein without being defined herein that is defined in the Credit Agreement shall have the meaning given to it therein.
2. Amendments to Credit Agreement. The Credit Agreement is hereby amended as follows:
(a) The following definitions in Section 1.01 of the Credit Agreement are hereby amended in their entirety to read as follows:
"Borrower's Consolidated Tangible Net Worth" means, as of any date, the remainder of (a) all assets of Borrower and the Restricted Subsidiaries on a Consolidated basis minus (b) the sum of (i) all GAAP Indebtedness and all Contingent Indebtedness of Borrower and the Restricted Subsidiaries, (ii) all assets of Borrower and the Restricted Subsidiaries which would be classified as intangible assets under GAAP, including Capitalized Servicing Rights, goodwill (whether representing the excess cost over book value of assets acquired or otherwise), patents, trademarks, trade names, copyrights, franchises, deferred charges and intercompany receivables, (iii) investments in and advances to Unrestricted Subsidiaries, and (iv) investments in and advances (other than loans permitted pursuant to Section 6.05(f)) to JV's plus (c) the Market Value of Borrower's servicing rights.
"Drawdown Termination Date" means the earlier of August 14, 2001, or the day on which the Notes first become due and payable in full.
"Majority Lenders" means (i) if there are less than three Lenders, Lenders collectively having Percentage Shares totaling in the aggregate one hundred percent (100%); and (ii) if there are three or more Lenders, Lenders collectively having Percentage Shares totaling in the aggregate at least sixty percent (60%).
(b) Section 1.01 of the Credit Agreement is further amended to add the following definition in the appropriate alphabetical order:
"JV" means a joint venture (whether structured as a corporation, partnership, limited liability company, or other entity or arrangement) between the Borrower and one or more builders, developers, title companies, or other service providers in the residential real estate industry for the purpose of making Mortgage Loans.
(c) Section 6.05 of the Credit Agreement is hereby amended in its entirety to read as follows:
Section 6.05 Loans, Advances, and Investments. Neither Borrower nor any Restricted Subsidiary shall make any loan (other than Mortgage Loans), advance, or capital contribution to, or investment in (including any investment in any Restricted Subsidiary, joint venture or partnership), or purchase or otherwise acquire any of the capital stock, securities, ownership interests, or evidences of indebtedness of, any Person (collectively, "Investment"), or otherwise acquire any interest in, or control of, another Person, except for the following:
(a) Cash Equivalents;
(b) Any acquisition of securities or evidences of indebtedness of others when acquired by Borrower in settlement of accounts receivable or other debts arising in the ordinary course of its business, so long as the aggregate amount of any such securities or evidences of indebtedness is not material to the business or condition (financial or otherwise) of Borrower;
(c) Mortgage Notes acquired in the ordinary course of Borrower's business;
(d) Investment in any Subsidiary or JV; provided that at the time any such investment is made and immediately thereafter, Borrower and the Restricted Subsidiaries are in compliance with all covenants set forth in the Loan Documents and no Default or Event of Default shall have occurred and be continuing;
(e) Loans to officers or employees in an aggregate amount not to exceed $300,000; and
(f) Loans made to JV's in an amount not to exceed $10,000,000 at any one time outstanding, secured by Mortgage Loans originated with the proceeds of such loans and covered by a bona fide current, unused and unexpired whole loan commitment issued in favor of and held by such JV made by an Approved Investor or the Borrower.
(d) Schedule 5 to the Credit Agreement is hereby amended in its entirety to read as set forth on Schedule 5 hereto.
3. Exiting Lender. On the Effective Date, the aggregate unpaid principal amount of the Loans made by Hibernia Bank ("Hibernia") under the Credit Agreement and related Note together with all interest, fees and other amounts, if any, payable to Hibernia hereunder as of the Effective Date (the "Payoff Amount"), shall be repaid in full from the proceeds of Loans made by the remaining Lenders, and the Commitment of Hibernia under the Credit Agreement shall terminate. The Agent shall distribute to Hibernia by not later than 3:00 P.M. (Minneapolis time) on the Effective Date out of the proceeds of the Loans made for such purpose, the amount required to pay Hibernia's Payoff Amount in full, whereupon Hibernia shall no longer be a party to the Credit Agreement.
4. Conditions to Effectiveness of this Amendment. This Amendment shall become effective when the Agent shall have received at least eight (8) counterparts of this Amendment, duly executed by the Borrower and all of the Lenders, provided the following conditions are satisfied:
(a) Before and after giving effect to this Amendment, the representations and warranties of the Borrower in Article IV of the Credit Agreement and Section 5 of the Pledge and Security Agreement shall be true and correct as though made on the date hereof, except for changes that are permitted by the terms of the Credit Agreement.
(b) Before and after giving effect to this Amendment, no Event of Default and no Default shall have occurred and be continuing.
(c) No material adverse change in the business, assets, financial condition or prospects of the Borrower shall have occurred since May 31, 1999.
(d) The Agent shall have received the following, each duly executed or certified, as the case may be, and dated as of the date of delivery thereof::
(i) a new Note payable to each Lender holding a Commitment from and after the Effective Date, in the amount of such Lender's respective Commitment Amount after giving effect to the increase thereof pursuant to this Amendment (each, a "New Note"), duly executed by the Company;
(ii) copy of resolutions of the Board of Directors of the Borrower, certified by its respective Secretary or Assistant Secretary, authorizing or ratifying the execution, delivery and performance of this Amendment;
(iii) a certified copy of any amendment or restatement of the Articles of Incorporation or the By-laws of the Borrower made or entered following the date of the most recent certified copies thereof furnished to the Lenders;
(iv) certified copies of all documents evidencing any necessary corporate action, consent or governmental or regulatory approval (if any) with respect to this Amendment;
(v) a certificate of good standing for the Borrower in the jurisdiction of its incorporation, certified by the appropriate governmental official as of a date not more than 10 days prior to the Effective Date; and
(vi) such other documents, instruments, opinions and approvals as the Agent may reasonably request.
(e) The Agent shall have received the amendment fee required by Section 10.02 of the Credit Agreement.
5. Acknowledgments. The Borrower and each Lender acknowledge that, as amended hereby, the Credit Agreement remains in full force and effect with respect to the Borrower and the Lenders, and that each reference to the Credit Agreement in the Loan Documents shall refer to the Credit Agreement as amended hereby. The Borrower confirms and acknowledges that it will continue to comply with the covenants set out in the Credit Agreement and the other Loan Documents, as amended hereby, and that its representations and warranties set out in the Credit Agreement and the other Loan Documents, as amended hereby, are true and correct as of the date of this Amendment. The Borrower represents and warrants that (i) the execution, delivery and performance of this Amendment is within its corporate powers and has been duly authorized by all necessary corporate action; (ii) this Amendment has been duly executed and delivered by the Borrower and constitutes the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms (subject to limitations as to enforceability which might result from bankruptcy, insolvency, or other similar laws affecting creditors' rights generally and general principles of equity) and (iii) no Events of Default or Unmatured Events of Default exist.
6. General.
(a) The Borrower agrees to reimburse the Agent upon demand for all reasonable expenses (including reasonable attorneys fees and legal expenses) incurred by the Agent in the preparation, negotiation and execution of this Amendment and any other document required to be furnished herewith, and to pay and save the Lenders harmless from all liability for any stamp or other taxes which may be payable with respect to the
execution or delivery of this Amendment, which obligations of the Borrower shall survive any termination of the Credit Agreement.
(b) This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.
(c) Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
(d) This Amendment shall be governed by, and construed in accordance with, the internal law, and not the law of conflicts, of the State of Minnesota, but giving effect to federal laws applicable to national banks.
(e) This Amendment shall be binding upon the Borrower, the Lenders, the Agent and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Lenders, the Agent and the successors and assigns of the Lenders and the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written.
CH MORTGAGE COMPANY I, LTD.
By: CH Mortgage Company GP, Inc.,
its General Partner
By: /s/ James D. Dolph ---------------------------- James D. Dolph Senior Vice President |
U.S. BANK NATIONAL ASSOCIATION,
as Agent and Lender
By: /s/ Kathleen M. Connor -------------------------------- Kathleen M. Connor Vice President |
RESIDENTIAL FUNDING CORPORATION
By: /s/ Sam Bryan -------------------------------- Sam Bryan Director |
HIBERNIA BANK
By: /s/ Susan H. Robinson -------------------------------- Susan H. Robinson Senior Vice President |
Signature Page to First Amendment to Credit Agreement
FIRST UNION NATIONAL BANK
By: /s/ Anthony J. Alfieri ---------------------------- Anthony J. Alfieri Vice President |
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Gary W. Sieveking ---------------------------- Gary W. Sieveking Vice President |
Signature Page to First Amendment to Credit Agreement
EXHIBIT 10.36
SECOND AMENDMENT TO
CREDIT AGREEMENT
AND
SECOND AMENDMENT TO
PLEDGE AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT AND SECOND AMENDMENT TO PLEDGE AND SECURITY AGREEMENT (the "Amendment") dated as of August 10, 2001 between CH Mortgage Company I, Ltd., a Texas limited partnership ("Company"), U.S. Bank National Association, as agent ("Agent") and Lenders referred to below ("Lenders").
WITNESSETH THAT:
WHEREAS, the Company, the Lenders and the Agent are parties to a Credit Agreement dated as of August 13, 1999, as amended by a First Amendment to Credit Agreement dated as of August 14, 2000 (as so amended, the "Credit Agreement"), pursuant to which the Lenders provide the Company with a revolving mortgage warehousing credit facility;
WHEREAS, to secure the Obligations, the Company and the Agent entered into a Pledge and Security Agreement dated as of August 13, 1999, as amended by a First Amendment to Pledge and Security Agreement dated as of April 5, 2000 (as so amended, the "Pledge and Security Agreement"); and
WHEREAS, the Company and the Lenders have agreed to amend the Credit Agreement and the Pledge and Security Agreement upon the terms and conditions herein set forth;
NOW, THEREFORE, for value received, the receipt and sufficiency of which are hereby acknowledged, the Company and the Lenders agree as follows:
1. Certain Defined Terms. Each capitalized term used herein without being defined herein that is defined in the Credit Agreement shall have the meaning given to it therein.
2. Amendments to Credit Agreement. The Credit Agreement is hereby amended as follows:
(a) Except as otherwise provided in this Amendment, all references in the Credit Agreement to "Borrower" shall mean and refer to "the Company." All references to "the Borrower" in the definitions of Commitment, Lenders, Loan Documents, Mortgage Collateral, Obligations, Security Agreement, Security Instrument, Swingline Commitment and Swingline Loan in Section 1.01 of the Credit Agreement, and in Sections 2.01(a), 2.08, 3.02(b), 4.03, 4.04, 4.05, 4.17, 5.03, 5.04, 5.08, 5.11, 5.14, 6.06, 7.01(e), 9.01, 9.05. 9.10, 9.11, 10.09, 10.10 and 10.18 of the Credit Agreement, shall mean and refer to "the Borrowers." All references to "the Borrower" in Sections 2.06, 4.18, 5.10, 7.01(a), 7.01(b), 7.01(c) and 7.01(d) of the Credit Agreement shall mean and refer to "the Company and the applicable Co-Borrower."
(b) All references in the Credit Agreement to "Reference Rate" shall mean and refer to "Prime Rate."
(c) The following definitions are hereby added to Section 1.01 in the appropriate alphabetical order:
"Borrowers" means the Company and the Co-Borrowers.
"Co-Borrower Sublimit" means $10,000,000.
"Co-Borrowers" means each Person who becomes a party to this Agreement as a Co-Borrower pursuant to a Joinder Agreement and Section 3.03.
"Company" means CH Mortgage Company I, Ltd., a Texas limited partnership.
"Joinder Agreement" means an agreement in the form attached hereto as Exhibit E.
(d) The definitions of "Drawdown Termination Date," "Eurodollar Rate," "Jumbo Mortgage Loan" and "Risk Rating" in Section 1.01 of the Credit Agreement is hereby amended in its entirety to read as follows:
"Drawdown Termination Date:" means the earlier of August 13, 2002, or the day on which the Notes first become due and payable in full.
"Eurodollar Rate:" on any date of determination, the average offered rate for deposits in United States dollars having a maturity of one month (rounded upward, if necessary, to the nearest 1/16 of 1%) for delivery of such deposits on such date of determination which appears on the Telerate Page 3750 or any successor thereto as of 11:00 a.m., London time (or such other time as of which such rate appears) on such date of determination, or the rate for such deposits determined by the Agent at such time based on such other published service of general application as shall be selected by the Agent for such purpose; provided, that in lieu of determining the rate in the foregoing manner, the Agent may determine the rate based on rates at which United States dollar deposits having a maturity of one month are offered to the Agent in the interbank Eurodollar market at such time for delivery in Immediately Available Funds on such date of determination in an amount equal to $1,000,000 (round upward, if necessary, to the nearest 1/16 of 1%).
"Jumbo Mortgage Loan" means a Mortgage Loan which would in all respects be a Conforming Loan but for the fact that the original unpaid principal amount of the underlying Mortgage Note is greater than $240,000 (but does not exceed $750,000).
"Risk Rating" means the risk rating of a Mortgage Loan determined by the underwriting guidelines of the Company or other applicable standards of an
Investor to which such Mortgage Loan is to be sold by a Borrower under a Take-Out Commitment, provided that such underwriting guidelines or other applicable standards comply with industry standards in the sole judgment of Agent.
(e) Section 2.01(b) of the Credit Agreement is hereby amended in its entirety to read as follows:
(b) Discretionary Swingline Commitment. Upon the terms and subject to the conditions of this Agreement, until the Drawdown Termination Date, U.S. Bank, in its sole discretion, may lend to the Borrowers loans (each such loan, a "Swingline Loan") at such times and in such amounts as the Company shall request, up to an aggregate principal amount at any time outstanding equal to the amount by which U.S. Bank's Commitment Amount exceeds the principal amount outstanding under U.S. Bank's Note; provided, that U.S. Bank will not make a Swingline Loan if (i) after giving effect thereto, any of the limitations set forth in Section 2.01(a) would be exceeded or (ii) U.S. Bank has received written notice from the Company or any Lender that one or more of the conditions precedent set forth in Article III for the making of a Loan have not been satisfied.
(f) Section 2.03(a) of the Credit Agreement is hereby amended in its entirety to read as follows:
(a) Notice and Manner of Obtaining Loans. The Company shall give Agent telephonic notice of each request for Loans not later than 1:00 p.m. (Minneapolis, Minnesota time) on the requested Borrowing Date and of each request for Swingline Loans not later than 3:00 p.m. (Minneapolis, Minnesota time) on the requested Borrowing Date. Each request for Loans or Swingline Loans shall specify the aggregate amount of Loans or Swingline Loans requested, whether each such Loan or Swingline Loan is being made to permit a Co-Borrower to originate or acquire one or more Mortgage Loans (and, if so, specifying the Co-Borrower), and whether such Loans to be made by each Lender are to be funded as Reference Rate Advances, Eurodollar Rate Advances or Balance Funded Rate Advances; provided, that any portion of a Loan not so designated shall be funded as a Eurodollar Rate Advance. Agent shall notify each Lender via facsimile and telephone by not later than 2:00 P.M. (Minneapolis, Minnesota time) on the date it receives such request of each request for Loans received from the Company, of such Lenders's Percentage Share of the Loans requested and whether such Lender's Loans are to funded as Reference Rate Advances, Eurodollar Rate Advances or Balance Funded Rate Advances. The Company shall, not later than the following Business Day, confirm any such request by delivering to Agent a Confirmation. Each request for Loans shall be irrevocable and binding on the Company and any applicable Co-Borrower. If all conditions precedent to such Loan have been met, each Lender shall deposit into the Collateral Account in immediately available dollars by not later than 4:00 P.M. (Minneapolis, Minnesota time) on the Borrowing Date the amount of such Lender's Loan and upon receipt of such funds, Agent shall promptly make such funds available to the Company and any applicable Co-Borrower by depositing
such funds in the Good Funds Wire Clearing Account or the
Operating Account, as requested by the Company. On the
Borrowing Date of requested Swingline Loans, U.S. Bank may
deposit into the Collateral Account in Immediately Available
Funds by not later than 4:00 p.m. (Minneapolis, Minnesota
time) on the requested Borrowing Date the amount of the
requested Swingline Loans. Unless Agent shall have received
notice from a Lender prior to 3:00 P.M. (Minneapolis,
Minnesota time) on any Borrowing Date that such Lender will
not make available to Agent such Lender's Loan, Agent may in
its discretion assume that such Lender has made such Loan
available to Agent in accordance with this section and Agent
may if it chooses, in reliance upon such assumption make such
Loan available to the Company and any applicable Co-Borrower.
If and to the extent such Lender shall not so make its Loan
available to Agent, such Lender shall, on demand, pay to Agent
the amount of such Loan together with interest thereon, for
each day from the date such amount is made available to the
Company and any applicable Co-Borrower until the date such
amount is paid or repaid to Agent at the Federal Funds Rate.
If such Lender does not pay such amount promptly upon Agent's
demand therefor, Agent shall notify the Company and the
Company and each applicable Co-Borrower shall immediately
repay such amount to Agent together with accrued interest
thereon at the applicable rate or rates provided in Section
2.04. Agent shall use its best efforts to demand any such
amount from both such Lender and the Company, provided, that
any failure by Agent to make any such demand on both such
Lender and the Company shall not in any manner affect such
Lender's, the Company's or any applicable Co-Borrower's
obligation to pay or repay such amount, with interest, as set
forth herein. The failure of any Lender to make any Loan to be
made by it hereunder shall not relieve any other Lender of its
obligation hereunder, if any, to make its Loan, but no Lender
shall be responsible for the failure of any other Lender to
make any Loan to be made by such other Lender. Each request
for Loans or Swingline Loans shall be deemed to be a
representation by the Company that (i) no Event of Default or
Default has occurred or will exist upon the making of the
requested Loans or Swingline Loans and (ii) the
representations and warranties contained in Section 4 hereof
and in Section 5 of the Security Agreement are true and
correct with the same force and effect as if made on and as of
the date of such request.
(g) Section 2.03(b)(iii) of the Credit Agreement is hereby amended in its entirety to read as follows:
(iii) Lenders' Obligation to Fund Refinancings of
Swingline Loans. Upon the giving of notice by U.S. Bank under
Section 2.03(b)(i) or 2.03(b)(ii), each Lender (including U.S.
Bank) shall make a Loan in an amount equal to its Percentage
Share of the aggregate principal amount of Swingline Loans to
be refinanced, and provide proceeds of such Loans, in
immediately available funds, by not later than 3:00 P.M.
(Minneapolis time) on the date such notice was received;
provided, however, that a Lender shall not be obligated to
make any such Loan unless (A) U.S. Bank believed in good faith
that all conditions to making the subject Swingline Loan were
satisfied at the time such Swingline Loan was made, or (B) if
the conditions to such Swingline Loan were not
satisfied, such Lender had actual knowledge, by receipt of the
statements furnished to it pursuant to Section 4.01 or
otherwise, that any such condition had not been satisfied and
failed to notify U.S. Bank in a writing received by U.S. Bank
prior to the time it made such Swingline Loan that U.S. Bank
was not authorized to make a Swingline Loan until such
condition had been satisfied, or U.S. Bank was obligated to
give notice of the occurrence of an Event of Default or a
Default to Lenders pursuant to Section 8.08 and failed to do
so, or (C) any conditions to the making of such Swingline Loan
that were not satisfied had been waived in writing by Majority
Lenders prior to or at the time such Swingline Loan was made.
The proceeds of Loans made pursuant to the preceding sentence
shall be paid to U.S. Bank (and not to any Borrower) and
applied to the payment of principal of the outstanding
Swingline Loans, and the Company authorizes Agent to charge
the Collateral Account or any other account (other than escrow
or custodial accounts) maintained by the Company with Agent
(up to the amount available therein) in order to immediately
pay U.S. Bank the principal amount of such Swingline Loans to
the extent Loans made by the Lenders are not sufficient to
repay in full the principal of the outstanding Swingline Loans
requested or required to be refinanced. Upon the making of a
Loan by a Lender pursuant to this Section 2.03(b)(iii), the
amount so funded shall become due under such Lender's Note and
the outstanding principal amount of the Swingline Loans shall
be correspondingly reduced. If any portion of any Loan made by
Lenders pursuant to this Section 2.03(b)(iii) should be
recovered by or on behalf of any Borrower from U.S. Bank in
bankruptcy or otherwise, the loss of the amount so recovered
shall be ratably shared among all Lenders in the manner
contemplated by Section 9.11. Each Lender's obligation to make
Loans referred to in this Section 2.03(b) shall, subject to
the proviso to the first sentence of this Section
2.03(b)(iii), be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation,
(1) any setoff, counterclaim, recoupment, defense or other
right which such Lender may have against U.S. Bank, any
Borrower or anyone else for any reason whatsoever; (2) the
occurrence or continuance of a Default or an Event of Default;
(3) any adverse change in the condition (financial or
otherwise) of the Company or any Co-Borrower; (4) any breach
of this Agreement by any Borrower, the Agent or any Lender; or
(5) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; provided, that
in no event shall a Lender be obligated to make a Loan if,
after giving effect thereto, the outstanding principal balance
of such Lender's Note would exceed its Commitment Amount.
(h) Sections 2.04(a) and (b) of the Credit Agreement are hereby amended in their entirety to read as follows:
(a) Interest Rates; Balances Deficiency Fees. The Borrowers will pay the Agent monthly in arrears, within two Business Days after the Company's receipt of Agent's statement therefor, interest on the unpaid principal balance of each Advance of each Lender from time to time outstanding as follows:
(i) with respect to Balance Funded Rate Advances, at the Balance Funded Rate; provided, that if for any Balance Calculation Period the Balance Funded Amount maintained by the Company with any Lender is less than an amount equal to the average daily aggregate unpaid principal balance of the Balance Funded Rate Advances owed to such Lender during such Balance Calculation Period (such deficiency being herein referred to as the "Balances Deficiency"), the Borrowers will pay such Lender a fee (the "Balances Deficiency Fee") for said Balance Calculation Period on the Balances Deficiency at a per annum rate equal to the average daily Eurodollar Rate plus Applicable Margin in effect during said Balance Calculation Period; and provided further, that if the Balance Funded Amount maintained by the Company with any Lender for any Balance Calculation Period exceeds the weighted average daily aggregate unpaid principal balance of the Balance Funded Rate Advances owed to such Lender during such Balance Calculation Period (such excess being defined herein as the "Balances Surplus"), then such Balances Surplus, or, if the Company and such Lender shall so agree, the charges reduction benefit for such Balances Surplus (as determined by such Lender), may be carried forward and applied to succeeding Balance Calculation Periods (but not to any Balance Calculation Period occurring in any subsequent calendar year);
(ii) with respect to Reference Rate Advances, the Reference Rate plus the Applicable Margin, as adjusted automatically on and as of the effective date of any change in the Reference Rate;
(iii) with respect to Eurodollar Rate Advance the Adjusted Eurodollar Rate plus the Applicable Margin, as adjusted automatically on and as of the effective date of any change in the Adjusted Eurodollar Rate; and
(iv) with respect to any Obligations not paid when due (A) consisting of Balance Funded Rate Advances, a rate per annum equal to the Balance Funded Rate plus 4.0% per annum,(B) consisting of Eurodollar Rate Advances, a rate per annum equal to the Adjusted Eurodollar Rate plus 4.0% per annum, (C) consisting of Reference Rate Advances, a rate per annum equal to the Reference Rate plus 4.0% per annum, and (D) consisting of other Obligations, a rate per annum equal to the Reference Rate plus the Applicable Margin plus 4.0% for the period from the date such Obligations were due until the same are paid.
(b) Payment of Interest and Fees. Agent shall use its best efforts to provide the Company with a statement for interest on the Notes, the facility fees with respect to the Commitments and the collateral handling fees with respect to Mortgage Loans pledged under the Pledge and Security Agreement, in each case accrued through the last day of each calendar month, on or before the third Business Day (and in any case, no later than the tenth Business Day), of the next
succeeding calendar month, but shall have no liability to any Borrower for its failure to do so. Interest on the Notes, facility fees and collateral handling fees accrued through the last day of each calendar month shall be due and payable on the second Business Day after the date the Company receives such statement from Agent; provided, that interest payable at the rates provided for in Section 2.04 (a)(iv) shall be payable on demand. Any Balances Deficiency Fee payable hereunder shall be due and payable quarterly after each Balance Calculation Period within two Business Days after receipt by the Company from any Lender of a statement therefor (a copy of which shall be provided to Agent) containing the calculations made to determine such Balances Deficiency Fee, which statement shall be conclusive absent manifest error unless approved by such Lender.
(i) Article III of the Credit Agreement is hereby amended to add the following after Section 3.02:
Section 3.03 New Co-Borrowers. The Company may, at any time, add any Person from which the Company regularly purchases Mortgage Loans in the ordinary course of its business as a Co-Borrower hereunder with the prior written consent of the Majority Lenders by entering into a Joinder Agreement with the Agent and such Person; provided, that the effectiveness of any such Joinder Agreement, and of the addition of any such Person as a Co-Borrower hereunder, shall be subject to the following conditions precedent:
(a) The Agent shall have received the following, all of which must be in form and content satisfactory to the Agent, in its sole discretion:
(1) The Joinder Agreement.
(2) Certified copies of the new Co-Borrower's articles of incorporation and bylaws or other organizational documents, and certificates of good standing dated no less recently than thirty (30) days prior to the date of the Joinder Agreement.
(3) A copy of resolutions of the board of directors or other governing authority of the new Co-Borrower, certified as of the date of the Joinder Agreement by its corporate secretary (or the equivalent), authorizing the execution, delivery and performance of the Joinder Agreement (and thereby the assumption of the Obligations under the Loan Documents) and all other instruments or documents to be delivered by the new Co-Borrower pursuant to this Agreement and the Joinder Agreement.
(4) A certificate of the corporate secretary (or the equivalent) of the new Co-Borrower, as to the incumbency and authenticity of the signatures of the officers of the new Co-
Borrower executing the Joinder Agreement, and all other instruments or documents to be delivered by such new Co-Borrower pursuant to the Joinder Agreement and this Agreement (the Agent being entitled to rely thereon until a new such certificate has been furnished to the Agent).
(5) A tax, lien and judgment search of the appropriate public records for the new Co-Borrower in the States where its chief executive office is located, including a search of Uniform Commercial Code financing statements, which search shall not have disclosed the existence of any prior Lien on the Collateral other than in favor of the Agent, for the benefit of the Secured Parties, or as permitted hereunder.
(6) Executed financing statements in recordable form naming the new Co-Borrower as debtor, covering the Collateral and ready for filing in all jurisdictions required by the Agent.
(7) Copies of the new Co-Borrower's errors and omissions insurance policy or mortgage impairment insurance policy and blanket bond coverage policy, all in form and content satisfactory to the Agent, showing compliance of the new Co-Borrower as of the date of the Joinder Agreement with the related provisions of Section 5.06.
(b) The representations and warranties contained in Article 4 hereof applicable to the Co-Borrower shall be accurate and complete in all material respects as if made on and as of the date of, and after giving effect to, the Joinder Agreement.
(c) The Borrowers shall have performed all agreements to be performed by them hereunder, and after giving effect to the addition of the new Co-Borrower hereunder, there shall exist no Default or Event of Default hereunder.
Each of the Co-Borrowers (including, without limitation, any Co-Borrower that becomes a party hereto pursuant to a Joinder Agreement) hereby authorizes the Company, on behalf of the Borrowers, to execute and deliver Joinder Agreements and Notes on behalf of all of the Borrowers.
(j) Section 4.11 of the Credit Agreement is hereby amended in its entirety to read as follows:
Section 4.11 Principal Office, etc. The principal office, chief
executive office and principal place of business of the Company and
each Restricted Subsidiary is at the address set forth in Section
10.01. The principal office, chief executive office and principal
place of business of each Co-Borrower is at the address set forth in
the applicable Joinder Agreement.
(k) Article IV of the Credit Agreement is hereby amended to add the following after Section 4.20:
4.21 Co-Borrowers. Each Co-Borrower originates and sells to the Company Mortgage Loans. The Company will receive benefit from each Loan or Swingline Loan made hereunder to enable a Co-Borrower to originate a Mortgage Loan, whether or not such Mortgage Loan is thereafter sold to the Company, because of the continuing business relationship between the Company and such Co-Borrower.
(l) Sections 5.05 and 5.06 of the Credit Agreement are hereby amended in their entirety to read as follows:
Section 5.05 Reimbursement of Expenses. The Borrowers shall pay, subject to the limitation in Section 10.19 hereof (in the case of each Co-Borrower) (a) all reasonable legal fees (including, without limitation, allocated costs for in-house legal service) incurred by Agent in connection with the preparation, negotiation or execution of this Agreement, the Notes and the other Loan Documents and any amendments, consents or waivers executed in connection therewith, (b) all fees, charges or taxes for the recording or filing of the Security Instruments, (c) all out-of-pocket expenses of Agent in connection with the legal administration of this Agreement, the Notes and the other Loan Documents, including courier expenses incurred in connection with the Mortgage Collateral, and (d) all amounts expended, advanced or incurred by Agent to satisfy any obligation of any Borrower under this Agreement or any of the other Loan Documents or to collect the Notes, or to enforce the rights of Agent or any Lender under this Agreement or any of the other Loan Documents or to collect the Note, or to enforce the rights of Agent or any Lender under this Agreement or any of the other Loan Documents, which amounts shall include all underwriting expenses, collateral liquidation costs, court costs, attorneys' fees (including, without limitation, for trial, appeal or other proceedings), fees of auditors and accountants, and investigation expenses reasonably incurred by Agent or any Lender in connection with any such matters, together with interest at the post-maturity rate specified in the Note on each item specified in clause (a) through (d) from thirty (30) days after the date of written demand or request for reimbursement until the date of reimbursement.
Section 5.06 Insurance. Each Borrower shall maintain with financially sound and reputable insurers, insurance with respect to its properties and business against such liabilities, casualties, risks and contingencies and in such types and amounts as is customary in the case of Persons engaged in the same or similar businesses and similarly situated, including, without limitation, a fidelity bond or bonds with financially sound and reputable insurers with such coverage and in such amounts as is customary in the case of Persons engaged in the same or similar business and similarly situated. The improvements on the land covered by each Mortgage shall be kept continuously insured at all times by responsible insurance companies against fire and extended coverage hazard under policies,
binders, letters, or certificates of insurance, with a standard mortgagee clause in favor of the applicable Borrower and its assigns. Each such policy must be in an amount equal to the lesser of the maximum insurable value of the improvements or the original principal amount of the Mortgage Note, without reduction by reason of any co-insurance, reduced rate contribution, or similar clause of the policies or binders. Upon request of Agent, each Borrower shall furnish or cause to be furnished to Agent from time to time a summary of the insurance coverage of such Borrower in form and satisfactory to Agent and if requested shall furnish Agent copies of the applicable policies.
(m) Section 6.13 is hereby amended in its entirety to read as follows:
Section 6.13 Tangible Net Worth. As of the end of each calendar month, Borrower's Consolidated Tangible Net Worth shall not be less than $25,000,000.
(n) Section 7.02 of the Credit Agreement is hereby amended in its entirety to read as follows:
Section 7.02 Default Remedies. Except as provided in the following sentence, upon the occurrence of an Event of Default, Agent may (and upon written instructions from Majority Lenders, Agent shall) declare the Commitments to be terminated and/or declare the entire principal and all interest accrued on the Notes to be, and the Notes, together with all Obligations, shall thereupon become, forthwith due and payable, without any presentment, demand, protest, notice of protest and nonpayment, notice of acceleration or of intent to accelerate or other notice of any kind, all of which hereby are expressly waived. Notwithstanding the foregoing, (a) if an Event of Default specified in Subsections 7.01(e)(i), (ii) or (iii) above occurs with respect to the Company, the Commitments shall automatically and immediately terminate and the Notes and all other Obligations shall become automatically and immediately due and payable, both as to principal and interest, without any action by Agent or any Lender and without presentment, demand, protest, notice of protest and nonpayment, notice of acceleration or of intent to accelerate, or any other notice of any kind, all of which are hereby expressly waived, anything contained herein or in any Notes to the contrary notwithstanding, and (b) if an Event of Default specified in Sections 7.01(b), (c), (d), (e), (f) or (g) occurs with respect to a Co-Borrower, the Agent and the Lenders shall not have the right to declare the Commitments to be terminated, declare the entire principal and all interest accrued on the Notes to be forthwith due and payable, or exercise any of their other rights hereunder or under the Loan Documents (except that the Lenders shall have no further obligation to make Loans to enable such Co-Borrower to originate Mortgage Loans, and the Agent and the Lenders may exercise their remedies with respect to the Mortgage Loans pledged by such Co-Borrower to the Agent pursuant to the Pledge and Security Agreement) for 10 Business Days after the occurrence of such Event of Default, or thereafter if all Loans made to enable
such Co-Borrower to originate or acquire Mortgage Loans hereunder have been repaid in full.
(o) Sections 10.01 and 10.02 of the Credit Agreement are hereby amended in their entirety to read as follows:
Section 10.01 Notices. Any notice or request required or permitted to be given under or in connection with this Agreement, the Notes or the other Loan Documents (except as may otherwise be expressly required therein) shall be in writing and shall be mailed by first class or express mail, postage prepaid, or sent by telex, telegram, telecopy or other similar form of rapid transmission, confirmed by mailing (by first class or express mail, postage prepaid) written confirmation at substantially the same time as such rapid transmission, or personally delivered to an officer of the receiving party. All such communications shall be mailed, sent or delivered to the parties hereto at their respective addresses as follows:
Any Borrower: CH Mortgage Company I, Ltd. 12554 Riata Vista Circle Austin, Texas 78757 Attn: Randall C. Present FAX: (512) 345-7348 TEL: (512) 345-4663 With copies to: Sam Fuller Ted I. Harbour 1901 Ascension Blvd., Suite 100 Arlington, Texas 76006 FAX: (817) 856-8249 TEL: (817) 856-8200 Agent: U.S. Bank National Association U.S. Bank Place - MPFP0508 601 Second Avenue South Minneapolis, Minnesota 55402 Attn: Kathleen M. Connor FAX: (612) 973-0826 TEL: (612) 973- 0306 |
or at such other addresses or to such individual's or department's attention as the Company or the Agent may have furnished the other party in writing. Any communication so addressed and mailed shall be deemed to be given when so mailed, except that requests for loans, Confirmations and other communications related thereto shall not be effective until actually received by Agent or the Company, as the case may be; and any notice so sent by rapid transmission shall be deemed to be given when receipt of such transmission is acknowledged, and any communication so delivered in person shall be deemed to be given when receipted for by, or actually received by, an authorized officer of the Company or
Agent, as the case may be. Each Co-Borrower hereby authorizes the Agent and the Lenders to send all notices under this Agreement and the Loan Documents to the Company, on behalf of such Co-Borrower, and the Company undertakes to provide such notices to the applicable Co-Borrower(s).
Section 10.02 Amendments, etc. No amendment or waiver of any provision of this Agreement, the Security Instruments, the Notes, or any other Loan Document, nor consent to any departure by any Borrower or any Restricted Subsidiary from the terms thereof, shall in any event be effective unless (a) the same shall be in writing and signed by (i) if such party is a Borrower, by the Company, (ii) if such party is Agent, by Agent and (iii) if such party is a Lender, by such Lender or by Agent on behalf of Lenders with the written consent of Majority Lenders (or without further consent than that already provided herein in the circumstances provided in Section 10.16) and (b) in the case of an amendment other than the first and second amendment and other than annual renewals or temporary extensions related to annual renewals, the Agent, on behalf of each Lender executing such amendment, shall have received an amendment fee from the Company in the amount of one thousand five hundred dollars ($1,500) for each Lender executing such amendment. Notwithstanding the foregoing or anything to the contrary herein, Agent shall not, without the prior consent of each individual Lender, execute and deliver on behalf of such Lender any waiver or amendment which would: (i) waive any of the conditions specified in Article III (provided that Agent may in its discretions withdraw any request it has made under Section 3.02(g)), (ii) increase the Percentage Share of the Commitment of such Lender or subject such Lender to any additional obligations, (iii) reduce any fees hereunder, or the principal of, or interest on, such Lender's Note, (iv) amend the definition herein of "Majority Lenders" or otherwise change the aggregate amount of Percentage Shares which is required for Agent, Lenders or any of them to take any particular action under the Loan Documents, (v) release any Borrower from its obligation to pay such Lender's Note, (vi) amend the definitions of "Collateral Value," "Drawdown Termination Date," and "Mortgage Collateral," (vii) release any Collateral except in accordance with and pursuant to the Loan Documents, or (viii) change the date on which any payments of principal, interest or fees are due hereunder.
(p) Article X of the Credit Agreement is hereby amended to add the following after Section 10.18:
Section 10.19 Relationship Among Borrowers.
(a) JOINT AND SEVERAL LIABILITY. THE COMPANY AGREES THAT IT IS LIABLE FOR THE PAYMENT OF ALL OBLIGATIONS OF THE BORROWERS UNDER THIS AGREEMENT, AND THAT THE LENDERS AND THE AGENT CAN ENFORCE SUCH OBLIGATIONS AGAINST THE COMPANY, IN THE LENDERS' OR THE AGENT'S SOLE AND UNLIMITED DISCRETION. EACH CO-BORROWER AGREES THAT IT IS
LIABLE ONLY FOR THE PAYMENT OF LOANS AND SWINGLINE LOANS MADE TO ENABLE IT TO ORIGINATE OR ACQUIRE MORTGAGE LOANS, INTEREST ON SUCH LOANS AND SWINGLINE LOANS, AND FEES, COSTS AND EXPENSES RELATED TO SUCH LOANS AND SWINGLINE LOANS AND SUCH CO-BORROWER'S PERFORMANCE OR NON-PERFORMANCE OF ITS OBLIGATIONS HEREUNDER. THE COMPANY AGREES THAT IT IS JOINTLY AND SEVERALLY LIABLE WITH EACH CO-BORROWER FOR SUCH CO-BORROWER'S OBLIGATIONS, AS DESCRIBED IN THE PRECEDING SENTENCE.
(b) Waivers of Defenses. The obligations of the Borrowers
hereunder shall not be released, in whole or in part, by any
action or thing which might, but for this provision of this
Agreement, be deemed a legal or equitable discharge of a surety
or guarantor, other than irrevocable payment and performance in
full of the Obligations (except for contingent indemnity and
other contingent Obligations not yet due and payable) at a time
after any obligation of the Lenders hereunder to make Loans shall
have expired or been terminated. The purpose and intent of this
Agreement is that the Obligations constitute the direct and
primary obligations of the Company and, to the extent provided in
Section 10.19(a), each Co-Borrower, and that the covenants,
agreements and all obligations of each Borrower hereunder be
absolute, unconditional and irrevocable. Each Borrower shall be
and remain liable for any deficiency remaining after foreclosure
of any mortgage, deed of trust or security agreement securing all
or any part of the Obligations for which it is liable, whether or
not the liability of any other Person for such deficiency is
discharged pursuant to statute, judicial decision or otherwise.
(c) Other Transactions. The Lenders and the Agent are expressly authorized to exchange, surrender or release with or without consideration any or all collateral and security which may at any time be placed with it by any Borrower or by any other Person on behalf of the Borrowers, or to forward or deliver any or all such collateral and security directly to the Company or the applicable Co-Borrower for collection and remittance or for credit. No invalidity, irregularity or unenforceability of any security for the Obligations or other recourse with respect thereto shall affect, impair or be a defense to the Borrowers' obligations under this Agreement. The liabilities of each Borrower hereunder shall not be affected or impaired by any failure, delay, neglect or omission on the part of any Lender or the Agent to realize upon any of the Obligations of any other Borrower to the Lenders or the Agent, or upon any collateral or security for any or all of the Obligations, nor by the taking by any Lender or the Agent of (or the failure to take) any guaranty or guaranties to secure the Obligations, nor by the taking by any Lender or the Agent of (or the failure to take or the failure to perfect its security interest in or other lien on) collateral or security of any kind. No act or omission of any Lender or
the Agent, whether or not such action or failure to act varies or increases the risk of, or affects the rights or remedies of a Borrower, shall affect or impair the obligations of the Borrowers hereunder.
(d) Actions Not Required. Each Borrower, to the extent permitted by applicable law, hereby waives any and all right to cause a marshaling of the assets of any other Borrower or any other action by any court or other governmental body with respect thereto or to cause any Lender or the Agent to proceed against any security for the Obligations or any other recourse which any Lender or the Agent may have with respect thereto and further waives any and all requirements that any Lender or the Agent institute any action or proceeding at law or in equity, or obtain any judgment, against any other Borrower or any other Person, or with respect to any collateral security for the Obligations, as a condition precedent to making demand on or bringing an action or obtaining and/or enforcing a judgment against, such Borrower under this Agreement.
(e) Subrogation. Notwithstanding any payment or payments made by any Borrower hereunder or any setoff or application of funds of any Borrower by any Lender or the Agent, such Borrower shall not be entitled to be subrogated to any of the rights of any Lender or the Agent against any other Borrower or any other guarantor or any collateral security or guaranty or right of offset held by any Lender or the Agent for the payment of the Obligations, nor shall such Borrower seek or be entitled to seek any contribution or reimbursement from any other Borrower or any other guarantor in respect of payments made by such Borrower hereunder, until all amounts owing to the Lenders and the Agent by the Borrowers on account of the Obligations are irrevocably paid in full; provided, however, that the Company may seek reimbursement from a Borrower for payments made by the Company on behalf of such Borrower if (i) all Obligations owing to the Lenders and the Agent by that Borrower are irrevocably paid in full and (ii) the Lenders have no further obligation to make Loans to enable such Borrower to originate Mortgage Loans. If any amount shall be paid to a Borrower on account of such subrogation rights at any time when all of the Obligations shall not have been irrevocably paid in full, such amount shall be held by that Borrower in trust for the Lenders and the Agent, segregated from other funds of that Borrower, and shall, forthwith upon receipt by the Borrower, be turned over to the Agent in the exact form received by the Borrower (duly indorsed by the Borrower to the Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Agent may determine. From and after the irrevocable payment in full of all amounts owing to the Lenders and the Agent by the Borrowers on account of the Obligations, each Co-Borrower shall be liable to the Company for any amount paid by the Company to the Agent or the Lenders (and not previously paid to the Company by such Co-Borrower) as principal of and interest on the Loans and Swingline Loans made to enable such Co
Borrowers to originate or acquire Mortgage Loans, fees, costs and expenses relating to such Loans and Swingline Loans, and such Co-Borrower's performance or non-performance of its Obligations hereunder.
(f) Application of Payments. Any and all payments upon the Obligations made by any Borrower, and/or the proceeds of any or all collateral or security for any of the Obligations provided by any Borrower, may be applied by the Lenders on such items of the Obligations for which such Borrower is liable as the Lenders may elect.
(g) Recovery of Payment. If any payment received by the Lenders or the Agent and applied to the Obligations is subsequently set aside, recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of a Borrower or any other obligor), the Obligations to which such payment was applied shall, to the extent permitted by applicable law, be deemed to have continued in existence, notwithstanding such application, and each Borrower liable on such Obligations shall be jointly and severally liable for such Obligations as fully as if such application had never been made. References in this Agreement to amounts "irrevocably paid" or to "irrevocable payment" refer to payments that cannot be set aside, recovered, rescinded or required to be returned for any reason.
(h) Borrowers' Financial Condition. The Company is familiar with the financial condition of each Co-Borrower, each Co-Borrower is familiar with the financial condition of the Company and each Borrower has executed and delivered this Agreement based on that Borrower's own judgment and not in reliance upon any statement or representation of the Agent or any Lender. The Lenders and the Agent shall have no obligation to provide any Borrower with any advice whatsoever or to inform any Borrower at any time of the Lenders' actions, evaluations or conclusions on the financial condition or any other matter concerning the Borrowers.
(i) Bankruptcy of the Borrowers. Each Borrower expressly agrees that, to the extent permitted by applicable law, the liabilities and obligations of that Borrower under this Agreement shall not in any way be impaired or otherwise affected by the institution by or against any other Borrower or any other Person of any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or any other similar proceedings for relief under any bankruptcy law or similar law for the relief of debtors and that any discharge of any of the Obligations pursuant to any such bankruptcy or similar law or other law shall not diminish, discharge or otherwise affect in any way the obligations of that Borrower under this Agreement, and that upon the institution of any of the above actions, such obligations shall be enforceable against that Borrower.
(j) Limitation; Insolvency Laws. As used in this
Section 10.17(j): (a) the term "Applicable Insolvency Laws"
means the laws of the United States of America or of any
State, province, nation or other governmental unit relating
to bankruptcy, reorganization, arrangement, adjustment of
debts, relief of debtors, dissolution, insolvency,
fraudulent transfers or conveyances or other similar laws
(including, without limitation, 11 U. S. C. 547, 548, 550
and other "avoidance" provisions of Title 11 of the United
Stated Code) as applicable in any proceeding in which the
validity and/or enforceability of this Agreement against
any Borrower, or any Specified Lien is in issue; and (b)
"Specified Lien" means any security interest, mortgage,
lien or encumbrance granted by any Borrower securing the
Obligations, in whole or in part. Notwithstanding any other
provision of this Agreement, if, in any proceeding, a court
of competent jurisdiction determines that with respect to
any Borrower, this Agreement or any Specified Lien would,
but for the operation of this Section, be subject to
avoidance and/or recovery or be unenforceable by reason of
Applicable Insolvency Laws, this Agreement and each such
Specified Lien shall be valid and enforceable against such
Borrower, only to the maximum extent that would not cause
this Agreement or such Specified Lien to be subject to
avoidance, recovery or unenforceability. To the extent that
any payment to, or realization by, the Lenders or the Agent
on the Obligations exceeds the limitations of this Section
and is otherwise subject to avoidance and recovery in any
such proceeding, the amount subject to avoidance shall in
all events be limited to the amount by which such actual
payment or realization exceeds such limitation, and this
Agreement as limited shall in all events remain in full
force and effect and be fully enforceable against such
Borrower. This Section is intended solely to reserve the
rights of the Lenders and the Agent hereunder against each
Borrower, in such proceeding to the maximum extent
permitted by Applicable Insolvency Laws and neither the
Borrowers, any guarantor of the Obligations nor any other
Person shall have any right, claim or defense under this
Section that would not otherwise be available under
Applicable Insolvency Laws in such proceeding.
(q) Schedule 1 to the Credit Agreement is hereby amended in its entirety to read as set forth on Schedule 1 hereto.
(r) Exhibits A, B and D to the Credit Agreement are hereby amended in their entirety to read as set forth on Exhibits A, B and D hereto.
(s) A new Exhibit E, in the form set forth on Exhibit E hereto, is added to the Credit Agreement.
3. Amendments to Pledge and Security Agreement. The Pledge and Security Agreement is hereby amended as follows:
(a) Except as otherwise provided in this Amendment, all references in the Pledge and Security Agreement to "the Borrower" shall mean and refer to "the Borrowers," "each Borrower," or "the applicable Borrower," as the context may require. All references in Sections 5(n) and 10.04(a) of the Pledge and Security Agreement to "the Borrower" shall mean and refer to "the Company."
(b) Section 3 of the Pledge and Security Agreement is hereby amended in its entirety to read as follows:
Section 3. REPORTS CONCERNING EXISTING COLLATERAL AND HEREAFTER ACQUIRED COLLATERAL. From time to time hereafter as reasonably requested by the Agent, the Company will promptly give a written report to the Agent describing and listing each document, instrument or other paper which evidences, secures, guarantees, insures or pertains to any item of the Collateral whether now or hereafter owned, acquired or held by the Borrowers. Such written report shall contain sufficient information to enable the Agent to identify each such document, instrument or other paper. The Company (a) upon the request of the Agent, shall promptly provide additional information concerning, or a more complete description of, each such document, instrument or other paper and (b) at the request of the Agent, shall promptly deliver the same to the Agent. The Co-Borrowers shall, at the request of the Company, cooperate with the Company in complying with the requirements of this Section 3.
(c) Section 16 of the Pledge and Security Agreement is hereby amended in its entirety to read as follows:
Section 16. NOTICES. Reasonable notification of the time and
place of any public sale of any Collateral, or reasonable
notification of the time after which any private sale or other
intended disposition of any of the Collateral is to be made shall
be sent to the Company (with a copy to any applicable Co-Borrower)
and to any other person entitled under the Code to notice;
provided, that if any of the Collateral threatens to decline
speedily in value, or is of a type customarily sold on a
recognized market, the Agent may sell or otherwise dispose of the
Collateral without notification, advertisement, or other notice of
any kind. The Borrowers acknowledge and agree that Mortgage Loans
are property of a type subject to widely distributed standard
price quotations and Mortgage-backed Securities are property of a
type ordinarily sold on a recognized market, and agrees that the
Agent may purchase Mortgage Loans and Mortgage-backed Securities
at a private sale thereof and may sell Mortgage-backed Securities
without providing prior notice thereof to the Borrower. It is
agreed that notice sent or given not less than ten (10) calendar
days prior to the taking of the action to which the notice relates
is reasonable notification and notice of the purposes of this
Section 16. All notices and other communications provided for in
this Agreement shall be given to the parties at their respective
addresses set forth in
the Credit Agreement or, as to each such party, at such other address as shall be designated by such party in a written notice to the other parties in accordance with the Credit Agreement. All such notices and other communications shall be given by one or more of the means specified in Section 10.01 of the Credit Agreement and, upon being so given, shall be deemed to have been given as of the earliest time specified in said Section 10.01 for the means so used. Each Co-Borrower hereby authorizes the Agent to send all notices of sale of any Collateral to the Company, on behalf of such Co-Borrower, and the Company undertakes to provide such notices to the applicable Co-Borrower(s).
(d) Clause FIFTH of Section 17 of the Pledge and Security Agreement is hereby amended in its entirety to read as follows:
Fifth: the balance (if any) of such proceeds shall be paid to the Borrowers, their successors or assigns, or as a court of competent jurisdiction may direct, provided, that if such proceeds are not sufficient to satisfy the Obligations in full, the Company and, to the extent provided in Section 10.19 of the Credit Agreement, each Co-Borrower, shall remain liable to the Agent and the Lenders for any deficiency.
(e) Attachments 1, 2, 3, 5 and 6 to the Pledge and Security Agreement are hereby amended in their entirety to read as set forth on Attachments 1, 2, 3, 5 and 6 hereto.
4. Exiting Lender. Effective as of December 12, 2001 (the "Exit Payoff Date"), the Commitment Amount of First Union National Bank ("First Union") shall terminate. If the outstanding principal balance of all Loans on the Exit Payoff Date exceeds the sum of the Commitment Amounts, after giving effect to such termination, the Company shall repay the Loans in the amount of such excess, together with all interest, fees and other amounts payable to First Union, if any, under the Credit Agreement as of the Exit Date. Provided there is no Default or Event of Default or any other failure to satisfy the conditions pursuant to Loans under the Credit Agreement on the Exit Date, the Agent shall request that each of the Lenders (other than First Union) make Loans on the Exit Date in the amount, if any, required to increase its outstanding Loans to its Percentage Share of all outstanding Loans, and shall deliver the proceeds of such Loans to the Agent; provided, however, that should any Lender fail to make such Loans on the Exit Date, the Company shall repay the Loans in the amount that such Lender failed to deliver to the Agent. The aggregate unpaid principal amount of the Loans made by First Union under the Credit Agreement, together with all interest, fees and other amounts, if any, payable to First Union under the Credit Agreement as of the Exit Date (the "Payoff Amount"), shall be repaid in full from the funds provided by the Company and the proceeds of Loans made by the other Lenders. The Agent shall distribute to First Union by not later than 3:00 P.M. (Minneapolis time) on the Exit Date out of the proceeds of the funds provided by the Company and the Loans made by the other Lenders for such purpose, the amount required to pay First Union's Payoff Amount in full, whereupon: (a) First Union shall no longer be a party to the Credit Agreement; and (b) First Union shall not be deemed to be a "Lender" for any purpose under the Credit Agreement.
5. Conditions to Effectiveness of this Amendment. This Amendment shall become effective on August 14, 2001 (the "Effective Date"), provided the Agent shall have received at least eight (8) counterparts of this Amendment, duly executed by the Company and all of the Lenders, and the following conditions are satisfied:
(a) Before and after giving effect to this Amendment, the representations and warranties of the Company in Article IV of the Credit Agreement and Section 5 of the Pledge and Security Agreement shall be true and correct as though made on the date hereof, except for changes that are permitted by the terms of the Credit Agreement.
(b) Before and after giving effect to this Amendment, no Event of Default and no Default shall have occurred and be continuing.
(c) No material adverse change in the business, assets, financial condition or prospects of the Company shall have occurred since May 31, 2000.
(d) The Agent shall have received the following, each duly executed or certified, as the case may be, and dated as of the date of delivery thereof:
(i) a new Note payable to each Lender, substantially in the form of Exhibit A hereto, in the amount of such Lender's respective Commitment Amount (each, a "New Note"), duly executed by the Company;
(ii) copy of resolutions of the Board of Directors of the Company, certified by its respective Secretary or Assistant Secretary, authorizing or ratifying the execution, delivery and performance of this Amendment;
(iii) a certified copy of any amendment or restatement of the Articles of Incorporation or the By-laws of the Company made or entered following the date of the most recent certified copies thereof furnished to the Lenders;
(iv) certified copies of all documents evidencing any necessary corporate action, consent or governmental or regulatory approval (if any) with respect to this Amendment;
(v) a certificate of good standing for the Company in the jurisdiction of its incorporation, certified by the appropriate governmental official as of a date not more than 10 days prior to the Effective Date; and
(vi) such other documents, instruments, opinions and approvals as the Agent may reasonably request.
(e) Each of the Lenders shall have received an upfront fee in the amount set forth on Schedule 6 to this Amendment.
(f) The Agent shall have received the amendment fee required by
Section 10.02 of the Credit Agreement.
6. Acknowledgments. The Company and each Lender acknowledge that, as amended hereby, the Credit Agreement and the Pledge and Security Agreement remain in full force and effect with respect to the Company and the Lenders, and that each reference to the Credit Agreement or the Pledge and Security Agreement in the Loan Documents shall refer to the Credit Agreement or the Pledge and Security Agreement as applicable, amended hereby. The Company confirms and acknowledges that it will continue to comply with the covenants set out in the Credit Agreement and the other Loan Documents, as amended hereby, and that its representations and warranties set out in the Credit Agreement and the other Loan Documents, as amended hereby, are true and correct as of the date of this Amendment. The Company represents and warrants that (i) the execution, delivery and performance of this Amendment is within its corporate powers and has been duly authorized by all necessary corporate action; (ii) this Amendment has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (subject to limitations as to enforceability which might result from bankruptcy, insolvency, or other similar laws affecting creditors' rights generally and general principles of equity) and (iii) no Events of Default or Unmatured Events of Default exist.
7. General.
(a) The Company agrees to reimburse the Agent upon demand for all reasonable expenses (including reasonable attorneys fees and legal expenses) incurred by the Agent in the preparation, negotiation and execution of this Amendment and any other document required to be furnished herewith, and to pay and save the Lenders harmless from all liability for any stamp or other taxes which may be payable with respect to the execution or delivery of this Amendment, which obligations of the Company shall survive any termination of the Credit Agreement.
(b) This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.
(c) Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
(d) This Amendment shall be governed by, and construed in accordance with, the internal law, and not the law of conflicts, of the State of Minnesota, but giving effect to federal laws applicable to national banks.
(e) This Amendment shall be binding upon the Company, the Lenders, the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, the Lenders, the Agent and the successors and assigns of the Lenders and the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written.
CH MORTGAGE COMPANY I, LTD.
By: CH Mortgage Company GP, Inc.,
its General Partner
By: /s/ Randall C. Present ------------------------------ Randall C. Present President |
U.S. BANK NATIONAL ASSOCIATION,
as Agent and Lender
By: /s/ Kathleen M. Connor ------------------------------ Kathleen M. Connor Vice President |
RESIDENTIAL FUNDING CORPORATION
By: /s/ Brian Hilberth ------------------------------ Brian Hilberth Director |
FIRST UNION NATIONAL BANK
By: /s/ Anthony Alfieri ------------------------------ Anthony Alfieri Senior Credit Officer |
[Signature Pages to Second Amendment to Credit Agreement and Second Amendment to Pledge and Security Agreement]
NATIONAL CITY BANK OF KENTUCKY
By:_______________________________
Gary W. Sieveking
Vice President
[Signature Pages to Second Amendment to Credit Agreement and Second Amendment to Pledge and Security Agreement]
EXHIBIT 10.37
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of February 22, 2002, is by and among CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (the "Company"), U.S. BANK NATIONAL ASSOCIATION, a national banking association ("U.S. Bank"), and as agent (the "Agent") for the Lenders ("the Lenders") party to the Credit Agreement described below, the Lenders party to the Credit Agreement, JPMORGAN CHASE BANK, a New York banking corporation ("Chase") and COMERICA BANK, a Michigan banking corporation ("Comerica" and collectively with Chase, the "New Lenders").
Recitals
A. The Company, the Agent and the Lenders are parties to a Credit Agreement dated as of August 13, 1999, as amended by a First Amendment to Credit Agreement dated as of August 14, 2000, by a Second Amendment (the "Second Amendment") to Credit Agreement and Second Amendment to Pledge Agreement dated as of August 10, 2001 and by an Agreement (the "Increase Agreement") to Increase Commitment Amount (as so amended, the "Credit Agreement"), pursuant to which the Lenders provide the Company and certain Co-Borrowers with a revolving mortgage warehousing credit facility.
B. Pursuant to the Increase Agreement, the Commitment Amount of U.S. Bank was increased to $80,000,000 and, by virtue of such increase, the Aggregate Commitment Amounts were increased to $200,000,000. Pursuant to the Second Amendment, after the effectiveness of the Increase Agreement, the Commitment Amount of First Union National Bank (which was in the amount of $45,000,000) was terminated effective as of December 12, 2001, and, by virtue of such termination, the Aggregate Commitment Amounts were reduced to $155,000,000.
C. Pursuant to Section 10.11(d) of the Credit Agreement, the Company has agreed to add the New Lenders as "Lenders" under the Credit Agreement with Commitments in the amount of $20,000,000 (in the case of Comerica) and $30,000,000 (in the case of Chase), for the purpose of increasing the Aggregate Commitment Amounts to $205,000,000.
D. This Amendment is executed and delivered by the Company, the Agent, each New Lender pursuant to Section 10.11(d) of the Credit Agreement for the purposes of among other things, (a) reflecting the Commitment Amounts of the New Lenders and the New Lenders' agreement to be bound by the Credit Agreement and the other Loan Documents and (b) reflecting the Agent's consent to the addition of the New Lenders as Lenders party to the Credit Agreement. This Amendment also amends the definition of "Jumbo Mortgage Loan" contained in the Credit Agreement, as set forth below.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Article I Definitions
Section 1.01. Incorporated Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Credit Agreement.
Article II Concerning the New Lenders and Increased Commitment Amounts; Amendments
Section 2.01. Addition of New Lenders. Subject to Article 3 hereof upon and after the Effective Date (defined below), each New Lender hereby assumes, adopts and agrees to become a party, as a Lender, to the Credit Agreement and to each other Loan Document to which the Lenders are parties and for all purposes thereof, with a Commitment Amount as stated in the amended Schedule 5 to the Credit Agreement attached hereto as Exhibit A, and the parties hereto, other than the New Lenders, acknowledge and consent to such actions by the New Lenders. Upon and after the Effective Date, each New Lender shall be a Lender under the Credit Agreement and the other Loan Documents to which the Lenders are a parties and shall have all of the rights, privileges and benefits of a Lender under the Credit Agreement and the other Loan Documents, and all of the duties of a Lender thereunder, in each case as if such New Lender had been initially a party to the Credit Agreement. Upon the Effective Date (defined below), each New Lender shall make Loans as calculated by the Agent so that its outstanding Loans are equal to its respective Percentage Share of all Loans outstanding on such date and the Agent shall distribute the proceeds of such Loans to the other Lenders in accordance with their Percentage Share of all Loans outstanding on the Effective Date, in each case after giving effect to this Amendment, but prior to any additional Loans requested by the Company to be made on the Effective Date.
Section 2.02. Interest and Fees. From and after the Effective Date, all interest, all Balances Deficiency Fees and all Facility Fees accrued under the Credit Agreement for the billing period in which the Effective Date falls shall be paid to the Agent as provided in the Credit Agreement, and distributed by the Agent (A) with respect to amounts accrued before the Effective Date, to the Lenders (other than the New Lenders) and (B) with respect to amounts accrued on or after the Effective Date, to the New Lenders and the other Lenders, in accordance with the terms of the Credit Agreement.
Section 2.03. Copies of Loan Documents. The Agent represents and warrants to each New Lender that the copies of the Loan Documents and the related agreements, certificates, and opinion letters previously delivered to such New Lender are true and correct copies of the Loan Documents and related agreements, certificates, and opinion letters executed by and/or delivered in connection with the closing of the credit facilities contemplated by the Credit Agreement, other than the letter agreement described in Section 2.05(c) of the Credit Agreement.
Section 2.04. No Representation or Warranty by Lenders. Each New Lender agrees and acknowledges that (a) neither any other Lender nor the Agent make any representation or warranty and assume no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of any of the Loan Documents or any other instrument or document furnished pursuant thereto and (b) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower, or the performance or observance by any Borrower or any other Person of any of their respective obligations under the Loan Documents or any other instrument or document furnished pursuant thereto.
Section 2.05. No Reliance By New Lenders. Each New Lender (a) confirms to each other Lender and the Agent that it has received a copy of the Loan Documents together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Amendment; and (b) acknowledges that it has, independently and without reliance upon the Agent or any other Lender and instead in reliance upon its own review of such documents and information as such New Lender deems appropriate, made its own credit analysis and decision to enter into this Amendment and the Loan Documents and agrees that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as such New Lender shall deem appropriate at the time, continue to make its own credit decision in taking or not taking action under the Loan Documents.
Section 2.06. Schedule of Commitment Amounts. Schedule 5 of the Credit Agreement is hereby amended and restated in its entirety to read as set forth in Exhibit A hereto.
Section 2.07. Amendment of Certain Defined Terms. Section 1.01 of the Credit Agreement is amended by deleting the definitions of "Jumbo Mortgage Loan" and "Majority Lenders" as they appear therein and by substituting in lieu thereof the following definitions in the appropriate alphabetical order:
"Jumbo Mortgage Loan" means a Mortgage Loan which would in all respects be a Conforming Loan but for the fact that the original unpaid principal amount of the underlying Mortgage Note is more than the maximum principal amount allowable for purchase by Fannie Mae or Freddie Mac (but not more than $750,000).
"Majority Lenders" means (i) if there are less than three Lenders, Lenders collectively having Percentage Shares totaling in the aggregate one hundred percent (100%); and (ii) if there are three or more Lenders, Lenders collectively having Percentage Shares totaling in the aggregate at least sixty-six and two-thirds percent (66 2/3%).
Section 2.08. Certain Fees. The Company shall pay to each New Lender on the Effective Date an Upfront Fee according to its Commitment Amount in the amount specified in Section 2.05(b) of the Credit Agreement.
Article III Conditions Precedent
Section 3.01. Delivery of Documents. This Amendment shall become effective on February 22, 2002 (the "Effective Date"), provided the Agent shall have received at least eight (8) counterparts of this Amendment, duly executed by the Company and the Lenders, and the following conditions are satisfied:
(a) a new Note payable to Chase and Comerica substantially in the form of Exhibits B and C hereto respectively, in the amount of such New Lender's Commitment Amount (each, a "New Note" and collectively, the "New Notes"), duly executed by the Company;
(b) a certificate of the Secretary or Assistant Secretary of the General Partner certifying as to (i) resolutions of its Board of Directors authorizing the execution, delivery and performance of this Amendment and the New Notes and any and all other documents to be executed and delivered by the Company in connection with this Amendment (collectively, the "Increase Documents"), (ii) the officers of the General Partner authorized to sign such instruments, and (iii) specimen signatures of the officers so authorized;
(c) pursuant to Section 10.02 of the Credit Agreement, the Agent, on behalf of each Lender executing this Amendment (including the New Lenders), shall have received an amendment fee from the Company in the amount of $1,500 for each Lender (including the New Lenders) executing this Amendment;
(d) such other documents as the Agent or any New Lender may reasonably request; and
(e) payment of the fees specified in Section 2.07 to the parties entitled thereto.
Article IV General
Section 4.01. The Company, the Agent, and each Lender party hereto acknowledge that, as amended hereby, the Credit Agreement and the other Loan Documents remain in full force and effect with respect to the Company and the Lenders, and that each reference to the Credit Agreement or the Loan Documents shall refer to the Credit Agreement, amended hereby. The Company confirms and acknowledges that it will continue to comply with the covenants set out in the Credit Agreement and the other Loan Documents, as amended hereby, and that its representations and warranties set out in the Credit Agreement and the other Loan Documents, as amended hereby, are true and correct as of the date of this Amendment. The Company represents and warrants that (i) the execution, delivery and performance of this Amendment is within its organizational powers and has been duly authorized by all necessary organizational action; (ii) this Amendment has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (subject to limitations as to enforceability which might result from bankruptcy, insolvency, or other similar laws affecting creditors' rights generally and general principles of equity) and (iii) no Events of Default or Defaults exist.
Section 4.02. The Company agrees to reimburse the Agent upon demand for all reasonable expenses (including reasonable attorneys fees and legal expenses) incurred by the Agent in the preparation, negotiation and execution of this Amendment and any other document required to be furnished herewith, and to pay and save the Lenders harmless from all liability for any stamp or other taxes which may be payable with respect to the execution or delivery of this
Amendment, which obligations of the Company shall survive any termination of the Credit Agreement.
Section 4.03. This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.
Section 4.04. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
Section 4.05. This Amendment shall be governed by, and construed in accordance with, the internal law, and not the law of conflicts, of the State of Minnesota, but giving effect to federal laws applicable to national banks.
Section 4.06. This Amendment shall be binding upon the Company, the Lenders, the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, the Lenders, the Agent and the successors and assigns of the Lenders and the Agent.
[The remainder of this page is intentionally left blank]
IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed as of the date first above written.
CH MORTGAGE COMPANY I, LTD.
By: CH Mortgage Company GP, Inc.,
its General Partner
By: /s/ Randall C. Present ----------------------------- Randall C. Present President |
U.S. BANK NATIONAL ASSOCIATION,
as Agent and Lender
By:`/s/ Kathleen M. Connor ----------------------------- Kathleen M. Connor Vice President |
RESIDENTIAL FUNDING CORPORATION
By: /s/ Brian Hilberth ----------------------------- Name: --------------------------- Title: -------------------------- |
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Michael A. Johnson ----------------------------- Name: --------------------------- Title: -------------------------- |
JPMORGAN CHASE BANK
By: /s/ Cynthia E. Crites ----------------------------- Name: --------------------------- Title: -------------------------- |
[Signature Page to Third Amendment to Credit Agreement]
COMERICA BANK
By: /s/ Robert W. Marr -------------------------------- Name: ------------------------------ Title: ----------------------------- |
[Signature Page to Third Amendment to Credit Agreement
EXHIBIT A TO
THIRD AMENDMENT TO CREDIT AGREEMENT
Schedule 5 to
Credit Agreement
COMMITMENT AMOUNTS AND PERCENTAGE SHARES
Commitment Percentage Amount Share ------ ----- U.S. Bank National Association $ 80,000,000 39.02% Residential Funding Corporation $ 50,000,000 24.39% National City Bank of Kentucky $ 25,000,000 12.20% Comerica Bank $ 20,000,000 9.76% JPMorgan Chase Bank $ 30,000,000 14.63% ------------ ------ Total $205,000,000 100.00% |
EXHIBIT B TO
THIRD AMENDMENT
TO CREDIT AGREEMENT
PROMISSORY NOTE
$30,000,000 Minneapolis, Minnesota February 22, 2002
FOR VALUE RECEIVED, CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (the "Company"), and each "Co-Borrower" from time to time party to the Credit Agreement described below (to the extent provided therein), hereby promise to pay to the order of JPMORGAN CHASE BANK (the "Lender") at the main office of the Agent (as such term and each other capitalized term used herein are defined in the Credit Agreement hereinafter referred to) in Minneapolis, Minnesota, in lawful money of the United States of America in immediately available funds, the principal sum of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000) or the aggregate unpaid principal amount of all Loans and Swingline Loans made by the Lender pursuant to the Credit Agreement described below, whichever is less, and to pay interest in like funds from the date hereof on the unpaid balance thereof at the rates per annum and at such times as are specified in the Credit Agreement. Interest (computed on the basis of actual days elapsed and a year of 360 days) shall be payable at said office at the times specified in the Credit Agreement.
Principal hereof shall be payable in the amounts and at the times set forth in the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated as of August 13, 1999, between the Borrower, the "Co-Borrowers" (as defined therein), if any, party thereto, the Lender, the other lenders party thereto and U.S. Bank National Association, as Agent (as the same has been and may hereafter be amended, modified or restated from time to time, the "Credit Agreement"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings given to such terms in the Credit Agreement. This note is subject to certain mandatory and voluntary prepayments and its maturity is subject to acceleration, in each case upon the terms provided in the Credit Agreement.
The Borrowers hereby waive diligence, presentment, demand, protest, and notice (except such notice as is required under the Loan Documents) of any kind whatsoever. The nonexercise by the Lender of any of its rights hereunder or under the other Loan Documents in any particular instance shall not constitute a waiver thereof in any subsequent instance.
The Borrowers reserve the right to prepay the outstanding principal balance of this Note, in whole or in part at any time and from time to time without premium or penalty in accordance with the terms of the Credit Agreement.
This note is entitled to the benefit of the Pledge and Security Agreement and the other Loan Documents.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of default hereunder, the undersigned agrees to pay all costs and expenses of collection, including but not limited to reasonable attorneys' fees.
CH MORTGAGE COMPANY I, LTD.
By______________________________
Its___________________________
EXHIBIT C TO
THIRD AMENDMENT
TO CREDIT AGREEMENT
PROMISSORY NOTE
$20,000,000 Minneapolis, Minnesota February 22, 2002
FOR VALUE RECEIVED, CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (the "Company"), and each "Co-Borrower" from time to time party to the Credit Agreement described below (to the extent provided therein), hereby promise to pay to the order of COMERICA BANK (the "Lender") at the main office of the Agent (as such term and each other capitalized term used herein are defined in the Credit Agreement hereinafter referred to) in Minneapolis, Minnesota, in lawful money of the United States of America in immediately available funds, the principal sum of TWENTY MILLION AND NO/100 DOLLARS ($20,000,000) or the aggregate unpaid principal amount of all Loans and Swingline Loans made by the Lender pursuant to the Credit Agreement described below, whichever is less, and to pay interest in like funds from the date hereof on the unpaid balance thereof at the rates per annum and at such times as are specified in the Credit Agreement. Interest (computed on the basis of actual days elapsed and a year of 360 days) shall be payable at said office at the times specified in the Credit Agreement.
Principal hereof shall be payable in the amounts and at the times set forth in the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated as of August 13, 1999, between the Borrower, the "Co-Borrowers" (as defined therein), if any, party thereto, the Lender, the other lenders party thereto and U.S. Bank National Association, as Agent (as the same has been and may hereafter be amended, modified or restated from time to time, the "Credit Agreement"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings given to such terms in the Credit Agreement. This note is subject to certain mandatory and voluntary prepayments and its maturity is subject to acceleration, in each case upon the terms provided in the Credit Agreement.
The Borrowers hereby waive diligence, presentment, demand, protest, and notice (except such notice as is required under the Loan Documents) of any kind whatsoever. The nonexercise by the Lender of any of its rights hereunder or under the other Loan Documents in any particular instance shall not constitute a waiver thereof in any subsequent instance.
The Borrowers reserve the right to prepay the outstanding principal balance of this Note, in whole or in part at any time and from time to time without premium or penalty in accordance with the terms of the Credit Agreement.
This note is entitled to the benefit of the Pledge and Security Agreement and the other Loan Documents.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of default hereunder, the undersigned agrees to pay all costs and expenses of collection, including but not limited to reasonable attorneys' fees.
CH MORTGAGE COMPANY I, LTD.
By___________________________
Its________________________
EXHIBIT 10.38
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment"),
dated as of August 12, 2002, is by and among CH MORTGAGE COMPANY I, LTD., a
Texas limited partnership (the "Company"), the lenders (the "Lenders") party to
the Credit Agreement (defined below) and U.S. BANK NATIONAL ASSOCIATION, a
national banking association ("U.S. Bank"), as agent (in such capacity, the
"Agent") for the Lenders.
Recitals
A. The Company, the Agent and the Lenders are parties to a Credit Agreement dated as of August 13, 1999, as amended by a First Amendment to Credit Agreement dated as of August 14, 2000, by a Second Amendment to Credit Agreement and Second Amendment to Pledge Agreement dated as of August 10, 2001 and by a Third Amendment to Credit Agreement dated as of February 22, 2002 (as so amended, the "Credit Agreement"), pursuant to which the Lenders provide the Company and certain Co-Borrowers with a revolving mortgage warehousing credit facility.
B. This Amendment is executed and delivered by the Company, the Agent and each Lender for the purposes of among other things, (a) reflecting that Residential Funding Corporation will be exiting as a Lender party to the Credit Agreement, (b) clarifying that the Company's and CH Funding, LLC's obligations under the CP Facility Documents (defined below) are permitted under certain provisions of the Credit Agreement and (c) reflecting certain other amendments to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Article I Definitions
Section 1.01. Incorporated Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Credit Agreement.
Article II Amendments to Credit Agreement
Section 2.01. Amendments to Defined Terms. Section 1.01 of the Credit Agreement is amended by deleting the definitions of "Applicable Margin", "Draw Down Termination Date" and "Nonconforming Mortgage Loan" and by inserting the following definitions therein in the appropriate alphabetical order:
"Applicable Margin" means, with respect to:
(a) Reference Rate Advances, 0%, and
(b) Eurodollar Rate Advances, 1.125%
"CP Facility Documents" means (a) Loan Agreement dated as of July 9, 2002 among CH Funding, LLC, Atlantic Asset Securitization Corp., Credit Lyonnais New York Branch, as a bank and as administrative agent, the banks party thereto and the Company as servicer, (b) Master Repurchase Agreement dated as of July 9, 2002 between the Company and CH Funding, LLC, (c) Addendum to Master Repurchase Agreement dated as of July 9, 2002 between the Company and CH Funding, LLC, (d) Collateral Agency Agreement dated as of July 9, 2002 between CH Funding, LLC, Credit Lyonnais New York Branch, as administrative agent and U.S. Bank National Association, as collateral agent and (e) any documents or instruments amending or restating any of the forgoing documents in a manner approved in advance in writing by the Agent.
"Drawdown Termination Date" means the earlier of August 12, 2003, or the day on which the Notes first become due and payable.
"Nonconforming Mortgage Loan" means a Mortgage Loan that (a)
is neither a Conforming Mortgage Loan nor a Jumbo Mortgage Loan, (b)
generally meets Standard & Poor's Ratings Group (a division of McGraw
Hill, Inc.) underwriting guidelines for Subprime Mortgage Loans, (c)
has a FICO score equal to or in excess of the requirements of the
Investor under the applicable Take-Out Commitment for such Mortgage
Loan, (d) has a combined loan-to-value ratio of not more than 100%, and
(e) has a face amount of no more than $100,000, in the case of a
Mortgage Loan made pursuant to a home equity line of credit, and no
more than $400,000, in the case of any other Mortgage Loan.
Section 2.02. Amendments Regarding CP Facility Documents. Section
6.02(c) of the Credit Agreement is amended by inserting the clause ", including
unsecured Contingent Indebtedness of the Company to CH Funding, LLC under the CP
Facility Documents" immediately prior to the semi-colon at the end thereof.
Section 6.02(d) of the Credit Agreement is amended by inserting the clause
"(including GAAP Indebtedness and Contingent Obligations of CH Funding, LLC
under the CP Facility Documents)" immediately prior to the period at the end
thereof. Section 6.04 of the Credit Agreement is amended by inserting the clause
"(including sales or transfers of Mortgage Loans by the Company to CH Funding
under the CP Facility Documents)" immediately after the clause "ordinary course
of their business" as it appears therein. Section 6.05(d) of the Credit
Agreement is amended by inserting the clause "(including Investments by the
Company in CH Funding, LLC, a Delaware limited liability company)" immediately
after the clause "Investment in any Subsidiary" as it appears therein. Section
6.07(c) of the Credit Agreement is amended by inserting the clause "and except
by the Company to CH Funding, LLC under the CP Facility Documents" immediately
prior to the period at the end thereof.
Section 2.03. Tangible Net Worth. Section 6.13 of the Credit Agreement is amended in its entirety to read as follows:
Section 6.13 Tangible Net Worth. As of the end of each calendar month, Company's Consolidated Tangible Net Worth shall not be less than $35,000,000.
Section 2.04. Schedule of Commitment Amounts. Schedule 5 of the Credit Agreement is hereby amended and restated in its entirety to read as set forth in Exhibit A hereto.
Article III Exiting Lender
Section 3.01. Exiting Lender. Upon the Fourth Amendment Effective Date (defined below), the aggregate unpaid principal amount of the Loans made by Residential Funding Corporation ("RFC") under the Credit Agreement, together with all interest, fees and other amounts, if any, payable to RFC under the Credit Agreement as of the Fourth Amendment Effective Date (the "Payoff Amount"), shall be repaid in full from the funds provided by the Company and the proceeds of Loans made by the other Lenders, and the commitments of RFC under the Credit Agreement shall terminate. The Company shall give the Agent notice with respect to such Payoff Amount. The Agent shall distribute to RFC by not later than 5:00 P.M. (Minneapolis time) on the Fourth Amendment Effective Date out of the proceeds of the Loans made for such purpose and from the other funds provided by the Company, the amount required to pay the Payoff Amount in full, whereupon: (a) RFC shall no longer be a party to the Credit Agreement and (b) RFC shall not be deemed to be a "Lender" for any purpose under the Credit Agreement.
Article IV Conditions Precedent
Section 4.01. Delivery of Documents. This Amendment shall become effective on August 12, 2002 (the "Fourth Amendment Effective Date"), provided the Agent shall have received at least eight (8) counterparts of this Amendment, duly executed by the Company and the Lenders, and the following conditions are satisfied:
(a) a new Note payable to Chase, in the amount of such Lender's Commitment Amount after giving effect to this Amendment (the "New Note"), duly executed by the Company;
(b) a certificate of the Secretary or Assistant Secretary of the General Partner certifying as to (i) resolutions of its Board of Directors authorizing the execution, delivery and performance of this Amendment and the New Notes and any and all other documents to be executed and delivered by the Company in connection with this Amendment (collectively, the "Amendment Documents"), (ii) the officers of the General Partner authorized to sign such instruments, and (iii) specimen signatures of the officers so authorized;
(c) such other documents as the Agent may reasonably request; and
(d) payment of the fees and expenses specified in Section 5.05 to the parties entitled thereto.
The Company, the Agent and Lenders agree and acknowledge that no Upfront Fees shall be payable by the Company in connection with any increase to any Commitment Amounts effected by this Amendment.
Article V General
Section 5.01. The Company, the Agent, and each Lender party hereto
acknowledge that, as amended hereby, the Credit Agreement and the other Loan
Documents remain in full force and effect with respect to the Company and the
Lenders, and that each reference to the Credit Agreement or the Loan Documents
shall refer to the Credit Agreement, amended hereby. The Company confirms and
acknowledges that it will continue to comply with the covenants set out in the
Credit Agreement and the other Loan Documents, as amended hereby, and that its
representations and warranties set out in the Credit Agreement and the other
Loan Documents, as amended hereby, are true and correct as of the date of this
Amendment. The Company represents and warrants that (i) the execution, delivery
and performance of the Amendment Documents is within its organizational powers
and has been duly authorized by all necessary organizational action; (ii) the
Amendment Documents have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with their terms (subject to limitations as to
enforceability which might result from bankruptcy, insolvency, or other similar
laws affecting creditors' rights generally and general principles of equity) and
(iii) no Events of Default or Defaults exist.
Section 5.02. The Company agrees to reimburse the Agent upon demand for all reasonable expenses (including reasonable attorneys fees and legal expenses) incurred by the Agent in the preparation, negotiation and execution of the Amendment Documents and any other document required to be furnished herewith, and to pay and save the Lenders harmless from all liability for any stamp or other taxes which may be payable with respect to the execution or delivery of the Amendment Documents, which obligations of the Company shall survive any termination of the Credit Agreement.
Section 5.03. This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.
Section 5.04. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
Section 5.05. This Amendment shall be governed by, and construed in accordance with, the internal law, and not the law of conflicts, of the State of Minnesota, but giving effect to federal laws applicable to national banks.
Section 5.06. This Amendment shall be binding upon the Company, the Lenders, the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, the Lenders, the Agent and the successors and assigns of the Lenders and the Agent.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed as of the date first above written.
CH MORTGAGE COMPANY I, LTD.
By: CH Mortgage Company GP, Inc.,
its General Partner
By: _____________________________________
Randall C. Present
President
U.S. BANK NATIONAL ASSOCIATION,
as Agent and Lender
By: _____________________________________
Kathleen M. Connor
Vice President
[Signature Page to Fourth Amendment to Credit Agreement
RESIDENTIAL FUNDING CORPORATION
By: /s/ Brian Hilberth ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- |
[Signature Page to Fourth Amendment to Credit Agreement
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Michael A. Johnson ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- |
[Signature Page to Fourth Amendment to Credit Agreement
JPMORGAN CHASE BANK
By: /s/ Cynthia E. Crites ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- |
[Signature Page to Fourth Amendment to Credit Agreement
COMERICA BANK
By: /s/ Robert W. Marr ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- |
[Signature Page to Fourth Amendment to Credit Agreement
EXHIBIT A TO
FOURTH AMENDMENT TO CREDIT AGREEMENT
Schedule 5 to
Credit Agreement
COMMITMENT AMOUNTS AND PERCENTAGE SHARES
Commitment Percentage Amount Share ------ ----- U.S. Bank National Association $ 80,000,000 48.49% National City Bank of Kentucky $ 25,000,000 15.15% Comerica Bank $ 20,000,000 12.12% JPMorgan Chase Bank $ 40,000,000 24.24% ------------ ------ Total $165,000,000 100.00% |
RESTATED PROMISSORY NOTE
$40,000,000 Minneapolis, Minnesota August 12, 2002
FOR VALUE RECEIVED, CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (the "Company"), and each "Co-Borrower" from time to time party to the Credit Agreement described below (to the extent provided therein), hereby promise to pay to the order of JPMORGAN CHASE BANK (the "Lender") at the main office of the Agent (as such term and each other capitalized term used herein are defined in the Credit Agreement hereinafter referred to) in Minneapolis, Minnesota, in lawful money of the United States of America in immediately available funds, the principal sum of FOURTY MILLION AND NO/100 DOLLARS ($40,000,000) or the aggregate unpaid principal amount of all Loans and Swingline Loans made by the Lender pursuant to the Credit Agreement described below, whichever is less, and to pay interest in like funds from the date hereof on the unpaid balance thereof at the rates per annum and at such times as are specified in the Credit Agreement. Interest (computed on the basis of actual days elapsed and a year of 360 days) shall be payable at said office at the times specified in the Credit Agreement.
Principal hereof shall be payable in the amounts and at the times set forth in the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated as of August 13, 1999, between the Company, the "Co-Borrowers" (as defined therein), if any, party thereto, the Lender, the other lenders party thereto and U.S. Bank National Association, as Agent (as the same has been and may hereafter be amended, modified or restated from time to time, the "Credit Agreement"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings given to such terms in the Credit Agreement. This note is subject to certain mandatory and voluntary prepayments and its maturity is subject to acceleration, in each case upon the terms provided in the Credit Agreement. This note amends and restates, but does not constitute payment upon or a novation of, that certain Promissory Note dated as of February 22, 2002 given by the Company in favor of the Lender in the amount of $30,000,000.
The Borrowers hereby waive diligence, presentment, demand, protest, and notice (except such notice as is required under the Loan Documents) of any kind whatsoever. The nonexercise by the Lender of any of its rights hereunder or under the other Loan Documents in any particular instance shall not constitute a waiver thereof in any subsequent instance.
The Borrowers reserve the right to prepay the outstanding principal balance of this Note, in whole or in part at any time and from time to time without premium or penalty in accordance with the terms of the Credit Agreement.
This note is entitled to the benefit of the Pledge and Security Agreement and the other Loan Documents.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of default hereunder, the undersigned agrees to pay all costs and expenses of collection, including but not limited to reasonable attorneys' fees.
CH MORTGAGE COMPANY I, LTD.
By: CH Mortgage Company GP, Inc.,
its General Partner
By ______________________________________
Its __________________________________
EXHIBIT 10.39
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of September 25, 2002, is by and among CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (the "Company"), the lenders (the "Lenders") party to the Credit Agreement (defined below) and U.S. BANK NATIONAL ASSOCIATION, a national banking association ("U.S. Bank"), as agent (in such capacity, the "Agent") for the Lenders.
Recitals
A. The Company, the Agent and the Lenders are parties to a Credit Agreement dated as of August 13, 1999, as amended by a First Amendment to Credit Agreement dated as of August 14, 2000, by a Second Amendment to Credit Agreement and Second Amendment to Pledge Agreement dated as of August 10, 2001, by a Third Amendment to Credit Agreement dated as of February 22, 2002, by a Fourth Amendment to Credit Agreement dated as of August 12, 2002 and by an Agreement to Increase Commitment Amounts (the "Increase Agreement") dated as of September 20, 2002 (as so amended, the "Credit Agreement"), pursuant to which the Lenders provide the Company and certain Co-Borrowers with a revolving mortgage warehousing credit facility.
B. The Company, U.S. Bank National Association ("U.S. Bank") and JPMorgan Chase Bank ("Chase") desire to temporarily increase U.S. Bank's and Chase's respective Commitment Amounts as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Article I
Definitions
Section 1.1 Incorporated Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Credit Agreement.
Article II
Concerning the Increased Commitment Amounts
Section 2.1 Changes in Commitment Amount of Chase. Effective as of September 25, 2002 (the "Increase Date"), the Commitment Amount of Chase is hereby increased from $65,000,000 to $110,000,000. Effective as of October 25, 2002 (the "First Reduction Date"), the Commitment Amount of Chase is hereby reduced from $110,000,000 to $65,000,000. Effective as of December 20, 2002 (the "Second Reduction Date"), the Commitment Amount of Chase is
hereby reduced from $65,000,000 to $55,000,000. This Section 2.1 amends and restates Section 2.1 of the Increase Agreement.
Section 2.2 Changes in Commitment Amount of U.S. Bank. Effective as of the Increase Date, the Commitment Amount of U.S. Bank is hereby increased from $80,000,000 to $135,000,000. Effective as of the First Reduction Date, the Commitment Amount of U.S. Bank is hereby reduced from $135,000,000 to $80,000,000.
Section 2.3 Loans by Chase and U.S. Bank on Increase Date. Upon the Increase Date, Chase and U.S. Bank shall each make Loans as calculated by the Agent so that its outstanding Loans are equal to its respective Percentage Share of all Loans outstanding on such date and the Agent shall distribute the proceeds of such Loans to the other Lenders in accordance with their Percentage Share of all Loans outstanding on the Increase Date, in each case after giving effect to this Amendment, but prior to any additional Loans requested by the Company to be made on the Increase Date.
Section 2.4 Repayment of Loans on First Reduction Date. If the outstanding principal balance of all Loans made by U.S. Bank or Chase as of the First Reduction Date exceeds such Lender's Commitment Amounts applicable on such dates, after giving effect to the reduction of such Lender's Commitment Amount on such dates, the Company shall repay the Loans made by such Lender in the amount of such excess. Without limiting the foregoing, provided there is no Event of Default or Default or any other failure to satisfy the conditions pursuant to Loans under the Credit Agreement on the First Reduction Date, the Agent shall request that each of the Lenders (other than Chase and U.S. Bank make on the First Reduction Date Loans in the amount, if any, required to increase its outstanding Loans to its Percentage Share of the Loans amount necessary to reduce U.S. Bank's and Chase's outstanding Loans to U.S. Bank's and Chase's Percentage Share of all outstanding Loans after giving effect to the reduction of its Commitment Amount on the First Reduction Date, and shall deliver the proceeds of such Loans to the Agent; provided, that should any Lender fail to make such Loans on the First Reduction Date, the Company shall repay the Loans made by U.S. Bank and Chase in the amount that such Lender failed to deliver to the Agent. The Agent shall distribute to U.S. Bank and Chase on the First Reduction Date, out of any payments made by the Company as set forth above and the proceeds of Loans made by the other Lenders as set forth above, the amount required to reduce U.S. Bank's and Chase's outstanding Loans to its Percentage Share of all outstanding Loans after giving effect to the reduction of its Commitment Amount on the First Reduction Date.
Section 2.5 Repayment of Loans on Second Reduction Date. If the outstanding principal balance of all Loans made by Chase as of the Second Reduction Date exceeds Chase's Commitment Amount applicable on such dates, after giving effect to the reduction of Chase's Commitment Amount on such dates, the Company shall repay the Loans made by Chase in the amount of such excess. Without limiting the foregoing, provided there is no Event of Default or Default or any other failure to satisfy the conditions pursuant to Loans under the Credit Agreement on the Second Reduction Date, the Agent shall request that each of the Lenders (other than Chase) make on the Second Reduction Date Loans in the amount, if any, required to increase its outstanding Loans to its Percentage Share of the Loans amount necessary to reduce Chase's outstanding Loans to Chase's Percentage Share of all outstanding Loans after giving effect to the reduction of its Commitment Amount on the Second Reduction Date, and shall
deliver the proceeds of such Loans to the Agent; provided, that should any Lender fail to make such Loans on the Second Reduction Date, the Company shall repay the Loans made by Chase in the amount that such Lender failed to deliver to the Agent. The Agent shall distribute to Chase on the Second Reduction Date, out of any payments made by the Company as set forth above and the proceeds of Loans made by the other Lenders as set forth above, the amount required to reduce Chase's outstanding Loans to its Percentage Share of all outstanding Loans after giving effect to the reduction of its Commitment Amount on the Second Reduction Date.
Section 2.6 Effect of Increase Agreement Sections 2.4 and 2.5 of this Amendment collectively amend and restate Section 2.4 of the Increase Agreement.
Article III
Amendment to Credit Agreement
Section 3.1 Schedule 5. Schedule 5 of the Credit Agreement is hereby amended and restated in its entirety to read as set forth in Exhibit A hereto.
Article IV
Conditions Precedent
Section 4.1 Delivery of Documents. This Amendment shall be effective as of the date hereof upon the delivery to the Agent by the Company of the following documents and the satisfaction of the following conditions:
(a) separate new Notes payable to Chase and U.S. Bank, in the amount of such Lenders' increased Commitment Amounts after giving effect to this Amendment (the "New Notes"), duly executed by the Company;
(b) a certificate of the Secretary or Assistant Secretary of the Company certifying the resolutions of its Board of Directors authorizing the execution, delivery and performance of this Amendment and the New Notes, and identifying the officers of the Company authorized to sign such instruments;
(c) payment of the fees and expenses specified in Section 5.05 of the Credit Agreement to the parties entitled thereto.
(d) the payment to the Agent for the ratable benefit of the U.S. Bank and Chase the increased commitment fees set forth in the fee letter between the Company, U.S. Bank and Chase dated concurrently herewith.
(e) such other documents as the Agent may reasonably request.
Article V
Miscellaneous
Section 5.1 The Company, the Agent, and each Lender party hereto acknowledge that, as amended hereby, the Credit Agreement and the other Loan Documents remain in full force and effect with respect to the Company and the Lenders, and that each reference to the Credit Agreement or the Loan Documents shall refer to the Credit Agreement, amended hereby. The Company confirms and acknowledges that it will continue to comply with the covenants set out in the Credit Agreement and the other Loan Documents, as amended hereby, and that its representations and warranties set out in the Credit Agreement and the other Loan Documents, as amended hereby, are true and correct as of the date of this Amendment. The Company represents and warrants that (i) the execution, delivery and performance of this Amendment and the New Notes (the "Amendment Documents") is within its organizational powers and has been duly authorized by all necessary organizational action; (ii) the Amendment Documents have been duly executed and delivered by the Company and constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their terms (subject to limitations as to enforceability which might result from bankruptcy, insolvency, or other similar laws affecting creditors' rights generally and general principles of equity) and (iii) no Events of Default or Defaults exist.
Section 5.2 The Company agrees to reimburse the Agent upon demand for all reasonable expenses (including reasonable attorneys fees and legal expenses) incurred by the Agent in the preparation, negotiation and execution of the Amendment Documents and any other document required to be furnished herewith, and to pay and save the Lenders harmless from all liability for any stamp or other taxes which may be payable with respect to the execution or delivery of the Amendment Documents, which obligations of the Company shall survive any termination of the Credit Agreement.
Section 5.3 This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.
Section 5.4 Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
Section 5.5 This Amendment shall be governed by, and construed in accordance with, the internal law, and not the law of conflicts, of the State of Minnesota, but giving effect to federal laws applicable to national banks.
Section 5.6 This Amendment shall be binding upon the Company, the Lenders, the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, the Lenders, the Agent and the successors and assigns of the Lenders and the Agent.
[Remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed as of the date first above written.
CH MORTGAGE COMPANY I, LTD.
By: CH Mortgage Company GP, Inc.,
its General Partner
By: /s/ Randall C. Present ---------------------------------- Randall C. Present President |
U.S. BANK NATIONAL ASSOCIATION,
as Agent and Lender
By: /s/ Kathleen M. Connor ---------------------------------- Kathleen M. Connor Vice President |
[Signature Page to Fifth Amendment to Credit Agreement]
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Michael A. Johnson ------------------------------------ Name: ---------------------------------- Title: --------------------------------- |
[Signature Page to Fifth Amendment to Credit Agreement]
JPMORGAN CHASE BANK
By: /s/ Michael W. Nicholson ----------------------------------- Name: --------------------------------- Title: -------------------------------- |
[Signature Page to Fifth Amendment to Credit Agreement]
COMERICA BANK
By: /s/ Robert W. Marr ----------------------------------- Name: --------------------------------- Title: -------------------------------- |
[Signature Page to Fifth Amendment to Credit Agreement]
EXHIBIT A TO FIFTH AMENDMENT
TO CREDIT AGREEMENT
Schedule 5 to
Credit Agreement
COMMITMENT AMOUNTS AND PERCENTAGE SHARES
Before the reduction of U.S. Bank National Association's and JPMorgan Chase Bank's Commitment Amounts to $80,000,000 and $65,000,000, respectively, on October 25, 2002:
Commitment Percentage Amount Share ------ ----- U.S. Bank National Association $135,000,000 45.00% National City Bank of Kentucky $ 25,000,000 8.33% Comerica Bank $ 30,000,000 10.00% JPMorgan Chase Bank $110,000,000 36.67% ------------ ------- Total $300,000,000 100.00% |
On and after the reduction of U.S. Bank National Association's and JPMorgan Chase Bank's Commitment Amounts to $80,000,000 and $65,000,000, respectively, on October 25, 2002, but prior to the reduction of JP Morgan Chase Bank's Commitment Amount to $55,000,000 on December 20, 2002:
Commitment Percentage Amount Share ------ ----- U.S. Bank National Association $ 80,000,000 40.00% National City Bank of Kentucky $ 25,000,000 12.50% Comerica Bank $ 30,000,000 15.00% JPMorgan Chase Bank $ 65,000,000 32.50% ------------ ------- Total $200,000,000 100.00% |
On and after the reduction of JPMorgan Chase Bank's Commitment Amount to $55,000,000 on December 20, 2002:
Commitment Percentage Amount Share ------ ----- U.S. Bank National Association $ 80,000,000 42.10% National City Bank of Kentucky $ 25,000,000 13.16% Comerica Bank $ 30,000,000 15.79% JPMorgan Chase Bank $ 55,000,000 28.95% ------------ ------- Total $190,000,000 100.00% |
PROMISSORY NOTE
$110,000,000 Minneapolis, Minnesota September 25, 2002
FOR VALUE RECEIVED, CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (the "Company"), and each "Co-Borrower" from time to time party to the Credit Agreement described below (to the extent provided therein), hereby promise to pay to the order of JPMORGAN CHASE BANK (the "Lender") at the main office of the Agent (as such term and each other capitalized term used herein are defined in the Credit Agreement hereinafter referred to) in Minneapolis, Minnesota, in lawful money of the United States of America in immediately available funds, the principal sum of ONE HUNDRED TEN MILLION AND NO/100 DOLLARS ($110,000,000) or the aggregate unpaid principal amount of all Loans and Swingline Loans made by the Lender pursuant to the Credit Agreement described below, whichever is less, and to pay interest in like funds from the date hereof on the unpaid balance thereof at the rates per annum and at such times as are specified in the Credit Agreement. Interest (computed on the basis of actual days elapsed and a year of 360 days) shall be payable at said office at the times specified in the Credit Agreement.
Principal hereof shall be payable in the amounts and at the times set forth in the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated as of August 13, 1999, between the Company, the "Co-Borrowers" (as defined therein), if any, party thereto, the Lender, the other lenders party thereto and U.S. Bank National Association, as Agent (as the same has been and may hereafter be amended, modified or restated from time to time, the "Credit Agreement"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings given to such terms in the Credit Agreement. This note is subject to certain mandatory and voluntary prepayments and its maturity is subject to acceleration, in each case upon the terms provided in the Credit Agreement. This Note amends and restates, but does not constitute payment upon or a novation of, that certain Promissory Note dated as of September 20, 2002 given by the Company in favor of the Lender in the amount of $65,000,000.
The Borrowers hereby waive diligence, presentment, demand, protest, and notice (except such notice as is required under the Loan Documents) of any kind whatsoever. The nonexercise by the Lender of any of its rights hereunder or under the other Loan Documents in any particular instance shall not constitute a waiver thereof in any subsequent instance.
The Borrowers reserve the right to prepay the outstanding principal balance of this Note, in whole or in part at any time and from time to time without premium or penalty in accordance with the terms of the Credit Agreement.
This note is entitled to the benefit of the Pledge and Security Agreement and the other Loan Documents.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of default hereunder, the undersigned agrees to pay all costs and expenses of collection, including but not limited to reasonable attorneys' fees.
CH MORTGAGE COMPANY I, LTD.
By ________________________________
Its ____________________________
PROMISSORY NOTE
$135,000,000 Minneapolis, Minnesota September 25, 2002
FOR VALUE RECEIVED, CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (the "Company"), and each "Co-Borrower" from time to time party to the Credit Agreement described below (to the extent provided therein), hereby promise to pay to the order of U.S. BANK NATIONAL ASSOCIATION (the "Lender") at the main office of the Agent (as such term and each other capitalized term used herein are defined in the Credit Agreement hereinafter referred to) in Minneapolis, Minnesota, in lawful money of the United States of America in immediately available funds, the principal sum of ONE HUNDRED THIRTY-FIVE MILLION AND NO/100 DOLLARS ($135,000,000) or the aggregate unpaid principal amount of all Loans and Swingline Loans made by the Lender pursuant to the Credit Agreement described below, whichever is less, and to pay interest in like funds from the date hereof on the unpaid balance thereof at the rates per annum and at such times as are specified in the Credit Agreement. Interest (computed on the basis of actual days elapsed and a year of 360 days) shall be payable at said office at the times specified in the Credit Agreement.
Principal hereof shall be payable in the amounts and at the times set forth in the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated as of August 13, 1999, between the Company, the "Co-Borrowers" (as defined therein), if any, party thereto, the Lender, the other lenders party thereto and U.S. Bank National Association, as Agent (as the same has been and may hereafter be amended, modified or restated from time to time, the "Credit Agreement"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings given to such terms in the Credit Agreement. This note is subject to certain mandatory and voluntary prepayments and its maturity is subject to acceleration, in each case upon the terms provided in the Credit Agreement. This Note amends and restates, but does not constitute payment upon or a novation of, that certain Promissory Note made by the Company in favor of the Lender dated as of in the amount of $80,000,000
The Borrowers hereby waive diligence, presentment, demand, protest, and notice (except such notice as is required under the Loan Documents) of any kind whatsoever. The nonexercise by the Lender of any of its rights hereunder or under the other Loan Documents in any particular instance shall not constitute a waiver thereof in any subsequent instance.
The Borrowers reserve the right to prepay the outstanding principal balance of this Note, in whole or in part at any time and from time to time without premium or penalty in accordance with the terms of the Credit Agreement.
This note is entitled to the benefit of the Pledge and Security Agreement and the other Loan Documents.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. In the event of default hereunder, the undersigned agrees to pay all costs and expenses of collection, including but not limited to reasonable attorneys' fees.
CH MORTGAGE COMPANY I, LTD.
By ________________________
Its ___________________
EXHIBIT 10.40
SIXTH AMENDMENT TO CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of October 18, 2002, is by and among CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (the "Company"), the lenders (the "Lenders") party to the Credit Agreement (defined below) and U.S. BANK NATIONAL ASSOCIATION, a national banking association ("U.S. Bank"), as agent (in such capacity, the "Agent") for the Lenders.
Recitals
A. The Company, the Agent and the Lenders are parties to a Credit Agreement dated as of August 13, 1999, as amended by a First Amendment to Credit Agreement dated as of August 14, 2000, by a Second Amendment to Credit Agreement and Second Amendment to Pledge Agreement dated as of August 10, 2001, by a Third Amendment to Credit Agreement dated as of February 22, 2002, by a Fourth Amendment to Credit Agreement dated as of August 12, 2002, by a Fifth Amendment to Credit Agreement dated as of September 25, 2002 and by an Agreement to Increase Commitment Amounts (the "Increase Agreement") dated as of September 20, 2002 (as so amended, the "Credit Agreement"), pursuant to which the Lenders provide the Company and certain Co-Borrowers with a revolving mortgage warehousing credit facility.
B. The Company, U.S. Bank National Association ("U.S. Bank") and JPMorgan Chase Bank ("Chase") desire to extend the first period during which the respective Commitment Amounts of U.S. Bank and Chase are temporarily increased.
NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Article I
Definitions
Section 1.1 Incorporated Definitions. Capitalized terms used in this Amendment, to the extent not otherwise defined herein, shall have the same meanings as in the Credit Agreement.
Article II
Concerning the Increased Commitment Amounts
Section 2.1 Change to First Reduction Date for the Commitment Amount of Chase. Effective as of November 25, 2002 (the "First Reduction Date"), the Commitment Amount of Chase is hereby reduced from $110,000,000 to $65,000,000. This Section 2.1 amends Section 2.1 of the Fifth Amendment.
Section 2.2 Change to First Reduction Date for the Commitment Amount of U.S. Bank. Effective as of the First Reduction Date, the Commitment Amount of U.S. Bank is hereby reduced from $135,000,000 to $80,000,000. This Section 2.2 amends Section 2.2 of the Fifth Amendment.
Article III
Amendment to Credit Agreement
Section 3.1 Schedule 5. Schedule 5 of the Credit Agreement is hereby amended and restated in its entirety to read as set forth in Exhibit A hereto.
Article IV
Conditions Precedent
Section 4.1 Delivery of Documents. This Amendment shall be effective as of the date hereof upon the delivery to the Agent by the Company of the following documents and the satisfaction of the following conditions:
(a) a certificate of the Secretary or Assistant Secretary of the Company certifying the resolutions of its Board of Directors authorizing the execution, delivery and performance of this Amendment, and identifying the officers of the Company authorized to sign such instruments;
(b) payment of the fees and expenses specified in Section 5.05 of the Credit Agreement to the parties entitled thereto.
(c) such other documents as the Agent may reasonably request.
Article V
Miscellaneous
Section 5.1 The Company, the Agent, and each Lender party hereto acknowledge that, as amended hereby, the Credit Agreement and the other Loan Documents remain in full force and effect with respect to the Company and the Lenders, and that each reference to the Credit Agreement or the Loan Documents shall refer to the Credit Agreement, amended hereby. The Company confirms and acknowledges that it will continue to comply with the covenants set out in the Credit Agreement and the other Loan Documents, as amended hereby, and that its representations and warranties set out in the Credit Agreement and the other Loan Documents, as amended hereby, are true and correct as of the date of this Amendment. The Company represents and warrants that (i) the execution, delivery and performance of this Amendment (the "Amendment Documents") is within its organizational powers and has been duly authorized by all necessary organizational action; (ii) the Amendment Documents have been duly executed and delivered by the Company and constitute the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with their terms (subject to limitations as to enforceability which might result from bankruptcy, insolvency, or other similar laws affecting
creditors' rights generally and general principles of equity) and (iii) no Events of Default or Defaults exist.
Section 5.2 The Company agrees to reimburse the Agent upon demand for all reasonable expenses (including reasonable attorneys fees and legal expenses) incurred by the Agent in the preparation, negotiation and execution of the Amendment Documents and any other document required to be furnished herewith, and to pay and save the Lenders harmless from all liability for any stamp or other taxes which may be payable with respect to the execution or delivery of the Amendment Documents, which obligations of the Company shall survive any termination of the Credit Agreement.
Section 5.3 This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument.
Section 5.4 Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
Section 5.5 This Amendment shall be governed by, and construed in accordance with, the internal law, and not the law of conflicts, of the State of Minnesota, but giving effect to federal laws applicable to national banks.
Section 5.6 This Amendment shall be binding upon the Company, the Lenders, the Agent and their respective successors and assigns, and shall inure to the benefit of the Company, the Lenders, the Agent and the successors and assigns of the Lenders and the Agent.
[Remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the undersigned have caused this instrument to be executed as of the date first above written.
CH MORTGAGE COMPANY I, LTD.
By: CH Mortgage Company GP, Inc.,
its General Partner
By: /s/ Randall C. Present -------------------------------- Randall C. Present President |
U.S. BANK NATIONAL ASSOCIATION,
as Agent and Lender
By: /s/ Kathleen M. Connor -------------------------------- Kathleen M. Connor Vice President |
[Signature Page to Fifth Amendment to Credit Agreement]
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Michael A. Johnson ---------------------------------- Name: -------------------------------- Title: ------------------------------- |
[Signature Page to Fifth Amendment to Credit Agreement]
JPMORGAN CHASE BANK
By: /s/ Cynthia E. Crites ----------------------------------- Name: --------------------------------- Title: -------------------------------- |
[Signature Page to Fifth Amendment to Credit Agreement]
COMERICA BANK
By: /s/ Robert W. Marr ----------------------------------- Name: --------------------------------- Title: -------------------------------- |
[Signature Page to Fifth Amendment to Credit Agreement]
EXHIBIT A TO SIXTH AMENDMENT
TO CREDIT AGREEMENT
Schedule 5 to
Credit Agreement
COMMITMENT AMOUNTS AND PERCENTAGE SHARES
Before the reduction of U.S. Bank National Association's and JPMorgan Chase Bank's Commitment Amounts to $80,000,000 and $65,000,000, respectively, on November 25, 2002:
Commitment Percentage Amount Share ------ ----- U.S. Bank National Association $135,000,000 45.00% National City Bank of Kentucky $ 25,000,000 8.33% Comerica Bank $ 30,000,000 10.00% JPMorgan Chase Bank $110,000,000 36.67% ------------ -------- Total $300,000,000 100.00% |
On and after the reduction of U.S. Bank National Association's and JPMorgan Chase Bank's Commitment Amounts to $80,000,000 and $65,000,000, respectively, on November 25, 2002, but prior to the reduction of JP Morgan Chase Bank's Commitment Amount to $55,000,000 on December 20, 2002:
Commitment Percentage Amount Share ------ ----- U.S. Bank National Association $ 80,000,000 40.00% National City Bank of Kentucky $ 25,000,000 12.50% Comerica Bank $ 30,000,000 15.00% JPMorgan Chase Bank $ 65,000,000 32.50% ------------ ------ Total $200,000,000 100.00% |
On and after the reduction of JPMorgan Chase Bank's Commitment Amount to $55,000,000 on December 20, 2002:
Commitment Percentage Amount Share ------ ----- U.S. Bank National Association $ 80,000,000 42.10% National City Bank of Kentucky $ 25,000,000 13.16% Comerica Bank $ 30,000,000 15.79% JPMorgan Chase Bank $ 55,000,000 28.95% ------------ ------ Total $190,000,000 100.00% |
EXHIBIT 10.41
LOAN AGREEMENT
By and Among:
and
Dated as of July 9, 2002
Page ---- ARTICLE I GENERAL TERMS............................................................ 2 1.1. Certain Definitions.................................................... 2 1.2. Other Definitional Provisions.......................................... 26 ARTICLE II AMOUNT AND TERMS OF COMMITMENT.......................................... 26 2.1. Maximum Facility Amount................................................ 26 2.2. Promissory Notes....................................................... 27 2.3. Notice and Manner of Obtaining Borrowings.............................. 27 2.4. Fees................................................................... 30 2.5. Prepayments............................................................ 30 2.6. Business Days.......................................................... 30 2.7. Payment Procedures..................................................... 31 2.8. The Reserve Account.................................................... 34 2.9. Interest Allocations................................................... 36 2.10. Interest Rates......................................................... 36 2.11. Quotation of Rates..................................................... 36 2.12. Default Rate........................................................... 36 2.13. Interest Recapture..................................................... 36 2.14. Interest Calculations.................................................. 37 2.15. Interest Period........................................................ 37 2.16. Additional Costs....................................................... 38 2.17. Additional Interest on Advances Bearing a Eurodollar Rate.............. 39 2.18. Consequential Loss..................................................... 40 2.19. Taxes.................................................................. 40 2.20. Replacement Banks...................................................... 42 ARTICLE III COLLATERAL............................................................. 42 3.1. Collateral............................................................. 42 3.2. Delivery of Collateral to Collateral Agent............................. 42 3.3. Redemption of Mortgage Collateral...................................... 44 3.4. Correction of Mortgage Notes........................................... 47 3.5. Collateral Reporting................................................... 47 3.6. Take-Out Commitment Reporting.......................................... 47 3.7. Servicer Monthly Reporting............................................. 48 3.8. Servicer Annual Pipeline Reporting..................................... 48 3.9. Administrative Agent Reporting......................................... 48 ARTICLE IV CONDITIONS PRECEDENT.................................................... 49 4.1. Initial Borrowing...................................................... 49 4.2. All Borrowings......................................................... 51 4.3. All Disbursements of Funds............................................. 52 ARTICLE V REPRESENTATIONS AND WARRANTIES........................................... 52 5.1. Representations of the Borrower and the Servicer....................... 52 |
5.2. Additional Representations of the Borrower............................. 55 5.3. Additional Representations and Warranties of the Servicer.............. 56 5.4. Survival of Representations............................................ 57 ARTICLE VI AFFIRMATIVE COVENANTS................................................... 57 6.1. Financial Statements and Reports....................................... 58 6.2. Taxes and Other Liens.................................................. 60 6.3. Maintenance............................................................ 60 6.4. Further Assurances..................................................... 60 6.5. Compliance with Laws................................................... 60 6.6. Insurance.............................................................. 61 6.7. Accounts and Records................................................... 61 6.8. Right of Inspection.................................................... 61 6.9. Notice of Certain Events............................................... 62 6.10. Performance of Certain Obligations..................................... 62 6.11. Use of Proceeds; Margin Stock.......................................... 62 6.12. Notice of Default...................................................... 63 6.13. Compliance with Transaction Documents.................................. 63 6.14. Compliance with Material Agreements.................................... 63 6.15. Operations and Properties.............................................. 63 6.16. D.R. Horton Credit Rating.............................................. 63 6.17. Take-Out Commitments................................................... 63 6.18. Collateral Proceeds.................................................... 64 6.19. Environmental Compliance............................................... 64 6.20. Closing Instructions................................................... 64 6.21. Special Affirmative Covenants Concerning Collateral.................... 64 6.22. Corporate Separateness................................................. 65 ARTICLE VII NEGATIVE COVENANTS..................................................... 66 7.1. Limitations on Mergers and Acquisitions................................ 66 7.2. Fiscal Year............................................................ 66 7.3. Business............................................................... 66 7.4. Use of Proceeds........................................................ 66 7.5. Actions with Respect to Collateral..................................... 67 7.6. Liens.................................................................. 67 7.7. Employee Benefit Plans................................................. 67 7.8. Change of Principal Office............................................. 68 7.9. No Commercial, A&D, Etc. Loans......................................... 68 7.10. Maximum Leverage....................................................... 68 7.11. Indebtedness........................................................... 68 7.12. Deposits to Collection Account......................................... 68 7.13. Transaction Documents.................................................. 68 7.14. Distributions, Etc..................................................... 69 7.15. Articles of Organization............................................... 69 ARTICLE VIII EVENTS OF DEFAULT..................................................... 69 8.1. Nature of Event........................................................ 69 |
8.2. Default Remedies....................................................... 74 8.3. Paydowns............................................................... 74 8.4. Waivers of Notice, Etc................................................. 75 8.5. Advance Cessation Trigger.............................................. 75 ARTICLE IX THE ADMINISTRATIVE AGENT................................................ 75 9.1. Authorization.......................................................... 75 9.2. Reliance by Agent...................................................... 76 9.3. Agent and Affiliates................................................... 76 9.4. Lender Decision........................................................ 76 9.5. Rights of the Administrative Agent..................................... 77 9.6. Indemnification of Administrative Agent................................ 77 9.7. UCC Filings............................................................ 77 ARTICLE X INDEMNIFICATION.......................................................... 77 10.1. Indemnities by the Borrower............................................ 77 ARTICLE XI ADMINISTRATION AND COLLECTION OF MORTGAGE LOANS......................... 78 11.1. Designation of Servicer................................................ 78 11.2. Duties of Servicer..................................................... 78 11.3. Certain Rights of the Administrative Agent............................. 79 11.4. Rights and Remedies.................................................... 80 11.5. Indemnities by the Servicer............................................ 80 ARTICLE XII MISCELLANEOUS.......................................................... 81 12.1. Notices................................................................ 81 12.2. Amendments, Etc........................................................ 83 12.3. Invalidity............................................................. 84 12.4. Restrictions on Informal Amendments.................................... 84 12.5. Cumulative Rights...................................................... 84 12.6. Construction; Governing Law............................................ 84 12.7. Interest............................................................... 85 12.8. Right of Offset........................................................ 85 12.9. Successors and Assigns................................................. 86 12.10. Survival of Termination................................................ 87 12.11. Exhibits............................................................... 87 12.12. Titles of Articles, Sections and Subsections........................... 88 12.13. Counterparts........................................................... 88 12.14. No Proceedings......................................................... 88 12.15. Confidentiality........................................................ 88 12.16. Recourse Against Directors, Officers, Etc.............................. 89 12.17. Waiver of Jury Trial................................................... 89 12.18. Consent to Jurisdiction; Waiver of Immunities.......................... 89 12.19. Costs, Expenses and Taxes.............................................. 90 12.20. Entire Agreement....................................................... 90 12.21. Excess Funds........................................................... 91 |
SCHEDULES AND EXHIBITS
Schedule I Bank Commitments and Percentages - (S)3.2(b) Schedule II Approved Investors - (S)3.2(b) Schedule III UCC Search- (S)3.2(b) Schedule IV Litigation - (S)5.1(g)(i) Exhibit A Form of Assignment and Acceptance - (S)1.1 Exhibit B Form of Subordination Agreement - (S)4.1(f) Exhibit C Form of Borrowing Report - (S)2.3(a)(i) Exhibit D Collateral Agency Agreement - (S)1.1 Exhibit D-1 Definitions - (S)1 Exhibit D-2 Security Agreement - (S)3.1(a) Exhibit D-3 Assignment of Account - (S)3.1(b) Exhibit D-4 Assignment - (S)3.1(c) and (S)3.2(a) Exhibit D-5 Form of Transfer Request - (S) 3.3(a) Exhibit D-5A Form of Shipping Request -(S)3.3(b) Exhibit D-6(a) Bailee and Security Agreement Letter -(S) 3.4(b)(i) Exhibit D-6(b) Bailee and Security Agreement Letter for Pool Custodian (S) 3.4(b)(i) Exhibit D-7 Trust Receipt and Security Agreement for Approved Investors - (S)3.5 Exhibit D-8 Collateral Agent Daily Report -(S)3.5 Exhibit D-9 Borrowing Report Exhibit D-10 UCC Financing Statements - (S)3.1(d) Exhibit D-11 Substitution Request Exhibit D-12 Assignment of Trade Exhibit E Form of Promissory Note - (S) 2.2 Exhibit F Form of Servicer Monthly Report - (S) 3.7 Exhibit G-1 [Reserved] iv |
Exhibit G-2 [Reserved] Exhibit H-1 CH Mortgage Quarterly Officer's Certificate - (S) 6.1(e) Exhibit H-2 Borrower's Quarterly Officer's Certificate - (S) 6.1(e) Exhibit I-1 Form of Opinion of Counsel to Borrower, Originator and D.R. Horton on Corporate Matters - (S) 4.1(i) Exhibit I-2 Form of Opinion of Counsel to Borrower and Originator on Security Interest Matters - (S) 4.1(i) Exhibit J Form of Opinion of Counsel to Originator on Bankruptcy Matters - (S) 4.1(j) Exhibit K Form of Hedge Report - (S) 3.6 Exhibit L [Reserved] Exhibit M Form of Administrative Agent Report - (S) 3.9 |
LOAN AGREEMENT
Dated as of July 9, 2002
THIS LOAN AGREEMENT, among CH FUNDING, LLC, a Delaware limited liability company (hereinafter, together with its successors and assigns, the "Borrower"), ATLANTIC ASSET SECURITIZATION CORP., a Delaware corporation (hereinafter, together with its successors and assigns, "Atlantic"), CREDIT LYONNAIS NEW YORK BRANCH ("CL New York"), as a Bank and the Administrative Agent, and CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (hereinafter, together with its successors and assigns, "CH Mortgage"), as Servicer.
RECITALS
1. Capitalized terms used in these Recitals and not defined in the preamble above have the meanings set forth in Article I.
2. The Originator is engaged in the business of originating, acquiring, investing in, marketing and selling, for its own account, mortgage loans that are made either to finance the purchase of one- to four-family owner-occupied homes or to refinance loans secured by such properties.
3. The Borrower has purchased, and may continue to purchase, Eligible Mortgage Loans from the Originator, as determined from time to time by the Borrower and the Originator.
4. In order to finance such purchases, the Borrower has requested that the Lenders provide the Borrower with credit in the form of revolving loans on the terms and conditions set forth herein.
5. The Issuer may, in its sole discretion, and the Banks shall, in each case subject to the terms and conditions contained in this Agreement, make Advances to the Borrower secured by a lien on, and security interest in, the Mortgage Loans and certain other Collateral.
6. The Lenders have appointed the Administrative Agent as their agent to perform certain administrative duties for the Lenders including, among other things, the administration of the funding of the transactions hereunder and the making of certain determinations hereunder and in connection herewith.
AGREEMENTS
In consideration of the recitals and the representations, warranties, conditions, covenants and agreements made in this Agreement, the sufficiency of which are acknowledged by all parties hereto, the Borrower, the Lenders and the Administrative Agent, intending to be legally bound, hereby establish a warehouse line of credit in the amount of the Maximum Facility Amount. Accordingly, the Borrower, the Lenders, the Administrative Agent and the Servicer covenant and agree as follows:
ARTICLE I
GENERAL TERMS
1.1. Certain Definitions.
As used in this Agreement, the following terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
"ABR Allocation" means all or any portion of Principal Debt if interest thereon is calculated by reference to the Eurodollar Rate or the Alternate Base Rate.
"Adjusted Liabilities" means, with respect to the Originator, without
duplication, and at any time, the sum of (a) all amounts that should be
reflected as liabilities on its balance sheet, plus (b) its total direct and
indirect guaranty and other obligations in respect of borrowed money
Indebtedness of others (calculated at the maximum amount of those obligations
that is stated in the relevant documents or, if not so stated, that may
reasonably be anticipated in good faith) plus (c) to the extent not already
included in clause (a) above, its total funding obligations to originate or
acquire Mortgage Loans that, in either case, are closed but not funded, minus
(d) its total trade payables and accrued expenses incurred in the ordinary
course of its business but unrelated to originating or acquiring any specific
Mortgage Loan (including, without limitation, trade payables and accrued
expenses owed to its Affiliates but excluding advances by its Affiliates and
interest on those advances), minus (e) the Originator's total
deferred-federal-income tax liabilities.
"Adjusted Net Worth" means, for the Originator, without duplication, and at any time, the sum of (a) its stockholders' equity reflected on its balance sheet, plus (b) the remainder of (A) the income that Originator has deferred, for accounting purposes, pending the sale of Mortgage Loans in accordance with Statement of Financial Accounting Standards Number 91 and Number 122, as each is published by the Financial Accounting Standards Board as of the date of this Agreement, minus (B) reasonable reserves for the federal income tax liabilities related to that deferred income.
"Administrative Agent" means CL New York, in its capacity as administrative agent for the Lenders, or any successor administrative agent.
"Administrative Agent Report" is defined in Section 3.9.
"Administrative Agent Fee Letter" is defined in Section 2.4(a).
"Advance" means any amount disbursed by the Lenders to the Borrower, whether such amount constitutes an original disbursement of funds to the Borrower under this Agreement or a continuation of an amount outstanding.
"Advance Cessation Trigger" means (a) when, based on D.R. Horton's most recent annual or quarterly report on Form 10-K or Form 10-Q or, if applicable, Form 8-K, filed with the Securities and Exchange Commission, D.R. Horton (i) has a Leverage Ratio greater than
2.10:1, (ii) has a Consolidated Net Worth less than $1,250,000,000 or (iii) has an EBITDA/Fixed Charge Ratio less than 2. 65:1 or (b) when D.R. Horton ceases to have the Required Ratings.
"Advance Rate" means (i) with respect to a Conforming Loan or a Jumbo Loan, ninety-eight percent (98%) and (ii) with respect to a Subprime Loan or an Alt-A Loan, ninety-seven percent (97%).
"Affected Party" means each Lender, the Administrative Agent, each bank party to the Liquidity Agreement and any permitted assignee or participant of any such bank, and any holding company of an Affected Party.
"Affiliate" of any Person means (a) any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person, or (b) any other Person who is a director, officer or employee (i) of such Person, or (ii) of any Person described in the preceding clause (a). For purposes of this definition, the term "control" (and the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession or ownership, directly or indirectly, of the power either (x) to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise, or (y) vote 10% or more of the securities having ordinary power in the election of directors of such Person.
"Agent's Account" means, the special account (account number 01-25680-0001 ABA No. 026008073) of CL New York maintained at the office of Credit Lyonnais New York Branch at 1301 Avenue of the Americas, New York, New York.
"Agreement" or the "Loan Agreement" means this Loan Agreement, as amended, modified or supplemented from time to time.
"Alt-A Loan" means a Mortgage Loan (other than a Conforming Loan or a Jumbo Loan) that (1) does not conform to the conventional underwriting standards of Fannie Mae, Freddie Mac or Ginnie Mae but that is underwritten by an Approved Investor (other than Fannie Mae, Freddie Mac or Ginnie Mae), within guidelines generally acceptable to industry norms for "Alt-A" loans, (2) has a demonstrated secondary market and are readily securitizable, and (3) matches all applicable requirements for purchase under the requirements of a Take-Out Commitment specifically issued for the purchase of such Mortgage Loan.
"Alternate Base Rate" means, on any date, a fluctuating rate of interest per annum equal to the higher of:
(a) the rate of interest most recently announced by CL New York as its base rate; or
(b) the Federal Funds Rate (as defined below) most recently determined by the Administrative Agent plus 1.0% per annum.
For purposes of this definition, "Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal (for each day during such period) to
(i) the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers, as
published 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
(ii) if such
rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. The Alternate Base Rate is not necessarily intended to be the lowest rate of interest determined by CL New York in connection with extensions of credit.
"Approved Investor" means:
(a) Fannie Mae, Freddie Mac or Ginnie Mae, or
(b) any Person with short-term ratings of at least A-1, P-1 and F1 from S&P, Moody's and Fitch, respectively, or long-term unsecured debt ratings (or in the case of a bank without such ratings that is the principal subsidiary of a bank holding company, the rating of the bank holding company) of at least AA, Aa2 and AA from S&P, Moody's and Fitch, respectively, or
(c) all other Persons as may be approved by the Administrative Agent, which approvals may be subject to certain concentration limits;
provided that (i) except for an Approved Investor defined above in section (c), if an Approved Investor has a short-term rating or a long-term unsecured debt rating at the time such Person becomes an "Approved Investor" and such Person's short-term ratings or long-term unsecured debt ratings are subsequently downgraded or withdrawn, such Person shall cease to be an "Approved Investor"; provided, further, that with respect to any Take-Out Commitments issued by such Person prior to the date of such downgrade or withdrawal, such Person shall cease to be an "Approved Investor" 60 days following such downgrade or withdrawal; and (ii) if an Approved Investor does not have a short-term rating or a long-term unsecured debt rating, such Person shall cease to be an "Approved Investor" upon prior written notice from the Administrative Agent if the Administrative Agent has good faith concerns about the future performance of such Person; provided, further, that with respect to any Take-Out Commitments issued by such Person prior to such notice, such Person shall cease to be an "Approved Investor" 60 days following such notice; provided, further, that the Collateral Agent may assume that the Approved Investors are listed on the Schedule II hereto most recently distributed to the Collateral Agent by the Administrative Agent.
As of the date of this Agreement, Schedule II hereto sets forth the Approved Investors pursuant to the preceding clause (c) (and any applicable concentration limits). Schedule II shall be updated from time to time as Approved Investors are added or deleted or concentration limits are changed pursuant to the preceding clauses (b) and (c); provided, further, that the Collateral Agent may assume that the Approved Investors are listed on the Schedule II hereto most recently distributed to the Collateral Agent by the Administrative Agent.
"Articles of Organization" means the Borrower's articles of organization, as amended through the date of this Agreement.
"Assignment" is defined in the Collateral Agency Agreement.
"Assignment and Acceptance" means an assignment and acceptance agreement entered into by a Bank, an Eligible Assignee and the Administrative Agent, pursuant to which such
Eligible Assignee may become a party to this Agreement, in substantially the form of Exhibit A hereto.
"Assignment of Account" is defined in the Collateral Agency Agreement.
"Atlantic" has the meaning set forth in the preamble to this Agreement.
"Atlantic Program Agent" means CL New York, in its capacity as the collateral agent pursuant to a security agreement made by Atlantic for the benefit of certain creditors of Atlantic, and any successor to CL New York in such capacity.
"Availability" means, at the time determined, the Maximum Facility Amount minus the Principal Debt.
"Available Collateral Value" means, at the time determined, the excess of the Collateral Value of all Eligible Collateral over the Primary Obligations.
"Bailee and Security Agreement Letter" is defined in Section 3.4(b)(i) of the Collateral Agency Agreement.
"Bank" means CL New York and each Eligible Assignee that shall become a party to this Agreement pursuant to an Assignment and Acceptance.
"Bank Commitment" means, for any Bank, (a) with respect to CL New York, the amount set forth on Schedule I hereto, and (b) with respect to a Bank that has entered into an Assignment and Acceptance, the amount set forth therein as such Bank's Bank Commitment, in each case as such amount may be reduced by each Assignment and Acceptance entered into between such Bank and an Eligible Assignee, and as may be further reduced (or terminated) pursuant to the next sentence. Any reduction (or termination) of the Maximum Facility Amount pursuant to the terms of this Agreement shall (unless otherwise agreed by all the Banks) reduce ratably (or terminate) each Bank's Bank Commitment. At no time shall the aggregate Bank Commitments of all Banks exceed the Maximum Facility Amount.
"Bank Commitment Percentage" means, for any Bank as of any date, the amount obtained by dividing such Bank's Bank Commitment on such date by the aggregate Bank Commitments of all Banks on such date. As of the date of this Agreement, the Bank Commitment Percentage for each Bank is as set forth on Schedule I hereto.
"Bank Spread" means 1.00%.
"Base Rate Advance" means an Advance that bears interest at a rate per annum determined on the basis of the Alternate Base Rate.
"Borrower" has the meaning specified in the preamble of this Agreement.
"Borrowing" means Advances by the Lenders under this Agreement.
"Borrowing Date" means the date, identified by the Borrower in the relevant Borrowing , as the date on which a Borrowing is to be made.
"Borrowing Report" means a request, in the form of Exhibit C to this Agreement, for a Borrowing pursuant to Article II.
"Business Day" means (a) a day on which (i) commercial banks in New York City, New York, are not authorized or required to be closed and (ii) commercial banks in the State in which the Collateral Agent has its principal office are not authorized or required to be closed, and (b) if this definition of "Business Day" is utilized in connection with a Eurodollar Advance, a day on which dealings in United States dollars are carried out in the London interbank market.
"CH Funding, LLC" has the meaning set forth in the preamble to this Agreement.
"CH Mortgage Company I, Ltd.," has the meaning set forth in the preamble to this Agreement.
"CL New York" has the meaning set forth in the preamble of this Agreement and its successors and assigns.
"Closing Protection Rights" means any rights of the Originator or the Borrower to or under (i) a letter issued by a title insurance company to the Originator assuming liability for certain acts or failure to act on behalf of a named closing escrow agent, approved attorney or similar Person in connection with the closing of a Mortgage Loan transaction, (ii) a bond, insurance or trust fund established to protect a mortgage lender against a loss or damage resulting from certain acts or failure to act of a closing escrow agent, approved attorney, title insurance company or similar Person, or (iii) any other right or claim that the Originator or the Borrower may have against any Person for any loss or damage resulting from such Person's acts or failure to act in connection with the closing of a Mortgage Loan and the delivery of the related Mortgage Loan Collateral to the Collateral Agent, the Originator or to the Borrower.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Collateral" means Property that is subject to a Lien for the benefit of the holders of the Obligations.
"Collateral Agency Agreement" means the Collateral Agency Agreement, dated as of the date hereof, among the Borrower, the Collateral Agent and the Administrative Agent, substantially in the form of Exhibit D hereto, as amended, supplemented, restated or otherwise modified from time to time.
"Collateral Agent" means U.S. Bank National Association, and its successors and assigns.
"Collateral Agent Daily Report" is defined in Section 3.8(a) of the Collateral Agency Agreement.
"Collateral Deficiency" means, at any time, the amount by which the related Primary Obligations exceed the lesser of either (a) the Collateral Value of all Eligible Mortgage Collateral or (b) if the Collateral Agent holds no Eligible Mortgage Collateral, zero.
"Collateral Proceeds" means all amounts received by the Borrower, the Servicer, the Administrative Agent, the Lenders, the Collateral Agent or any other Person, in respect of the Collateral, whether in respect of principal, interest, fees or other amounts, including, without limitation, (i) all amounts received pursuant to Take-Out Commitments, and (ii) with respect to any Mortgage Loan, all funds that are received from or on behalf of the related Obligors in payment of any amounts owed (including, without limitation, purchase prices, finance charges, interest and all other charges) in respect of such Mortgage Loan, or applied to such amounts owed by such Obligors (including, without limitation, insurance payments that Borrower or Servicer applies in the ordinary course of its business to amounts owed in respect of such Mortgage Loan and net proceeds of sale or other disposition of Property of the Obligor or any other party directly or indirectly liable for payment of such Mortgage Loan and available to be applied thereon).
"Collateral Value" means
(A) with respect to each Eligible Mortgage Loan and at all times, an amount equal to the Advance Rate for such Mortgage Loan times the least of:
(1) the original principal amount of such Eligible Mortgage Loan;
(2) with respect to which there is a loan level Take-Out Commitment, the price of that Take-Out Commitment;
(3) with respect to which there is no loan level Take-Out Commitment, a ratable amount determined by multiplying (a) the weighted average purchase price (expressed as a percentage of par) that Approved Investors are obligated to pay, pursuant to Take-Out Commitments, for all Eligible Mortgage Loans, as shown on the most recent Collateral Agent Daily Report, times (b) the outstanding principal amount of such Eligible Mortgage Loan; and
(4) while a Default or Event of Default is continuing, the Market Value of such Eligible Mortgage Loan; and
(B) with respect to the Collection Account, the balance of collected funds therein that is not subject to any Lien in favor of any Person other than the Lien in favor of the Administrative Agent for the benefit of the holders of the Obligations;
provided, however, that
(a) at any time, the portion of total Collateral Value that may be attributable to Jumbo Loans shall not exceed twenty percent (20%) of the Maximum Facility Amount;
(b) at any time, the portion of total Collateral Value that may be attributable to Super Jumbo Loans shall not exceed ten percent (10%) of the Maximum Facility Amount;
(c) at any time, the portion of total Collateral Value that may be attributable to Alt-A Loans shall not exceed fifteen percent (15%) of the Maximum Facility Amount;
(d) at any time, the portion of total Collateral Value that may be attributable to Subprime Loans shall not exceed five (5%) of the Maximum Facility Amount; provided, that (i) no more than 10% (by Collateral Value) of the Subprime Loans shall have Borrowers with Mortgagor Credit Ratings of C or lower, (ii) at least 70% (by Collateral Value) of the Subprime Loans shall have Borrowers with Mortgagor Credit Ratings of A- and (iii) 100% of the Subprime Loans shall have a weighted average Loan-to-Value Ratio of no more than 80%;
(e) at any time, the portion of total Collateral Value that may be attributable to Mortgage Loans for which the Mortgage Notes have been withdrawn for correction pursuant to Section 3.4 shall not exceed $5,000,000 as determined in accordance with said Section 3.4;
(f) at any time, the portion of the total Collateral Value that may be attributable to any single Approved Investor listed on Schedule II pursuant to one or more Take-Out Commitments shall not exceed the concentration limit for such Approved Investor as set forth on Schedule II;
(g) at any time, the portion of total Collateral Value that may be attributable to Mortgage Loans that have been Eligible Mortgage Loans owned by the Borrower (A) for more than 120 days shall not exceed ten percent (10%) of the Maximum Facility Amount or (B) for more than 180 days shall be zero;
(h) a Mortgage Loan that ceases to be an Eligible Mortgage Loan shall have a Collateral Value of zero;
(i) at any time, (A) except the first five and last five Business Days of any month, the portion of total Collateral Value that may be attributable to Special Mortgage Loans with respect to which the related Principal Mortgage Documents have not been delivered to the Collateral Agent within nine (9) Business Days after the date the Assignment was delivered to the Collateral Agent shall not exceed thirty percent (30%) of the Maximum Facility Amount, and (B) during the first five and last five Business Days of any month, the portion of total Collateral Value that may be attributable to Special Mortgage Loans with respect to which the related Principal Mortgage Documents have not been delivered to the Collateral Agent within nine (9) Business Days after the date the Assignment was delivered to the Collateral Agent shall not exceed fifty percent (50%) of the Maximum Facility Amount;
(j) at any time, a Mortgage Loan with respect to which to the related obligor is 90 days or more in payment default, shall have a Collateral Value of zero.
"Collection Account" means the account established by the Borrower with the Collateral Agent or another Eligible Institution acceptable to the Administrative Agent pursuant to Section 2.7(b) of the Loan Agreement and designated therein as the "Collection Account."
"Collection Period" means, initially, the period commencing on the Effective Date and ending on July 30, 2002, and thereafter, each calendar month, beginning on the first day of each month and including the last day of the month.
"Collections" means, with respect to any Mortgage Asset, all cash collections (other than in respect of escrows for taxes and insurance premiums payable under the related Mortgage Loan) and other cash proceeds of such Mortgage Asset.
"Commercial Paper Notes" means short-term promissory notes issued or to be issued by the Issuer to fund or maintain its Advances or investments in other financial assets.
"Commercial Paper Rate" for any Interest Period for the related Advance
means: (a) a rate per annum equal to the sum of (i) the rate or, if more than
one rate, the weighted average of the rates, determined by converting to an
interest-bearing equivalent rate per annum the discount rate (or rates) at which
Commercial Paper Notes having a term equal to such Interest Period and to be
issued to fund or to maintain such Advance by Atlantic (including, without
limitation, Principal Debt and accrued and unpaid interest), may be sold by any
placement agent or commercial paper dealer selected by the Administrative Agent,
as agreed between each such agent or dealer and the Administrative Agent, plus
(ii) the commissions and charges charged by such placement agent or commercial
paper dealer with respect to such Commercial Paper Notes expressed as a
percentage of such face amount and converted to an interest-bearing equivalent
rate per annum, provided the commissions and charges by the agent or dealer must
in the Administrative Agent's good faith judgment be within market range; plus
(iii) the Conduit Spread; or (b) such other rate as Atlantic and the Borrower
shall agree to in writing.
"Conduit Spread" means the margin set forth in the Administrative Agent Fee Letter.
"Conforming Loan" means (i) a Mortgage Loan that complies with all applicable requirements for purchase under a Fannie Mae, Freddie Mac or similar Governmental Authority standard form of conventional mortgage loan purchase contract, then in effect, or (ii) an FHA Loan or a VA Loan.
"Consequential Loss" means any loss (measured by the diminution in yield to the Affected Party as a result of a prepayment) and/or expense (such as any transaction costs incurred in connection with the reinvestment of a prepayment or any cost associated with the issuance of commercial paper in anticipation of a Borrowing Reported but not accepted by the Borrower) that any Affected Party may reasonably incur in respect of a Borrowing as a consequence of (a) any failure or refusal of Borrower (for any reasons whatsoever other than a default by the Administrative Agent, any Lender or any Affected Party) to take such Borrowing after Borrower shall have requested it under this Agreement, (b) any prepayment or payment of such Borrowing that is a Eurodollar Advance or an Advance bearing interest by reference to the Commercial Paper Rate on a day other than the last day of the Interest Period applicable to such Borrowing, (c) any prepayment of any Borrowing that is not made in compliance with the provisions of Section 2.5(a); provided, that so long as an Event of Default shall not have occurred, the Borrower shall not be responsible for any Consequential Loss resulting from changes in the Settlement Date made by the Administrative Agent, as described in the proviso contained in the definition of "Settlement Date," or (d) Borrower's failure to make a prepayment after giving notice under Section 2.5(a) that a prepayment will be made.
"Consolidated Net Worth" means the aggregate assets of D.R. Horton and its Subsidiaries less the aggregate liabilities of D.R. Horton and its Subsidiaries as reported on D.R. Horton's
most recent annual or quarterly report on Form 10-K or Form 10-Q filed with the Securities and Exchange Commission.
"CP Allocation" means all or any portion of Principal Debt if interest thereon is calculated by reference to the Commercial Paper Rate.
"CP Borrowing" means a Borrowing bearing interest by reference to the Commercial Paper Rate.
"Debtor Laws" means all applicable liquidation, conservatorship, bankruptcy, fraudulent transfer or conveyance, moratorium, arrangement, receivership, insolvency, reorganization or similar laws from time to time in effect affecting the rights of creditors generally.
"Default" means any condition or event that, with the giving of notice or lapse of time or both and unless cured or waived, would constitute an Event of Default.
"Default Rate" means a per annum rate of interest equal from day to day to the lesser of (a) the sum of the Alternate Base Rate plus two percent and (b) the Maximum Rate.
"Default Ratio" means as of the end of any Collection Period, the ratio of (i) the principal amount of all Mortgage Loans that were Defaulted Mortgage Loans at such time, to (ii) the aggregate principal amount of all Mortgage Loans at such time.
"Defaulted Mortgage Loan" means a Mortgage Asset under which the Obligor is 30 or more days in payment default or has taken any action, or suffered any event of the type described in Section 8.1(f), (g) or (h) or is in foreclosure.
"Deferred Income" means the amount of income that the Originator or Borrower has deferred, for accounting purposes, pending the sale of Mortgage Loans, in accordance with Statement of Financial Accounting Standards Number 91 ("SFAS 91") and Statement of Financial Accounting Standards Number 122 ("SFAS 122"), each as currently published by the Financial Accounting Standards Board.
"D.R. Horton" means D.R. Horton, Inc., a Delaware corporation, and its successors and assigns.
"Drawdown Termination Date" means the earliest to occur of (a) July 4,
2003, unless such date shall be extended pursuant to Section 2.1(b) then the
date specified in such Extension Request, (b) the date on which the Maximum
Facility Amount is terminated by the Borrower pursuant to Section 2.1(d), and
(c) the date, on or after the occurrence of an Event of Default, determined
pursuant to Section 8.1.
"EBITDA" means, for D.R. Horton and its Restricted Subsidiaries for the twelve (12) months period ending on any date of determination, an amount equal to (a) consolidated net income for such period, plus (b) cash dividends from Unrestricted Subsidiaries paid to D.R. Horton during such period, minus (c) gains from extraordinary items for such period, to the extend included in the calculation of consolidated net income for such period in accordance with GAAP, but without duplication, plus (d) the sum of (i) any provision for income taxes for such
period, (ii) Interest Expense deducted in the calculation of consolidated net income for such period in accordance with GAAP (including, without duplication, previously capitalized Interest Expense which would be included in "costs of goods sold" and deducted from consolidated revenues in determining consolidated net income), (iii) the amount of depreciation and amortization for such period and (iv) the amount of any item of extraordinary loss not paid in cash in such period, in each case to the extent included in the calculation of consolidated net income for such period in accordance with GAAP, but without duplication. In the case of any Subsidiary of D.R. Horton that becomes a Restricted Subsidiary during any period of calculation, EBITDA shall, for the purposes of the foregoing calculations, be adjusted by increasing, if positive, or decreasing, if negative, EBITDA by the EBITDA of such Subsidiary during such period of calculation occurring prior to the date such Subsidiary became a Restricted Subsidiary.
"EBITDA/Fixed Charge Ratio" means, with respect to D.R. Horton, the ratio of (i) EBITDA and (ii) Fixed Charges.
"Effective Date" means July 9, 2002.
"Eligible Assignee" means (i) CL New York or any of its Affiliates,
(ii) any Person managed by CL New York or any of its Affiliates, or (iii) any
financial or other institution that is acceptable to the Administrative Agent.
"Eligible Institution" means any depository institution, organized under the laws of the United States or any state, having capital and surplus in excess of $200,000,000, the deposits of which are insured to the full extent permitted by law by the Federal Deposit Insurance Corporation and that is subject to supervision and examination by federal or state banking authorities; provided that such institution also must have a rating of A or higher with respect to long-term deposit obligations from Moody's, A2 or higher with respect to long-term deposit obligations from S&P and AA or higher with respect to long-term deposit obligations from Fitch. If such depository institution publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
"Eligible Mortgage Collateral" means Eligible Mortgage Loans and the Collection Account.
"Eligible Mortgage Loan" means a Mortgage Loan:
(a) that (i) is a closed and funded Mortgage Loan, (ii) has a maximum term to maturity of 30 years and the proceeds of which were used either to finance a portion of the purchase price of a Property encumbered by the related Mortgage or to refinance a loan secured by such Property, and (iii) is secured by a perfected first-priority Lien on residential real Property consisting of land and a one-to-four family dwelling thereon which is completed and ready for owner occupancy, including townhouses and condominiums;
(b) that is a Conforming Loan, a Jumbo Loan, a Subprime Loan or an Alt-A Loan;
(c) in which the Administrative Agent has been granted and continues to hold a perfected (other than actual delivery of the Mortgage Note to the Collateral Agent for Special Borrowings), first-priority, security interest for the benefit of the holders of the Obligations;
(d) for which the Mortgage Note is payable to or endorsed (without recourse) in blank and each of such Mortgage Loan and the related Mortgage Note is a legal, valid and binding obligation of the Obligor thereof;
(e) for which, other than in respect of Special Mortgage Loans, the Principal Mortgage Documents have been received by the Collateral Agent and are in form and substance acceptable to the Collateral Agent;
(f) that is either (i) eligible (in the case of Conforming Loans), or
(ii) designated (in the case of Non-Conforming Loans), for delivery under a
Take-Out Commitment from an Approved Investor; provided that no more than 45
days have lapsed since the date on which any documentation was shipped to the
related Approved Investor;
(g) that, upon pledge thereof under this Agreement and application of any related Advance to pay off any prior lienholder as required by the Collateral Agency Agreement and hereunder, together with the related Mortgage Loan Collateral, is owned beneficially by Borrower free and clear of any Lien of any other Person other than the Administrative Agent for the benefit of the holders of the Obligations;
(h) that, together with the related Mortgage Loan Collateral, does not contravene any Governmental Requirements applicable thereto (including, without limitation, the Real Estate Settlement Procedures Act of 1974, as amended, and all laws, rules and regulations relating to usury, truth-in-lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices, privacy and other applicable federal and state consumer protection laws) and with respect to which no party to the related Mortgage Loan Collateral is in violation of any Governmental Requirements (or procedure prescribed thereby) if such violation would impair the collectability of such Mortgage Loan or the saleability of such Mortgage Loan under the applicable Take-Out Commitment;
(i) that, (i) is not an Uncovered Mortgage Loan; (ii) is not a
Defaulted Mortgage Loan at the time it is transferred to the Borrower pursuant
to the Repurchase Agreement; (iii) has not previously been sold to an Approved
Investor and repurchased by Borrower; (iv) is not a Mortgage Loan with respect
to which the Principal Mortgage Documents relating to such Mortgage Loan were
not delivered to the Collateral Agent within the time periods provided in
Section 2.3(c); provided, however, that upon delivery of such Principal Mortgage
Documents to the Collateral Agent, such Mortgage Loans may subsequently qualify
as Eligible Mortgage Loans to support Borrowings subsequent to such delivery;
(v) has not been rejected by the Collateral Agent under Section 3.2(c) of the
Collateral Agency Agreement; or (vi) has an original principal balance not in
excess of $1,000,000.00;
(j) that if the Mortgage Loan Collateral has been withdrawn for correction pursuant to Section 3.4 such Mortgage Loan Collateral has been returned to the Collateral Agent within 14 calendar days after withdrawal as required by Section 3.4;
(k) that is denominated and payable in U.S. dollars in the United States and the Obligor of which is a natural person who is a U.S. citizen or resident alien or a corporation or other legal entity organized under the laws of the United States or any State thereof or the District of Columbia;
(l) that is not subject to any right of rescission, setoff, counterclaim or other dispute whatsoever;
(m) that was acquired by the Borrower from the Originator within 60 days after its Mortgage Origination Date;
(n) that is covered by the types and amounts of insurance required by
Section 6.6(b);
(o) that is not underwritten on a "no-income - no asset" verification basis or in a manner such that the Obligor credit information contained in the related Mortgage Loan application was not corroborated by credit underwriting standards generally acceptable within the mortgage underwriting business;
(p) with respect to which all representations and warranties made by the related Originator in the Repurchase Agreement are true and correct in all material respects and with respect to which all loan level covenants made in the Repurchase Agreement have been complied with;
(q) that is subjected to the following "Quality Control" measures by personnel of the Originator before the Mortgage Note is funded by the Originator:
(i) for those Mortgage Loans not originated by the Originator, is underwritten by the Originator prior to funding thereof and after performance of all underwriting procedures, is submitted to the Originator for closing where it is reviewed for thoroughness and compliance (including truth-in-lending, good faith estimates and other disclosures) and a verbal verification of employment and in-file credit report are obtained; and
(ii) with respect to which, all Mortgage Loan Collateral is prepared by the Originator and submitted to the closing agent at the time of funding the related Mortgage Loans.
For the purpose of this definition:
(x) A Conforming Loan is "eligible for delivery" under a Take-Out Commitment if (i) the underwriting criteria utilized and the Mortgage Loan Collateral either match, or are in respect of interest rates (which rates must bear a reasonable relationship to prevailing current market rates of interest for loans with similar maturities), term, product type and delivery period representative of the terms for purchase that are specified in a Take-Out Commitment, and (ii) the aggregate outstanding principal of all Conforming Loans is not more than the aggregate Take-Out Commitments' unutilized amount (i.e. taking in account all Conforming Loans already allocated to the aggregate Take-Out Commitments for purposes of determining Eligible Mortgage Loans whether or not already delivered by the Borrower to the Collateral Agent).
(y) A Non-Conforming Loan is "designated for delivery" under a Take-Out Commitment if the underwriting criteria utilized in approving such Mortgage Loan conform to the underwriting criteria, and the terms of repayment (including interest rate and "term to maturity") and other terms and conditions of the Mortgage Loan Collateral match the specifications of that specific Take-Out Commitment that designates that particular Non-Conforming Loan for purchase.
"Employee Plan" means an employee pension benefit plan covered by Title IV of ERISA and established or maintained by the Originator or any ERISA Affiliate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.
"ERISA Affiliate" means any corporation, trade or business that is,
along with D.R. Horton, treated as a single employer under Section 414(b), (c),
(m) or (o) of the Code, or Section 4001 of ERISA.
"Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Federal Reserve Board, as in effect from time to time.
"Eurodollar Advance" means an Advance that bears interest at a rate per annum determined on the basis of the Eurodollar Rate.
"Eurodollar Rate" means, for any Interest Period for any Eurodollar Advance, for each Lender, an interest rate per annum (expressed as a decimal and rounded upwards, if necessary, to the nearest one hundredth of a percentage point) equal to the offered rate per annum for deposits in U.S. Dollars in a principal amount of not less than $10,000,000 for such Interest Period as of 11:00 A.M., London time, two Business Days before (and for value on) the first day of such Interest Period, that appears on the display designated as "Page 3750" on the Telerate Service (or such other page as may replace "Page 3750" on that service for the purpose of displaying London interbank offered rates of major banks); provided, that if such rate is not available on any date when the Eurodollar Rate is to be determined, then an interest rate per annum determined by the Administrative Agent equal to the rate at which it would offer deposits in United States dollars to prime banks in the London interbank market for a period equal to such Interest Period and in a principal amount of not less than $10,000,000 at or about 11:00 A.M. (London time) on the second Business Day before (and for value on) the first day of such Interest Period.
"Eurodollar Reserve Percentage" means, with respect to any Bank and for any Interest Period for such Bank's Eurodollar Advance, the reserve percentage applicable during such Interest Period (or, if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Federal Reserve Board (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for such Bank with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period.
"Event of Default" is defined in Section 8.1.
"Excess Spread" means, as of the last day of each Collection Period, a percentage equal to the Portfolio Yield for such Collection Period minus the Eurodollar Rate minus the Conduit Spread or Bank Spread, as applicable, minus the Servicing Fee for a period equal to such Collection Period.
"Fannie Mae" means the government sponsored enterprise formerly known as the Federal National Mortgage Association, or any successor thereto.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve System, or any successor thereto.
"FHA" means the Federal Housing Administration, or any successor thereto.
"FHA Loan" means a Mortgage Loan, the ultimate payment of which is partially or completely insured by the FHA or with respect to which there is a current, binding and enforceable commitment for such insurance issued by the FHA.
"Financial Officer" means (i) with respect to the Servicer or the
Originator, the chief financial officer, treasurer or a vice president having
the knowledge and authority necessary to prepare and deliver the financial
statements and reports required pursuant to Sections 6.1(b) and Section 3.8 and
(ii) with respect to D.R. Horton, the chief financial officer, the vice
president -assistant comptroller, vice president - assistant treasurer or senior
vice president-comptroller.
"Fitch" means Fitch, Inc., and any successor thereto.
"Fixed Charges" means the aggregate consolidated Interest Incurred by D.R. Horton and its Restricted Subsidiaries plus scheduled amortization plus preferred dividends for the most recently completed four (4) fiscal quarters for which results have been reported to certain lenders.
"Freddie Mac" means the Federal Home Loan Mortgage Corporation, or any successor thereto.
"GAAP" means generally accepted accounting principles as in effect in the United States from time to time.
"Ginnie Mae" means the Government National Mortgage Association, or any successor thereto.
"Governmental Authority" means any nation or government, any agency, department, state or other political subdivision thereof, or any instrumentality thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Governmental Authority shall include, without limitation, each of Freddie Mac, Fannie Mae, FHA, HUD, VA and Ginnie Mae.
"Governmental Requirement" means any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other requirement (including, without limitation, any of the foregoing that relate to energy regulations and occupational, safety and health standards or controls and any hazardous materials laws) of any Governmental Authority that has jurisdiction over either Originator, the Servicer, the Collateral Agent or the Borrower or any of their respective Properties.
"Hedge Report" means, with respect to any Conforming Loans included in
the Eligible Mortgage Collateral with respect to which there is no loan-specific
Take-Out Commitment, a report prepared by the Servicer prepared pursuant to
Section 3.6 hereof, showing, as of the close of business on the previous
Business Day, all trades that have been assigned to the Administrative Agent,
and certain information with respect to such trades including information as the
Administrative Agent may request, in the form of Exhibit K hereto.
"HUD" means the Department of Housing and Urban Development, or any successor thereto.
"Indebtedness" means, for any Person, without duplication, and at any time, (a) all obligations required by GAAP to be classified on such Person's balance sheet as liabilities, (b) obligations secured (or for which the holder of the obligations has an existing contingent or other right to be so secured) by any Lien existing on property owned or acquired by such Person, (c) obligations that have been (or under GAAP should be) capitalized for financial reporting purposes, and (d) all guaranties, endorsements, and other contingent obligations with respect to obligations of others.
"Indemnified Amounts" is defined in Section 10.1.
"Indemnified Party" is defined in Section 10.1.
"Interest Expense" means, for any period, the interest expense of D.R. Horton and its Restricted Subsidiaries calculated on a consolidated basis for such period in accordance with GAAP.
"Interest Incurred" means, for any period, the aggregate amount (without duplication and determined in each case in accordance with GAAP) of interest incurred, whether such interest was expensed or capitalized, paid, accrued or scheduled to be paid or accrued by D.R. Horton and its Restricted Subsidiaries during such period, including (a) original issue discount and non-cash interest payments or accruals on any Indebtedness, (b) the interest portion of all deferred payment obligations, and (c) all commissions, discounts and other fees and charges owed with respect to bankers' acceptances and letter of credit financings and financial hedges, in each case to the extent attributable to such period. For purposes of this definition, (i) interest on any obligations arising under any capital lease or sublease which is capitalized on a balance sheet in accordance with GAAP shall be deemed to accrue at an interest rate reasonably determined by D.R. Horton to be the rate of interest implicit in such obligations in accordance with GAAP, and (ii) interest expense attributable to any Indebtedness represented by the guaranty of an obligation of another Period shall be deemed to be the interest expense attributable to the Indebtedness guaranteed.
"Interest Period" is defined in Section 2.15.
"Issuer" means Atlantic.
"Jumbo Loan" means a Mortgage Loan (other than a Conforming Loan) that
(1) is underwritten by an Approved Investor, (2) matches all applicable
requirements for purchase under the requirements of a Take-Out Commitment issued
for the purchase of such Mortgage Loan, and (3) differs from a Conforming Loan
solely by reason of the size of the principal amount of such Mortgage Loan,
which size is announced by Fannie Mae or Freddie Mac from time to time.
"Lenders" means, collectively, the Issuer and the Banks.
"Leverage Ratio" means, with respect to D.R. Horton, the ratio of (1) outstanding debt of D.R. Horton and the Restricted Subsidiaries (including undrawn and outstanding financial letters of credit or financial bonds) including all pari passu, subordinated, or convertible debt less unrestricted cash and equivalents in excess of $50 million to (2) the Consolidated Net Worth of D.R. Horton and the Restricted Subsidiaries plus 50% of any Indebtedness of D.R. Horton or any of its Restricted Subsidiaries that is subordinated to the Obligations on terms and conditions reasonably acceptable to the Administrative Agent with maturities 12 months or longer than the subject facility, provided that the amount added does not exceed the lesser of 20% of Consolidated Net Worth or $200,000,000.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (whether statutory, consensual or otherwise), or other security arrangement of any kind (including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the uniform commercial code or comparable law of any jurisdiction in respect of any of the foregoing).
"Liquidity Agreement" means a liquidity loan agreement, liquidity asset purchase agreement or similar agreement entered into by a Bank and providing for the making of loans to the Issuer, or the purchase of Advances (or interests therein) from the Issuer, to support the Issuer's payment obligations under its Commercial Paper Notes.
"Loan-to-Value Ratio" means, with respect to any Mortgage Loan, the fraction, expressed as a percentage found by dividing the original principal balance of a Mortgage Loan by the value of the Mortgage Loan, such value being measured by (i) the appraised value of such property at such time, if the Mortgage Loan is a refinance of an existing lien or (ii) the lower of the sales price of the related property at the time of origination of the Mortgage Loan or the appraised value of such property at such time, if the Mortgage Loan is a purchase money loan.
"Majority Banks" means, at any time, Banks, including Banks that have become party to this Agreement pursuant to an Assignment and Acceptance, having outstanding Advances equal to more than 67% of the aggregate outstanding Advances held by Banks or, if no Advance is then outstanding from any Bank, Banks having more than 67% of the Bank Commitments.
"Market Value" means at the time determined, for any (a) Mortgage Loan (other than a Non-Conforming Loan), the market value of such Mortgage Loan based upon the then most recent posted net yield for 30-day mandatory future delivery furnished by Fannie Mae and published and distributed by Telerate Mortgage Services, or, if such posted net yield is not available from Telerate Mortgage Services, such posted net yield obtained by the Administrative Agent from Fannie Mae, or (b) Non-Conforming Loan, or any other Mortgage Loan while the posted rate is not available from Fannie Mae, the value determined by the Administrative Agent in good faith.
"Material Adverse Effect" means, with respect to any Person, any material adverse effect on (i) the validity or enforceability of this Agreement, the Notes or any other Transaction Document, (ii) the business, operations, total Property or financial condition of such Person, (iii) the Collateral taken as a whole, (iv) the enforceability or priority of the Lien in favor of the Administrative Agent on any significant portion of the Collateral, or (v) the ability of such Person to fulfill its obligations under this Agreement, the Notes or any other Transaction Document.
"Maximum Facility Amount" means $100,000,000, as such amount may be reduced pursuant to Section 2.1(c).
"Maximum Rate" means the maximum non-usurious rate of interest that, under applicable law, each of the Lenders is permitted to contract for, charge, take, reserve, or receive on the Obligations.
"MERS" means Mortgage Electronic Registration Systems, Inc., a Delaware corporation.
"MERS Designated Mortgage Loan" means a Mortgage Loan registered to or by the related Originator on the MERS electronic mortgage registration system.
"Moody's" means Moody's Investors Service, and any successor thereto.
"Mortgage" means a mortgage or deed of trust or other security instrument creating a Lien on real property, on a standard form as approved by Fannie Mae, Freddie Mac or Ginnie Mae or such other form as the Originator determines is satisfactory for any Approved Investor unless otherwise directed by the Administrative Agent and communicated to the Collateral Agent.
"Mortgage Assets" means, collectively, all of the Mortgage Loans and all Take-Out Commitments.
"Mortgage Loan" means a loan evidenced by a Mortgage Note and secured by a Mortgage, the beneficial interest of which has been acquired by the Borrower from the Originator by purchase pursuant to the Repurchase Agreement (with the record owner thereof being the Originator or, in the case of a MERS Designated Mortgage Loan, MERS as nominee for the Originator, and its successors and assigns).
"Mortgage Loan Collateral" means all Mortgage Notes and related Principal Mortgage Documents, Other Mortgage Documents, and other Collateral.
"Mortgage Note" means a promissory note, on a standard form approved by Fannie Mae, Freddie Mac or Ginnie Mae or such other form as the Originator determines is satisfactory for any Approved Investor unless otherwise directed by the Administrative Agent and communicated to the Collateral Agent.
"Mortgage Origination Date" means, with respect to each Mortgage Loan, the date (transmitted to the Collateral Agent) that is the later of (1) the date of the Mortgage Note or (2) the date such Mortgage Loan was funded and disbursed to or at the direction of the Obligor.
"Multiemployer Plan" means a multiemployer plan defined in Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which Borrower or any ERISA Affiliate is required to make contributions.
"Net Worth" of a Person means, as of any date of determination, the total stockholder's equity (including capital stock, additional paid-in capital and retained earnings after deducting treasury stock) that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP but excluding the value of any investment made by such Person in an unconsolidated Subsidiary.
"Non-Conforming Loan" means a Subprime Loan, a Jumbo Loan or an Alt-A Loan.
"Note" means each or any of the promissory notes executed by the Borrower, substantially in the form of Exhibit E hereto, together with all renewals, extensions, and replacements for any such note.
"Obligations" means any and all present and future indebtedness, obligations, and liabilities of the Borrower to any of the Lenders, the Collateral Agent, each Affected Party, each Indemnified Party and the Administrative Agent, and all renewals, rearrangements and extensions thereof, or any part thereof, arising pursuant to this Agreement or any other Transaction Document, and all interest accrued thereon, and attorneys' fees and other costs incurred in the drafting, negotiation, enforcement or collection thereof, regardless of whether such indebtedness, obligations, and liabilities are direct, indirect, fixed, contingent, joint, several or joint and several.
"Obligor" means (i) with respect to each Mortgage Note included in the Collateral, the obligor on such Mortgage Note and (ii) with respect to any other agreement included in the Collateral, any person from whom the Originator or the Borrower is entitled to performance.
"Originator" means CH Mortgage Company I, Ltd., a Texas limited partnership, and its successors and assigns.
"Other Company" means D.R. Horton and all of its Subsidiaries except the Borrower.
"Other Mortgage Documents" is defined in Section 3.2(c).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto.
"Permitted Investments" means book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form that evidence any of the following:
(a) direct obligations of, and obligations fully guaranteed by, the United States of America or any agency or instrumentality of the United States of America, the obligations of which are backed by the full faith and credit of the United States of America;
(b) (i) demand and time deposits in, certificates of deposits of, bankers' acceptances issued by, or federal funds sold by, any depository institution or trust company incorporated under the laws of the United States of America, any State thereof or the District of Columbia or any foreign depository institution with a branch or agency licensed under the laws of the United States of America or any State, subject to supervision and examination by Federal and/or State banking authorities and having a rating of P-1 by Moody's, a rating of at least A-1 by S&P and a rating of at least F1 by Fitch at the time of such investment or contractual commitment providing for such investment or otherwise approved in writing by each Rating Agency or (ii) any other demand or time deposit or certificate of deposit that is fully insured by the Federal Deposit Insurance Corporation;
(c) repurchase obligations with respect to (i) any security described in clause (a) above or (ii) any other security issued or guaranteed by an agency or instrumentality of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) described in clause (b)(i) above;
(d) short-term securities bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States of America or any State, the short-term unsecured obligations of which have a rating of P-1 by Moody's, a rating of at least A-1 by S&P and a rating of F1 by Fitch at the time of such investment; provided, however, that securities issued by any particular corporation will not be Permitted Investments to the extent that investment therein will cause the then outstanding principal amount of securities issued by such corporation and held in the Reserve Account to exceed 10% of amounts held in the Reserve Account;
(e) commercial paper having a rating of P-1 by Moody's, a rating of at least A-1 by S&P and a rating of at least F1 by Fitch at the time of such investment or pledge as security;
(f) money market funds whose investments consist solely of one of the foregoing; or
(g) any other investments approved in writing by each Rating Agency.
"Permitted Transferee" is defined in Section 3.3(c).
"Person" means any individual, corporation (including a business trust), limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, Governmental Authority, or any other form of entity.
"Portfolio Yield" means, with respect to any Collection Period, the percentage equivalent to the amount computed as of the last day of such Collection Period by dividing (a) the aggregate
amount of interest accrued (whether or not paid) with respect to all Eligible Mortgage Loans included in the Collateral during such Collection Period by (b) the daily average outstanding principal amount of all Eligible Mortgage Loans included in the Collateral during such Collection Period.
"Primary Obligations" means, at the time determined, the sum of Principal Debt plus accrued and unpaid interest thereon through the end of the then current Interest Period, plus accrued and unpaid fees under Section 2.4(b).
"Principal Debt" means, at the time determined, the unpaid principal balance of all Advances under this Agreement.
"Principal Mortgage Documents" is defined in Section 3.2(b).
"Program Documents" means, in the case of the Issuer, the Liquidity Agreement relating to this Agreement and the other documents executed and delivered in connection therewith, as each may be amended, supplemented or otherwise modified from time to time.
"Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
"Rating Agency" means S&P, Moody's and Fitch.
"Regulation T, U, X and Z," respectively, mean Regulation T, U, X and Z promulgated by the Federal Reserve Board as in effect from time to time, or any successor regulations thereto.
"Regulatory Change" means, relative to any Affected Party:
(a) any change in (or the adoption, implementation, change in the phase-in or commencement of effectiveness of) any:
(i) United States federal or state law or foreign law applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement or request (whether or not having the force of law) applicable to such Affected Party of (A) any court, government authority charged with the interpretation or administration of any law referred to in clause (a)(i) or (B) any fiscal, monetary or other authority having jurisdiction over such Affected Party; or
(iii) GAAP or regulatory accounting principles applicable to such Affected Party and affecting the application to such Affected Party of any law, regulation, interpretation, directive, requirement or request referred to in clause (a)(i) or (a)(ii) above (it being understood that if an Affected Party elects to make an accounting adjustment prior to the required date for such adjustment, and such adjustment affects the application to such Affected Party of any law, regulation, interpretation, directive, requirement or request referred to in clause (a)(i) or (a)(ii) above, such adjustment will not constitute a Regulatory Change until the date on which the adjustment actually is required to be made);
(b) any change in the application to such Affected Party of any existing law, regulation, interpretation, directive, requirement, request or accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above; or
(c) the issuance, publication or release of any regulation,
interpretation, directive, requirement or request of a type described in clause
(a)(ii) above to the effect that the obligations of any Bank under the
applicable Liquidity Agreement are not entitled to be included in the zero
percent category of off-balance sheet assets for purposes of any risk-weighted
capital guidelines applicable to such Bank or any related Affected Party.
"Repurchase Agreement" means the Master Repurchase Agreement and the Addendum to the Master Repurchase Agreement incorporated therein, each dated as of the date of this Agreement between the Originator, as Seller, and the Borrower, as purchaser, as the same may be amended, modified or restated from time to time.
"Required Ratings" means a rating of BB- or higher by S&P, a rating of Ba3 or higher by Moody's and a rating of BB- or higher by Fitch.
"Required Reserve Account Amount" means on any date 0.50% of the Maximum Facility Amount on such date.
"Requirement of Law" as to any Person means the articles of incorporation and by-laws or other organizational or governing documents of such Person, and any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other determination, direction or requirement (including, without limitation, any of the foregoing that relate to energy regulations and occupational, safety and health standards or controls and any hazardous materials laws) of any 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 Account" is defined in Section 2.8.
"Reserve Account Bank" means the institution then holding the Reserve Account pursuant to Section 2.8.
"Restricted Subsidiaries" means any Subsidiary of D.R. Horton which has been designated as a Restricted Subsidiary by D.R. Horton and which is a party to a guaranty agreement pursuant to which each such Restricted Subsidiary has guaranteed the full and faithful payment and performance of certain obligations of D.R. Horton and other parties.
"S&P" means Standard & Poor's Rating Services, a Division of The McGraw-Hill Companies, Inc., and any successor thereto.
"Security Agreement" is defined in the Collateral Agency Agreement.
"Security Instruments" means (a) the Collateral Agency Agreement, (b) the Security Agreement, (c) the Assignment of Account, and (d) such other executed documents as are or may be necessary to grant to the Administrative Agent a perfected first, prior and continuing
security interest in and to the Collateral and any and all other agreements or instruments now or hereafter executed and delivered by or on behalf of the Borrower in connection with, or as security for the payment or performance of, all or any of the Obligations, as amended, modified or supplemented.
"Servicer" means at any time the Person then authorized pursuant to
Section 11.1 to administer and collect Mortgage Loans on behalf of the Lenders.
The initial Servicer shall be CH Mortgage Company I, Ltd.
"Servicer Default" means any Event of Default, to the extent relating to
the Servicer, arising under Sections 8.1(a), (b), (c), (d), (e), (f), (g), (h),
(i), (j), (k), (l), (p) or (aa) in each case, without giving effect to any
provisions in such sections that make such sections applicable only so long as
the Servicer and the Originator are the same entities.
"Servicer Fee" is defined in Section 2.4(b).
"Servicer Monthly Report" is defined in Section 3.7.
"Settlement Date" means the 15th day of each calendar month, commencing July 15, 2002 or, if such day is not a Business Day, the next succeeding Business Day, provided, however, that on and after the Drawdown Termination Date, the Administrative Agent may, by notice to the Borrower and the Servicer, select other days to be Settlement Dates (including days occurring more frequently than once per month).
"Shipping Request" means the shipping request presented by the Borrower or the Servicer to the Collateral Agent substantially on the form attached as Exhibit D-5A (as amended, modified or supplemented from time to time as agreed to by the Administrative Agent, the Borrower and the Collateral Agent).
"Shortfall Amount" means, with respect to the last day of any Interest
Period or any Settlement Date, the excess, if any, of (a) all amounts due
pursuant to (i) Section 2.7(c)(iii)(B) or Section 2.7(c)(iv)(C) on the last day
of such Interest Period occurring prior to, on or after the Drawdown Termination
Date, as applicable, (ii) Section 2.7(c)(iii)(A), (C), (D), or (F) on any such
Settlement Date occurring prior to the Drawdown Termination Date or (iii)
Section 2.7(c)(iv)(A), (B), (D), (E), or (G) on any such Settlement Date
occurring on or after the Drawdown Termination Date, over (b) the sum of the
collections then held by the Servicer for the Lenders and the Administrative
Agent pursuant to Section 2.7(c)(ii) plus collected funds then on deposit in the
Collection Account.
"Sixty-Day Default Ratio" means as of the end of any Collection Period, the ratio of (i) the principal amount of all Mortgage Loans with respect to which the Obligor is 60 or more days in payment default or has taken any action, or suffered any event of the type described in Section 8.1(f), (g) or (h) or is in foreclosure at such time, to (ii) the aggregate principal amount of all Mortgage Loans at such time.
"Special Borrowing" is defined in Section 2.3(c).
"Special Indemnified Amounts" is defined in Section 11.5.
"Special Mortgage Loans" is defined in Section 2.3(c).
"Subordination Agreement" means the agreement, substantially in the form attached as Exhibit B hereto, executed by D.R. Horton and certain of its Affiliates, if applicable, in favor of the Borrower and the Administrative Agent for the benefit of the holders of the Obligations.
"Subprime Loan" means a Mortgage Loan (other than a Conforming Loan, a Jumbo Loan, or Alt-A Loan) that (1) is underwritten by an Approved Investor, (2) matches all applicable requirements for purchase under the requirements of a Take-Out Commitment specifically issued for the purchase of such Mortgage Loan, and (3) differs from a Conforming Loan because of the credit quality of the Obligor, and is originated by the Originator or by a correspondent of the Originator using the established underwriting guidelines for subprime loans of the Originator, which are the same underwriting guidelines that the Originator uses to originate subprime loans for sales into the secondary mortgage market.
"Subsidiary" means, with respect to any Person, any corporation or other entity of which securities having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person, or one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries.
"Super Jumbo Loan" means a Jumbo Loan having an original principal balance equal to or in excess of $650,000.
"Take-Out Commitment" means (A) with respect to Mortgage Loans that are included in the Eligible Mortgage Collateral, a current, valid, binding, enforceable, written commitment, issued by an Approved Investor, to purchase one or more Mortgage Loans from the Originator prior to the date that is 120 days (or 180 days to the extent Collateral Value may include Mortgage Loans that have been Eligible Mortgage Loans for more than 120 days pursuant to paragraph (g) of the definition of Collateral Value) from the date that such Mortgage Loan first becomes Eligible Mortgage Collateral and at a specified price and in amounts, form and substance satisfactory to the Administrative Agent, which commitment is not subject to any term or condition (i) that is not customary in commitments of like nature or (ii) that, in the reasonably anticipated course of events, cannot be fully complied with prior to the expiration thereof, which commitment has been assigned to the Borrower (partial assignments being permitted so long as the amount assigned (together with all other Take-Out Commitments) fully covers the amount of the Eligible Mortgage Collateral) and in which a perfected and first-priority security interest has been granted by the Borrower to the Administrative Agent; provided, that promptly upon receipt of the actual written confirmation (each, a "trade confirmation") of such trade duly executed by the Originator and the trade counterparty (such trade confirmation being held in trust for the Collateral Agent pursuant to Section 3.2(c), the Originator must provide such trade confirmation upon such receipt to the Administrative Agent, immediately upon its request, and the Administrative Agent, on behalf of the Lenders shall have the right, without notice, to review such trade confirmation at the office of, and with the officers of, the Originator, or (B) with respect to the Non-Conforming Loans included in the Eligible Mortgage Collateral, a current, valid, binding, enforceable, written commitment, issued by an Approved Investor, to purchase loans with characteristics of such Subprime Loans from the Originator from time to time at a specified price (or a specified spread to an agreed-upon index) and in amounts, and upon terms,
satisfactory to the Administrative Agent, which commitment is not subject to any
term or condition (i) that is not customary in commitments of like nature or
(ii) that, in the reasonably anticipated course of events, cannot be fully
complied with prior to the expiration thereof, the rights but not the
obligations under which commitment have been assigned to the Borrower (partial
assignments being permitted so long as the aggregate amount assigned fully
covers the amount of the Eligible Mortgage Collateral) and in which a perfected
and first-priority security interest has been granted by the Borrower to the
Administrative Agent.
"Take-Out Commitment Documents" means (1) with respect to any Mortgage Loan, with respect to which there is no loan-specific Take-Out Commitment, an executed original assignment of trade as described in the definition of "Take-Out Commitment"; and (2) with respect to any Mortgage Loan, with respect to which there is a loan-specific Take-Out Commitment, copies of all Take-Out Commitments.
"Take-Out Commitment Master Agreement" means with respect to which there is a loan-specific Take-Out Commitment, the master flow sale agreement, investor bulk sales agreement, or similar agreement setting forth the basic terms of sales to the related Approved Investor.
"Transaction Document" means any of this Agreement, the Notes, the Security Instruments, the Collateral Agency Agreement, the Repurchase Agreement, the Administrative Agent Fee Letter, the Subordination Agreement and any and all other agreements or instruments now or hereafter executed and delivered by or on behalf of the Borrower in connection with, or as security for the payment or performance of any or all of the Obligations, as any of such documents may be renewed, amended, restated or supplemented from time to time.
"Transfer Request" is defined in Section 3.3(a).
"UCC" means the Uniform Commercial Code as adopted in the applicable state, as the same may hereafter be amended.
"Uncovered Mortgage Loan" means a Mortgage Loan that would be an Eligible Mortgage Loan but for the expiration, forfeiture, termination, or cancellation of, or default under, the relevant Take-Out Commitment.
"Unrestricted Subsidiaries" means Subsidiaries of D.R. Horton which are not Restricted Subsidiaries.
"VA" means the Department of Veterans Affairs, or any successor thereto.
"VA Loan" means a Mortgage Loan, the payment of which is partially or completely guaranteed by the VA under the Servicemen's Readjustment Act of 1944, as amended, or Chapter 37 of Title 38 of the United States Code or with respect to which there is a current binding and enforceable commitment for such a guaranty issued by the VA.
1.2. Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in this Agreement have the above-defined meanings when used in the Notes or any other Transaction Document, certificate, report or other document made or delivered pursuant hereto.
(b) The words "hereof," "herein," "hereunder" and similar terms when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, subsection, schedule and exhibit references herein are references to articles, sections, subsections, schedules and exhibits to this Agreement unless otherwise specified.
(c) As used herein, in the Notes or in any other Transaction Document, certificate, report or other document made or delivered pursuant hereto, accounting terms relating to any Person and not specifically defined in this Agreement or therein shall have the respective meanings given to them under GAAP.
(d) All accounting and financial terms used -- and compliance with each financial covenant -- in the Transaction Documents shall be determined under GAAP; however, unless the Administrative Agent has agreed (in writing) to the contrary, the determinations concerning the financial covenants found in Sections 7.1 and 7.10 and the Net Worth of the Servicer (so long as the Originator is the Servicer), including determinations of Deferred Income under SFAS 91 and SFAS 122, shall be made under GAAP, and SFAS 91 and SFAS 122, as in effect on the date of this Agreement. All accounting principles shall be applied on a consistent basis so that the accounting principles in a current period are comparable in all material respects to those applied during the preceding comparable period.
ARTICLE II
AMOUNT AND TERMS OF COMMITMENT
2.1. Maximum Facility Amount.
(a) Subject to the terms of this Agreement and so long as (i) the total Principal Debt never exceeds the Maximum Facility Amount, (ii) the Primary Obligations never exceed the total Collateral Value of all Eligible Mortgage Collateral, (iii) no Borrowing ever exceeds the Availability, and (iv) Borrowings are only made on Business Days before the Drawdown Termination Date, the Issuer may, in its sole discretion, and if an Issuer does not make such Advance, the Banks shall, ratably in accordance with their Bank Commitments, make Advances to the Borrower from time to time in such amounts as may be requested by the Borrower pursuant to Section 2.3, so long as each Borrowing is the least of (x) the Availability, (y) the Available Collateral Value, and (z) $5,000,000 or an integral multiple of $10,000 in excess thereof. Within the limits of the Maximum Facility Amount, the Borrower may borrow, prepay (whether pursuant to Section 2.5 or Section 3.3(a) of this Agreement or otherwise), and reborrow under this Section 2.1.
(b) The Borrower may, from time to time by written request to the Lenders and the Administrative Agent (each such notice being an "Extension Request") given not later
than 60 days and not sooner than 90 days prior to the first and second
anniversaries of the Effective Date requesting an extension of such date to the
Business Day falling not more than 360 days after such date. If the Lenders and
the Administrative Agent consent, in their sole discretion, to such Extension
Request within 30 days following their receipt of such Extension Request, then
the date set forth in clause (a) of the definition of Drawdown Termination Date
shall be extended to the date set forth in such Extension Request. Any such
extension (or waiver of the right to terminate the Maximum Facility Amount in
2002 and 2003) may be accompanied by such additional fees as the parties shall
mutually agree. Notwithstanding anything else to the contrary herein, the
Maximum Facility Amount shall terminate automatically as of July 9, 2003 or July
9, 2004 if an Extension Request is not granted beyond such date pursuant to this
Section 2.1(b).
(c) The Borrower may, upon at least thirty (30) days prior irrevocable notice to the Administrative Agent, but no more than once every three months, reduce the Maximum Facility Amount; provided, however, that each partial reduction shall be in the aggregate amount of $10,000,000 or integral multiples of $1,000,000 in excess thereof; provided further, however that no such reduction shall reduce the Maximum Facility Amount below the greater of (i) the total Principal Debt or (ii) $25,000,000.
(d) The Borrower may, upon at least thirty (30) days prior irrevocable notice to the Administrative Agent, terminate the Maximum Facility Amount in its entirety upon payment in full of all Obligations.
2.2. Promissory Notes.
The Advances made by each of the Lenders pursuant to this Article II shall be evidenced by separate Notes each substantially in the form set forth in Exhibit E hereto, each in the maximum principal amount of its Bank Commitment. The Administrative Agent on behalf of the Lenders shall record in its records the date and amount of each Advance to the Borrower and each repayment thereof. The information so recorded shall be rebutable presumptive evidence of the accuracy thereof. The failure to so record, in the absence of manifest error, any such information or any error in so recording any such information shall not, however, limit or otherwise affect the obligations of the Borrower hereunder or under the Notes to pay the principal of all Advances, together with interest accruing thereon.
2.3. Notice and Manner of Obtaining Borrowings.
(a) Borrowings.
(i) The Borrower shall give the Administrative Agent and the Collateral Agent notice of each request for a Borrowing, pursuant to a Borrowing Report, and in accordance with the provisions of Section 4.2 hereof. On the Borrowing Date specified in the Borrowing Report and subject to all other terms and conditions of this Agreement, the Issuer may, in its discretion, make available to the Administrative Agent at the office of the Administrative Agent set forth in Section 12.1, in immediately available funds, the Borrowing.
(ii) In the event that the Issuer shall elect not to make a Borrowing requested by the Borrower, each Bank agrees that it shall, on the Borrowing Date specified in the Borrowing Report and subject to all other terms and conditions of this Agreement, make available to the Administrative Agent at the office of the Administrative Agent set forth in Section 12.1, in immediately available funds, an amount equal to the product of (x) such Bank's Bank Commitment Percentage, multiplied by (y) the portion of such Borrowing that the Issuer has elected not to fund.
(iii) After the Administrative Agent's receipt of funds pursuant to the preceding paragraph (i) or (ii) and upon fulfillment of the applicable conditions set forth in Article IV, the Administrative Agent will make such funds available to the Borrower by crediting Borrower's operating account with a like amount of immediately available funds. So long as the Borrower is otherwise entitled to make a specific Borrowing, Borrowing Reports that are received by the Administrative Agent and the Collateral Agent by 10:30 a.m. (eastern time) on a Business Day will be funded on the next Business Day following receipt of the Borrowing Report.
(iv) Notwithstanding the foregoing, a Bank shall not be obligated to make Advances under this Section 2.3 at any time to the extent that the principal amount of all Advances made by such Bank would exceed such Bank's Bank Commitment less the outstanding and unpaid principal amount of any loans or purchases made by such Bank under a Liquidity Agreement. Each Bank's obligation shall be several, such that the failure of any Bank to make available to the Borrower any funds in connection with any Borrowing shall not relieve any other Bank of its obligation, if any, hereunder to make funds available on the date of such Borrowing, but no Bank shall be responsible for the failure of any other Bank to make funds available in connection with any Borrowing.
(b) Type of Loan.
(i) Each Advance by the Issuer shall initially be funded by the issuance of commercial paper by the Issuer.
(ii) Each Advance by a Bank shall be either a Base Rate Advance or a Eurodollar Advance, as determined pursuant to Section 2.15(b).
(c) Special Borrowings. The Borrower may from time to time
request that certain Borrowings be funded prior to the delivery to the
Collateral Agent of the corresponding Principal Mortgage Documents
(individually, a "Special Borrowing"; collectively, "Special Borrowings").
Advances in respect of Special Borrowings shall be made in accordance with
Section 2.3(a), subject to the terms and conditions of this Agreement,
including, without limitation, the following additional terms and conditions:
(i) Pursuant to an Assignment, the Borrower shall grant to the Administrative Agent for the benefit of the holders of the Obligations, from the Borrowing Date of each Special Borrowing, a perfected, first-priority security interest in the Mortgage Loans identified in Schedule III to said Assignment (such Mortgage Loans being sometimes called "Special Mortgage Loans";
(ii) The Assignment in connection with the Borrowing Report delivered by the Borrower to the Administrative Agent and the Collateral Agent, pursuant to which the Borrower requests a Special Borrowing, shall describe the Mortgage Note or Mortgage Notes to be delivered to the Collateral Agent in connection therewith by the loan number assigned by the Originator, original principal amount, the amount funded (minus discount points paid to the Originator) by the Originator, Obligor's name and interest rate;
(iii) Within nine (9) Business Days after the date that each Assignment is delivered (and inclusion of the related Special Mortgage Loan within the computation of Collateral Value as reported on the Collateral Agent Daily Report), to Collateral Agent, the Borrower shall deliver to the Collateral Agent the Principal Mortgage Documents pertaining to any Special Mortgage Loan identified on Schedule III of such Assignment;
(iv) At any time, (A) except the first five and last five Business Days of any month, the portion of total Collateral Value that may be attributable to Special Mortgage Loans with respect to which the related Principal Mortgage Documents have not been delivered to the Collateral Agent within nine (9) Business Days after the date the Assignment was delivered to the Collateral Agent shall not exceed thirty percent (30%) of the Maximum Facility Amount and (B) during the first five and last five Business Days of any month, the portion of total Collateral Value that may be attributable to Special Mortgage Loans with respect to which the related Principal Mortgage Documents have not been delivered to the Collateral Agent within nine (9) Business Days after the date the Assignment was delivered to the Collateral Agent shall not exceed fifty percent (50%) of the Maximum Facility Amount;
(v) The Borrower shall not request any Special Borrowing, and no Special Borrowing shall be made, in respect of any Mortgage Loan that is closed with an escrow agent other than the relevant title insurance company, unless at the time of such request, the Borrower is entitled to the benefit of Closing Protection Rights with provisions substantially similar to one of the prescribed sets of rights set forth in Exhibit N to this Agreement or as otherwise required by the Administrative Agent (it being understood that pursuant to the Security Agreement, the Administrative Agent has a security interest in all Closing Protection Rights).
Each request by the Borrower for a Special Borrowing shall be automatically deemed to constitute a representation and warranty by the Borrower to the effect that immediately before and after giving effect to such Borrowing, the terms and conditions specified in the foregoing clauses (i) through (v) and in Section 4.2 are and shall be satisfied in full as of the related Borrowing Date.
(d) Failure to Deliver Principal Mortgage Documents. The failure to deliver Principal Mortgage Documents by the ninth Business Day, as required by subparagraph (iii) of Section 2.3(c) and elsewhere in this Agreement, shall not be treated as a Default or an Event of Default so long as the Administrative Agent is satisfied that each such failure, when considered in the light of past and other contemporaneous failures, is not sufficient to have a Material
Adverse Effect; however, (i) if any such Principal Mortgage Documents related to such Special Mortgage Loans are not so delivered on a timely basis, the Borrower shall make a mandatory prepayment so that after giving effect thereto, the Collateral Value of Eligible Mortgage Collateral (excluding such Special Mortgage Loans) shall equal or exceed the Primary Obligations, and (ii) the Special Mortgage Loan shall not be an Eligible Mortgage Loan and shall have a Collateral Value of zero until such Principal Mortgage Documents shall have been delivered to the Collateral Agent in connection with a subsequent Borrowing.
The Borrower diligently shall pursue delivery to the Collateral Agent of all Principal Mortgage Documents pertaining to any Special Borrowings.
2.4. Fees.
(a) The Borrower shall pay to the Administrative Agent the fees set forth in a letter agreement dated the date hereof (the "Administrative Agent Fee Letter"), between the Administrative Agent and the Borrower, such fees to be payable at such times and in such amounts as shall be specified thereunder.
(b) The Borrower shall pay to the Servicer a fee (the "Servicer Fee") of 0.25% per annum on the aggregate outstanding principal balance of the Eligible Mortgage Loans from the date hereof until the Principal Debt is paid in full, payable monthly in arrears on each Settlement Date. The Servicer Fee shall be payable only from Collections pursuant to, and subject to the priority of payments set forth in, Section 2.7(c).
2.5. Prepayments.
(a) Optional Prepayments. The Borrower may, at any time and from time to time with five (5) Business Days' notice to the Administrative Agent, prepay the Advances in whole or in part, in the aggregate amount of $1,000,000 or integral multiples of $100,000 in excess thereof, without premium or penalty other than Consequential Loss, if any. Notwithstanding the foregoing, any prepayment made hereunder shall be accompanied by accrued interest on the principal amount being prepaid. After giving notice that a prepayment will be made, the Borrower shall be liable to each Affected Party for any Consequential Loss resulting from such prepayment (including prepayments of Advances bearing interest at the Commercial Paper Rate or Eurodollar Rate on a day other than the last day of the related Interest Period) or the failure to make a prepayment designated in any such notice.
(b) Mandatory Prepayments. The Borrower shall immediately on demand by the Administrative Agent make a mandatory prepayment if at any time, and to the extent that, (i) the Principal Debt exceeds the Maximum Facility Amount or (ii) the Primary Obligations exceed the total Collateral Value of all Eligible Mortgage Collateral. The Borrower shall be liable for any Consequential Loss resulting from any such prepayment.
2.6. Business Days.
If the date for any payment under this Agreement falls on a day that is not a Business Day, then for all purposes of the Notes and this Agreement the same shall be deemed to have fallen on either (a) the next following Business Day, and such extension of time shall in such
case be included in the computation of payments of interest or (b) if the next following Business Day is in another calendar month and payment is being made with respect to a Eurodollar Advance, then on the immediately previous Business Day.
2.7. Payment Procedures.
(a) In General. Subject to the provisions of this Section 2.7, all payments on the Principal Debt and interest and fees under the Notes and this Agreement shall be made by the Borrower (or the Collateral Agent or the Servicer on behalf of the Borrower) to the Administrative Agent for the account of the Lenders represented by the Administrative Agent. All such payments shall be made before 11:00 a.m. (eastern time) on the respective due dates in federal or other funds immediately available by that time of day and at the Agent's Account. Funds received after 11:00 a.m. (eastern time) shall be treated for all purposes as having been received by the Administrative Agent on the Business Day next following the date of receipt of such funds from the Borrower.
(b) The Borrower shall establish an account (the "Collection Account") in the name and under the control of the Administrative Agent with the Collateral Agent (the "Collection Account Bank"), which account shall be titled "Credit Lyonnais New York Branch, as Administrative Agent, pursuant to the Loan Agreement dated as of even date herewith among CH Funding, LLC, as Borrower, the Administrative Agent and certain other parties (Collection Account)." The Collection Account shall be a fully segregated trust account, unless the Collection Account Bank shall be an Eligible Institution having short-term debt ratings from S&P, Moody's and Fitch no lower than A-1/P-1/F1 respectively, in which case the account need not be a trust account. The Collection Account shall be under the control of the Administrative Agent, and the Borrower shall have no right, title or interest in, or any right to withdraw any amount from, the Collection Account except as otherwise contemplated in Section 2.7(c) or Section 3.3(a).
(c) Collections.
(i) The Servicer shall administer Collections in accordance with the provisions of this Section 2.7.
(ii) The Servicer shall hold, on behalf of the Lenders and
the Administrative Agent, from Collections received by it with respect to
any Mortgage Asset, amounts necessary to make payments on the following
Settlement Date (or end of the related Interest Period) pursuant to
Section 2.7(c)(iii) or (iv), as applicable. Such amounts shall be
deposited into the Collection Account no later than such Settlement Date
or at the end of such Interest Period, or, on or after the Drawdown
Termination Date or upon the occurrence and during the continuation of an
Event of Default, within one Business Day after receipt before 11:00 a.m.
(eastern time) by the Servicer.
(iii) Prior to the Drawdown Termination Date, unless the most recent Servicer Monthly Report shows that an Advance Cessation Trigger has occurred and is continuing, the Servicer shall withdraw funds from the Collection Account (to the extent
of collected funds therein) and shall make payments from the Collection Account at the following times and in the following order of priority:
(A) To the extent not previously paid, on each Settlement Date, the Servicer shall deposit an amount equal to the costs, fees and expenses then due and payable to the Collateral Agent to an account designated by the Collateral Agent.
(B) On the last day of each Interest Period for any Advance made by Atlantic that bears interest at the Commercial Paper Rate and on the last day of each Interest Period for any Eurodollar Advance made by any Lender, the Servicer shall deposit an amount equal to accrued interest on such Advance to the Agent's Account. On each Settlement Date, the Servicer shall deposit an amount equal to accrued interest on each Advance that bears interest at the Alternate Base Rate to the Agent's Account.
(C) To the extent not previously paid, on each Settlement Date, the Servicer shall deposit an amount equal to the fees, costs and expenses then due and payable to the Administrative Agent under the Administrative Agent Fee Letter to the Agent's Account.
(D) On each Settlement Date on which the Required Reserve Account Amount exceeds the amount then on deposit in the Reserve Account, the Servicer shall deposit an amount equal to such excess to the Reserve Account.
(E) To the extent not previously paid, on each
Settlement Date, the Servicer shall deposit any amounts, other
than those listed in clauses (A), (B) and (C) above and other than
principal on the Advances, that are then due and payable and of
which the Servicer has received prior written notice, including
without limitation additional costs under Section 2.16, any
additional interest under Section 2.17, Consequential Losses under
Section 2.18, indemnities under Section 10.1 and costs, expenses
and taxes under Section 12.21, to the Agent's Account.
(F) If requested by the Borrower, the Servicer (1)
shall remit the amount of any principal prepayment to be made
hereunder to the Agent's Account, and (2) to the extent not
required to make payments pursuant to clauses (A) through (E) on
any Settlement Date or at the end of any Interest Period occurring
within 30 days after the Borrower's request, to an account
designated by the Borrower to pay for the purchase of Mortgage
Assets by the Borrower.
(G) On each Settlement Date, the Servicer shall retain for its own account an amount equal to accrued Servicing Fee then due and payable.
(iv) On the Drawdown Termination Date and thereafter, unless the most recent servicer Monthly Report shows that an Advance Cessation Trigger has occurred and is continuing, the Administrative Agent shall make payments from the
Collection Account (to the extent of collected funds therein) at the following times and in the following order of priority:
(A) On each Settlement Date, if the Servicer is not the Originator or an Affiliate of the Originator, an amount equal to accrued Servicing Fee then due and payable shall be paid to the Servicer.
(B) On the last day of each Interest Period for any Advance made by Atlantic that bears interest at the Commercial Paper Rate and on the last day of each Interest Period for any Eurodollar Advance made by any Lender, an amount equal to accrued interest on each such Advance shall be paid to the Agent's Account. On each Settlement Date, an amount equal to accrued interest on Advances that bear interest at the Alternate Base Rate shall be paid to the Agent's Account.
(C) To the extent not previously paid, on each Settlement Date, an amount equal to the costs, fees and expenses then due and payable to the Collateral Agent shall be paid to an account designated by the Collateral Agent.
(D) On each Settlement Date, an amount equal to the unpaid principal balance of all Advances made by Lenders, or such lesser amount as is available from Collections, shall be paid to the Agent's Account.
(E) To the extent not previously paid, on each Settlement Date, an amount equal to the fees then due and payable to the Administrative Agent under the Administrative Agent Fee Letter shall be paid to the Agent's Account.
(F) To the extent not previously paid, on each Settlement Date, any amounts of the type described in Section 2.7(c)(iii)(E) are then due and payable and any other unpaid Obligations shall be paid to the Agent's Account.
(G) On the Settlement Date on which all Obligations are paid in full, if the Servicer is the Originator or an Affiliate of the Originator, an amount equal to accrued Servicing Fee then due and payable shall be paid to the Servicer.
(v) Upon receipt of funds deposited into the Agent's Account, the Administrative Agent shall distribute such funds to the Lenders or to itself for application to the Obligations in accordance with the order of priority set forth in Section 2.7(c)(iii) or (iv), as applicable.
(vi) On the Drawdown Termination Date and thereafter, Issuer shall use commercially reasonable efforts to coordinate Interest Periods for advances so that Consequential Losses and other expenses charged to Borrower are mitigated.
(d) Interest Payments. Interest on each Advance made by Atlantic that bears interest at the Commercial Paper Rate and interest on each Eurodollar Advance shall be due and payable on the last day of the Interest Period applicable to such Advance. Interest on each
Advance that bears interest at a rate based on the Alternate Base Rate shall be due and payable in arrears on each Settlement Date, on the Drawdown Termination Date, and thereafter, on demand.
(e) Payments from Collection Account. To effect payments (including prepayments) hereunder, the Borrower or the Servicer may request the Administrative Agent to remit the collected funds (if any) then held on deposit in the Collection Account.
2.8. The Reserve Account.
(a) Establishment. The Borrower shall establish an account (the "Reserve Account") in the name and under the control of the Administrative Agent with U. S. Bank National Association titled "Credit Lyonnais New York Branch, as Administrative Agent, pursuant to the Loan Agreement dated as of July 9, 2002 among CH Funding, LLC, as Borrower, the Administrative Agent and certain other parties (Reserve Account)". The Reserve Account shall be a fully segregated trust account, unless the Reserve Account Bank shall be an Eligible Institution having short term debt ratings from S&P, Moody's and Fitch no lower than A-1/P-1/F1 respectively. The Reserve Account shall be under the sole dominion and control of the Administrative Agent, and the Borrower shall have no right to withdraw any amount from, the Reserve Account.
(b) Taxation. The taxpayer identification number associated with the Reserve Account shall be that of the Borrower, and the Borrower will report for federal, state and local income tax purposes the income, if any, earned on funds in the Reserve Account.
(c) Investments. The Borrower is hereby appointed as the investment agent, which appointment the Borrower hereby accepts, to act on behalf of the Administrative Agent for determining investments of cash at any time on deposit in the Reserve Account. All funds on deposit in the Reserve Account shall be invested in Permitted Investments (as shall be specified by the Borrower, as investment agent, in writing to the Reserve Account Bank and the Administrative Agent; provided, that if the Borrower shall fail to specify such Permitted Investments in a timely manner, the Administrative Agent may specify such Permitted Investments) that shall mature not later than the Business Day preceding the next Settlement Date and shall be held to maturity. All such investments shall be made in the name of the Reserve Account Bank, as agent, and held by the Reserve Account Bank, or its nominee, for the benefit of the Administrative Agent. The Reserve Account Bank shall not be liable for any loss incurred in connection with any investment in the Reserve Account, except for losses in respect of investments in any investment issued or guaranteed by the Reserve Account Bank. Income earned on funds deposited to the Reserve Account, if any, shall be considered a part of the Reserve Account.
(d) New Reserve Account. In the event the Reserve Account Bank ceases to be an Eligible Institution, the Borrower shall, within ten days after learning thereof, establish a new Reserve Account (and transfer any balance and investments then in the Reserve Account to such new Reserve Account) at another Eligible Institution.
(e) Statements for Reserve Account. On a monthly basis, the Reserve Account Bank shall provide the Administrative Agent with a written statement with respect to
the preceding calendar month regarding the Reserve Account in a form customary for statements provided by the Reserve Account Bank for other accounts held by it, which statement shall include, at a minimum, the amount on deposit in the Reserve Account, and the dates and amounts of all deposits, withdrawals and investment earnings with respect to the Reserve Account. The Reserve Account Bank shall promptly deliver a copy of each such statement to the Borrower and to the Servicer.
(f) Payments from Reserve Account.
(i) On the Business Day preceding the last day of each Interest Period and each Settlement Date, the Servicer will determine whether any Shortfall Amount will arise with respect to such Interest Period or Settlement Date and will give the Administrative Agent notice of the amount thereof by noon New York City time. By 2:00 p.m. New York City time on the Business Day prior to the last day of each Interest Period and each Settlement Date on which the amount of the Shortfall Amount is greater than zero, the Administrative Agent shall notify the Reserve Account Bank requesting payment thereof. To the extent funds are available in the Reserve Account, the Reserve Account Bank shall pay the amount requested to the Agent's Accounts, as specified by the Administrative Agent, by 11:00 a.m. New York City time on the last day of such Interest Period or on such Settlement Date.
(ii) On each Settlement Date prior to the Drawdown Termination Date on which the funds on deposit in the Reserve Account exceed the Required Reserve Account Amount (after giving effect to any payments pursuant to Section 2.8(f)(i)), so long as no Advance Cessation Trigger has occurred and is continuing, the Administrative Agent agrees to notify the Reserve Bank to pay such excess to the Borrower.
(g) Payments to Reserve Account. On the date hereof, the Borrower shall deposit $500,000 in immediately available funds into the Reserve Account. Additional payments shall be deposited to the Reserve Account from time to time pursuant to Section 2.7(c)(iii)(D).
(h) Pledge. The Borrower hereby pledges and assigns to the Administrative Agent for the benefit of the Lenders, and hereby grants to the Administrative Agent for the benefit of the Lenders, a security interest in, all of the Borrower's right, title and interest in and to the Reserve Account, including, without limitation, all funds on deposit therein, all investments arising out of such funds, all interest and any other income arising therefrom, all claims thereunder or in connection therewith, and all cash, instruments, securities, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of such account, such funds or such investments, and all money at any time in the possession or under the control of, or in transit to such account, or any bailee, nominee, agent or custodian of the Reserve Account Bank, and all proceeds and products of any of the foregoing. Except as provided in the preceding sentence, the Borrower may not assign, transfer or otherwise convey its rights under this Agreement to receive any amounts from the Reserve Account.
(i) Termination of Reserve Account. On the date following the Drawdown Termination Date on which all Obligations have been paid in full, all funds then on deposit in the Reserve Account shall be paid to the Borrower and the Reserve Account shall be closed.
2.9. Interest Allocations.
The Administrative Agent shall, from time to time and in its sole discretion, determine whether an Advance shall be part of the "CP Allocation" or the "ABR Allocation"; provided, however, that each Advance made by a Bank hereunder shall be allocated to the ABR Allocation. The Administrative Agent shall provide the Borrower with reasonably prompt notice of the allocations made by it pursuant to this Section 2.9. Following designation by the Administrative Agent of any Advance, or any portion thereof, as being a CP Allocation, the Borrower may, at all times that such designation remains in effect, consult with the Administrative Agent as to the number and length of Interest Periods relating to such CP Allocation. In addition, in any Borrowing Report, the Borrower may request that an Advance be part of the CP Allocation and may request the length of any related Interest Period. In selecting the Interest Periods for a CP Allocation, the Administrative Agent shall use reasonable efforts, taking into account market conditions, to accommodate the Borrower's preferences; provided, however, that the Administrative Agent shall have the ultimate authority to make all such selections.
2.10. Interest Rates.
Except where specifically otherwise provided, Borrowings in respect of any CP Allocation shall bear interest with respect to each Interest Period comprising such CP Allocation at a rate per annum equal to the Commercial Paper Rate applicable to such Interest Period, and Borrowings in respect of any ABR Allocation shall bear interest at either the Eurodollar Rate plus the Bank Spread, or the Alternate Base Rate; provided, however, that in no event shall the rate of interest with respect to any Borrowings or portion thereof exceed the Maximum Rate. Each change in the Alternate Base Rate and Maximum Rate, subject to the terms of this Agreement, will become effective, without notice to the Borrower or any other Person, upon the effective date of such change.
2.11. Quotation of Rates.
It is hereby acknowledged that an officer or other individual appropriately designated by an officer previously identified to the Administrative Agent in a certificate of incumbency or other appropriately designated officer of the Borrower may call the Administrative Agent from time to time in order to receive an indication of the rates then in effect, but such indicated rates shall neither be binding upon the Administrative Agent nor the Lenders nor affect the rate of interest which thereafter is actually in effect.
2.12. Default Rate.
So long as any Event of Default exists, all principal and accrued interest shall bear interest at the Default Rate until paid, regardless of whether such payment is made before or after entry of a judgment.
2.13. Interest Recapture.
If the designated rate applicable to any Borrowing exceeds the Maximum Rate, the rate of interest on such Borrowing shall be limited to the Maximum Rate, but any subsequent
reductions in such designated rate shall not reduce the rate of interest thereon below the Maximum Rate until the total amount of interest accrued thereon equals the amount of interest that would have accrued thereon if such designated rate had at all times been in effect. If at maturity (stated or by acceleration), or at final payment of the Notes, the total amount of interest paid or accrued is less than the amount of interest that would have accrued if such designated rates had at all times been in effect, then, at such time and to the extent permitted by applicable Governmental Requirements, the Borrower shall pay an amount equal to the difference between (a) the lesser of the amount of interest that would have accrued if such designated rates had at all times been in effect and the amount of interest that would have accrued if the Maximum Rate had at all times been in effect, and (b) the amount of interest actually paid or accrued on the Notes.
2.14. Interest Calculations.
All computations of interest and any other fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) elapsed. All such determinations and calculations by the Administrative Agent shall be conclusive and binding absent manifest error.
2.15. Interest Period.
(a) "Interest Period" means with respect to any Advance included in the CP Allocation, each period (i) commencing on, and including, the date that such Advance was initially designated by the Administrative Agent as comprising a part of the CP Allocation hereunder, or the last day of the immediately preceding Interest Period for such Advance (whichever is latest); and (ii) ending on, but excluding, the date that falls such number of days (not to exceed 30 days) thereafter as the Administrative Agent shall select; provided, however, that no more than ten Interest Periods shall be in effect at any one time with respect to Advances included in the CP Allocation.
(b) "Interest Period" means with respect to any Advance included in the ABR Allocation, a period of one month, which Advance shall be a Eurodollar Advance, unless:
(i) on or prior to the first day of such Interest Period the Lender with respect to such Advance shall have notified the Administrative Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for such Lender to fund such Advance at the Eurodollar Rate (and such Lender shall not have subsequently notified the Administrative Agent that such circumstances no longer exist), or
(ii) the Borrower shall have requested a Base Rate Advance or an Interest Period shorter than one month, or
(iii) the Administrative Agent does not receive notice, on or before 12:00 noon (New York City time) on the third Business Day preceding the first day of such Interest Period, that the related Advance will not be funded by issuance of commercial paper, or
(iv) the principal amount of such Advance is less than $500,000, or
(v) an Event of Default shall have occurred and be continuing,
in which case (if any of the foregoing events occurs) such Advance shall be a Base Rate Advance having a duration not in excess of 31 days as selected by the Borrower (unless an Event of Default shall exist, in which case such duration shall be selected by the Administrative Agent).
(c) Notwithstanding any provision in this Agreement to the contrary, (x) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day (provided, however, if interest in respect of such Interest Period is computed by reference to the Eurodollar Rate, and such Interest Period would otherwise end on a day that is not a Business Day, and there is no subsequent Business Day in the same calendar month as such day, such Interest Period shall end on the immediately preceding Business Day); (y) any Interest Period that commences before the Drawdown Termination Date and would otherwise end after the Drawdown Termination Date shall end on the Drawdown Termination Date; and (z) the duration of each Interest Period that commences on or after the Drawdown Termination Date shall be of such duration as shall be selected by the Administrative Agent and communicated by notice to the Borrower.
2.16. Additional Costs.
(a) If any Regulatory Change occurring after the date hereof:
(i) shall impose, modify or deem applicable any reserve (other than reserve requirements referred to in Section 2.17), special deposit or similar requirement against assets of any Affected Party, deposits or obligations with or for the account of any Affected Party or with or for the account of any affiliate (or entity deemed by the Federal Reserve Board to be an affiliate) of any Affected Party, or credit extended by any Affected Party; or
(ii) shall change the amount of capital maintained or required or requested or directed to be maintained by any Affected Party and such Affected Party determines that the amount of such capital is increased by or based upon the existence of a commitment to lend or maintain a loan against Mortgage Collateral hereunder or any commitments to an Investor related to this Agreement or the bonding thereof or any related liquidity facility or credit enhancement facility (or any participation therein) or other commitments of the same type related to this Agreement; or
(iii) shall impose any other condition affecting any Advance funded by any Affected Party, or its obligations or rights, if any, to make Advances or to provide funding therefor;
and the result of any of the foregoing is or would be:
(x) to increase the cost to or impose a cost on (I) an Affected Party funding or making or maintaining any Advances or any liquidity loan to an Issuer or any commitment of such
Affected Party with respect to any of the foregoing, or (II) the Administrative Agent for continuing its, or the Borrower's, relationship with the Lenders, or
(y) to reduce the amount of any sum received or receivable by an Affected Party under this Agreement or any Note, or under the Liquidity Agreement with respect thereto.
then within thirty days after written demand by such Affected Party (which demand shall be accompanied by a statement setting forth the basis of such demand), the Borrower shall pay directly to such Affected Party such additional amount or amounts as will compensate such Affected Party for such additional or increased cost or such reduction to the extent that such Affected Party reasonably determines such additional or increased cost or such reduction is fairly allocable to the Borrower.
(b) Each Affected Party will promptly notify the Borrower and the Administrative Agent of any event of which it has knowledge that will entitle such Affected Party to compensation pursuant to this Section 2.16; provided that if any Affected Party fails to give such notice within 180 days after it obtains actual knowledge of such an event, such Affected Party shall, with respect to compensation payable pursuant to Section 2.16 or 2.17 in respect of any costs or reduction in such rate of return resulting from such event, only be entitled to payment under such section for costs incurred from and after the date 180 days prior to the date that such Affected Party does give such notice and any Affected Party shall use commercially reasonable efforts to mitigate any such costs or reduction in such rate of return.
(c) In determining any amount provided for or referred to in this Section 2.16, an Affected Party may use any reasonable averaging and attribution methods that it (in its sole discretion) shall deem applicable. Any Affected Party when making a claim under this Section 2.16 shall submit to the Borrower a statement as to such increased cost or reduced return (including calculation thereof), which Statement shall be conclusive and binding upon the Borrower in the absence of manifest error in the case of a claim in an amount equal to or less than $5,000,000.
2.17. Additional Interest on Advances Bearing a Eurodollar Rate.
The Borrower shall pay to any Affected Party, so long as such Affected Party shall be required under regulations of the Federal Reserve Board to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal of each Advance or portion thereof made or funded (including fundings to an Issuer for the purpose of maintaining an Advance) by such Affected Party during each Interest Period in respect of which interest is computed by reference to the Eurodollar Rate, for such Interest Period, at a rate per annum equal at all times during such Interest Period to the remainder obtained by subtracting (i) the Eurodollar Rate for such Interest Period from (ii) the rate obtained by dividing such Eurodollar Rate referred to in clause (i) above by that percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Affected Party for such Interest Period, payable on each date on which interest is payable on such Advance. Such additional interest shall be determined by such Affected Party and notice thereof given to the Borrower (with a copy to the Administrative Agent) within 30 days after any interest payment is made with respect to which such additional interest is requested. A certificate as to such additional interest
submitted to the Borrower and the Administrative Agent by such Affected Party shall be, in the case of a claim in an amount equal to or less than $5,000,000, conclusive and binding for all purposes, absent manifest error.
2.18. Consequential Loss.
The Borrower shall indemnify each Affected Party against, and shall pay to the Administrative Agent for such Affected Party within ten days after request therefor, any Consequential Loss of any Affected Party. When any Affected Party requests that the Borrower pay any Consequential Loss, it shall deliver to the Borrower and the Administrative Agent a certificate setting forth the basis for imposing such Consequential Loss and the calculation of such amount thereof, which calculation shall be conclusive and binding absent manifest error.
2.19. Taxes.
(a) All payments made by the Borrower under this Agreement and the Notes shall be without setoff, deduction or counterclaim, and the Borrower agrees to pay on demand any present or future stamp or documentary taxes or any other taxes, levies, imposts, duties, charges, fees or withholdings which arise from payment made hereunder or under the Notes or from the execution or delivery or otherwise with respect to this Agreement or the Notes but excluding franchise taxes and taxes imposed on or measured by all or part of the gross or net income (but not including any such tax in the nature of a withholding tax) of such Affected Party by the jurisdiction under the laws of which such Affected Party is organized or has its applicable lending office or any political subdivision of any thereof (all such excluded taxes, levies, imposts, deductions, changes, withholding and liabilities collectively or individually referred to herein as "Excluded Taxes" and all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings, and liabilities collectively or individually referred to herein as "Taxes"). If the Borrower shall be required to deduct any Taxes from or in respect of any sum payable hereunder to any Affected Party: (i) the sum payable shall be increased by the amount (an "additional amount") necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.19) such Affected Party shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) any Borrower shall make such deductions and (iii) any Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.
(b) The Borrower agrees to pay to the relevant Governmental Authority in accordance with applicable law all taxes, levies, imposts, deductions, charges, assessments or fees of any kind (including but not limited to any current or future stamp or documentary taxes or any other excise or property taxes, charges, or similar levies, but excluding any Excluded Taxes) imposed upon any Affected Party as a result of the transactions contemplated by this Agreement or that arise from any payment made hereunder or from the execution, delivery, or registration of or otherwise similarly with respect to, this Agreement ("Other Taxes").
(c) Each Lender that is not a U.S. Person (each a "Non-U.S. Lender") sh all deliver to the Borrower: (i) two copies of either (A) United States Internal Revenue Service Form W-8BEN (including any successor forms thereto) or (B) United States Internal Revenue Service Form W-8ECI (including any successor forms thereto), or (ii) in the case of a Non-U.S.
Lender claiming an exemption from U.S. federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of "portfolio interest," a
Form W-8BEN (or any subsequent versions thereof or successors thereto) and a
certificate representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, in either case properly completed and duly executed
by such Non-U.S. Lender claiming complete exemption from U.S. federal
withholding tax on payments by each Borrower under this Agreement. Such forms
shall be delivered by each Non-U.S. Lender before the date it receives its first
payment under this Agreement, and before the date it receives its first payment
under this Agreement occurring after the date, if any, that such Non-U.S. Lender
changes its applicable lending office by designating a different lending office
(a "New Lending Office"). In addition, each Non-U.S. Lender shall deliver such
forms promptly after (or, if reasonably practicable, prior to) the obsolescence
or invalidity of any form previously delivered by such Non-U.S. Lender.
Notwithstanding any other provision of this Section 2.19(c), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.19(c) that
such Non-U.S. Lender is not legally able to deliver.
(d) Within 30 days after the Borrower pays any amount to any Affected Party from which it is required by law to make any deduction or withholding, and within 30 days after it is required by law to remit such deduction or withholding to any relevant taxing or other authority, any such Borrower shall deliver to the Administrative Agent for delivery to such Affected Party evidence satisfactory to such Person of such deduction, withholding or payment (as the case may be).
(e) If an Issuer or Agent receives the benefit of a tax refund, credit or other benefit which is attributable to any Taxes as to which the Issuer or Agent has been reimbursed by the Borrower, or with respect to which the Borrower have paid an additional amount hereunder, the Issuer or Agent shall within 30 days after the date of such receipt pay over the amount of such refund or credit (to the extent so attributable) to the Borrower, net of all reasonable out-of-pocket third party expenses of such Issuer or Agent related to claiming such refund or credit; provided, however, that (i) the Issuer or Agent, as the case may be, acting in good faith will be the sole judge of the amount of any such refund, credit or reduction and of the date on which such refund, credit or reduction is received, (ii) the Issuer or Agent, as the case may be, acting in good faith shall have absolute discretion as to the order and manner in which it employs or claims tax refunds, credits, reductions and allowances available to it, (iii) the Borrower agrees to repay the Issuer or Agent, as the case may be, upon written request from the Issuer or Agent, as the case may be, the amount of such refund, credit or reduction received by the Borrower, in the event and to the extent, the Issuer or Agent is required to repay such refund, credit or reduction to any relevant Governmental Authority, and (iv) neither the Issuer nor the Agent shall be required to make available its tax returns or any other information relating to its taxes and the computation thereof.
(f) Nothing contained in this Section 2.19 shall require an Affected Party to make available any of its tax returns (or any other information that it deems to be confidential or proprietary).
2.20. Replacement Banks.
Upon the election of any Affected Party to request reimbursement by the Borrower for increased costs under Sections 2.16 or 2.17 or for compensation in respect of withholding taxes under Section 2.19, the Borrower may, upon prior written notice to the Administrative Agent and such Affected Party, seek a replacement Bank to whom such additional costs or taxes shall not apply and which shall be satisfactory to the Administrative Agent (a "Replacement Bank"); provided, however, that the Borrower may not seek a replacement for a Bank unless the Issuer is also terminated as a party to this Agreement and all of its outstanding Advances are repaid in full as they become due. Each Affected Party agrees that, should it be identified for replacement pursuant to this Section 2.20, upon payment in full of all amounts due and owing to such Affected Party hereunder and under the other Transaction Documents, it will promptly execute and deliver all documents and instruments reasonably required by the Borrower to assign such Affected Party's portion of the Borrowings to the applicable Replacement Bank. Any such replacement shall not relieve the Borrower of its obligation to reimburse the Affected Party for any such increased costs or taxes incurred through the date of such replacement.
ARTICLE III
COLLATERAL
3.1. Collateral.
To secure the payment of the Obligations, the Borrower shall execute and deliver to the Administrative Agent and the Collateral Agent, as applicable:
(a) the Security Agreement,
(b) the Assignment of Account,
(c) the Assignments, and
(d) the UCC Financing Statements;
all as more fully provided for in the Collateral Agency Agreement. The Borrower further agrees to execute all documents and instruments, and perform all other acts deemed necessary by the Administrative Agent to create and perfect, and maintain the security interests and collateral assignments in favor of the Administrative Agent for the benefit of the holders of the Obligations, as perfected first priority security interests. Any security interest or collateral assignments granted to the Administrative Agent under any Transaction Document is for the benefit of the holders of the Obligations, whether or not reference is made to such holders.
3.2. Delivery of Collateral to Collateral Agent.
(a) Periodically, the Borrower may deliver Mortgage Loan Collateral to the Collateral Agent to hold as bailee for the Administrative Agent. Each delivery shall be made in association with an Assignment to the Administrative Agent, for the benefit of the holders of the Obligations, in all Mortgage Loans, Take-Out Commitments and related Collateral delivered
with or described in such Assignment or any schedules thereto. The Borrower shall use the form of Assignment provided for in the Collateral Agency Agreement.
(b) Each Assignment delivered to the Collateral Agent shall be accompanied by a completed Schedule II and Schedule III using the forms of such schedules as prescribed in the Collateral Agency Agreement and, with respect to each Mortgage Loan described in Schedule II to each Assignment, shall deliver or cause to be delivered the following items (collectively, the "Principal Mortgage Documents"):
(i) the original of each Mortgage Note, endorsed in blank (without recourse) and all intervening endorsements thereto;
(ii) an original executed assignment in blank for each Mortgage securing such Mortgage Loan, in recordable form, executed by the Originator, in the case of each Mortgage Loan that is not a MERS Designated Mortgage Loan, or by an authorized signatory of MERS, in the case of each MERS Designated Mortgage Loan; and
(iii) a certified copy of the executed Mortgage related to such Mortgage Note;
(c) The Servicer shall hold in trust for the Administrative Agent for the benefit of the holders of the Obligations, with respect to each Mortgage Loan included in the Collateral,
(i) the original filed Mortgage relating to such Mortgage Loan, provided, however, that, until an original Mortgage is received from the public official charged with its filing and recordation, a copy, certified by the closing agent to be a true and correct copy of the filed and recorded original, may be used by the Borrower to satisfy this requirement; however, the Borrower shall thereafter pursue, with reasonable diligence, receipt of the filed and recorded original Mortgage;
(ii) other than with respect to a HUD repossessed Property that is sold to a cosumer, a mortgagee's policy of title insurance (or binding unexpired commitment to issue such insurance if the policy has not yet been delivered to the Servicer) insuring the Borrower's perfected, first-priority Lien created by the Mortgage securing such Mortgage Loan (subject to such title exceptions that conform to the related Take-Out Commitments) in a policy amount not less than the principal amount of such Mortgage Loan;
(iii) the original hazard insurance policy, appropriately endorsed to provide that all insurance proceeds will be paid to the Originator or its assigns, referred to in Section 6.6(b) hereof which relate to such Mortgage Loan, or other evidence of insurance acceptable to the Administrative Agent;
(iv) the form of current appraisal of the Property described in the Mortgage, prepared by a state licensed appraiser, that complies with all applicable Governmental Requirements, including all Governmental Requirements that are
applicable to the Lenders or any other Affected Party; provided, however, that no appraisal shall be required for Mortgage Loans (x) financing HUD repossessed Property that is sold to a consumer, financed with an FHA loan, fully insurable and in accordance with FHA guidelines, but for which an appraisal is not required, or (y) representing so called VA Rate Reduction or FHA streamline refinances, insurable in accordance with VA and FHA guidelines, but for which an appraisal is not required ; and
(v) all other original documents (collectively, the "Other Mortgage Documents").
Upon request of the Administrative Agent, and three Business Days' prior notice by the Administrative Agent to the Collateral Agent, the Servicer shall immediately deliver, or shall cause to be delivered, all such items, held in trust, to the Collateral Agent as bailee for the Administrative Agent or such other party as may be designated in such notice. Upon instructions from the Administrative Agent, the Collateral Agent shall reject as unsatisfactory any items so delivered, noting the rejection on the Schedule of Exceptions, whereupon the Mortgage Loan shall not be an Eligible Mortgage Loan.
(d) In connection with each Assignment delivered to the Collateral Agent, the Borrower shall deliver to the Administrative Agent copies of the related Take-Out Commitment Master Agreements with the related Approved Investor, with any confidential economic terms redacted (unless a copy of such agreement or commitment has been delivered previously).
(e) The Servicer shall provide the Collateral Agent and the Administrative Agent with full access to all Other Mortgage Documents held in trust for the Administrative Agent at all times.
(f) With respect to each Assignment that is received by the Collateral Agent, the Collateral Agent shall review such Assignment and make a written report to the Borrower and the Administrative Agent, all as more fully provided in the Collateral Agency Agreement.
3.3. Redemption of Mortgage Collateral.
(a) Generally. So long as no Default or Event of Default is continuing, the Servicer (on behalf of the Borrower) may obtain releases of the Administrative Agent's security interest in all or any part of the Eligible Mortgage Collateral (including releases from the Collection Account) at any time, and from time to time, (i) to the extent that total Collateral Value of all Eligible Mortgage Collateral (immediately after giving effect to the requested release) equals or exceeds the Primary Obligations, as shown on the most recent Borrowing Report, or (ii) by either (A) the Borrower making a principal payment on account of the Principal Debt in an amount, or (B) delivering to the Collateral Agent as bailee for the Administrative Agent substitute Eligible Mortgage Collateral with a Collateral Value, such that after giving effect to such payment or delivery, the total Collateral Value of all Eligible Mortgage Collateral will equal or exceed the Primary Obligations.
(b) Redemption Pursuant to Sale. So long as no Default or Event of Default is continuing, any one of the following may occur: (x) the Borrower, or the Servicer acting for the Borrower, from time to time may sell or pool Mortgage Loans either to an Approved Investor
pursuant to a Take-Out Commitment or to the Originator under the Repurchase Agreement; (y) the Borrower may provide Mortgage Loans to the Originator for sale to an Approved Investor pursuant to a Take-Out Commitment, provided that payment is directed to the Collection Account and the security interest in the Mortgage Loan will not be released and the Borrower will not be deemed to have sold the Mortgage Loans to the Originator until the Purchase Price is received in the Collection Account; and (z) the Borrower, or the Servicer acting for the Borrower, may request the Administrative Agent to permit the Borrower to sell Mortgage Loans, or to pool Mortgage Loans, under such other circumstances as may be described in the request. Upon the receipt by the Collateral Agent of a Shipping Request preliminary to a transaction permitted by this Section 3.3, identifying Collateral to be delivered to an Approved Investor or through the Originator, and so long as no Default or Event of Default shall be in existence:
(i) The Collateral Agent shall deliver to the Approved Investor, or its loan servicing provider or custodian, under the Collateral Agent's "Bailee and Security Agreement Letter" substantially in the form provided for in the Collateral Agency Agreement, as appropriate, the items of Mortgage Loan Collateral being sold that are held by the Collateral Agent as bailee for the Administrative Agent pursuant to Section 3.2 hereof, with the release of the security interest in favor of the Administrative Agent for the benefit of the holders of the Obligations in such items being conditioned upon timely payment to the Collection Account of the amount described in Section 3.3(b)(iii) or delivery of additional Eligible Mortgage Collateral;
(ii) The Servicer shall, as agent for the Administrative Agent, deliver to such Approved Investor, or such Approved Investor's loan servicing provider or custodian, pursuant to procedures provided for in the Collateral Agency Agreement, the items held by the Servicer pursuant to Section 3.2(c) that are related to the Mortgage Loan Collateral to be transferred on the condition that such Approved Investor or its loan servicing provider or custodian shall hold or control such Other Mortgage Documents as bailee for the Administrative Agent (for the benefit of the holders of the Obligations) until the Approved Investor has either paid the full purchase price for such Mortgage Loan Collateral to the Collection Account, as required by the relevant Take-Out Commitment;
(iii) Within forty-five (45) days after the delivery by the
Collateral Agent to such Approved Investor or its loan servicing provider
or custodian of the items of Mortgage Loan Collateral described in
Section 3.3(b)(i) or (ii) , the Borrower shall make a payment, or shall
cause a payment to be made, to the Collection Account, for distribution
to the Administrative Agent for the account of the Lenders in an amount
equal to at least the full purchase price for such Mortgage Loan
Collateral or shall substitute Eligible Mortgage Collateral as permitted
by this Section 3.3; and
(iv) With respect to each Shipping Request that is received by the Collateral Agent by 11:30 a.m. (eastern time) on a Business Day, the Collateral Agent shall use due diligence and efforts to review such Shipping Request and prepare the Mortgage Loan files identified in each Shipping Request, for shipment prior to the close of business on such day.
(c) Transfers. So long as no Default or Event of Default is continuing, the Borrower shall, at any time, be permitted to transfer Mortgage Loans to any Permitted Transferees (as defined below) by means of its daily electronic transmissions to the Collateral Agent, together with delivery of a Transfer Request delivered to the Collateral Agent, identifying each Mortgage Loan being transferred. The Collateral Agent's sole responsibility with respect to any such transfers shall be to correctly reflect such transfers on its computer system and books and records and to indicate, on its Collateral Agent's Daily Report on the next Business Day, that such transfers have been effected. "Permitted Transferees" means (i) the related Originator, in connection with any sale and transfer thereto effected pursuant to the terms of the Repurchase Agreement and (ii) any Approved Investor approved by the Administrative Agent as a Permitted Transferee. However, requested transfers will not be made if (A) as reflected on the most recent Borrowing Report, total Primary Obligations will equal or exceed the total Collateral Value of Eligible Mortgage Collateral immediately after giving effect to a requested transfer and any accompanying substitution of Mortgage Collateral, or (B) the Collateral Agent shall have received written notice from the Administrative Agent that a Default or Event of Default has occurred.
(d) Continuation of Lien. Unless released in writing by the Administrative Agent as herein provided, the security interest in favor of the Administrative Agent for the benefit of the holders of the Obligations, in all Mortgage Loan Collateral transmitted pursuant to Section 3.3(b) shall continue in effect until such time as payment in full of the amount described in Section 3.3(b)(iii) shall have been received.
(e) Application of Proceeds; No Duty. Neither the Administrative Agent nor the Lenders shall be under any duty at any time to credit Borrower for any amount due from any Approved Investor in respect of any purchase of any Mortgage Collateral contemplated under Section 3.3(b) above, until such amount has actually been received in immediately available funds and deposited to the Collection Account. Neither the Collateral Agent, nor the Lenders, nor the Administrative Agent shall be under any duty at any time to collect any amounts or otherwise enforce any obligations due from any Approved Investor in respect of any such purchase.
(f) Mandatory Redemption of Mortgage Collateral. Notwithstanding any provision herein to the contrary, if at any time a Collateral Deficiency exists, the Borrower shall, immediately upon receipt of notice (which may be by telephone, promptly confirmed in writing) from either the Administrative Agent or the Collateral Agent, make a payment to the Collection Account (or make payment directly to the Administrative Agent) or pledge, assign and deliver additional or substitute Eligible Mortgage Collateral to the Administrative Agent for the benefit of the holders of the Obligations, so that, immediately after giving effect to such payment or pledge and assignment, total Collateral Value of Eligible Mortgage Collateral shall be equal or greater than the Principal Debt.
(g) Representation in Connection with Releases, Sales and Transfers. The Borrower represents and warrants that each request for any release or transfer pursuant to Section 3.3(a) or Section 3.3(b) shall automatically constitute a representation and warranty to the effect that immediately before and after giving effect to such release or Transfer Request, the Collateral Value of Eligible Mortgage Collateral shall equal or exceed the Primary Obligations.
(h) Limitation on Releases. Notwithstanding any provision to the contrary, the Collateral Agent shall not release any Collateral unless payment of the purchase price by the Approved Investor shall have been made in immediately available funds to the Collection Account; provided, however, that the foregoing shall not apply if immediately before and after giving effect thereto, the total Collateral Value of Eligible Mortgage Collateral shall equal or exceed the Principal Debt.
3.4. Correction of Mortgage Notes.
The Servicer may from time to time request, in writing, that the Collateral Agent deliver a Mortgage Note that constitutes Mortgage Loan Collateral so that such Mortgage Note may be replaced by a corrected Mortgage Note. Upon receipt by the Collateral Agent of such a request from the Servicer, and so long as no Default or Event of Default shall be in existence, the Collateral Agent shall deliver to the Servicer, under the Collateral Agent's "Trust Receipt and Security Agreement Letter", in the form provided for in the Collateral Agency Agreement, the Mortgage Note to be corrected, such delivery to be conditioned upon the receipt within fourteen (14) calendar days by the Collateral Agent of a corrected Mortgage Note acceptable to it; provided, that:
(i) until such time as a corrected Mortgage Note shall have been delivered to the Collateral Agent, the Collateral Value attributed to each Mortgage Note delivered to the Servicer to be corrected in accordance with this Section 3.4 shall be notwithstanding the preceding clause (i); and
(ii) notwithstanding the preceding clause (i), unless the corrected Mortgage Note is endorsed in blank (without recourse) within 14 calendar days of the delivery by the Collateral Agent of the Mortgage Note to be corrected, the Collateral Value attributed to both the Mortgage Note to be delivered and the corrected Mortgage Note shall be zero; provided, however, that the Collateral Value attributable to the corrected Mortgage Note will be reinstated promptly upon the delivery thereof to the Collateral Agent.
3.5. Collateral Reporting.
Pursuant to the Collateral Agency Agreement, at the commencement of each Business Day, and in no event later than 1:00 p.m. (eastern time), the Collateral Agent shall furnish to the Borrower and the Administrative Agent by facsimile (a hard copy of which shall not subsequently be mailed, sent or delivered to the Administrative Agent, unless so requested by the Administrative Agent) a duly completed Collateral Agent Daily Report in the form of Exhibit D-8 to the Collateral Agency Agreement.
3.6. Take-Out Commitment Reporting.
(a) Each Assignment delivered to the Collateral Agent shall
indicate (x) the Approved Investor with respect to the Take-Out Commitment, or
(y) that there is no loan level Take-Out Commitment but that the Mortgage Loan
is hedged.
For each Mortgage Loan that, as of the fourth Business Day after delivery of the Assignment relating to such Mortgage Loan, is covered by a Take-Out Commitment in the form of a hedge by forward sale commitment but is not covered by a loan-specific Take-Out Commitment, the Servicer shall furnish to the Borrower and the Collateral Agent a duly completed Hedge Report in the form of Exhibit K, no later than 10:00 a.m. (eastern time) on the fifth Business Day after delivery of such Assignment relating to such Mortgage Loan. In addition, no later than 10:00 a.m. on the fifth Business Day following the delivery of any Assignment that reflected one or more Mortgage Loans that were covered by a Take-Out Commitment in the form of a forward sale commitment hedge, but not a loan-specific Take-Out Commitment, the Servicer shall furnish the Borrower and the Collateral Agent with a list of Mortgage Loans that subsequently were committed pursuant to the loan-specific Take-Out Commitment, with an code indicating the Investor related to the Take-Out Commitment and an indication of the price associated with the Take-Out Commitment.
(b) The Borrower shall provide the Administrative Agent with up-to-date copies of the Take-Out Commitment Master Agreements for each Approved Investor.
(c) Upon request of the Administrative Agent at any time, the Servicer shall furnish to the Administrative Agent (x) if there are any Mortgage Loans not subject to a loan level Take-Out Commitment, a duly completed Hedge Report in the form of Exhibit K, and (y) a list of loan-specific Take-Out Commitments, together with copies of any such loan-specific Take-Out Commitments to the extent not previously delivered to the Administrative Agent.
3.7. Servicer Monthly Reporting.
No later than 10:00 a.m. (eastern time) on the 15th day of each month
(or, if such day is not a Business Day, the next Business Day) and within twenty
(20) days after request by the Administrative Agent, the Servicer shall furnish
the Borrower and the Administrative Agent (by facsimile or electronic
transmission (a hard copy of which shall not subsequently be mailed, sent or
delivered to the Administrative Agent, unless so requested by the Administrative
Agent) a report executed by a Financial Officer of the Servicer or the
Originator, in the form of Exhibit F hereto ("Servicer Monthly Report") which
shall provide as of the last day of the previous month (or of the date of such
request) (i) a computation of the Default Ratio and Sixty-Day Default Ratio,
(ii) delinquency of Mortgage Loans owned by the Borrower that are financed by
the Lenders and constitute Collateral hereunder, and (iii) the other information
provided for therein.
3.8. Servicer Annual Pipeline Reporting.
No later than 10:00 a.m. (eastern time) promptly after becoming available, and in any event within 90 days after the close of each fiscal year of the Originator, a report, in form and content acceptable to the Administrative Agent, on the Originator's "open and pipeline positions" for Conforming Loans as of the last day of such fiscal year, and the Originator's Mortgage Loan production for such fiscal year for all Mortgage Loans.
3.9. Administrative Agent Reporting.
At the request of the Borrower and not more often than on each Business Day that falls on the first day of an Interest Period, the Administrative Agent shall furnish the Borrower and
the Servicer (by facsimile (a hard copy of which shall subsequently be mailed, sent or delivered to the Servicer or Borrower, only if so requested by such Person) a duly completed Administrative Agent Report in the form of Exhibit M (the "Administrative Agent Report") specifying the Maximum Facility Amount and other information, as more fully provided therein.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Initial Borrowing.
The effectiveness of this Agreement and the making of the initial Advance hereunder shall not occur until the later of July 9, 2002, or satisfaction of the conditions precedent specified in Section 4.2 hereof and delivery to the Administrative Agent of the following (each of the following documents being duly executed and delivered and in form and substance satisfactory to the Administrative Agent, and, with the exception of the Notes and the UCC statement(s), each in a sufficient number of originals that the Administrative Agent may have an executed original of each document):
(a) an executed counterpart of this Agreement;
(b) the Notes;
(c) the Collateral Agency Agreement, the Security Agreement, the Assignment of Account and such other Security Instruments as may be requested by the Administrative Agent;
(d) the Repurchase Agreement;
(e) the Subordination Agreement in the form of Exhibit B;
(f) a certificate of the Secretary or Assistant Secretary of each of the Borrower, the general partner of the Originator and D.R. Horton setting forth (i) resolutions of the Borrower's, the general partner of the Originator's and D.R. Horton's board of directors authorizing the execution, delivery, and performance by each of the Borrower, Originator and D.R. Horton of the Transaction Documents to which they are a party and identifying the officers of the Borrower, the Originator and D.R. Horton who are authorized to sign such Transaction Documents, and (ii) specimen signatures of the officers so authorized;
(g) a copy, certified as true by the Secretary or Assistant Secretary of each of the Borrower, the general partner of the Originator and D.R. Horton, of the articles of incorporation, articles of limited partnership, articles of organization, certificate of limited partnership, certificate of incorporation, certificate of organization and the bylaws, the operating agreement or the Partnership Agreement of each of the Borrower, the Originator and D.R. Horton, respectively, together with all amendments thereto;
(h) a favorable written opinion from counsel to the Borrower, Originator and D.R. Horton on entity matters substantially in the form of Exhibit I-1 hereto and a favorable
written opinion from counsel to the Borrower and the Originator on security interest matters substantially in the form of Exhibit I-2 hereto.
(i) a favorable written opinion from counsel to the Originator as to true sale and non-consolidation matters, substantially in the form of Exhibit J hereto;
(j) a certificate from each of (i) the Secretary of the State of Delaware, (ii) the Secretary of State of the State of Texas and (iii) an officer of the Borrower, D.R. Horton and the general partner of the Originator with respect to every state in which the Borrower, D.R. Horton and the Originator conducts business, as to the good standing or existence of the Borrower, D.R. Horton and/or the Originator, as applicable, in each state or states for which each certificate is made;
(k) the Administrative Agent Fee Letter;
(l) evidence of the payment of fees due at closing, as provided in the Administrative Agent Fee Letter;
(m) a letter agreement between the Borrower and the Collateral Agent establishing fees for collateral agency, custodial and administrative services, and a mutually agreeable schedule for payment of such fees shall have been executed by the Borrower and the Collateral Agent and shall have been approved by the Administrative Agent;
(n) acknowledgment copies of proper Financing Statements (Form UCC-1), filed on or prior to the date of the initial Advance, naming (i) the Originator as the Seller, the Borrower as the secured party/purchaser and the Administrative Agent as the assignee, and (ii) the Borrower as the debtor and the Administrative Agent on behalf of the holders of the Obligations as the secured party, or other, similar instruments or documents, as may be necessary or, in the opinion of the Administrative Agent, desirable under the UCC or any comparable law of all appropriate jurisdictions to perfect the ownership and security interests in the Collateral contemplated by the Repurchase Agreement and this Agreement;
(o) a search report provided in writing to the Administrative Agent by the Corporation Service Company, listing all effective financing statements that name the Borrower or the Originator as debtor and that are filed in the jurisdictions in which filings were made pursuant to subsection (o) above and in such other jurisdictions as the Administrative Agent shall request, together with copies of such financing statements (none of which, except as listed on Schedule III, shall cover any Mortgage Loans or interests therein or proceeds thereof);
(p) evidence of the initial deposit to the Reserve Account in the amount of 0.5% of the Maximum Facility Amount;
(q) such other documents as the Administrative Agent may request at any time at or prior to the Borrowing Date of the initial Borrowing hereunder; and
(r) copies of all Take-Out Commitment Master Agreements with Approved Investors.
4.2. All Borrowings.
Each Advance (including, without limitation, the initial Advance) pursuant to this Agreement is subject to the following further conditions precedent:
(a) (i) prior to 10:30 a.m. (eastern time) on the Business Day before the designated Borrowing Date, the Administrative Agent and the Collateral Agent shall have received a Borrowing Report, verifying that after giving effect to the requested Advance, the Collateral Value of all Eligible Mortgage Collateral shall exceed the Primary Obligations (together with any related Assignment) duly executed and delivered by the Borrower; and (ii) the Administrative Agent shall have received, no later than 1:00 p.m. (eastern time), on the proposed date of funding, a Collateral Agent Daily Report, pursuant to Section 3.8 of the Collateral Agency Agreement;
(b) all Collateral in which the Borrower has granted a security interest to the Administrative Agent for the benefit of the holders of the Obligations, with the exception of Special Mortgage Loans pursuant to Section 2.3(c), shall have been physically delivered to the possession of the Collateral Agent in accordance with Section 3.2;
(c) the representations and warranties of the Borrower, the Originator and (so long as the Servicer and the Originator are the same entity) the Servicer contained in this Agreement, any Assignment or Borrowing Report, or any Security Instrument or other Transaction Document (other than those representations and warranties that, by their express terms, are limited to the effective date of the document or agreement in which they are initially made) shall be true and correct in all respects on and as of the date of such Advance;
(d) no Default, Event of Default, Servicer Default or Advance Cessation Trigger shall have occurred and be continuing, or would result from such Advance, and no change or event that constitutes a Material Adverse Effect shall have occurred and be continuing as of the date of such Advance;
(e) the Collection Account shall be established and in existence and free from any Lien other than pursuant to the Assignment of Account;
(f) delivery of a sufficient number of originals such that the Administrative Agent may have an executed original thereof, of such other documents and opinions of counsel, including such other documents as may be necessary or desirable to perfect or maintain the priority of any Lien granted or intended to be granted hereunder or otherwise and including favorable written opinions of counsel with respect thereto, as the Administrative Agent may request; and
(g) the Drawdown Termination Date shall not have occurred.
Each Borrowing Report shall be automatically deemed to constitute a representation and warranty by the Borrower on the Borrowing Date set forth therein to the effect that all of the conditions of this Section 4.2 are satisfied as of such Borrowing Date.
4.3. All Disbursements of Funds.
Each disbursement of funds to the Borrower in connection with an Advance (including without limitation, the Initial Advance) pursuant to this Agreement is subject to the further condition precedent that no Advance Cessation Trigger shall have occurred and be continuing. This condition precedent shall not prevent any Advance that constitutes a continuation of an amount outstanding if no new funds are disbursed to the Borrower. Each Borrowing Report shall be automatically deemed to constitute a representation and warranty by the Borrower on the Borrowing Date set forth therein to the effect that all of the conditions of this Section 4.3 are satisfied as of such Borrowing Date.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations of the Borrower and the Servicer.
The Borrower and the Servicer each represents and warrants, as to itself, as follows:
(a) Organization and Good Standing. It (i) in the case of the Borrower, is a limited liability company and, in the case of the Servicer, is a limited partnership, in each case duly organized and existing in good standing under the laws of the jurisdiction of its organization, (ii) is duly qualified to do business and in good standing in all jurisdictions in which its failure to be so qualified could have a Material Adverse Effect, (iii) has the requisite entity power and authority to own its properties and assets and to transact the business in which it is engaged and is or will be qualified in those states wherein it proposes to transact business in the future and (iv) is in compliance with all Requirements of Law except, with respect to the Servicer, if the failure to be so qualified would not have a Material Adverse Effect.
(b) Authorization and Power. It has the requisite entity power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party; it is duly authorized to and has taken all requisite entity action necessary to authorize it to, execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and is and will continue to be duly authorized to perform this Agreement and such other Transaction Documents.
(c) No Conflicts or Consents. Neither the execution and delivery by it of this Agreement or the other Transaction Documents to which it is a party, nor the consummation of any of the transactions herein or therein contemplated, nor compliance with the terms and provisions hereof or with the terms and provisions thereof, will (i) contravene or conflict with any Requirement of Law to which it is subject, or any indenture, mortgage, deed of trust, or other agreement or instrument to which it is a party or by which it may be bound, or to which its Property may be subject, or (ii) result in the creation or imposition of any Lien, other than the Liens of the Security Instruments, on the Property of the Borrower.
(d) Enforceable Obligations. This Agreement and the other Transaction Documents to which it is a party have been duly and validly executed by it and are its legal, valid
and binding obligations, enforceable in accordance with their respective terms, except as limited by Debtor Laws.
(e) Full Disclosure. Neither its financial statements nor any Borrowing Report, officer's certificate or statement delivered by it to the Administrative Agent in connection with this Agreement, contains or will contain any untrue or inaccurate statement of material fact or omits or will omit to state a material fact necessary to make such information not misleading.
(f) No Default. It is not in default under any loan agreement,
mortgage, security agreement or other agreement or obligation to which it is a
party or by which any of its Property is bound, if such default would also be a
Default or an Event of Default (or, with notice or passage of time would become
a Default or Event of Default) under either of subparagraphs (e) or (i) of
Section 8.1 of this Agreement.
(g) Litigation.
(i) Except as set forth on Schedule IV, there are no actions, suits or proceedings, including arbitrations and administrative actions, at law or in equity, either by or before any Governmental Authority, now pending or, to its knowledge, threatened by or against it or any of its Subsidiaries, and pertaining to any Governmental Requirement affecting its Property or rights or any of its Subsidiaries, that, if determined adversely to the Borrower or Servicer, would result in liability of $1,000,000 or more.
(ii) Neither it nor any of its Subsidiaries is in default with respect to any Governmental Requirements which, with respect to the Servicer, would have a Material Adverse Effect.
(iii) The Borrower is not liable on any judgment, order or decree (or any series of judgments, orders, or decrees) having an aggregate liability of $100,000 or more and that has not been paid, stayed or dismissed within 30 days.
(h) Taxes. All tax returns required to be filed by it in any jurisdiction have been filed and all taxes, assessments, fees and other governmental charges upon it or upon any of its properties, income or franchises have been paid prior to the time that such taxes could give rise to a Lien thereon, unless protested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been established on its books. It has no knowledge of any proposed tax assessment against it that would have a Material Adverse Effect.
(i) Indebtedness. If the Servicer is the Originator, the
Servicer is in compliance with the maximum leverage test set forth in
Section 7.10.
(j) Permits, Patents, Trademarks, Etc.
(i) It has all permits and licenses necessary for the operation of its business.
(ii) It owns or possesses (or is licensed or otherwise has the necessary right to use) all patents, trademarks, service marks, trade names and copyrights, technology, know-how and processes, and all rights with respect to the foregoing, which are necessary for the operation of its business, without any conflict with the rights of others. Except, with respect to the Servicer, to the extent that failure to comply with any of the foregoing could not reasonably be expected to have a Material Adverse Effect, the consummation of the transactions contemplated hereby will not alter or impair any of such rights of it.
(k) Status Under Certain Federal Statutes. It is not (i) a "holding company", or a "subsidiary company" of a "holding company" or an "affiliate" of a "holding company," or of a "subsidiary company" of a "holding company," as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, (ii) a "public utility," as such term is defined in the Federal Power Act, as amended, (iii) an "investment company," or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended, or (iv) a "rail carrier," or a "person controlled by or affiliated with a rail carrier," within the meaning of Title 49, U.S.C., and it is not a "carrier" to which 49 U.S.C. (S) 11301(b)(1) is applicable.
(l) Securities Acts. It has not issued any unregistered securities in violation of the registration requirements of the Securities Act of 1933, as amended, or of any other Requirement of Law, and is not violating any rule, regulation, or requirement under the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended. The Borrower is not required to qualify an indenture under the Trust Indenture Act of 1939, as amended, in connection with its execution and delivery of the Notes.
(m) No Approvals Required. Other than consents and approvals previously obtained and actions previously taken, neither the execution and delivery of this Agreement and the other Transaction Documents to which it is a party, nor the consummation of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, or the registration, recording or filing by it of any document with, or the taking of any other action in respect of, any Governmental Authority that has jurisdiction over it or any of its Property, except, with respect to the Servicer, to the extent that failure to obtain any such consent or approval could not reasonably be expected to have a Material Adverse Effect.
(n) Environmental Matters. There have been no past, and there are no pending or threatened, claims, complaints, notices, or governmental inquiries against it regarding any alleged violation of, or potential liability under, any environmental laws that could be expected to have a Material Adverse Effect. It and its properties are in compliance in all material respects with all environmental laws and related licenses and permits. No conditions exist at, on or under any Property now or previously owned or leased by it that could give rise to liability under any environmental law that could be expected to have a Material Adverse Effect.
(o) Eligibility. The Servicer and the Originator are approved and qualified and in good standing as a lender or seller/servicer, as follows:
(i) Each of the Servicer and the Originator is a Fannie Mae approved seller/servicer and the Borrower is a Fannie Mae approved seller (in good standing) of Mortgage Loans, eligible to originate, purchase, hold, sell and, with respect to the Originator and the Servicer, service Mortgage Loans to be sold to Fannie Mae.
(ii) Each of the Servicer and the Originator is a Freddie Mac approved seller/servicer (in good standing) of Mortgage Loans, eligible to originate, purchase, hold, sell and service Mortgage Loans to be sold to Freddie Mac.
Each of the Servicer and Originator is an approved FHA servicer, VA servicer and Ginnie Mae issuer (in good standing) of mortgage loans, eligible to originate, purchase, hold, sell and service mortgage loans to be pooled into Ginnie Mae MBS Pools and to issue Ginnie Mae MBS.
5.2. Additional Representations of the Borrower.
The Borrower further represents and warrants as follows:
(a) Activities. The Borrower was formed on June 21, 2002, and the Borrower did not engage in any business activities prior to the date of this Agreement. The Borrower will limit its activities to those specified in the Articles of Organization and has no Subsidiaries.
(b) Solvency. Both prior to and after giving effect to each Borrowing, (i) the fair value of the property of the Borrower is greater than the total amount of liabilities, including contingent liabilities, of the Borrower, (ii) the present fair salable value of the assets of the Borrower is not less than the amount that will be required to pay all probable liabilities of the Borrower on its debts as they become absolute and matured, (iii) the Borrower does not intend to, and does not believe that it will, incur debts or liabilities beyond the Borrower's abilities to pay such debts and liabilities as they mature and (iv) the Borrower is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which the Borrower's property would constitute reasonably small capital.
(c) Purchase of Mortgage Loans. With respect to each Mortgage Loan, the Borrower shall have purchased such Mortgage Loan from the Originator in exchange for payment (made by the Borrower to the Originator in accordance with the provisions of the Repurchase Agreement) of cash, the Deferred Purchase Price (as such term is defined in the Repurchase Agreement), or a combination thereof in an amount that constitutes fair consideration and reasonably equivalent value. Each such sale referred to in the preceding sentence shall not have been made for or on account of an antecedent debt owed by the Originator to the Borrower and no such sale is or may be voidable or subject to avoidance under any section of the Federal Bankruptcy Code.
(d) Priority of Debts and Liens. The Borrower has incurred no Indebtedness except as expressly incurred hereunder and under the other Transaction Documents. Upon delivery of an Assignment to the Collateral Agent, the Administrative Agent will have a valid, enforceable, perfected and first-priority Lien, for the benefit of the holders of the Obligations, in all Mortgage Loan Collateral described in or delivered with such Assignment. Upon delivery of funds for deposit in the Collection Account to the Collateral Agent, the Administrative Agent
will have a valid, enforceable, perfected and first-priority Lien for the benefit of the holders of the Obligations, on the Collection Account and related Collateral.
(e) No Liens. The Borrower has (or, as to all Mortgage Loan
Collateral delivered to the Collateral Agent after the date of this Agreement,
will have) good and indefeasible title to all Collateral, and the Mortgage Loan
Collateral and all proceeds thereof are (or, as to all Mortgage Loan Collateral
delivered to the Collateral Agent after the date of this Agreement, will be)
free and clear of all Liens and other adverse claims of any nature, other than
(i) the right of the related Originator to repurchase such Mortgage Loan
Collateral pursuant to the terms of the Repurchase Agreement and/or (ii) Liens
in the Mortgage Loan Collateral or proceeds in favor of the Administrative Agent
for the benefit of the holders of the Obligations.
(f) Financial Condition. The opening pro forma balance sheet of the Borrower as at June 30, 2002, giving effect to the initial capitalization of the Borrower and the initial Borrowing to be made under this Agreement, a copy of which has been furnished to the Administrative Agent, fairly presents the financial condition of the Borrower as at such date, in accordance with GAAP, and since June 30, 2002 there has been no material adverse change in the business, operations, property or financial or other condition of the Borrower.
(g) Principal Office, Etc. The principal office, chief executive office and principal place of business of the Borrower is at 12357 Riata Trace Parkway, Suite C150, Austin, TX 78727. CH Mortgage is organized under the laws of Delaware and not under the laws of any other jurisdiction.
(h) Ownership. CH Mortgage is the owner of all of the issued and outstanding limited liability company interests of the Borrower.
(i) UCC Financing Statements. Except as set forth on Schedule III,
no effective financing statement or other instrument similar in effect covering
any Mortgage Loan, any interest therein, or the related Collateral with respect
thereto is on file in any recording office except such as may be filed (x) in
favor of the Originator or the Borrower in accordance with the Mortgage Loans,
(y) in favor of the Borrower in connection with the Repurchase Agreement, or (z)
in favor of the Administrative Agent or the holders of the Obligations in
accordance with this Agreement or in connection with a Lien arising solely as
the result of any action taken by the Lenders (or any assignee thereof) or by
the Administrative Agent.
(j) Trade Names. The Borrower is not known by and does not use any trade name or doing-business-as name.
5.3. Additional Representations and Warranties of the Servicer.
The Servicer represents and warrants as follows:
(a) Financial Condition.
(i) The Servicer has delivered to the Administrative Agent (x) copies of the Servicer's balance sheet, as of March 31, 2002, and the related statements of income, stockholder's equity and cash flows for the year ended on such date, audited by
independent certified accountants of recognized national standing and (y) copies of the Servicer's balance sheet, as of March 31, 2002, and the related statements of income, stockholder's equity and cash flows for the nine months ended on such date, ("Interim Statements"); and all such financial statements fairly present the financial condition of the Servicer as of their respective dates, subject, in the case of the Interim Statements, to normal year end adjustments and the results of operations of the Servicer for the periods ended on such dates and have been prepared in accordance with GAAP.
(ii) As of the date thereof, there are no obligations, liabilities or Indebtedness (including contingent and indirect liabilities and obligations or unusual forward or long-term commitments) of the Servicer required to be recorded under GAAP that are not reflected therein.
(iii) No change that constitutes a Material Adverse Effect has occurred in the financial condition or business of the Servicer since March 31, 2002.
(b) Employee Benefit Plans. (i) No Employee Plan of the
Servicer or any ERISA Affiliate has incurred an "accumulated funding deficiency"
(as defined in Section 302 of ERISA or Section 412 of the Code), (ii) neither
the Servicer nor any ERISA Affiliate has incurred liability under ERISA to the
PBGC, (iii) neither the Servicer nor any ERISA Affiliate has partially or fully
withdrawn from participation in a Multiemployer Plan, (iv) no Employee Plan of
the Servicer or any ERISA Affiliate has been the subject of involuntary
termination proceedings, (v) neither the Servicer nor any ERISA Affiliate has
engaged in any "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the Code) that might give rise to a material liability of the
Servicer or any ERISA Affiliate, and (vi) no "reportable event" (as defined in
Section 4043 of ERISA) has occurred in connection with any Employee Plan of the
Servicer or any ERISA Affiliate other than events for which the notice
requirement is waived under applicable PBGC regulations.
(c) Ownership. On the date of this Agreement, D.R. Horton has beneficial ownership of 100% of the issued and outstanding shares of each class of the stock of the general partner and each limited partner of the Servicer. The Servicer is the owner of all the limited liability company shares in the Borrower.
5.4. Survival of Representations.
All representations and warranties by the Borrower and the Servicer herein shall survive delivery of the Notes and the making of the Advances, and any investigation at any time made by or on behalf of the Administrative Agent or the Lenders shall not diminish the right of the Administrative Agent or the Lenders to rely thereon.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower and the Servicer shall each at all times comply with the covenants applicable to it contained in this Article VI, from the date hereof until the later of the Drawdown Termination Date and the date all of the Obligations are paid in full.
6.1. Financial Statements and Reports.
The Servicer, for so long as the Servicer is the Originator, and thereafter the Borrower, shall furnish to the Administrative Agent the following, all in form and detail satisfactory to the Administrative Agent:
(a) promptly after becoming available, and in any event within
120 days after the close of each fiscal year of each of the Servicer, the
Originator and D.R. Horton, such Person's audited consolidated balance sheet as
of the end of such fiscal year, and the related statements of income,
stockholder's equity and cash flows of such Person for such year accompanied by
(i) the related report of independent certified public accountants acceptable to
the Administrative Agent, which report shall be to the effect that such
statements have been prepared in accordance with GAAP applied on a basis
consistent with prior periods except for such changes in such principles with
which the independent public accountants shall have concurred and (ii) if
issued, the auditor's letter or report to management customarily given in
connection with such audit;
(b) promptly after becoming available, and in any event within 60 days after the end of each fiscal quarter, excluding the fourth fiscal quarter, of each fiscal year of each of the Servicer, the Originator and D.R. Horton, the unaudited consolidated balance sheet of each of the Servicer, the Originator and D.R. Horton as of the end of such fiscal quarter and the related statements of income, stockholders' equity and cash flows of each of the Servicer, the Originator and D.R. Horton for such fiscal quarter and the period from the first day of the then current fiscal year of the Servicer, the Originator and D.R. Horton through the end of such fiscal quarter, certified by a Financial Officer of the Servicer, the Originator and D.R. Horton, respectively, to have been prepared in accordance with GAAP applied on a basis consistent with prior periods, subject to normal year-end adjustments;
(c) promptly upon receipt thereof, a copy of each other report submitted to each of the Servicer, the Originator and D.R. Horton by independent accountants in connection with any annual, interim or special audit of the books of such Person;
(d) promptly and in any event within twenty (20) days after the request of the Administrative Agent at any time and from time to time, a certificate, executed by the president or chief financial officer of the Servicer or the Originator, setting forth all of such Person's warehouse borrowings and a description of the collateral related thereto;
(e) promptly and in any event within 60 days after the end of each of the first three (3) quarters in each fiscal year of the Borrower, and within 120 days after the close of the Borrower's fiscal year, completed officer's certificates in the form of Exhibit H-1 and H-2 hereto, executed by the president or chief financial officer of each of the Servicer and the Borrower, respectively;
(f) promptly and in any event within 60 days after the end of each quarter (120 days in the case of the fourth quarter), a management report regarding the Originator's Mortgage Loan production for the prior quarter and year-to-date, in form and detail as required by the Administrative Agent;
(g) promptly furnish copies of all reports and notices with respect to any "reportable event" defined in Title IV of ERISA that the Borrower, the Originator or the Servicer files or that the Borrower, Originator or Servicer is required to file under ERISA with the Internal Revenue Service, the PBGC or the U.S. Department of Labor or that the Borrower, Originator or Servicer receives from the PBGC;
(h) immediately after becoming aware of the expiration, forfeiture, termination, or cancellation of, or default under, any Take-Out Commitment relating to any Collateral, telephone notice thereof confirmed in writing within one Business Day, together with a statement as to what action the Borrower proposes to take with respect thereto; provided that no such notice need be given if such Take-Out Commitment is replaced by another Take-Out Commitment;
(i) promptly after becoming available, and in any event within 120
days after the close of each fiscal year of the Borrower, the Borrower's balance
sheet as of the end of such fiscal year, and the related statements of income,
stockholder's equity and cash flows of the Borrower for such year accompanied by
(i) the related report of independent certified public accountants acceptable to
the Administrative Agent, which report shall be to the effect that such balance
sheets have been prepared in accordance with GAAP applied on a basis consistent
with prior periods except for such changes in such principles with which the
independent public accountants shall have concurred and (ii) if issued, the
auditor's letter to report to management customarily given in connection with
such audit;
(j) promptly after becoming available, and in any event within 60 days after the end of each fiscal quarter, excluding the fourth fiscal quarter, of each fiscal year of the Borrower, the balance sheet of the Borrower as of the end of such fiscal quarter and the related statements of income, stockholders' equity and cash flows of the Borrower for such fiscal quarter and the period from the first day of such fiscal year through the end of such fiscal quarter, certified by the chief financial officer of the Borrower, to have been prepared in accordance with GAAP applied on a basis consistent with prior periods, subject to normal year-end adjustments;
(k) promptly after the Borrower obtains knowledge thereof, notice of any "Event of Default" or "Facility Termination Date" under the Repurchase Agreement;
(l) promptly after receipt thereof, copies of all notices received by the Borrower from the Originator under the Repurchase Agreement;
(m) promptly after the Servicer obtains knowledge thereof, notice of any Servicer Default or of any condition or event that, with the giving of notice or lapse of time or both and unless cured or waived, would constitute a Servicer Default;
(n) such other material information concerning the business, properties or financial condition of the Borrower or the Originator as the Administrative Agent may reasonably request; and
(o) (i) promptly upon entering into any Take-Out Commitment Master Agreement, a copy of such agreement and (ii) upon request by the Administrative Agent, or if there is an Event of Default, copies of all Take-Out Commitment Documents with respect to
Non-Conforming Loans (if the Take-Out Commitment is made on a confirmation or supplement to a master agreement and the master agreement has been previously delivered to the Administrative Agent, only the confirmation or supplement is required to be delivered pursuant to this clause).
6.2. Taxes and Other Liens.
The Borrower shall pay and discharge promptly all taxes, assessments and governmental charges or levies imposed upon it or upon its income or upon any of its Property as well as all claims of any kind (including claims for labor, materials, supplies and rent) that, if unpaid, might become a Lien upon any or all of its Property; provided, however, the Borrower shall not be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings diligently conducted by it or on its behalf and if it shall have set up reserves therefor adequate under GAAP.
6.3. Maintenance.
The Borrower shall (i) maintain its limited liability company existence, rights and franchises and (ii) observe and comply with all Governmental Requirements. The Servicer shall maintain its entity existence. The Borrower shall maintain its Properties (and any Properties leased by or consigned to it or held under title retention or conditional sales contracts) in good and workable condition at all times and make all repairs, replacements, additions, betterments and improvements to its Properties as are needful and proper so that the business carried on in connection therewith may be conducted properly and efficiently at all times.
6.4. Further Assurances.
The Borrower and the Servicer shall, each within three (3) Business Days (or, in the case of Mortgage Notes, such longer period as provided under Section 3.5 of this Agreement) after the request of the Administrative Agent, cure any defects in the execution and delivery of the Notes, this Agreement or any other Transaction Document. The Borrower and the Servicer shall, each at its expense, promptly execute and deliver to the Administrative Agent, upon the Administrative Agent's request, all such other and further documents, agreements and instruments in compliance with or accomplishment of the covenants and agreements of the Borrower and the Servicer, respectively, in this Agreement and in the other Transaction Documents or to further evidence and more fully describe the collateral intended as security for the Notes, or to correct any omissions in this Agreement or the other Transaction Documents, or more fully to state the security for the obligations set out herein or in any of the other Transaction Documents, or to perfect, protect or preserve any Liens created (or intended to be created) pursuant to any of the other Transaction Documents, or to make any recordings, to file any notices, or obtain any consents.
6.5. Compliance with Laws.
The Servicer shall comply with all applicable laws, rules, regulations and orders in connection with servicing the Mortgage Assets.
6.6. Insurance.
(a) The Borrower and the Servicer shall each maintain with financially sound and reputable insurers, insurance with respect to its Properties and business against such liabilities, casualties, risks and contingencies and in such types and amounts as is customary in the case of Persons engaged in the same or similar businesses and similarly situated, including, without limitation, a fidelity bond or bonds in form and with coverage and with a company satisfactory to the Administrative Agent and with respect to such individuals or groups of individuals as the Administrative Agent may designate. Upon request of the Administrative Agent, the Borrower and the Servicer shall each furnish or cause to be furnished to the Administrative Agent from time to time a summary of the insurance coverage of the Borrower and the Servicer, respectively, in form and substance satisfactory to the Administrative Agent and if requested shall furnish the Administrative Agent with copies of the applicable policies.
(b) With respect to Mortgages comprising the Collateral (i) the Servicer, for as long as the Servicer is the Originator, and thereafter the Borrower, shall cause the improvements on the land covered by each Mortgage to be kept continuously insured at all times by responsible insurance companies against fire and extended coverage hazards under policies, binders, letters, or certificates of insurance, with a standard mortgagee clause in favor of the original mortgagee and its successors and assigns or, in the case of a MERS Designated Mortgage Loan, the beneficial owner of such mortgage loan, and (ii) the Servicer, for so long as the Servicer is the Originator, and thereafter the Borrower, shall cause each such policy to be in an amount equal to the lesser of the maximum insurable value of the improvements or the original principal amount of the Mortgage, without reduction by reason of any co-insurance, reduced rate contribution, or similar clause of the policies or binders.
6.7. Accounts and Records.
The Borrower and, so long as the Servicer and the Originator are the same entity, the Servicer shall each keep books of record and account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and activities, in accordance with GAAP. The Borrower and the Servicer shall each maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate all records pertaining to the performance of the Borrower's obligations under the Take-Out Commitments and other agreements made with reference to any Mortgage Loans in the event of the destruction of the originals of such records) and keep and maintain all documents, books, records, computer tapes and other information necessary or advisable for the performance by the Borrower of its Obligations. The Borrower shall not enter the "loan servicing" business.
6.8. Right of Inspection.
The Borrower and, so long as the Servicer and the Originator are the same entity, the Servicer shall each permit upon reasonable notice (a) any officer, employee or agent of the Administrative Agent to visit and inspect any of its Properties, examine its books of record and accounts, telecopies and extracts therefrom, and discuss its affairs, finances and accounts with its officers, accountants, and auditors, all during reasonable business hours and as often as the Administrative Agent may reasonably request and (b) on request of the Administrative Agent,
Ernst & Young LLP to conduct, a review of its books and records. The Borrower agrees to pay the reasonable costs of reviews and inspections performed pursuant to this Section 6.8.
6.9. Notice of Certain Events.
The Borrower and, so long as the Servicer and the Originator are the same entity (other than with respect to clause (g) hereof), the Servicer shall each promptly notify the Administrative Agent upon (a) the receipt of any notice from, or the taking of any other action by, the holder of any of its promissory notes, debentures or other evidences of Indebtedness with respect to a claimed default, together with a detailed statement by a responsible officer of the Borrower or the Servicer, as the case may be, specifying the notice given or other action taken by such holder and the nature of the claimed default and what action the Borrower or the Servicer is taking or proposes to take with respect thereto, but only if such alleged default or event of default (if it were true) would also be a Default or Event of Default under this Agreement; (b) the commencement of, or any determination in, any legal, judicial or regulatory proceedings that, if adversely determined, could also be a Default or Event of Default under this Agreement; (c) any dispute between the Borrower or the Servicer, as the case may be, and any Governmental Authority or any other Person that, if adversely determined, could have a Material Adverse Effect; (d) any adverse change in the business, operations prospects or financial condition of the Borrower or the Servicer, as the case may be, that is reasonably likely to result in a Material Adverse Effect, including, without limitation, the Borrower's or the Servicer's insolvency; (e) any event or condition known to it that, if adversely determined, would have a Material Adverse Effect; (f) the receipt of any notice from, or the taking of any other action by any Approved Investor indicating an intent not to honor, or claiming a default under a Take-Out Commitment, together with a detailed statement by a responsible officer of the Borrower specifying the notice given or other action taken by such Approved Investor and the nature of the claimed default and what action the Borrower is taking or proposes to take with respect thereto; (g) the receipt of any notice from, and or the taking of any action by any Governmental Authority indicating an intent to cancel the Borrower's or the Servicer's right to be either a seller or servicer of such Governmental Authority's insured or guaranteed Mortgage Loans; and (h) the receipt of any notice of any final judgment or order for payment of money applicable to the Borrower or the Servicer in excess of $1,000,000.
6.10. Performance of Certain Obligations.
The Borrower and, so long as the Servicer and the Originator are the same entity, the Servicer shall each perform and observe each of the provisions of each Mortgage Loan and Take-Out Commitment on its part to be performed or observed and will cause all things to be done that are necessary to have each Mortgage Loan covered by a Take-Out Commitment comply with the requirements of such Take-Out Commitment.
6.11. Use of Proceeds; Margin Stock.
The proceeds of the Advances shall be used by the Borrower solely for the acquisition of Mortgage Loans under the Repurchase Agreement. None of such proceeds shall be used for the purpose of purchasing or carrying any "margin stock" as defined in Regulation U, or for the purpose of reducing or retiring any Indebtedness that was originally incurred to purchase or carry
margin stock or for any other purpose that might constitute this transaction a "purpose credit" within the meaning of such Regulation U. Neither the Borrower nor any Person acting on behalf of the Borrower shall take any action in violation of Regulations U or X or shall violate Section 7 of the Securities Exchange Act of 1934, as amended, or any rule or regulation thereunder, in each case as now in effect or as the same may hereafter be in effect.
6.12. Notice of Default.
The Borrower shall furnish to the Administrative Agent immediately upon becoming aware of the existence of any Default or Event of Default, a written notice specifying the nature and period of existence thereof and the action that the Borrower is taking or proposes to take with respect thereto.
6.13. Compliance with Transaction Documents.
The Borrower and, so long as the Servicer and the Originator are the same entity, the Servicer shall each promptly comply with any and all covenants and provisions of this Agreement applicable to it, the Notes, in the case of the Borrower, and the other Transaction Documents.
6.14. Compliance with Material Agreements.
The Borrower and, so long as the Servicer and the Originator are the same entity, the Servicer shall each comply in all respects with all agreements, indentures, Mortgages or documents (including, with respect to the Borrower, the Articles of Organization) binding on it or affecting its Property or business.
6.15. Operations and Properties.
The Borrower and, so long as the Servicer and the Originator are the same entity, the Servicer shall each act prudently and in accordance with customary industry standards in managing and operating its Property and shall continue to underwrite, hedge and sell Mortgage Loans in the same diligent manner it has applied in the past and take no greater credit or market risks than are currently being borne by it.
6.16. D.R. Horton Credit Rating.
If at any time any of the senior debt of D.R. Horton, which is publicly held, shall fail to bear a rating of at least BB by S&P, Ba1 by Moody's or BB by Fitch, the Borrower shall give the Administrative Agent written notice of such change in rating, within two Business Days of the date on which such change is announced by either of these rating agencies.
6.17. Take-Out Commitments.
The Borrower shall obtain, and maintain in full force and effect, Take-Out Commitments reflecting total Approved Investor obligations, as of each date of determination, with an aggregate purchase price equal to the total of the original principal balances of the Borrower's entire portfolio of Mortgage Loans issued as proceeds thereof. Each of such Take-Out
Commitments shall reflect only those terms and conditions as are permitted hereunder or are acceptable to the Administrative Agent. The Borrower shall obtain, and maintain in full force and effect, forward purchase commitments (which may include options to sell Mortgage Loans to Approved Investors, so long as the Approved Investor is bound thereby) issued by Approved Investors and obligating such Approved Investors to purchase a portion of the Borrower's subsequently acquired Mortgage Loans.
6.18. Collateral Proceeds.
The Borrower and the Servicer shall instruct all Approved Investors to cause all payments in respect of Take-Out Commitments on Mortgage Loans to be deposited directly in the Collection Account.
6.19. Environmental Compliance.
The Borrower and, so long as the Servicer and the Originator are the same entity, the Servicer shall each use and operate all of its facilities and properties in compliance with all environmental laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in compliance therewith, and handle all hazardous materials in compliance with all applicable environmental laws.
6.20. Closing Instructions.
The Borrower agrees to indemnify and hold the Lenders and the Administrative Agent harmless from and against any loss, including attorneys' fees and costs, attributable to the failure of a title insurance company, agent or approved attorney to comply with the disbursement or instruction letter or letters of the Borrower or of the Administrative Agent relating to any Mortgage Loan. The Administrative Agent shall have the right to pre-approve the closing instructions of the Originator to the title insurance company, agent or attorney in any case where the Mortgage Loan to be created at settlement is intended to be warehoused by the Lenders pursuant hereto.
6.21. Special Affirmative Covenants Concerning Collateral.
(a) The Borrower shall at all times warrant and defend the right, title and interest of the Lenders, the Collateral Agent and the Administrative Agent in and to the Collateral against the claims and demands of all Persons whomsoever.
(b) The Borrower and the Servicer shall each service or cause to be serviced all Eligible Mortgage Loans in accordance with the standard requirements of the issuers of Take-Out Commitments covering the same and all applicable Fannie Mae, Freddie Mac or Ginnie Mae requirements, including without limitation taking all actions necessary to enforce the obligations of the Obligors under such Eligible Mortgage Loans. The Servicer shall hold all escrow funds collected in respect of Eligible Mortgage Loans in accordance with applicable law, and apply the same for the purposes for which such funds were collected.
(c) The Borrower shall, no less than on an annual basis, review financial statements, compliance with financial parameters, Fannie Mae/Freddie Mac approvals (if
applicable), and state licenses of all Persons from whom the Originator acquires Mortgage Loans.
6.22. Corporate Separateness.
(a) The Borrower covenants to take the following actions, and the Servicer covenants to cause the Borrower to take the following actions: The Borrower shall at all times maintain at least one Independent Director (as such term is defined in the Articles of Organization).
(b) The Borrower shall not direct or participate in the management of any of the operations of the Other Companies.
(c) The Borrower shall allocate fairly and reasonably any overhead for shared office space. The Borrower shall have stationery and other business forms separate from that of the Other Companies.
(d) The Borrower shall at all times be adequately capitalized in light of its contemplated business.
(e) The Borrower shall at all times provide for its own operating expenses and liabilities from its own funds.
(f) The Borrower shall maintain its assets and transactions separately from those of the Other Companies and reflect such assets and transactions in financial statements separate and distinct from those of the Other Companies and evidence such assets and transactions by appropriate entries in books and records separate and distinct from those of the Other Companies. The Borrower shall hold itself out to the public under the Borrower's own name as a legal entity separate and distinct from the Other Companies. The Borrower shall not hold itself out as having agreed to pay, or as being liable, primarily or secondarily, for, any obligations of the Other Companies.
(g) The Borrower shall not maintain any joint account with any Other Company or become liable as a guarantor or otherwise with respect to any Indebtedness or contractual obligation of any Other Company.
(h) The Borrower shall not grant a Lien on any of its assets to secure any obligation of any Other Company.
(i) The Borrower shall not make loans, advances or otherwise extend credit to any of the Other Companies.
(j) The Borrower shall conduct its business in its own name and strictly comply with all organizational formalities to maintain its separate existence.
(k) The Borrower shall have bills of sale (or similar instruments of assignment) and, if appropriate, UCC-1 financing statements, with respect to all assets purchased from any of the Other Companies.
(l) The Borrower shall not engage in any transaction with any of the Other Companies, except as permitted by this Agreement or the Articles of Organization and as contemplated by the Repurchase Agreement.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower and the Servicer shall each at all times comply with the covenants applicable to it contained in this Article VII, from the date hereof until the later of the Drawdown Termination Date and the date all of the Obligations are paid in full:
7.1. Limitations on Mergers and Acquisitions.
(a) The Servicer (so long as the Servicer and the Originator are the same entity) shall not (i) merge or consolidate with or into any corporation unless the Servicer is the surviving entity of any such merger or consolidation or (ii) liquidate or dissolve.
(b) The Borrower will not merge with or into or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions), all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets or capital stock or other ownership interest of, or enter into any joint venture or partnership agreement with, any Person, other than as contemplated by this Agreement and the Repurchase Agreement.
7.2. Fiscal Year.
Neither the Borrower nor, so long as the Servicer and the Originator are the same entity, the Servicer shall change its fiscal year other than to conform with changes that may be made to D.R. Horton's fiscal year and then only after notice to the Administrative Agent and after whatever amendments are made to this Agreement as may be required by the Administrative Agent, in order that the reporting criteria for the financial covenants contained in Articles VI and VII remain substantially unchanged.
7.3. Business.
The Borrower will not engage in any business other than as set forth in Article V of the Articles of Organization.
7.4. Use of Proceeds.
The Borrower shall not permit the proceeds of the Advances to be used for any purpose other than those permitted by Section 6.11 hereof. The Borrower shall not, directly or indirectly, use any of the proceeds of the Advances for the purpose, whether immediate, incidental or ultimate, of buying any "margin stock" or of maintaining, reducing or retiring any Indebtedness originally incurred to purchase a stock that is currently any "margin stock," or for any other purpose that might constitute this transaction a "purpose credit," in each case within the meaning of Regulation U, or otherwise take or permit to be taken any action that would involve a
violation of such Regulation U or of Regulation T or Regulation Z (12 C.F.R. 224, as amended) or any other regulation promulgated by the Federal Reserve Board.
7.5. Actions with Respect to Collateral.
Neither the Borrower nor the Servicer shall:
(a) Compromise, extend, release, or adjust payments on any Mortgage Collateral, accept a conveyance of mortgaged Property in full or partial satisfaction of any Mortgage debt or release any Mortgage securing or underlying any Mortgage Collateral, except as permitted by the related Approved Investor or as contemplated in the servicing guidelines distributed thereby;
(b) Agree to the amendment or termination of any Take-Out Commitment in which the Administrative Agent has a security interest or to substitution of a Take-Out Commitment for a Take-Out Commitment in which the Administrative Agent has a security interest hereunder, if such amendment, termination or substitution may be expected (as determined by the Collateral Agent or the Administrative Agent in either of their sole discretion) to have a Material Adverse Effect or to result in a Default or Event of Default;
(c) Transfer, sell, assign or deliver any Mortgage Loan Collateral pledged to the Administrative Agent to any Person other than the Administrative Agent, except pursuant to a Take-Out Commitment or pursuant to either Section 3.3 or Section 3.4;
(d) Grant, create, incur, permit or suffer to exist any Lien upon any Mortgage Loan Collateral except for (i) Liens granted to the Administrative Agent to secure the Notes and Obligations and (ii) any rights created by the Repurchase Agreement; or
(e) With respect to any Mortgage Loans constituting Collateral, permit the payment instructions relating to a Take-Out Commitment to provide for payment to any Person except directly to the Collection Account.
7.6. Liens.
The Borrower will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien upon or with respect to, any Mortgage Asset, or upon or with respect to any account to which any Collections of any Mortgage Asset are sent, or assign any right to receive income in respect thereof except as contemplated hereby.
7.7. Employee Benefit Plans.
Neither the Borrower nor, so long as the Servicer and the Originator are the same entity, the Servicer may permit any of the events or circumstances described in Section 5.3(b) to exist or occur.
7.8. Change of Principal Office.
The Borrower shall not move its principal office, executive office or principal place of business from the address set forth in Section 5.2(g) without 30-days' prior written notice to the Administrative Agent. CH Mortgage shall not organize under the law of any jurisdiction other than the state under which it is organized as of the Closing Date (whether changing its jurisdiction of organization or organizing under an additional jurisdiction) without prior written notice to the Agent, which shall be accompanied by copies of all necessary UCC-3 amendments, with evidence of filing thereon, to all UCC-1 financing statements filed in connection with this Agreement.
7.9. No Commercial, A&D, Etc. Loans.
The Borrower shall not make or acquire any direct outright ownership interest, participation interest or other creditor's interest in any commercial real estate loan, acquisition and/or development loan, unimproved real estate loan, personal property loan, oil and gas loan, commercial loan, wrap-around real estate loan, unsecured loan, acquisition, development or construction loan.
7.10. Maximum Leverage.
If the Servicer is the Originator, the Servicer shall never permit its Adjusted Liabilities to exceed 14 times its Adjusted Net Worth.
7.11. Indebtedness.
The Borrower will not incur any Indebtedness, other than any Indebtedness incurred pursuant to this Agreement or the Repurchase Agreement or permitted to be incurred pursuant to the Articles of Organization.
7.12. Deposits to Collection Account.
Neither the Borrower nor the Servicer shall deposit or otherwise credit, or cause or permit to be so deposited or credited, to the Collection Account, cash or cash proceeds other than Collateral Proceeds.
7.13. Transaction Documents.
The Borrower will not amend, waive, terminate or modify any provision of any Transaction Document to which it is a party (provided that the Borrower may extend the "Facility Termination Date" or waive the occurrence of any "Event of Default" under the Repurchase Agreement) without, in each case, the prior written consent of the Administrative Agent. The Borrower will perform all of its obligations under each Transaction Document to which it is a party and will enforce each Transaction Document to which it is a party in accordance with its terms in all respects.
7.14. Distributions, Etc.
The Borrower will not declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any equity ownership interests of the Borrower, or return any capital to its members as such, or purchase, retire, defease, redeem or otherwise acquire for value or make any payment in respect of any equity ownership interests of the Borrower or any warrants, rights or options to acquire any such interests, now or hereafter outstanding; provided, however, that the Borrower may declare and pay cash distributions on its equity ownership interests to its members so long as (a) no Event of Default shall then exist or would occur as a result thereof, (b) such distributions are in compliance with all applicable law including the limited liability company law of the state of Borrower's organization, and (c) such distributions have been approved by all necessary and appropriate action of the Borrower.
7.15. Articles of Organization.
The Borrower will not amend or delete (a) Articles __ through __ or (b) the definition of "Independent Manager" set forth in the Articles of Organization. The Borrower will perform all of its obligations under the Articles of Organization.
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Nature of Event.
An "Event of Default" shall exist if any one or more of the following occurs:
(a) the Borrower fails (i) to make any payment of principal of or interest on any of the Notes when due, or (ii) to make any payment when due, of any fee, expense or other amount due hereunder, under the Notes or under any other Transaction Document or, so long as the Servicer and the Originator are the same entity, the Servicer fails to make any payment or deposit to be made by it under this Agreement when due and (with respect to this clause (ii)), such failure continues unremedied for one Business Day; or
(b) the Borrower, the Originator or, so long as the Servicer and
the Originator are the same entity, the Servicer fails to keep or perform any
covenant or agreement contained in this Agreement (other than as referred to in
Section 8.1(a)) and such failure continues unremedied beyond the expiration of
any applicable grace or notice period that may be expressly provided for in such
covenant or agreement; or
(c) the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) defaults in the due observance or performance of any of the covenants or agreements contained in any Transaction Document other than this Agreement, and (unless such default otherwise constitutes a Default or an Event of Default pursuant to other provisions of this Section 8.1) such default continues unremedied beyond the expiration of any applicable grace or notice period that may be expressly provided for in such Transaction Document; or
(d) any statement, warranty or representation by or on behalf of the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) contained in this Agreement, the Notes or any other Transaction Document or any Borrowing Report, officer's certificate or other writing furnished in connection with this Agreement, proves to have been incorrect or misleading in any material respect as of the date made or deemed made; or
(e) (i) the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) fails to make when due or within any applicable grace period any payment on any other Indebtedness with an unpaid principal balance of over $1,000,000.00 with respect to the Borrower, the Originator and the Servicer; or (ii) any event or condition occurs under any provision contained in any such obligation or any agreement securing or relating to such obligation (or any other breach or default under such obligation or agreement occurs) if the effect thereof is to cause or permit with the giving of notice or lapse of time or both the holder or trustee of such obligation to cause such obligation to become due prior to its stated maturity that results in a Material Adverse Effect; or (iii) any such obligation becomes due (other than by regularly scheduled payments) prior to its stated maturity and such acceleration results in a Material Adverse Effect; or (iv) any of the foregoing occurs with respect to any one or more items of Indebtedness of the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) with unpaid principal balances exceeding, in the aggregate, $1,000,000.00 with respect to the Borrower, the Originator and the Servicer; or
(f) the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) generally shall not pay its debts as they become due or shall admit in writing its inability to pay its debts, or shall make a general assignment for the benefit of creditors; or
(g) the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) shall (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor or liquidator of it or of all or a substantial part of its assets, (ii) file a voluntary petition in bankruptcy, (iii) file a petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any Debtor Laws, (iv) file an answer admitting the allegations of, or consent to, or default in answering, a petition filed against it in any bankruptcy, reorganization or insolvency proceeding, or (v) take action for the purpose of effecting any of the foregoing; or
(h) an involuntary petition or complaint shall be filed against the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) seeking bankruptcy or reorganization of the Borrower, the Originator or the Servicer or the appointment of a receiver, custodian, trustee, intervenor or liquidator of the Borrower, the Originator or the Servicer, or all or substantially all of the assets of either the Borrower, the Originator or the Servicer, and such petition or complaint shall not have been dismissed within 60 days of the filing thereof; or an order, order for relief, judgment or, decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition or complaint seeking reorganization of the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) or appointing a receiver, custodian, trustee,
intervenor or liquidator of the Borrower, the Originator or the Servicer, or of all or substantially all of assets of the Borrower, the Originator or the Servicer; or
(i) the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) shall fail within 30 days to pay, bond or otherwise discharge any final judgment or order for payment of money in excess of $1,000,000.00; or the Borrower, the Originator or, so long as the Servicer and the Originator are the same entity, the Servicer shall fail within 30 days to pay, bond or otherwise discharge final judgments or orders for payment of money which exceed in the aggregate $1,000,000.00; or the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) shall fail within 30 days to timely appeal or pay, bond or otherwise discharge any judgments or orders for payment of money which exceed, in the aggregate, $1,000,000.00 and which the Borrower, the Originator or the Servicer may appeal; or
(j) any Person shall levy on, seize or attach all or any material portion of the assets of the Borrower, the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) and within thirty (30) days thereafter the Borrower, the Originator or the Servicer shall not have dissolved such levy or attachment, as the case may be, and, if applicable, regained possession of such seized assets; or
(k) if an event or condition specified in Section 5.3(b) shall occur or exist and results in a Material Adverse Effect; or
(l) the Originator or the Servicer (so long as the Servicer and the Originator are the same entity) becomes ineligible to originate, sell or service Mortgage Loans to Fannie Mae, Freddie Mac or Ginnie Mae, or Fannie Mae, Freddie Mac or Ginnie Mae shall impose any sanctions upon or terminate or revoke any rights of the Servicer (so long as the Servicer and the Originator are the same entity) or the Originator; or
(m) if (x) any Governmental Authority cancels the Originator's right to be either a seller or servicer of such Governmental Authority's insured or guaranteed Mortgage Loans or mortgage-backed securities, (y) any Approved Investor cancels for cause any servicing or underwriting agreement between the Borrower or the Originator and such Approved Investor and such agreement is not replaced within 30 days or (z) the Originator receives notice from a Governmental Authority that such Governmental Authority intends to revoke the Originator's right to be a seller or servicer of such Governmental Authority's insured or guaranteed Mortgage Loans or mortgaged-backed securities and such notice is not withdrawn within 30 days of the receipt thereof; or
(n) failure of the Borrower or the Originator to correct an imbalance in any escrow account established with Borrower or the Originator as either an originator, purchaser or servicer of Mortgage Loans, which imbalance may have a Material Adverse Effect, within two (2) Business Days after receipt of demand by the Administrative Agent or within 30 days after receipt of demand by the related mortgagee; or
(o) this Agreement, the Notes or any other Transaction Document shall for any reason cease to be in full force and effect, or be declared null and void or unenforceable; or the validity or enforceability of any such document shall be repudiated; or
(p) a "change in control," with respect to the ownership of D.R. Horton shall have occurred (and as used in this subparagraph, the term "change in control" shall mean an acquisition by any Person, partnership or group, as defined under the Securities Exchange Act of 1934, as amended, of a direct or indirect beneficial ownership of more than 50% of the then-outstanding voting stock of D.R. Horton); or D.R. Horton shall cease at any time to own, directly or indirectly, 100% of the stock or membership interests or partnership interests of the general partner of the Originator and 75% of the stock or membership interests or partnership interests of the limited partner(s) of the Originator; or
(q) the total Collateral Value of all Eligible Mortgage Collateral shall be less than the Primary Obligations, at any time, and the Borrower shall fail either to provide additional Eligible Mortgage Collateral with a sufficient Collateral Value, or to pay Principal Debt, in an amount sufficient to correct the deficiency within two Business Days after notice; or
(r) if, as a result of the Borrower's failure to obtain and deliver to the Collateral Agent, Principal Mortgage Documents as required by Section 2.3(c), the Administrative Agent shall determine that the continuation of such condition may have a Material Adverse Effect on the Borrower or the Lenders; or
(s) there shall have occurred any event that adversely affects the enforceability or collectability of any material portion of the Mortgage Loans or the Take-Out Commitments (provided that to the extent such event gives rise to an obligation by the Originator to repurchase such Mortgage Loans pursuant to the Repurchase Agreement and the Originator does so repurchase in accordance with the provisions of the Repurchase Agreement, no Event of Default shall occur under this Section 8.1(s) or there shall have occurred any other event that adversely affects the ability of the Borrower, the Servicer or the Collateral Agent to collect a material portion of Mortgage Loans or Take-Out Commitments or the ability of the Borrower or, so long as the Servicer and the Originator are the same entity, the Servicer to perform hereunder or a Material Adverse Effect has occurred in the financial condition or business of the Borrower since inception or, so long as the Servicer and the Originator are the same entity, the Servicer since March 31, 2002; or
(t) (i) any litigation, in any amount with respect to the Borrower and in an aggregate amount greater than $1,000,000 with respect to the Affiliates of the Borrower, (including, without limitation, derivative actions), arbitration proceedings or governmental proceedings not disclosed in writing by the Borrower to the Lenders and the Administrative Agent prior to the date of execution and delivery of this Agreement is pending against the Borrower or any Affiliate thereof, or (ii) any development not so disclosed as of the date of this Agreement has occurred in any litigation, in any amount with respect to the Borrower and in an amount greater than $1,000,000 in aggregate with respect to any Affiliate of the Borrower (including, without limitation, derivative actions), arbitration proceedings or governmental proceedings so disclosed, which, in the case of either clause (i) and/or (ii), in the opinion of the Administrative Agent, is likely to have a Material Adverse Effect on the financial position or
business of the Borrower, the Originator or the Servicer or materially impair the ability of the Borrower, the Originator or the Servicer to perform its obligations under this Agreement or any other Transaction Document; or
(u) the Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Code with regard to any of the assets of the Borrower or the Originator and such lien shall not have been released within 30 days and, with respect to the Originator only, such lien is in an amount exceeding $250,000, or the PBGC shall, or shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with regard to any of the assets of the Borrower or the Originator and as to the Originator only, such lien is or will be in an amount exceeding $250,000; or
(v) as at the end of any Collection Period, the Default Ratio shall exceed 1%; or
(w) a successor Collateral Agent shall not have been appointed and accepted such appointment within 180 days after the retiring Collateral Agent shall have given notice of resignation pursuant to Section 4.4 of the Collateral Agreement; or
(x) a "Default" shall occur under the Repurchase Agreement and be continuing upon the lapse of any grace or cure period, or an "Event of Default" shall occur under the Repurchase Agreement, or the Repurchase Agreement shall cease to be in full force and effect; or
(y) all of the outstanding equity ownership interests of the Borrower shall cease to be owned, directly or indirectly, by D.R. Horton; or
(z) the Borrower shall cease or otherwise fail to have a good and valid title to (or, to the extent that Article 9 of the UCC is applicable to the Borrower's acquisition thereof, a valid perfected security interest in) a material portion of the Collateral (other than Collateral released in accordance with Section 3.3) or the Security Instruments shall for any reason (other than pursuant to the terms hereof) fail or cease to create a valid and perfected first priority security interest in the Mortgage Loans and the other Collateral for the benefit of the holders of the Obligations and such Collateral is not replaced; or
(aa) the Originator's Net Worth shall be less than $25,000,000; or
(bb) as at the end of any Collection Period the amount of the Excess Spread is less than fifty (50) basis points; or
(cc) as of the Settlement Date following any withdrawal from the Reserve Account pursuant to Section 2.8(f)(i) (after giving effect to any deposit to the Reserve Account pursuant to Section 2.7(c)(iii)(D) on such Settlement Date) the amount on deposit in the Reserve Account shall be less than the Required Reserve Account Amount; or
(dd) if an Advance Cessation Trigger shall occur or exist.
8.2. Default Remedies.
(a) Upon the occurrence and continuation of an Event of Default under
(f), (g) or (h) of this Agreement, the entire unpaid balance of the Obligations
shall automatically become due and payable, the Drawdown Termination Date shall
immediately occur and the Maximum Facility Amount shall immediately terminate,
all without any notice or action of any kind whatsoever.
(b) Upon the occurrence and continuation of an Event of Default under Sections 8.1 (b) (excluding Events of Default related to any breach of Section 7.5 herein), (c), (d) (l), (m), (u), (v), (aa) and (bb) upon the Borrower or the Originator, the Administrative Agent may declare the Drawdown Termination Date to have immediately occurred and terminate the Maximum Facility Amount upon notice to the Originator and to the Borrower, provided that if such Event of Default is not cured within 30 days of occurrence, then the Administrative Agent may proceed under Section 8.2(c).
(c) Upon the occurrence and continuation of an Event of Default under any provision of Section 8.1 other than those set forth in Section 8.2(a), and subject to the limitations of Section 8.2(b), the Administrative Agent may do any one or both of the following: (i) declare the entire unpaid balance of the Obligations immediately due and payable, whereupon it shall be due and payable; and (ii) declare the Drawdown Termination Date to have occurred and terminate the Maximum Facility Amount.
(d) Upon the occurrence of an Event of Default under any provision of
Section 8.1 and the acceleration of the unpaid balance of the Obligations
pursuant to Section 8.2(a) or (c), the Administrative Agent may do any one or
more of the following: (i) reduce any claim to judgment; (ii) exercise the
rights of offset or banker's Lien against the interest of the Borrower in and to
every account and other Property of the Borrower that are in the possession of
the Lenders, the Collateral Agent or the Administrative Agent to the extent of
the full amount of the Obligations (the Borrower being deemed directly obligated
to the Lenders and the Administrative Agent in the full amount of the
Obligations for such purposes); (iii) foreclose or direct the Collateral Agent
to foreclose any or all Liens or otherwise realize upon any and all of the
rights the Administrative Agent may have in and to the Collateral, or any part
thereof; and (iv) exercise any and all other legal or equitable rights afforded
by the Transaction Documents, applicable Governmental Requirements, or
otherwise, including, but not limited to, the right to bring suit or other
proceedings before any Governmental Authority either for specific performance of
any covenant or condition contained in any of the Transaction Documents or in
aid of the exercise of any right granted to the Lenders or the Administrative
Agent in any of the Transaction Documents.
8.3. Paydowns.
Immediately upon the occurrence of an Event of Default, and without any requirement for notice or demand (including, without limitation, any notice or demand otherwise required under Section 8.1), the Borrower shall (a) make a payment to the Administrative Agent equal to the Collateral Deficiency and (b) deliver to the Collateral Agent additional Take-Out Commitment Documents relating to Take-Out Commitments in an amount equal to unrepaid
Advances that have been made against any Uncovered Mortgage Loans. Take-Out
Commitment Documents for Conforming Loans that are delivered pursuant to clause
(b), above, in addition to conforming with all other criteria of this Agreement,
shall also substantially conform to the interest rates and "terms to maturity"
for all Uncovered Mortgage Loans. Any demand for performance under this Section
8.3 shall not waive or affect the Lenders' or the Administrative Agent's rights
to enforce any security interest in the Collateral, collect a deficiency or to
pursue damages or any other remedy, as herein provided or as permitted at law or
in equity, until all Obligations have been fully paid and performed.
8.4. Waivers of Notice, Etc.
Except as otherwise provided in this Agreement, the Borrower and each surety, endorser, guarantor and other party liable for payment of any sum or sums of money that may become due and payable, or the performance or any undertaking that may be owed, to the Lenders or the Administrative Agent pursuant to this Agreement, the Notes, or the other Transaction Documents, including the Obligations, jointly and severally waive demand for payment, presentment, protest, notice of protest and nonpayment or other notice of default, notice of acceleration and notice of intention to accelerate, and agree that its or their liability under this Agreement, the Notes or other Transaction Documents shall not be affected by any renewal or extension of the time or place of payment or performance hereof, or any indulgences by the Lenders or the Administrative Agent, or by any release or change in any security for the payment of the Obligations, and hereby consent to any and all renewals, extensions, indulgences, releases or changes, regardless of the number of such renewals, extensions, indulgences, releases or changes.
8.5. Advance Cessation Trigger.
Upon the occurrence and continuation of an Advance Cessation Trigger, the Administrative Agent may declare that an Advance Cessation Trigger has occurred and may terminate the Maximum Facility Amount upon notice to the Borrower.
ARTICLE IX
THE ADMINISTRATIVE AGENT
9.1. Authorization.
Each Lender has appointed the Administrative Agent as its agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement of this Agreement), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Bank, and such instructions shall be binding upon all Lenders; provided, however, that the Administrative Agent shall not be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to this Agreement or applicable law.
9.2. Reliance by Agent.
Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, neither the Administrative Agent nor any of its directors, officers, agents, representatives, employees, attorneys-in-fact or Affiliates shall be liable for any action taken or omitted to be taken by it or them (in their capacity as or on behalf of the Administrative Agent) under or in connection with this Agreement or the other Transaction Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Administrative Agent: (a) may treat the payee of the Notes as the holder thereof; (b) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it or the Borrower and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender or the Administrative Agent and shall not be responsible to any Lender or the Administrative Agent for any statements, warranties or representations made in or in connection with this Agreement or the other Transaction Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the Property (including the books and records) of the Borrower; (e) shall not be responsible to any Lender or the Administrative Agent for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto or the enforceability or perfection or priority of any Collateral; and (f) shall incur no liability under or in respect of this Agreement or any other Transaction Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, cable or telex) believed by the Administrative Agent to be genuine and signed or sent by the proper Person or party.
9.3. Agent and Affiliates.
With respect to any Advance made by CL New York, CL New York shall have the same rights and powers under this Agreement as would any Lender and may exercise the same as though it were not the Administrative Agent. CL New York and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, any of the Borrower's Affiliates and any Person who may do business with or own securities of the Borrower or any such Affiliate, all as if CL New York were not the Administrative Agent and without any duty to account therefor to the Lenders. If CL New York is removed as Administrative Agent, such removal will not affect CL New York's rights and interests as a Lender.
9.4. Lender Decision.
Each Lender (including each Lender that becomes a party hereto by assignment) acknowledges that it has, independently and without reliance on the Administrative Agent, any of its Affiliates or any other Lender and based on such documents and information as it has deemed appropriate, made its own evaluation and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance on the Administrative Agent, any of its Affiliates or any other Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under this Agreement.
9.5. Rights of the Administrative Agent.
Each right and remedy expressly provided by this Agreement as being available to the Administrative Agent shall be exercised by the Administrative Agent only at the direction of the Majority Banks.
9.6. Indemnification of Administrative Agent.
Each Bank agrees to indemnify the Administrative Agent (to the extent not reimbursed by or on behalf of the Borrower), ratably according to the respective principal amounts held by it (or if no Advances are then outstanding, each Bank shall indemnify the Administrative Agent ratably according to the amount of its Bank Commitment), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or the other Transaction Documents or any action taken or omitted by the Administrative Agent under this Agreement or the other Transaction Documents, provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's gross negligence or willful misconduct.
9.7. UCC Filings.
The Lenders and the Borrower expressly recognize and agree that the Administrative Agent may be listed as the assignee or secured party of record on the various UCC filings required to be made hereunder in order to perfect the security interest in the Collateral granted by the Borrower for the benefit of the holders of the Obligations and that such listing shall be for administrative convenience only in creating a record-holder or nominee to take certain actions hereunder on behalf of the holders of the Obligations.
ARTICLE X
INDEMNIFICATION
10.1. Indemnities by the Borrower.
(a) General Indemnity. Without limiting any other rights that any such Person may have hereunder or under applicable law, the Borrower hereby agrees to indemnify each of the Lenders, the Administrative Agent, any Affected Party, their respective successors, transferees, participants and assigns and all affiliates, officers, directors, shareholders, controlling persons, employees and agents of any of the foregoing (each an "Indemnified Party"), forthwith on demand, from and against any and all damages, losses, claims, liabilities and related costs and expenses, including attorneys' fees and disbursements (all of the foregoing being collectively referred to as "Indemnified Amounts") awarded against or incurred by any of them arising out of or relating to this Agreement or the exercise or performance of any of its or
their powers or duties, in respect of any Mortgage Loan or Take-Out Commitment, or related in any way to its or their possession of, or dealings with, the Collateral, excluding, however, Indemnified Amounts to the extent resulting from gross negligence, willful misconduct, or unlawful collection activity directed against a borrower under a mortgage loan included in the Collateral on the part of such Indemnified Party. The foregoing indemnity does not extend to any damages, losses, claims, liabilities, or costs and expenses, arising solely from Issuer's sale or issuance of commercial paper.
(b) Contribution. If for any reason the indemnification provided above in this Section 10.1 is unavailable to an Indemnified Party or is insufficient to hold an Indemnified Party harmless, then the Borrower shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such Indemnified Party on the one hand and Borrower on the other hand but also the relative fault of such Indemnified Party as well as any other relevant equitable considerations.
ARTICLE XI
ADMINISTRATION AND COLLECTION OF MORTGAGE LOANS
11.1. Designation of Servicer.
The servicing, administration and collection of the Mortgage Assets shall be conducted by the Servicer so designated hereunder from time to time. Until the Administrative Agent gives notice to the Borrower and the Originator of the designation of a new Servicer after the occurrence of a Default or an Event of Default, the Originator is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms hereof. The Administrative Agent may at any time following the occurrence of a Servicer Default designate as Servicer any Person (including itself) to succeed the Originator or any successor Servicer, if such Person shall consent and agree to the terms hereof, but the Administrative Agent may not designate a new Servicer unless there is an Event of Default. The Servicer may, with the prior consent of the Administrative Agent, subcontract with any other Person for the servicing, administration or collection of the Mortgage Assets. Any such subcontract shall not affect the Servicer's liability for performance of its duties and obligations pursuant to the terms hereof.
11.2. Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions as
may be necessary or advisable to collect each Mortgage Asset from time to time,
all in accordance with applicable laws, rules and regulations, with care and
diligence, and in accordance with the servicing guide issued by the Governmental
Authority applicable to such Mortgage Asset or, in the case of Non-Conforming
Loans, the servicing criteria specified by the Approved Investor that has issued
a Take-Out Commitment with respect thereto. The Borrower and the Administrative
Agent hereby appoint the Servicer, from time to time designated pursuant to
Section 11.1, as agent for themselves and for the Lenders to enforce their
respective rights and interests in the Mortgage Assets and the Collections
thereof. In performing its duties as Servicer,
the Servicer shall exercise the same care and apply the same policies as it would exercise and apply if it owned such Mortgage Loans and shall act in the best interests of the Borrower and the Lenders.
(b) The Servicer shall administer the Collections in accordance with the procedures described in Section 2.7 and shall service the Collateral in accordance with Section 7.5.
(c) The Servicer shall hold on behalf of the Borrower and the Lenders, in accordance with their respective interests, all books and records (including, without limitation, computer tapes or disks) that relate to the Mortgage Assets.
(d) The Servicer shall, as soon as practicable following receipt, turn over to the Borrower or the Originator, as appropriate, any cash collections or other cash proceeds received with respect to Property of the Borrower not constituting Mortgage Assets.
(e) The Servicer shall, from time to time at the request of the
Administrative Agent, furnish to the Administrative Agent (promptly after any
such request) a calculation of the amounts held for the Lenders pursuant to
Section 2.7(c).
(f) The Servicer shall perform the duties and obligations of the Servicer set forth in the Collateral Agency Agreement and the other Security Instruments.
11.3. Certain Rights of the Administrative Agent.
At any time following the designation of a Servicer other than the Originator pursuant to Section 11.1 or following an Event of Default:
(a) The Administrative Agent may direct the Obligors that all payments thereunder be made directly to the Administrative Agent or its designee.
(b) At the Administrative Agent's request and at the Borrower's expense, the Borrower shall notify each Obligor of the Lien on the Mortgage Assets and direct that payments be made directly to the Administrative Agent or its designee.
(c) At the Administrative Agent's request and at the Borrower's expense, the Borrower and the Servicer shall (i) assemble all of the documents, instruments and other records (including, without limitation, computer tapes and disks) that evidence or relate to the Mortgage Assets and Collections and Collateral, or that are otherwise necessary or desirable to collect the Mortgage Assets, and shall make the same available to the Administrative Agent at a place selected by the Administrative Agent or its designee, and (ii) segregate all cash, checks and other instruments received by it from time to time constituting Collections in a manner acceptable to the Administrative Agent and, promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Administrative Agent or its designee.
(d) The Borrower authorizes the Administrative Agent to take any and all steps in the Borrower's name and on behalf of the Borrower that are necessary or desirable, in
the determination of the Administrative Agent, to collect amounts due under the Mortgage Assets, including, without limitation, endorsing the Borrower's name on checks and other instruments representing Collections and enforcing the Mortgage Assets and the other Collateral.
11.4. Rights and Remedies.
(a) If the Servicer fails to perform any of its obligations under this Agreement, the Administrative Agent may (but shall not be required to) itself perform, or cause performance of, such obligation; and the Administrative Agent's costs and expenses incurred in connection therewith shall be payable by the Servicer.
(b) With respect to each Mortgage Loan, the Servicer shall follow procedures (including collection procedures) that the Servicer customarily employs and exercises in servicing and administering mortgage loans for its own account and that are in accordance with accepted mortgage servicing practices of prudent lending institutions servicing mortgage loans of the same type as the Mortgage Loans in the jurisdictions in which the related Mortgaged Properties are located. The exercise by the Administrative Agent on behalf of the Lenders of their rights under this Agreement shall not release the Servicer from any of their duties or obligations with respect to any Mortgage Loans. Neither the Administrative Agent, nor the Lenders shall have any obligation or liability with respect to any Mortgage Loans, nor shall any of them be obligated to perform the obligations of the Borrower thereunder.
(c) In the event of any conflict between the provisions of this Article XI of this Agreement and Article VI of the Repurchase Agreement, the provisions of this Agreement shall control.
11.5. Indemnities by the Servicer.
Without limiting any other rights that the Administrative Agent, any Lender or any of their respective Affiliates (each, a "Special Indemnified Party") may have hereunder or under applicable law, and in consideration of its appointment as Servicer, the Servicer hereby agrees to indemnify each Special Indemnified Party from and against any and all claims, losses and liabilities (including attorneys' fees) (all of the foregoing being collectively referred to as "Special Indemnified Amounts") arising out of or resulting from any of the following (so long as such Special Indemnified Party provides notice to the Servicer within 180 days of the Special Indemnified Party's actual knowledge of such Special Indemnified Amounts) (excluding, however, (x) Special Indemnified Amounts to the extent resulting from gross negligence (including gross negligence in connection with any direct collection actions by the Administrative Agent as successor servicer hereunder) or willful misconduct on the part of such Special Indemnified Party, (y) recourse for Mortgage Assets that are not collected, not paid or uncollectible on account of the insolvency, bankruptcy or financial inability to pay of the applicable Obligor or (z) any income taxes or any other tax or fee measured by income incurred by such Special Indemnified Party arising out of or as a result of this Agreement or the Borrowings hereunder):
(a) any representation or warranty or statement made or deemed made by the Servicer under or in connection with this Agreement that shall have been incorrect in any material respect when made;
(b) the failure by the Servicer to comply in any material respect with any applicable law, rule or regulation with respect to any Mortgage Asset or the failure of any Mortgage Loan to conform to any such applicable law, rule or regulation;
(c) the failure to have filed, or any delay in filing, financing statements, Mortgages or assignments of Mortgages under the applicable laws of any applicable jurisdiction with respect to any Mortgage Assets and the other Collateral and Collections in respect thereof, whether at the time of any purchase under the Repurchase Agreement or at any subsequent time;
(d) any material failure of the Servicer to perform its duties or obligations in accordance with the provisions of this Agreement;
(e) the commingling of Collections at any time by the Servicer with other funds;
(f) any action or omission by the Servicer, other than a Servicer appointed by the Administrative Agent, reducing or impairing the rights of the Administrative Agent or the Lenders with respect to any Mortgage Asset or the value of any Mortgage Asset;
(g) any Servicer Fees or other reasonable costs and expenses payable to any replacement Servicer, to the extent in excess of the Servicer Fees payable to the Servicer hereunder; or
(h) any claim brought by any Person other than a Special Indemnified Party arising from any activity by the Servicer or its Affiliates in servicing, administering or collecting any Mortgage Asset.
ARTICLE XII
MISCELLANEOUS
12.1. Notices.
Any notice, demand or request required or permitted to be given under or in connection with this Agreement, the Notes or the other Transaction Documents (except as may otherwise be expressly required therein) shall be in writing and shall be mailed by first class or express mail, postage prepaid, or sent by telex, telegram, telecopy or other similar form of rapid transmission, confirmed by mailing (by first class or express mail, postage prepaid) written confirmation at substantially the same time as such rapid transmission, or personally delivered to an officer of the receiving party. With the exception of certain administrative and collateral reports that may be directed to specific departments of the Administrative Agent, all such communications shall be mailed, sent or delivered to the parties hereto at their respective addresses as follows:
The Borrower: CH FUNDING, LLC 12357 Riata Trace Parkway Suite C150 Austin, Texas 78727 with copies of any notices of Event of Default to: CH MORTGAGE COMPANY I, LTD. 12357 Riata Trace Parkway Suite C150 Austin, Texas 78727 Telephone: (512) 502-0545 Telecopy: (512) 345-7348 The Issuer: ATLANTIC ASSET SECURITIZATION CORP. c/o Credit Lyonnais Building 1301 Avenue of the Americas New York, New York 10019 Facsimile: (212) 459-3258 Attention: Conduit Securitization With a copy to the Administrative Agent (except in the case of notice from the Administrative Agent). The Bank: CREDIT LYONNAIS NEW YORK BRANCH Credit Lyonnais Building 1301 Avenue of the Americas New York, New York 10019 Facsimile: (212) 459-3258 Attention: Conduit Securitization The Administrative Agent: CREDIT LYONNAIS NEW YORK BRANCH Credit Lyonnais Building 1301 Avenue of the Americas New York, New York 10019 Telephone No.: (212) 261-7810 Telex No.: 62410 (Answerback: CRED A 62410 UW) Facsimile: (212) 459-3258 Attention: Conduit Securitization The Originator and Servicer: CH MORTGAGE COMPANY I, LTD. 12357 Riata Trace Parkway Suite C150 Austin, Texas 78727 Telephone: (512) 502-0545 Telecopy: (512) 345-7348 82 |
D.R. Horton: D.R. HORTON, INC. 1901 Ascension Boulevard Suite 100 Arlington, Texas 76006 Telephone No.: (817) 856-8200 Facsimile: (817) 856-8259 Attention: Samuel R. Fuller, Chief Financial Officer, Assistant Treasurer Ted I. Harbour, Vice President, Assistant Secretary |
or at such other addresses or to such officer's, individual's or department's attention as any party may have furnished the other parties in writing. Any communication so addressed and mailed shall be deemed to be given when so mailed, except with respect to notices and requests given pursuant to Sections 2.3 and 3.3. Borrowing Reports and communications related thereto shall not be effective until actually received by the Collateral Agent, the Administrative Agent, the Issuer or the Borrower, as the case may be; and any notice so sent by rapid transmission shall be deemed to be given when receipt of such transmission is acknowledged, and any communication so delivered in person shall be deemed to be given when receipted for by, or actually received by, an authorized officer of the Borrower, the Collateral Agent, or the Administrative Agent.
12.2. Amendments, Etc.
No amendment or waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall be effective unless in a writing signed by the Majority Banks, the Administrative Agent (as agent for the Issuer) and the Administrative Agent (and, in the case of any amendment, also signed by the Borrower), and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Notwithstanding the foregoing, unless an amendment, waiver or consent shall be made in writing and signed by each of the Banks and the Administrative Agent, and each of the Rating Agencies shall confirm that any amendment will not result in a downgrade or withdrawal of the ratings assigned to any Commercial Paper Notes, no amendment, waiver or consent shall do any of the following:
(a) amend the definitions of Eligible Mortgage Loan, Collateral Value, Advance Rate or Majority Banks or
(b) amend, modify or waive any provision of this Agreement in any way that would:
(i) reduce the amount of principal or interest that is payable on account of any Advance or delay any scheduled date for payment thereof or
(ii) impair any rights expressly granted to an assignee or participant under this Agreement or
(c) reduce the fees payable by the Borrower to the Administrative Agent or the Lenders or delay the dates on which such fees are payable or
(d) amend or waive the Event of Default set forth in Sections 8.1(f), (g) or (h) relating to the bankruptcy of D.R. Horton, the Originator or the Borrower or
(e) amend clause (a) of the definition of Drawdown Termination Date or
(f) amend this Section 12.2;
and provided, further, that no amendment, waiver or consent shall, unless in writing and signed by the Servicer in addition to the other parties required above to take such action, affect the rights or duties of the Servicer under this Agreement. No failure on the part of the Lenders or the Administrative Agent to exercise, and no delay in exercising, any right thereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.
12.3. Invalidity.
In the event that any one or more of the provisions contained in the Notes, this Agreement or any other Transaction Document shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of such document.
12.4. Restrictions on Informal Amendments.
No course of dealing or waiver on the part of the Administrative Agent, the Collateral Agent, any Lender or any Affected Party, or any of their officers, employees, consultants or agents, or any failure or delay by any such Person with respect to exercising any right, power or privilege under the Notes, this Agreement or any other Transaction Document shall operate as an amendment to the express written terms of the Notes, this Agreement or any other Transaction Document or shall act as a waiver of any right, power or privilege of any such Person.
12.5. Cumulative Rights.
The rights, powers, privileges and remedies of each of the Lenders, the Collateral Agent and the Administrative Agent under the Notes, this Agreement, and any other Transaction Document shall be cumulative, and the exercise or partial exercise of any such right, power, privilege or remedy shall not preclude the exercise of any other right or remedy.
12.6. Construction; Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL APPLY HERETO).
12.7. Interest.
Any provisions herein, in the Notes, or in any other Transaction Document, or any other document executed or delivered in connection herewith, or in any other agreement or commitment, whether written or oral, expressed or implied, to the contrary notwithstanding, the Lenders shall in no event be entitled to receive or collect, nor shall or may amounts received hereunder be credited, so that the Lenders shall be paid, as interest, a sum greater than the maximum amount permitted by applicable law to be charged to the Person primarily obligated to pay such Note at the time in question. If any construction of this Agreement, any Note or any other Transaction Document, or any and all other papers, agreements or commitments indicate a different right given to a Lender to ask for, demand or receive any larger sum as interest, such is a mistake in calculation or wording that this clause shall override and control, it being the intention of the parties that this Agreement, each Note, and all other Transaction Documents or other documents executed or delivered in connection herewith shall in all things comply with applicable law and proper adjustments shall automatically be made accordingly. In the event that any of the Lenders shall ever receive, collect or apply as interest, any sum in excess of the maximum nonusurious rate permitted by applicable law (the "Maximum Rate"), if any, such excess amount shall be applied to the reduction of the unpaid principal balance of the Note held by such Lender, and if such Note is paid in full, any remaining excess shall be paid to the Borrower. In determining whether or not the interest paid or payable, under any specific contingency, exceeds the Maximum Rate, if any, the Borrower and each of the Lenders shall, to the maximum extent permitted under applicable law: (a) characterize any nonprincipal payment as an expense or fee rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) "spread" the total amount of interest throughout the entire term of the respective Note; provided that if any Note is paid and performed in full prior to the end of the full contemplated term hereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Rate, if any, the respective Lender shall refund to the Borrower the amount of such excess, or credit the amount of such excess against the aggregate unpaid principal balance of all Advances made by such Lender hereunder at the time in question.
12.8. Right of Offset.
The Borrower hereby grants to each of the Lenders and the Administrative Agent and to any assignee or participant a right of offset, to secure the repayment of the Obligations, upon any and all monies, securities or other Property of the Borrower, and the proceeds therefrom now or hereafter held or received by or in transit to such Person, from or for the account of the Borrower, whether for safekeeping, custody, pledge, transmission, collection or otherwise, and also upon any and all deposits (general or special, time or demand, provisional or final) and credits of the Borrower, and any and all claims of the Borrower against such Person at any time existing. Upon the occurrence of any Event of Default, such Person is hereby authorized at any time and from time to time, without notice to the Borrower, to offset, appropriate, and apply any and all items hereinabove referred to against the Obligations. Notwithstanding anything in this Section 12.8 or elsewhere in this Agreement to the contrary, the Administrative Agent and the Lenders and any assignee or participant shall not have any right to offset, appropriate or apply any accounts of the Borrower that consist of escrowed funds (except and to the extent of any beneficial interest of the Borrower in such escrowed funds) that have been so identified by the Borrower in writing at the time of deposit thereof.
12.9. Successors and Assigns.
(a) This Agreement and the Lenders' rights and obligations herein (including ownership of each Advance) shall be assignable by the Lenders and their successors and assigns to any Eligible Assignee. Each assignor of an Advance or any interest therein shall notify the Administrative Agent and the Borrower of any such assignment.
(b) Each Bank may assign to any Eligible Assignee or to any other Bank all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Bank Commitment and any Advances or interests therein owned by it), provided however, that:
(i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement,
(ii) the amount being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance Agreement with respect to such assignment) shall in no event be less than the lesser of (x) $20,000,000 and (y) all of the assigning Bank's Bank Commitment,
(iii) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance Agreement, together with a processing and recordation fee of $2,500, and
(iv) concurrently with such assignment, such assignor Bank shall assign to such assignee Bank an equal percentage of its rights and obligations under the related Liquidity Agreement.
Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance Agreement, (x) the assignee thereunder shall be a party to this Agreement and, to the extent that rights and obligations hereunder or under this Agreement have been assigned to it pursuant to such Assignment and Acceptance Agreement, have the rights and obligations of a Bank hereunder and thereunder and (y) the assigning Bank shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance Agreement, relinquish such rights and be released from such obligations under this Agreement (and, in the case of an Assignment and Acceptance Agreement covering all or the remaining portion of an assigning Bank's rights and obligations under this Agreement, such Bank shall cease to be a party thereto).
(c) The Administrative Agent shall maintain at its address referred to in Section 12.1 a copy of each Assignment and Acceptance Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Banks and the Bank Commitment of, and aggregate outstanding principal of Advances or interests therein owned by, each Bank from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Servicer, the Administrative Agent and the Banks may treat each person whose name is recorded in the Register as a Bank under this Agreement for all purposes of this Agreement. The Register shall
be available for inspection by the Borrower, the Servicer, the Administrative Agent or any Bank at any time and from time to time upon prior notice.
(d) Each Bank may sell participations, to one or more banks or other entities that are Eligible Assignees, in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Bank Commitment and the Advances or interests therein owned by it); provided, however, that:
(i) such Bank's obligations under this Agreement (including, without limitation, its Bank Commitment to the Borrower thereunder) shall remain unchanged,
(ii) such Bank shall remain solely responsible to the other parties to this Agreement for the performance of such obligations, and
(iii) concurrently with such participation, the selling Bank shall sell to such bank or other entity a participation in an equal percentage of its rights and obligations under the related Liquidity Agreement.
The Administrative Agent, the other Banks, the Servicer and the Borrower shall have the right to continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement.
(e) The Borrower may not assign its rights or obligations hereunder or any interest herein without the prior written consent of the Administrative Agent and each Lender.
(f) The parties hereto acknowledge that Atlantic has granted to the Atlantic Program Agent for the benefit of holders of its Commercial Paper Notes, its liquidity banks, and certain other creditors of Atlantic, a security interest in its right, title and interest in and to the Advances, the Transaction Documents and the Collateral. Each reference herein or in any of the other Transaction Documents to the Liens in the Collateral granted to Atlantic under the Transaction Documents shall be deemed to include a reference to such security interest of the Atlantic Program Agent.
12.10. Survival of Termination.
The provisions of Article X and Sections 2.12, 11.4, 12.14, 12.15, 12.19 and 12.21 shall survive any termination of this Agreement.
12.11. Exhibits.
The exhibits attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein, except that in the event of any conflict between any of the provisions of such exhibits and the provisions of this Agreement, the provisions of this Agreement shall prevail.
12.12. Titles of Articles, Sections and Subsections.
All titles or headings to articles, sections, subsections or other divisions of this Agreement or the exhibits hereto are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such articles, sections, subsections or other divisions, such other content being controlling as to the agreement between the parties hereto.
12.13. Counterparts.
This Agreement may be executed in two or more counterparts, and it shall not be necessary that the signatures of each of the parties hereto be contained on any one counterpart hereof; each counterpart shall be deemed an original, but all counterparts together shall constitute one and the same instrument.
12.14. No Proceedings.
The Borrower, the Servicer, the Administrative Agent and each Bank hereby agrees that it will not institute against the Issuer, or join any other Person in instituting against the Issuer, any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law so long as any Commercial Paper Notes issued by the Issuer shall be outstanding or there shall not have elapsed one year plus one day since the last day on which any such Commercial Paper Notes shall have been outstanding. The foregoing shall not limit the rights of the Borrower, the Servicer, the Administrative Agent or any Bank to file any claim in or otherwise take any action with respect to any insolvency proceeding that was instituted by any other Person.
12.15. Confidentiality.
The Borrower and the Servicer each hereby agrees that it will maintain and cause its respective employees to maintain the confidentiality of this Agreement, and the other Transaction Documents (and all drafts thereof), and each Lender and the Administrative Agent agrees that it will maintain and cause its respective employees to maintain the confidentiality of the Collateral and all other non-public information with respect to the Borrower and the Servicer, and their respective businesses obtained by such party in connection with the structuring, negotiating and execution of the transactions contemplated herein, in each case except (a) as may be required or appropriate in communications with its respective independent public accountants, legal advisors, or with independent financial rating agencies, (b) as may be required or appropriate in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over it, (c) as may be required or appropriate in response to any summons or subpoena or in connection with any litigation, (d) as may be required by or in order to comply with any law, order, regulation or ruling, (e) in the case of any Bank, any Issuer or the Administrative Agent, to any Liquidity Bank or provider of credit support to an Issuer, any dealer or placement agent for the Issuer's commercial paper, and any actual or potential assignee of, or participant in, any of the rights or obligations of such Lender, or (f) in the case of any Issuer or the Administrative Agent, to any Person whom any dealer or placement agent for the Issuer shall have identified as an actual or potential investor in
Commercial Paper Notes; provided that any proposed recipient under clause (e) or
(f) shall, as a condition to the receipt of any such information, agree to
maintain the confidentiality thereof. The Issuer, Administrative Agent and Banks
acknowledge that information regarding borrowers in the Mortgage Loan Collateral
is confidential under federal and state privacy laws and regulations and agree
to observe all such laws and regulations and not to take any action that would
place the Originator, Servicer or Borrower in violation thereof.
12.16. Recourse Against Directors, Officers, Etc.
The Obligations are solely the entity obligations of the Borrower. No
recourse for the Obligations shall be had hereunder against any director,
officer, employee (in its capacity as such, and not as Servicer), trustee, agent
or any Person owning, directly or indirectly, any legal or beneficial interest
in the Borrower (in its capacity as such owner, and not as Servicer or otherwise
as a party to any Transaction Document). This Section 12.16 shall not, however,
(a) constitute a waiver, release or impairment of the Obligations, or (b) affect
the validity or enforceability of any other Transaction Document to which the
Originator, the Servicer, D.R. Horton or any of their Affiliates may be a party.
12.17. Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
12.18. Consent to Jurisdiction; Waiver of Immunities.
EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION WITH RESPECT TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.
12.19. Costs, Expenses and Taxes.
In addition to its obligations under Articles II and X, the Borrower agrees to pay on demand:
(a) (i) all reasonable costs and expenses incurred by the Administrative Agent and the Lenders, in connection with the negotiation, preparation, execution and delivery or the administration (including periodic auditing) of this Agreement, the Notes, the other Transaction Documents, and, to the extent related to this Agreement, the Program Documents (including any amendments or modifications of or supplements to the Program Documents entered into in connection herewith), and any amendments, consents or waivers executed in connection therewith, including, without limitation, (A) the fees and expenses of counsel to any of such Persons incurred in connection with any of the foregoing or in advising such Persons as to their respective rights and remedies under any of the Transaction Documents or (to the extent related to this Agreement) the Program Documents, and (B) all out-of-pocket expenses (including fees and expenses of independent accountants) incurred in connection with any review of the books and records of the Borrower or the Servicer either prior to the execution and delivery hereof or pursuant to Section 6.8, and (ii) all costs and expenses incurred by the Administrative Agent and the Lenders, in connection with the enforcement of, or any breach of, this Agreement, the Notes, the other Transaction Documents and, to the extent related to this Agreement, the Program Documents (including any amendments or modifications of or supplements to the Program Documents entered into in connection herewith), including, without limitation, the fees and expenses of counsel to any of such Persons incurred in connection therewith; and
(b) all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, the Notes, the other Transaction Documents or (to the extent related to this Agreement) the Program Documents, and agrees to indemnify each Indemnified Party against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees.
12.20. Entire Agreement.
THE NOTES, THIS AGREEMENT, AND THE OTHER TRANSACTION DOCUMENTS EXECUTED AND DELIVERED AS OF EVEN DATE HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO ANY MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
12.21. Excess Funds.
The Issuer shall not be obligated to pay any amount pursuant to this Agreement unless the Issuer has excess cash flow from operations or has received funds with respect to such obligation which may be used to make such payment and which funds or excess cash flow are not required to repay when due its Commercial Paper Note or other short term funding backing its Commercial Paper Notes. Any amount which the Issuer does not pay pursuant to the operation of the preceding sentence shall not constitute a claim, as defined in Section 101(5) of the United States Bankruptcy Code, against the Issuer for any such insufficiency unless and until the Issuer does have excess cash flow or excess funds.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
BORROWER CH FUNDING, LLC By: /s Mark C. Winter ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ISSUER ATLANTIC ASSET SECURITIZATION CORP. By: Credit Lyonnais New York Branch, as Attorney-in-Fact By: /s/ Gary M. Miller ------------------------------------ Name: ---------------------------------- Title: --------------------------------- ADMINISTRATIVE AGENT CREDIT LYONNAIS NEW YORK BRANCH By: /s/ Gary M. Miller ------------------------------------ Name: ---------------------------------- Title: --------------------------------- BANK CREDIT LYONNAIS NEW YORK BRANCH By: /s/ Gary M. Miller ------------------------------------ Name: ---------------------------------- Title: --------------------------------- SERVICER CH MORTGAGE COMPANY I, LTD. By: CH Mortgage Company GP, Inc., its general partner By: /s/ Mark C. Winter ------------------------------------ Name: ---------------------------------- Title: --------------------------------- |
[CH Mortgage Loan Agreement] |
SCHEDULE I
BANK COMMITMENTS AND PERCENTAGES
Bank Bank Commitment Bank Commitment ---- --------------- Percentage ---------- CREDIT LYONNAIS NEW YORK BRANCH $100,000,000 100% I-1 |
[CH Mortgage Loan Agreement] |
SCHEDULE II
APPROVED INVESTORS
------------------------------------------------------------------------------------------------------------------------ Moody's Investors Service, Equivalent Long-Term Ratings Applicable Concentration Limit ------------------------------------------------------------------------------------------------------------------------ Long-Term Short-Term --------- ---------- ------------------------------------------------------------------------------------------------------------------------ Aaa through A1 P-1 Not applicable ------------------------------------------------------------------------------------------------------------------------ A2 through Baa1 P-2 Not applicable ------------------------------------------------------------------------------------------------------------------------ Baa2 through Baa3 P-3 Not applicable ------------------------------------------------------------------------------------------------------------------------ Below Baa3 Below P-3 25% ------------------------------------------------------------------------------------------------------------------------ Not Rated by Moody's Not Rated 10% ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ Standard & Poor's Equivalent Long-Term Ratings ------------------------------------------------------------------------------------------------------------------------ Long-Term Short-Term --------- ---------- ------------------------------------------------------------------------------------------------------------------------ AAA through AA- A-1+ Not applicable ------------------------------------------------------------------------------------------------------------------------ A+ A-1 Not applicable ------------------------------------------------------------------------------------------------------------------------ A through BBB+ A-2 Not applicable ------------------------------------------------------------------------------------------------------------------------ BBB through BBB- A-3 Not applicable ------------------------------------------------------------------------------------------------------------------------ Below BBB- Below A-3 25% ------------------------------------------------------------------------------------------------------------------------ Not Rated by S&P Not Rated 10% ------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------ Fitch's Equivalent Long-Term Ratings ------------------------------------------------------------------------------------------------------------------------ Long-Term Short-Term --------- ---------- ------------------------------------------------------------------------------------------------------------------------ AAA through AA- F1+ Not applicable ------------------------------------------------------------------------------------------------------------------------ A+ F1 Not applicable ------------------------------------------------------------------------------------------------------------------------ A through BBB+ F2 Not applicable ------------------------------------------------------------------------------------------------------------------------ BBB through BBB- F3 Not applicable ------------------------------------------------------------------------------------------------------------------------ Below BBB- Below F3 25% ------------------------------------------------------------------------------------------------------------------------ Not Rated by Fitch Not Rated 10% ------------------------------------------------------------------------------------------------------------------------ |
If rating is split, the lower rating will apply. If only one agency provides a rating, the rating will apply,
II-1
[CH Mortgage Loan Agreement]
-------------------------------------------------------------------------------------------------------------------- Investor Name Concentration Fitch rating Moody's rating S&P rating Limit -------------------------------------------------------------------------------------------------------------------- Bank of America Mortgage (formerly Nationsbanc Mortgage Corp.) N/A AA-/F1+ Aa3/P-1 A+/A1 Charter Mortgage N/A A-/F1 A-3/P-2 NR Chase Manhattan Mortgage Corporation N/A AA- AA2/P-1 AA-/A-1+ Countrywide N/A A/F1 A3/P-2 A/A1 Federal National Mortgage Association N/A NR Aaa/P-1 AAA First Union Mortgage Corporation N/A A+/F-1 (Natio Bank) A1/P-1 A/A1 Fleet Mortgage group N/A A+/F1 A2 A+ GMAC Mortgage N/A NR NR AAA Greenpoint Mortgage (formerly Headlands Mortgage) N/A BBB/F2 Baa2 BBB/A-2 Homeside Lending Inc. N/A AA-/F1+ A2/P-1 BBB/A2 National City Mortgage N/A F1+ Aa3/P-1 A Novastar 10% NR NR NR PHH Mortgage Service N/A A/F1 Baa1/P-2 A-/A-2 Principle Residential Mortgage N/A NR P-1 A-1 Suntrust Bank N/A AA-/F1+ AA3/P-1 AA-/A-1+ Wells Fargo N/A AA/F1+ AA2/P-1 A+/A-1 Colorado Housing and Finance Authority 10% NR NR NR First Bank of Arizona 10% NR NR NR First Nationwide Mortgage Corporation 10% NR NR NR Guaranty Federal 10% NR NR NR Leader Mortgage Corp. 10% NR NR NR Ohio Savings Financial Corp. (Ohio Savings Bank) 10% NR NR NR Option 1 10% NR NR Resource Bankshare Mortgage 10% NR Sebring Capital 10% NR NR NR -------------------------------------------------------------------------------------------------------------------- |
II-2
[CH Mortgage Loan Agreement]
SCHEDULE III
UCC SEARCH
No Exceptions.
III-1
[CH Mortgage Loan Agreement]
SCHEDULE IV
LITIGATION
None.
IV-1
[CH Mortgage Loan Agreement]
EXHIBIT A
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated ________, 20__
Reference is made to the Loan Agreement dated as of July 9, 2002 (the "Loan Agreement"), among CH FUNDING, LLC, a Delaware limited liability company (hereinafter, together with its successors and assigns, the "Borrower"), ATLANTIC ASSET SECURITIZATION CORP., a Delaware corporation (hereinafter, together with its successors and assigns, "Atlantic"), CREDIT LYONNAIS NEW YORK BRANCH ("CL New York"), as a Bank and the Administrative Agent, and CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (hereinafter, together with its successors and assigns, "CH Mortgage"), as Servicer.
_______________ (the "Assignor") and ________________ (the "Assignee") agree as follows:
1. Purchase and Sale of Interest. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to all of the Assignor's rights and obligations as a Bank under the Loan Agreement as of the date hereof equal to the Percentage specified on the signature page hereto of all outstanding rights and obligations of all Banks under the Loan Agreement. After giving effect to such sale and assignment, the Assignee's Bank Commitment and the principal amount of Advances held by the Assignee will be as set forth in Section 2 of the signature page hereto.
2. Representations and Disclaimers of Assignor. The Assignor
(1) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim;
(2) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement or any other instrument or document furnished pursuant thereto; and
(3) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower, the Originator, or the Servicer or the performance or observance by the Borrower, the Originator, or the Servicer of any of its respective obligations under the Loan Agreement or any other instrument or document furnished pursuant thereto.
3. Representations and Agreements of Assignee. The Assignee
(1) confirms that it has received a copy of the Loan Agreement, together with copies of the most recent financial statements referred to in Section 6.1 thereto and such
[CH Mortgage Loan Agreement]
other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance;
(2) agrees that it will, independently and without reliance upon the Administrative Agent or the Assignor and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Agreement;
(3) appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Loan Agreement as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto;
(4) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Agreement are required to be performed by it as a Bank;
(5) specifies as its address for notices the office set forth beneath its name on the signature pages hereof;
(6) represents that this Assignment and Acceptance has been duly authorized, executed and delivered by such Assignee pursuant to its corporate powers and constitutes the legal, valid and binding obligation of such Assignee; and
(7) if the Assignee is organized under the laws of a jurisdiction outside the United States, (a) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Loan Agreement or such other documents as are necessary to indicate that all such payments are subject to such taxes at a rate reduced by an applicable tax treaty, and (b) agrees to provide the Administrative Agent (to the extent permitted by applicable law) with similar forms for each subsequent tax year of the Assignee in which payments are to be made to the Assignee under the Loan Agreement.
4. Effectiveness of Assignment. (a) Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, counterparts will be delivered to the Administrative Agent for acceptance and recording by the Administrative Agent. The effective date of this Assignment and Acceptance shall be the date of acceptance thereof by the Administrative Agent, unless otherwise specified in Section 3 of the signature page hereto (the "Effective Date").
(1) Upon such acceptance and recording by the Administrative Agent as of the Effective Date, (i) the Assignee shall be a party to the Loan Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Bank thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Agreement.
[CH Mortgage Loan Agreement]
(2) Upon such acceptance and recording by the Administrative Agent, from and after the Effective Date, the Administrative Agent shall make all payments under the Loan Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Loan Agreement for periods prior to the Effective Date directly between themselves.
5. Obligations of the Assignee, Including Confidentiality. The Assignee agrees to abide by any obligations set forth in the Loan Agreement on the part of the Bank including, without limitation, the obligations as to confidentiality set forth in Section 12.15 of the Loan Agreement.
6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF, OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL APPLY HERETO).
[Signatures Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized, as of the date first above written, such execution being made on the signature page hereto.
Section 1. Percentage:/2/ ______% Section 2. Assignee's Bank Commitment: $______ Aggregate principal amount of Advances held by the Assignee: $______ |
Section 3.
Effective Date:/3/ _______, 20__
[CH Mortgage Loan Agreement]
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE] By:__________________________ By:__________________________ Title: Title: A-4 |
[CH Mortgage Loan Agreement] |
EXHIBIT B
FORM OF SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Subordination Agreement") is entered into as of July ___, 2002, by D.R. HORTON, INC., a Delaware corporation ("D.R. Horton"), in favor of CH FUNDING, LLC, a Delaware limited liability company, ("Borrower") and CREDIT LYONNAIS NEW YORK BRANCH, as administrative agent (the "Administrative Agent") under the Loan Agreement referred to below.
RECITALS
A. CH MORTGAGE COMPANY I, LTD., a Texas limited partnership ("CH Mortgage") (the "Originator") and Borrower have entered into a Master Repurchase Agreement dated as of June ___, 2002 (as amended or restated from time to time, the "Repurchase Agreement") pursuant to which the Originator may sell to Borrower, and Borrower may acquire from the Originator, certain Mortgage Loans and pursuant to which the Originator may repurchase those Mortgage Loans.
B. Borrower has entered into a Loan Agreement dated as of June ___, 2002 (as amended or restated from time to time, the "Loan Agreement") with the Administrative Agent and the Banks party thereto, and CH Mortgage, as Servicer, (in such capacity, the "Servicer"), pursuant to which, and subject to the terms of which, the Lenders have agreed to make loans to the Borrower secured by Mortgage Loans and other collateral, and CH Mortgage has agreed to provide certain administration and collection services.
C. It is a condition precedent to the initial purchase under the Repurchase Agreement and the initial loan under the Loan Agreement that the Companies (as defined herein) shall have entered into this Agreement, pursuant to which all existing and future obligations, except for certain excluded obligations, of the Originator to D.R. Horton or to any Affiliate of D.R. Horton or the Originator other than Borrower is subordinated to certain obligations of the Originator under the Repurchase Agreement and of the Servicer under the Loan Agreement.
AGREEMENTS
In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Companies hereby covenant and agree with Borrower and the Administrative Agent as follows:
1. Terms defined in the Repurchase Agreement or the Loan Agreement have the same meanings when used in this Subordination Agreement, except that, solely for the purpose of this Subordination Agreement, the term "Affiliate", when used in connection with D.R. Horton, the Companies or the Originator, shall not include Borrower. As used in this Subordination Agreement:
"Companies" means D.R. Horton and any Affiliate of D.R. Horton (other than the Borrower) to which the Originator owes or may owe in the future any Subordinated Debt.
[CH Mortgage Loan Agreement]
"Excluded Obligations" means all indebtedness of the Originator to D.R. Horton or any Affiliate of the Originator, incurred in the ordinary course of the Originator's business related to (a) the Originator's payroll and operating expenses, (b) insurance premiums on policies held by the Originator, (c) information technology, (d) human resources, (e) the management fee payable by Originator to D.R. Horton, (f) office rent and utility, maintenance and operating costs related to occupancy, (g) real estate transaction settlement costs paid or advanced by Originator, (h) use of trade names, trade marks, trade dress, patents, copyrights or other intellectual property licensed to Originator and (i) the processing or closing of applications for residential mortgage loans or any mortgage loan brokerage fee payable by the Originator to D.R. Horton or an Affiliate; provided that any indebtedness in clauses (a) through (i) will cease to be an Excluded Obligation ninety days after the origination of such indebtedness unless paid or satisfied by setoff or otherwise.
"Senior Debt" means all obligations for the payment of money which are or may become due and owing by (a) the Originator under the Repurchase Agreement, whether for repurchase prices, fees, expenses (including counsel fees), indemnified amounts or otherwise or (b) the Servicer under the Loan Agreement, whether for the deposit of collections received by it or for fees, expenses (including counsel fees), indemnified amounts or otherwise.
"Subordinated Debt" means all present and future indebtedness for borrowed money, liabilities or obligations of the Originator to D.R. Horton or to any Affiliate of the Originator, the Companies or D.R. Horton, except for Excluded Obligations, whether (i) principal, interest (before or after the beginning of any proceedings under any Debtor Law), premium, court costs, attorneys' fees, or other costs of collection, (ii) direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, (iii) created directly or acquired by assignment or otherwise, or (iv) whether or not evidenced in writing.
"Senior Liens" means all present and future security interests and liens, if any, directly or indirectly securing any Senior Debt.
"Subordinated Liens" means all present and future security interests and liens, if any, directly or indirectly securing any Subordinated Debt.
2. Until the Facility Termination Date under the Repurchase Agreement and the Drawdown Termination Date under the Loan Agreement have expired and the Senior Debt has been paid in full, all Subordinated Debt and the proceeds of all Subordinated Liens are hereby subordinated to all Senior Debt and the proceeds of all Senior Liens as provided in this Subordination Agreement. For purposes hereof, Senior Debt shall not be deemed paid in full unless it has been paid in full for more than 366 days and such payment is final and indefeasible and not subject to rescission or setting aside for any reason whatsoever.
(a) Unless a Default or an Event of Default under the Repurchase Agreement or (so long as the Originator is the Servicer) a Servicer Default (each, a "Senior Debt
[CH Mortgage Loan Agreement]
Default") is continuing, the Companies may receive payments of principal on Subordinated Debt, and interest accruing on Subordinated Debt at a reasonable market rate as agreed upon between the Originator and the Companies.
(b) While a Senior Debt Default is continuing, the Companies may not receive any payment directly or indirectly related to any Subordinated Debt or proceeds of any Subordinated Lien.
3. D.R. Horton agrees that (a) all existing and future obligations, except for Excluded Obligations, of any nature owed or owing by the Originator to any Affiliates of the Originator or D.R. Horton shall also be Subordinated Debt and (b) it will cause each such Affiliate that may provide credit to, or otherwise have obligations, except for Excluded Obligations, owing to it by, the Originator to subordinate its rights of repayment and security therefor to the rights of the Senior Debt holders, and the priorities and rights of the Senior Liens, as herein provided, the same as if each such Affiliate was a party to this Subordination Agreement in like capacity to that of D.R. Horton, and for such purpose each reference to D.R. Horton in this Agreement (other than this paragraph 3) shall be deemed to refer to such Affiliate. Nothing herein shall require D.R. Horton to obtain separate documents from its Affiliates agreeing to subordinate except as may be required for D.R. Horton to perform its obligation to cause its Affiliates to subordinate all existing and future obligations, except Excluded Obligations, upon a Senior Debt Default.
4. To the extent of the subordination provided in paragraph 2 above, if any payment or distribution of assets or securities of the Originator of any kind or character, whether in cash, property or securities, is made or to be made upon any (a) dissolution or winding up of Originator or (b) total or partial liquidation of Originator or (c) reorganization of the Originator, any one of which results in an Event of Default under the Loan Agreement, not timely cured, if applicable, that permits the acceleration or results in the acceleration of the payment of Senior Debt, then the provisions of this paragraph 4 shall apply. Further, this paragraph 4 shall apply whether such dissolution and winding up, liquidation or reorganization is voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings. If an event triggers the application of this paragraph 4, then and in any such event, all principal of and interest then due upon all Senior Debt, whether or not the Senior Debt is then due or matured, shall first be paid in full, or full payment thereof provided for in money or money's worth, before a Company, or any trustee or receiver acting on its or their behalf, shall be entitled to receive any assets or securities other than (a) shares of stock ("Stock") of the Originator as reorganized or readjusted or (b) securities ("Subordinated Securities") of the Originator or any other corporation provided for by a plan of reorganization or readjustment, junior to (or the payment of which is subordinated by a written instrument in form and substance satisfactory to and approved in writing by Borrower and the Administrative Agent, to the payment of), all Senior Debt which may at the time be outstanding or contemplated, in payment of, partial or complete compensation for or otherwise in respect of any of the Subordinated Debt. Upon any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets or securities of the Originator of any kind or character, whether in cash, properties or securities (other than as aforesaid) which, but for the provisions of this paragraph 4, would then be made to the Companies or any Affiliate of the Companies shall, to the extent of the subordination provided in paragraph 2 above, instead be made by the Originator or by any receiver, trustee in bankruptcy,
[CH Mortgage Loan Agreement]
liquidating trustee, agent or other person making such payment or distribution, directly to the holder or holders of Senior Debt, or their representatives, to the extent necessary to pay all Senior Debt in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt.
5. If any Company or any Affiliate of the Companies or anyone else acting on its or their behalf shall receive any payment or distribution of assets or securities of the Originator of any kind or character, or for the Originator, whether in cash, property or securities (other than Stock or Subordinated Securities) before all Senior Debt is paid in full or full payment thereof is provided for in money or money's worth to the satisfaction of Borrower and the Administrative Agent, then and in that event, to the extent of the subordination provided in paragraph 2 above, the recipient of such assets or securities of the Originator so paid or distributed shall pay over and deliver all such payments and distributions forthwith to the receiver, trustee in bankruptcy, liquidating trustee, agent or other person responsible for making payment or distribution of assets or securities of the Originator, who shall then pay or distribute such assets or securities to the holders of the Senior Debt for application to the Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt. Each Company or anyone else acting in its behalf will not be required to pay over and deliver any sums paid to or for the benefit of such Company to the extent that such payments or distributions were permitted, at the time paid or distributed, under subparagraph 2(a).
6. Each Company hereby, unconditionally and irrevocably, waives and releases any and all rights which it now has or may hereafter acquire to be subrogated to the rights of the holders of the Senior Debt or to receive payments or distributions of assets or securities of the Originator applicable to the Senior Debt and to any of the Senior Liens, either before or after all obligations to the holders of the Senior Debt shall be paid in full, although no such payments or distributions applicable to Senior Debt shall (as between the Originator, its creditors other than holders of the Senior Debt and the Companies) be deemed to be a payment by the Originator to or on account of its obligations to the Companies or any Affiliate of the Companies. The provisions of this paragraph 6 are (and are intended solely) for the purpose of defining the relative rights of the Companies or any Affiliate of the Companies, on the one hand, and the holders of Senior Debt, on the other hand, and nothing contained in this paragraph 6 or elsewhere in this Agreement is intended to impair, or shall impair, as between the Originator and the Companies or any Affiliate of the Companies, the obligations of the Originator to the Companies or any Affiliate of the Companies or to affect (except to the extent specifically provided above in this paragraph 6) the relative rights of the Companies, the Affiliates of the Companies and creditors of the Originator other than the holders of Senior Debt. Nothing herein contained shall prevent the Companies or any Affiliate of the Companies from exercising all remedies otherwise permitted by applicable law, upon default under the Originator's obligations to the Companies or the Affiliates of the Companies, subject to the rights under this Subordination Agreement of the holders of Senior Debt in respect of assets or securities of the Originator of any kind or character, whether cash, property or securities, received upon the exercise of any such remedy.
7. Before the time of the occurrence of any Senior Debt Default, the Companies and the Affiliates of the Companies shall have the right to receive and retain payments on Subordinated Debt to the extent provided in paragraph 2 hereof; however, automatically and
[CH Mortgage Loan Agreement]
without any requirement for notice or any other action by Borrower or the Administrative Agent, from and after the occurrence of any Senior Debt Default and until Borrower and the Administrative Agent shall have declared in writing that such Senior Debt Default has been cured or waived or ceased to exist or that the Senior Debt has been fully paid and satisfied, no payment shall be made, directly or indirectly, by the Originator or with any of its funds, or accepted by such Company or any Affiliate of such Company on, against or on account of any of the Subordinated Debt, and no remedies against the Originator or any of its property or interests shall be enforced by or for the account of such Company or any Affiliate of such Company on account of any Subordinated Debt.
8. From and after the date of maturity (however it may occur or be brought about), and until such Senior Debt so matured shall have been fully paid and satisfied, all of such matured Senior Debt shall first be paid in full before any payment or distribution is made by Originator or accepted by the Companies or any Affiliate of the Companies on, against or on account of any Subordinated Debt and before any remedy against either Originator or any of its property or interests may be enforced on account of the Subordinated Debt. Nothing herein requires the payment in full of maturing tranches of Senior Debt as a condition to the payment of Originator's costs in the ordinary course so long as the maturing tranche of debt will be paid timely and in the ordinary course.
9. The subordination provided for in this Subordination Agreement is unconditional, and no right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Originator or the Companies or any Affiliate of the Companies or by any act or failure to act by any holder of any Senior Debt or Borrower or the Administrative Agent or by any noncompliance by the Originator or the Companies or any Affiliate of the Companies with the terms, provisions and covenants of the Transaction Documents, regardless of any knowledge thereof any such holder might have or be chargeable or charged with. The obligations of the Companies are unconditional irrespective of the validity or enforceability or collectability of the Senior Debt or any other circumstance whatsoever which might constitute a legal or equitable defense of a guarantor or of the Companies hereunder, any and all such defenses being hereby expressly waived by the Companies.
10. Borrower or the Administrative Agent or any other holder of Senior Debt may, at any time without the consent of or notice to the Companies or any other holder of Subordinated Debt, without incurring responsibility to the Companies or such other holder of Subordinated Debt, without impairing or releasing the terms or obligations of this Subordination Agreement, upon or without any terms or conditions and in whole or in part:
(1) change the manner, place or terms of payment or change or extend the time of payment of, renew, increase or alter any Senior Debt and the subordinations herein made and provided for shall apply to the Senior Debt as so changed, extended, increased, renewed or altered in any manner;
(2) sell, exchange, release, surrender, realize upon or otherwise deal with in any manner and in any order any property at any time pledged or mortgaged to secure or securing the Senior Debt or any offset against any Senior Debt;
[CH Mortgage Loan Agreement]
(3) exercise, delay exercising or refrain from exercising any rights against the Originator or others, or otherwise act or refrain from acting;
(4) settle or compromise any Senior Debt.
Notwithstanding any provision hereof to the contrary, or any prior termination hereof, this Agreement and the obligations of the Companies hereunder shall be automatically reinstated if at any time any payment, settlement or compromise of any of the Senior Debt is rescinded, set aside or vacated by a Governmental Authority or required to be returned or repaid to the Originator or any Person on its behalf for any reason whatsoever. No delay on the part of Borrower, the Administrative Agent or any other holder of Senior Debt in exercising any right under this or any other agreement, including the Transaction Documents, or failure to exercise any such right shall operate as a waiver of such right. In no event shall any modification or waiver of the provisions of this Subordination Agreement be effective unless in writing, nor shall any such waiver be applicable except in the specific instance for which it may be given.
Each Company, for itself and all other present and future holders of Subordinated Debt (including, without limitation, Subordinated Debt held or originated by Affiliates of the Originator other than such Company), agrees to execute and deliver to Borrower, the Administrative Agent and to any other holder or holders of Senior Debt requesting it, such further instruments, and to take such other action, as may be necessary or appropriate in the reasonable opinion of Borrower, the Administrative Agent or such other holder or holders of Senior Debt, and upon request of Borrower, the Administrative Agent or such other holder or holders, to fully effectuate the subordinations provided for in this Subordination Agreement and in accordance with its terms.
11. This Subordination Agreement shall bind and benefit the parties hereto
and their respective successors, custodians, receivers, trustees and assigns,
and the provisions of this Subordination Agreement shall be enforceable by
Borrower, the Administrative Agent or directly by the holders of Senior Debt.
Borrower (and any assignee of Borrower) may at any time assign any and all of
its rights hereunder to any other person or entity holding an interest in the
Senior Debt without the consent of any of the Companies, whereupon (i) each
reference herein to Borrower shall mean and be a reference to such assignee and
(ii) such assignee may enforce this Subordination Agreement to the fullest
extent as if it were a named party hereto. Without limiting the generality of
the foregoing, each Company acknowledges and consents to the assignment by
Borrower, under and in connection with the Loan Agreement, of all of Borrower's
right, title and interest in, to and under this Subordination Agreement to the
Administrative Agent for the benefit of the Lenders, and each Company agrees
that at all times that the Loan Agreement shall be in effect (i) any claim made
by Borrower hereunder shall be deemed made for the benefit of the Administrative
Agent and the Lenders and (ii) any payment or remittance to be made hereunder by
any Company in respect of any claim being made by or in respect of Borrower or
Senior Debt due to Borrower under the Repurchase Agreement shall be paid or
remitted to the Administrative Agent for the benefit of the Lenders.
12. THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF,
[CH Mortgage Loan Agreement]
OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL APPLY HERETO). Neither acceptance nor execution of this Subordination Agreement by Borrower, the Administrative Agent or any holder of Senior Debt shall be necessary to cause this Subordination Agreement to be or remain in full force and effect from and after the date of its execution and delivery by the Companies to Borrower and the Administrative Agent, and each Company's obligations under this Subordination Agreement are unconditional. This Subordination Agreement may not be revoked or amended except by an instrument in writing executed by each Company, Borrower and the Administrative Agent. Any holder of Senior Debt may at any time and without notice waive in whole or in part any provision of this Subordination Agreement as to all or part of the Senior Debt held by such holder (but may not affect or impair the rights of any other holder of Senior Debt), but no such waiver shall be effective unless expressly stated in a writing signed by such holder.
13. THIS SUBORDINATION AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
14. EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUBORDINATION AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND BY EXECUTION AND DELIVERY OF THIS SUBORDINATION AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION WITH RESPECT TO THIS SUBORDINATION AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS SUBORDINATION AGREEMENT.
[CH Mortgage Loan Agreement]
15. The Administrative Agent agrees and acknowledges that neither the Administrative Agent nor the Lenders that are parties to the Loan Agreement, nor any successors or assigns or their successors or assigns have direct or indirect Recourse to the Companies (other than the Originator or the Borrower) with respect to the Senior Debt. "Recourse", as used in this paragraph 15, means the right to demand payment of the Senior Debt as a matter of contract law, but does not include any claims that sound in tort.
[CH Mortgage Loan Agreement]
EXECUTED as of the date first stated in this Subordination Agreement.
D.R. HORTON, INC.
By:___________________________
Name:______________________
Title:_____________________
Acknowledged and agreed to
as of the date first written above:
CH FUNDING, LLC
By:_________________________
Name:____________________
Title:___________________
CREDIT LYONNAIS NEW YORK BRANCH
By:_________________________
Name:____________________
Title:___________________
[CH Mortgage Loan Agreement]
ASSIGNMENT OF SUBORDINATION AGREEMENT
The undersigned hereby assigns all of its right, title and interest in and to the foregoing Subordination Agreement to Credit Lyonnais New York Branch, in its capacity as administrative agent (the "Administrative Agent") for the "Lenders" under and as defined in that certain Loan Agreement dated as of July ___, 2002 by and among D.R. Horton Funding, Inc. ("Borrower"), certain Banks, parties thereto, the Issuer, the Administrative Agent and CH Mortgage, as servicer thereunder, as the same may be amended, restated, supplemented or otherwise modified from time to time. D.R. Horton Corporation ("D.R. Horton"), for itself and on behalf of the other Companies, acknowledges such assignment and agrees that the Administrative Agent may further assign, without notice, its right, title and interest in and to the Subordination Agreement without consent of any person or entity. The Administrative Agent, as the assignee of Borrower, shall have the right to enforce the Subordination Agreement and to directly exercise all of Borrower's rights and remedies under the Subordination Agreement, and D.R. Horton agrees to cooperate fully with the Administrative Agent in the exercise of such rights and remedies thereunder.
[CH Mortgage Loan Agreement]
Dated as of: July ___, 2002
D.R. HORTON, INC.
By:_____________________________
Name:________________________
Title:_______________________
Acknowledged and agreed to
as of the date first written above:
CH FUNDING, LLC
By:____________________________________
Name:_______________________________
Title:______________________________
CREDIT LYONNAIS NEW YORK BRANCH
By:____________________________________
Name:_______________________________
Title:______________________________
[CH Mortgage Loan Agreement]
EXHIBIT C
FORM OF BORROWING REPORT
TO: CREDIT LYONNAIS NEW YORK BRANCH as Administrative Agent under the Loan Agreement referred to below Attn: Florence Reyes
U.S. BANK NATIONAL ASSOCIATION, as the Collateral Agent for the Lenders under the Loan Agreement referred to below
1. CH FUNDING, LLC hereby requests the following Borrowing or Collateral Substitution (the "Requested Borrowing") in the amount and on the Borrowing Date herein specified, pursuant to the Loan Agreement (the "Loan Agreement") dated as of July 9, 2002 among CH FUNDING, LLC, a Delaware limited liability company (hereinafter, together with its successors and assigns, the "Borrower"), ATLANTIC ASSET SECURITIZATION CORP., a Delaware corporation (hereinafter, together with its successors and assigns, "Atlantic"), CREDIT LYONNAIS NEW YORK BRANCH ("CL New York"), as a Bank and the Administrative Agent, and CH MORTGAGE COMPANY I, LTD., a Texas limited partnership (hereinafter, together with its successors and assigns, "CH Mortgage"), as Servicer. Capitalized terms used and not otherwise defined herein have the meanings given thereto in the Loan Agreement.
2. Type of Request:
[_] Borrowing, as described in Schedule I.
[_] Collateral Substitution, as described in Schedule I.
3. The undersigned officer of the Borrower hereby represents and certifies, and the undersigned officer of the Servicer hereby confirms, for the benefit of the Lenders and the Agent that after giving effect to the Requested Borrowing/Substitution as described above, and detailed in the attached Schedule I:
(a) Maximum Facility Amount is $___________
(b) Total Principal Debt is $___________
(c) Availability is $___________
(d) Primary Obligations is $___________
(e) Collateral Value is $___________
4. The undersigned officer of the Borrower hereby represents and warrants, and the undersigned officer of the Servicer hereby confirms, for the benefit of the Lenders and the Agent, that:
(1) The Borrower is entitled to receive the Requested Borrowing under the terms and conditions of the Loan Agreement (and pursuant to the Assignment, if any,
executed in connection herewith, the Borrower grants to the Administrative Agent a security interest in the Collateral described in such Assignment);
(2) (i) if the Requested Borrowing is not a Special Borrowing, all
Principal Mortgage Documents required under Section 3.2(b) of the
Loan Agreement and that relate to the Mortgage Loans identified on
Schedule II to the Assignment, if any, executed in connection
herewith have been delivered to the Collateral Agent, and (ii) if
the Requested Borrowing is a Special Borrowing, either (A) all
such documents that relate to Schedule III to the Assignment shall
be delivered to the Collateral Agent within 9 Business Days after
the Borrowing Date set forth in item 1(c) above, as required under
Section 2.3(c) of the Loan Agreement, or (B) the Principal Debt
that has been borrowed against such Mortgage Loans shall be repaid
in full as and to the extent required under Section 2.3(d) of the
Loan Agreement;
(3) all Mortgage Loans, Principal Mortgage Documents and Other Mortgage Documents in which the Administrative Agent is granted a security interest pursuant to the Assignment, if any, in connection herewith, comply in all respects with the applicable requirements set forth in the Loan Agreement and the Security Agreement;
(4) at all times relevant to this Agreement, total Collateral Value attributable to the types or categories of Collateral referred to in the definition of Collateral Value has not, and does not now, exceed the limitations established in such definition;
(5) no Default or Event of Default has occurred or is continuing;
(6) no change or event that constitutes a Material Adverse Effect as to the Borrower has occurred;
(7) If at any time the total Collateral Value of all Eligible Mortgage Collateral is less than the Primary Obligations, the Borrower either provided additional Eligible Mortgage Collateral with a sufficient Collateral Value or paid Principal Debt in an amount sufficient to correct the deficiency within two Business Days after notice.
5. The representations and warranties of the Borrower and the Servicer contained in the Loan Agreement and those contained in each other Transaction Document to which the Borrower or the Servicer is a party are true and correct in all material respects on and as of the date hereof.
6. All of the conditions applicable to the Requested Borrowing pursuant to
Section 4.2 of the Loan Agreement are and will be satisfied immediately
before and after giving effect to the Requested Borrowing.
[CH Mortgage Loan Agreement]
CH FUNDING, LLC,
as the Borrower Date: ___________________ By: _______________________________ Name: _____________________________ Title: ____________________________ CH MORTGAGE COMPANY I, LTD. as the Servicer Date: ___________________ By: CH MORTGAGE COMPANY GP, INC., its General Partner By: Name: _____________________________ Title: ____________________________ C-3 |
[CH Mortgage Loan Agreement] SCHEDULE I |
I. Change in Borrowings Requested ------------------------------ --------------------------------------------------------------------------- Current Prior Unmatured Borrowings in Place --------------------------------------------------------------------------- (1) Amt of Borrowings (maturing) - - - ------------ ------------ ------------ (2) New Borrowing requested - - - ------------ ------------ ------------ (3) Borrowing or Substitution Date ----------------------------------------------------------------------- (4) Int. Period Maturity/Term (days) ----------------------------------------------------------------------- ------------------- Jumbo ----------------------------------------------------------------------- Total Conforming Alt A Sub Prime All Super Only --------------------------------------------------------------------------- (5) Maximum Facility Amount/Sublimits 100,000,000 100,000,000 15,000,000 5,000,000 20,000,000 10,000,000 --------------------------------------------------------------------------- II. Prior to Request ---------------- --------------------------------------------------------------------------- (10) Collateral Value (mtgs) per CA report - - - - - - --------------------------------------------------------------------------- (11) Special Mtg Loans (wet) - ** Nine business days from assignment ------------ (12) Non Spec Mtg Loans (dry) - ------------ (13) Collateral Value (Cash Collection) - =============------------- (14) Total Collateral Value - - Collateral in pool for over 120 days =============------------- (15) Total Borrowings/Principal Debt - ------------ (16) Special Borrowings 0% - ------------ (17) Non Special Borrowings 0% - ------------ (18) Primary Obligations - Total - ------------ III. Substitutions or Change in Borrowings only (Assignments to be attached) ----------------------------------------------------------------------- ------------ ------------- ------------ ------------- ------------ -------- (20) Unpaid Mortgage Loan Balance * - ------------ ------------- ------------ ------------- ------------ -------- (21) Take Out Commitments * - ------------ ------------- ------------ ------------- ------------ -------- (22) Lesser of (20) or (21) - ------------ ------------- ------------ ------------- ------------ -------- (23) Advance Rate 98% 97% 97% 98% 98% ------------ ------------- ------------ ------------- ------------ -------- (24) Collateral Value * - - - - - - ------------ ------------- ------------ ------------- ------------ -------- (25) Special Mtg Loans (wet) * ------------ (26) Non Spec Mtg Loans (dry) * ------------ (27) Collateral Value Cash - Collection * + Amt of Cash Collateral to be (swept) by Collateral Agent ------------ (28) Collateral Value Change * - ------------ (29) Net Borrowings/Principal Debt * - ------------ (30) Special Borrowings * 0% - ------------ (31) Non Special Borrowings * 0% - ------------ (32) Primary Obligations * ------------ * - Denotes net change of new assets less previous assets being substituted/removed/matured. IV. Portfolio After Request ----------------------- --------------------------------------------------------------------------- (40) Collateral Value (mortgages) - - - - - - --------------------------------------------------------------------------- (41) Special Mtg Loans (wet) - ------------ (42) Non Spec Mtg Loans (dry) - ------------ (43) Collateral Value Cash - Collection - ============ (44) Total Collateral Value - ============ (45) Total Borrowings/Principal Debt - ------------ (46) Special Borrowings 0% - * $50MM if last five or 1st five bus.days of mo., * $30MM otherwise ------------ (47) Non Special Borrowings 0% - ------------ (48) Primary Obligations - Total - ------------ (49) Overcollateralized (44) - (48) - + Must be ** $0 for Collateral Agent to sweep/substitute. ------------ ----------------------- V. Sublimit Tests Jumbo -------------- ------------------------------------------------------------------------------------------- Test Spec. Borr. Spec Borr 50% 120 Day Alt A Sub Prime All Super Only 30% ------------------------------------------------------------------------------------------- Results OK OK OK OK OK OK OK |
* denotes less than ** denotes greater than
[CH Mortgage Loan Agreement]
EXHIBIT D
COLLATERAL AGENCY AGREEMENT
[Attached hereto.]
[CH Mortgage Loan Agreement]
EXHIBITS TO COLLATERAL AGENCY AGREEMENT
D-1 through D-12
[Attached hereto.]
[CH Mortgage Loan Agreement]
EXHIBIT E
FORM OF PROMISSORY NOTE
$100,000,000 July 9, 2002
FOR VALUE RECEIVED, on the Drawdown Termination Date (as defined in the Loan Agreement referred to below), CH Funding, LLC, a Delaware limited liability company ("Maker"), promises to pay to the order of [Insert Name of Lender] ("Payee") at the offices of CREDIT LYONNAIS NEW YORK BRANCH, as Administrative Agent for Payee ("Agent") at 1301 Avenue of the Americas, New York, New York, 10019, the principal sum of $100,000,000 or, if less, the aggregate unpaid principal amount of Advances made by the Payee to the Maker pursuant to the terms of the Loan Agreement referred to below, together with interest, as provided below.
This note is one of the "Notes" described in the Loan Agreement dated as of July 9, 2002 as amended (the "Loan Agreement"), among Maker, Payee, the Agent and certain other parties. Terms defined in the Loan Agreement have the same meanings when used in this Note. The Loan Agreement contains provisions that affect this Note relating to, among other things, interest rate options, calculation of interest, voluntary and mandatory prepayments, acceleration of maturity, exercise of rights, payment of attorneys' fees, court costs, and other costs of collection, certain waivers by Maker and others, and security for the payment of this Note.
The unpaid principal balance of Advances under this Note bears interest at the interest rates set forth in the Loan Agreement. So long as an Event of Default exists, the unpaid principal and accrued interest shall bear interest at the Default Rate, until paid.
Each Advance owing to the Payee by the Maker pursuant to the Loan Agreement, and all payments made on account of principal thereof, shall be recorded by the Payee and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note.
This Note shall be construed in accordance with and governed by the laws of the State of New York.
Maker:
CH Funding, LLC
By:________________________________
Name:______________________________
Title:_____________________________
[CH Mortgage Loan Agreement]
ADVANCES AND PAYMENTS OF PRINCIPAL
--------------------------------------------------------------------------------------------- Date Amount of Advance Amount of Principal Unpaid Principal Notation Paid or Prepaid Balance Made By --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- |
[CH Mortgage Loan Agreement]
EXHIBIT F
FORM OF SERVICER MONTHLY REPORT
[Date]
Credit Lyonnais New York Branch,
as Administrative Agent under the Loan
Agreement referred to below
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019
Attention: Structured Finance
Re: Loan Agreement dated as of July ___, 2002 among CH FUNDING, LLC (the
"Borrower"), ATLANTIC ASSET SECURITIZATION CORP., CREDIT LYONNAIS NEW YORK
BRANCH, as a Bank and the Administrative Agent and CH MORTGAGE COMPANY I, LTD.
as the Servicer ("CH Mortgage") (such agreement, as from time to time
supplemented, amended, restated or extended, the "Loan Agreement").
Pursuant to Section 3.7 of the Loan Agreement (terms not otherwise defined herein being used as defined in the Loan Agreement), the Servicer hereby confirms that as of the date hereof:
1. The Default Ratio does not exceed 1%. Computations of the Default Ratio and the Sixty-Day Default Ratio are attached on Schedule I hereto.
2. (A) Set forth on Schedule I is (i) delinquency of Mortgage Loans owned by CH Mortgage as a whole and (ii) delinquency of Mortgage Loans owned by the Borrower that are financed by the Lenders and constitute Collateral under the Loan Agreement and (B) and other information set forth on Schedule I is true and correct.
3. No Default, Event of Default, Servicer Default or Advance Cessation Trigger exists.
4. The Originator's Net Worth is $_________, which is not less than $25,000,000.
5. The Excess Spread is ______% and is not less than 0.5%. Computations of the Excess Spread are attached on Schedule I hereto.
6. The amount of funds in the Reserve Account is $______, and this amount is not below 0.5% of the Maximum Facility Amount.
7. The Collateral Value is equal to or exceeds the Primary Obligations.
8. Based upon information set forth in D. R. Horton's most recently filed report on form [10-K] [10-Q] [8-K], D. R. Horton's Leverage Ratio is ______, and this ratio is not below 2.10:1.
[CH Mortgage Loan Agreement]
9. Based upon information set forth in D. R. Horton's most recently filed report on form [10-K] [10-Q] [8-K], D. R. Horton's Consolidated Net Worth is ______, and this amount is not below $1,250,000,000.
10. Based upon information set forth in D. R. Horton's most recently filed report on form [10-K] [10-Q] [8-K], D. R. Horton's EBITDA/Fixed Charge Ratio is ______, and this ratio is not below 2.65:1.
11. D.R. Horton is rated ______ by S&P, ______ by Moody's, ______ by Fitch, and thus, has all of the Required Ratings.
12. D.R. Horton owns, directly or indirectly, all of the outstanding equity ownership interests of the Borrower.
Very truly yours,
CH MORTGAGE COMPANY I, LTD.,
as Servicer
By: CH Mortgage Company GP, Inc.,
its General Partner
By:___________________________________
Name:_________________________________
Title:________________________________
[CH Mortgage Loan Agreement]
SCHEDULE I TO EXHIBIT F
CH Mortgage
Warehouse Facility
Please input blue highlighted cells
----------- [1] Borrower Default Ratio: ----------- [2] Borrower Sixty Day Default Ratio: [3] CH Mortgage Default Ratio: [4] CH Funding Inc. (SPV) Mortgage Loan Delinquency Data: [A] [B] [C] [D] [E] [F] [G] Total 31-60 DPD 61-70 DPD 71-90 DPD 91+ DPD Foreclosure Bankruptcy [I] # of loans [ii] Principal amount of Mortgage Loans ----------------------------------------------------------------------------------- [iii] % of Total Principal Amount of Mortgage Loans 100% ----------------------------------------------------------------------------------- |
[5] CH Mortgage Company I Loan Delinquency Data:
[A] [B] [C] [D] [E] [F] [G] Total 31-60 DPD 61-70 DPD 71-90 DPD 91+ DPD Foreclosure Bankruptcy [I] # of loans [ii] Principal amount of Mortgage Loans ----------------------------------------------------------------------------------- [iii] % of Total Principal Amount of Mortgage Loans 100% ----------------------------------------------------------------------------------- |
[CH Mortgage Loan Agreement]
-------------------------------------------------------------------------------------------------------- [6] Excess Spread ----------------------------------------------------- Portfolio Yield ---------------------------------------- Conduit Spread 0.600% -------------------- Euro Dollar Rate -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- [7] Reserve Amount -------------------------------------------------------------------------------------------------------- Required Reserve Amount -------------------- -------------------- -------------------------------------------------------------------------------------------------------- [8] CH Mortgage Company I Net Worth -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- [9] Total Collateral Value as of the end of reporting period: Total unpaid Advances as of the end of reporting period: Total unpaid accrued interest (from Admin Agent Report) Servicing Fee Total Primary Obligations --------------------- Compliance Status --------------------- -------------------------------------------------------------------------------------------------------- |
[CH Mortgage Loan Agreement]
EXHIBIT G-1
[Reserved]
G-1-1
[CH Mortgage Loan Agreement]
EXHIBIT G-2
[Reserved]
G-1-2
[CH Mortgage Loan Agreement]
EXHIBIT H-1
CH MORTGAGE COMPANY I, LTD.
QUARTERLY OFFICER'S CERTIFICATE
FOR THE PERIOD FROM ____________ TO _________________,
Credit Lyonnais New York Branch
as Administrative Agent under the Loan
Agreement referred to below
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019
Attention: Structured Finance
Re: Loan Agreement
This Certificate is delivered pursuant to Section 6.1(e) of the Loan Agreement dated as of July 9, 2002, as amended to date (the "Loan Agreement") among CH Funding, LLC, Credit Lyonnais New York Branch as Administrative Agent, the Lenders, CH Mortgage Company I, Ltd. as Originator and Servicer. Capitalized terms used and not otherwise defined herein have the meanings given thereto in the Loan Agreement.
I hereby certify to the Agents and the Lenders as follows:
1. I am, and at all times mentioned herein have been, the duly elected, qualified and acting [president] [chief financial officer] of the Servicer.
2. I have individually reviewed the provisions of the Loan Agreement, and a review of the activities of the Servicer during the fiscal quarter ending as of ___________________, ____ (the "Subject Period") has been made under my supervision with a view toward determining whether, during the Subject Period, the Servicer has kept, observed, performed and fulfilled its obligations under the Loan Agreement.
3. To the best of my knowledge, and based upon the review referred to in paragraph 2, above, the representations and warranties of the Servicer in Article V of the Loan Agreement are true and correct in all material respects on the date hereof as though made on and as of the date hereof, and no Default, Event of Default, Servicer Default or Event of Termination has occurred and is continuing or is imminent.
H-1-1
[CH Mortgage Loan Agreement]
4. The Net Worth of the Servicer, as of the last day of the Subject Period, is:
$____________.
Requirement of Loan Agreement (clause (b) of definition of Servicer Default): Not less than $__________.
Condition satisfied _______________.
Condition not satisfied ________________.
5. Maximum Leverage - Computation. As of _________________ __,:
(a) Servicer's total liabilities as shown on its balance sheet are:
$____________.
(b) Servicer's total contingent liabilities for borrowed money Indebtedness:
$____________.
(c) To the extent not already included in total liabilities, Servicer's total obligations to fund either the origination or the purchase of mortgage loans that are closed but not funded are: $____________.
(d) Subtotal of Items 5(a), (b) and (c) is: $____________.
(e) Servicer's total trade payables and accrued expenses, arising out of the ordinary course of business and that are not related to funding or purchasing any specific mortgage loan:
$____________.
(f) Servicer's total deferred federal income tax liabilities:
$____________.
(g) Adjusted Liabilities (Item 5(d) minus the sum of Item 5(e) and Item 5(f) is:
$____________.
(h) Servicer's stockholders' equity $____________.
(i) Servicer's deferred income less reasonable adjustments for reserves for related deferred income tax liabilities is:
$____________.
H-1-2
[CH Mortgage Loan Agreement]
(j) Adjusted Net Worth (Sum of Items 5(h) and 5(i)) is: $
(k) 15 x Item 5(j) $____________.
(l) Requirement of Loan Agreement ((S)7.10). Item 5(g) shall not be greater than Item 5(k).
Covenant satisfied _______________.
Covenant not satisfied ________________.
EXECUTED and delivered this ____ day of _______________, ____.
H-1-3
[CH Mortgage Loan Agreement]
EXHIBIT H-2
CH FUNDING, LLC
QUARTERLY OFFICER'S CERTIFICATE
FOR THE PERIOD FROM ____________, _____ TO _________________, _____
Credit Lyonnais New York Branch
as Administrative Agent under the Loan
Agreement referred to below
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019
Attention: Structured Finance
Re: Loan Agreement
This Certificate is delivered pursuant to Section 6.1(e) of the Loan Agreement dated as of July 9, 2002, as amended to date (the "Loan Agreement") among CH Mortgage Company I, Ltd., a Texas limited partnership, Atlantic Asset Securitization Corp., a Delaware corporation, as a Bank and the Administrative Agent and CH Funding, LLC, a Delaware limited liability company, as the Borrower. Capitalized terms used and not otherwise defined herein have the meanings given thereto in the Loan Agreement.
I hereby certify to the Agents and the Lenders as follows:
1. I am, and at all times mentioned herein have been, the duly elected, qualified and acting [president] [chief financial officer] of the Borrower.
2. I have individually reviewed the provisions of the Loan Agreement, and a review of the activities of the Borrower during the fiscal quarter ending as of _______________, _____ (the "Subject Period") has been made under my supervision with a view toward determining whether, during the Subject Period, the Borrower has kept, observed, performed and fulfilled its obligations under the Loan Agreement.
3. To the best of my knowledge, and based upon the review referred to in paragraph 2, above, the representations and warranties of the Borrower in Article V of the Loan Agreement are true and correct in all material respects on the date hereof as though made on and as of the date hereof, and no Default or Event of Default has occurred and is continuing or is imminent.
H-2-1
[CH Mortgage Loan Agreement]
EXECUTED and delivered this ____ day of _______________, 20__.
By:_________________________________ Name:____________________________ Title:___________________________
H-2-2
[CH Mortgage Loan Agreement]
EXHIBIT I-1
Opinion of Counsel
To Borrower, Originator and D.R. Horton
On Entity Matters
See Tab 29
I-1-1
[CH Mortgage Loan Agreement]
EXHIBIT I-2
Opinion of Counsel
To Borrower and Originator
On Security Interest Matters
See Tab 31
I-2-1
[CH Mortgage Loan Agreement]
EXHIBIT J
Opinion of Counsel
To Originator
On Bankruptcy Matters
See Tab 30
[CH Mortgage Loan Agreement]
EXHIBIT K
CH MORTGAGE COMPANY I, LTD.
As of:
FORM OF HEDGE REPORT
--------------------------------------------------------------------------------------------------------------------- Price PSA TBA Take-Out Trade # Trade Date Broker Security Coupon (32nd's) Settle Amount Amount* --------------------------------------------------------------------------------------------------------------------- TRADES: % $ $ ------------- ------------- TRADES: $ $ ============= ============= CONFORMING $ COLLATERAL $ AT BANK: ------------- CUSHION: ============= |
* Take-out amount must exceed collateral.
[CH Mortgage Loan Agreement]
FORM OF HEDGE REPORT
Mortgage Loans in which the Administrative Agent is Granted a Security Interest for the Benefit of the Holders of the Obligations and that were Covered by a Take-Out Commitment in the form of a Forward Sale Commitment Hedge but not a Loan Specific Take-Out Commitment
---------------------------------------------------------------------------------------- Originator's Loan Number Investor related to Price Associated with Take-Out Commitment Take-Out Commitment ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- |
[CH Mortgage Loan Agreement]
EXHIBIT M
FORM OF ADMINISTRATIVE AGENT REPORT
ATLANTIC ASSET SECURITIZATION CORP.
CH Mortgage
CP Issuance Report
Maximum Facility Amount $100,000,000
Today's Date:
------------------------------------------------------------------------------------------------------------------------------------ New Issue Issue Maturity Days In Face Discount Principal Discount Equivalent Interest Due Dealer Tranche Date Date Tenor Amount Amount Debt Rate Yield @ Maturity ------------------------------------------------------------------------------------------------------------------------------------ MS 1 MS 2 - - - ======= ========= ============= |
At maturity, kindly wire payment to: Credit Lyonnais NY Branch
ABA: 026008073
For Account #
Account Name: Atlantic Asset
Securitization Corp.
Attn: Florence Reyes
Reference: CH Funding, LLC
EXHIBIT 10.42
OMNIBUS AMENDMENT
THIS OMNIBUS AMENDMENT (this "Amendment"), dated as of August 26, 2002, is
entered into, by and among CH FUNDING, LLC, as the Borrower (the "Borrower"),
ATLANTIC ASSET SECURITIZATION CORP., as the Issuer ("Atlantic"), CREDIT LYONNAIS
NEW YORK BRANCH, as a Bank and as the Administrative Agent (the "Administrative
Agent"), U.S. BANK NATIONAL ASSOCIATION, as the Collateral Agent ("U.S. Bank"),
and CH MORTGAGE COMPANY I, LTD., as the Servicer (the "Servicer"). Capitalized
terms used and not otherwise defined herein are used as defined in the related
Operative Documents (as defined below).
RECITALS
WHEREAS, CH Mortgage Company I, Ltd., as the Seller, and CH Funding, LLC, as the Purchaser, entered into that certain Master Repurchase Agreement and Addendum to the Master Repurchase Agreement incorporated therein, dated as of July 9, 2002 (as the same may be amended, restated, supplemented or modified from time to time, the "Repurchase Agreement");
WHEREAS, the Borrower, the Administrative Agent and U.S. Bank entered into that certain Collateral Agency Agreement, dated as of July 9, 2002 (the "Collateral Agency Agreement");
WHEREAS, the Borrower, Atlantic Asset Securitization Corp., as the Issuer, Credit Lyonnais New York Branch, as a Bank and as the Administrative Agent, and CH Mortgage Company I, Ltd., as the Servicer, have entered into a Loan Agreement dated as of July 9, 2002 (as the same may be amended, restated, supplemented or modified from time to time, the "Loan Agreement"; the Repurchase Agreement, the Collateral Agency Agreement and the Loan Agreement, collectively the "Operative Documents");
WHEREAS, the parties to the Operative Documents hereto desire to amend the Operative Documents to make additional amendments;
NOW, THEREFORE, the parties agree as follows:
Section 1. Amendments to Collateral Agency Agreement.
(a) The definition of Collateral Value in Exhibit D-1 of the Collateral Agency Agreement is hereby amended by deleting clauses (A)(2) and (A)(3) in their entirety and replacing them with the following:
(2) with respect to which there is a loan level Take-Out Commitment, the price of that Take-Out Commitment, including, if applicable, any related servicing release premium;
(3) with respect to which there is no loan level Take-Out Commitment, a ratable amount determined by multiplying (a) the weighted average purchase price (expressed as a percentage of par) that Approved Investors are obligated to pay, pursuant to Take-Out Commitments, for all Eligible Mortgage Loans, including any related servicing release premium, as shown on the most recent Collateral Agent Daily Report, times (b) the outstanding principal amount of such Eligible Mortgage Loan; and
(b) Exhibit D-1 of the Collateral Agency Agreement is hereby amended by adding the following definition after the definition of Defaulted Mortgage Loan:
"Document Defect" means, with respect to a Principal Mortgage Document, an error on the face of the document, including, without limitation, a missing date, a missing signature, a missing legal description, an origination amount that does not match the amount shown on reports and on the other Principal Mortgage Documents or, with respect to a Principal Mortgage Document other than a Mortgage Note, such Principal Mortgage Document is missing.
(c) The definition of Drawdown Termination Date in Exhibit D-1 of the Collateral Agency Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
"Drawdown Termination Date" means the earliest to occur of (a) July 3, 2005, subject to the limitation set forth in Section 2.1(b) of the Loan Agreement, (b) the date on which the Maximum Facility Amount is terminated by the Borrower pursuant to Section 2.1(d) of the Loan Agreement, and (c) the date, on or after the occurrence of an Event of Default, determined pursuant to Section 8.1 of the Loan Agreement.
(d) The definition of Eligible Mortgage Loan in Exhibit D-1 of the Collateral Agency Agreement is hereby amended by adding the following at the end of clause (e):
; provided that Principal Mortgage Documents with Document Defects may be corrected by the Servicer pursuant to Section 3.5 hereof;
(e) The definition of Maximum Facility Amount in Exhibit D-1 of the Collateral Agency Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
"Maximum Facility Amount" means $150,000,000.00, as such amount may be reduced pursuant to Section 2.1(c) of the Loan Agreement.
(d) Section 3.5 of the Collateral Agency Agreement is hereby amended by
(i) deleting the title and replacing it with "Correction of Mortgage Notes and
other Principal Mortgage Documents", (ii) adding an (A) at the beginning of the
first paragraph and (iii) adding the following subsection (B) at the end of
Section 3.5:
(B) the Collateral Agent notifies the Servicer that a Document Defect in a Principal Mortgage Document (other than a Mortgage Note) needs to be corrected then the Servicer shall correct such Document Defect and deliver the corrected Principal Mortgage Document to the Collateral Agent within 14 days. Unless the corrected Principal Mortgage Document is delivered to the Collateral Agent within 14 days of such notice, the Collateral Value attributed to the related Mortgage Loan shall be zero beginning on the 15th calendar day; provided, however, that the Collateral Value attributable to such Mortgage Loan will be reinstated promptly upon the subsequent delivery of the corrected Principal Mortgage Document to the Collateral Agent.
Section 2. Amendments to the Loan Agreement
(a) The definition of Collateral Value in Section 1.1 of the Loan Agreement is hereby amended by deleting clauses (A)(2) and (A)(3) in their entirety and replacing them with the following:
(2) with respect to which there is a loan level Take-Out Commitment, the price of that Take-Out Commitment, including, if applicable, any related servicing release premium;
(3) with respect to which there is no loan level Take-Out Commitment, a ratable amount determined by multiplying (a) the weighted average purchase price (expressed as a percentage of par) that Approved Investors are obligated to pay, pursuant to Take-Out Commitments, for all Eligible Mortgage Loans, including any related servicing release premium, as shown on the most recent Collateral Agent Daily Report, times (b) the outstanding principal amount of such Eligible Mortgage Loan; and
(b) Section 1.1 of the Loan Agreement is amended by the addition of the following definition after the definition of Alternate Base Rate:
"Annual Extension Date" shall mean (i) July 3, 2003 and (ii) thereafter, if consented to by the Lenders, the Managing Agent and the Administrative Agent pursuant to Section 2.1(b), the date that is specified by the Lenders and the Administrative Agent
in the applicable consent, which date shall not be more than 364 days following the then effective Annual Extension Date.
(c) Section 1.1 of the Loan Agreement is amended by adding the following definition after the definition of Deferred Income:
"Document Defect" means, with respect to a Principal Mortgage Document, an error on the face of the document, including, without limitation, a missing date, a missing signature, a missing legal description, an origination amount that does not match the amount shown on reports and on the other Principal Mortgage Documents, or, with respect to a Principal Mortgage Document other than a Mortgage Note, such Principal Mortgage Document is missing.
(d) The definition of Drawdown Termination Date in Section 1.1 of the Loan Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
"Drawdown Termination Date" means the earliest to occur of (a) July 3, 2005, subject to the limitation set forth in Section 2.1(b), (b) the date on which the Maximum Facility Amount is terminated by the Borrower pursuant to Section 2.1(d), and (c) the date, on or after the occurrence of an Event of Default, determined pursuant to Section 8.1.
(e) The definition of Eligible Mortgage Loan in Section 1.1 of the Loan Agreement is hereby amended by adding the following at the end of clause (e):
; provided that Principal Mortgage Documents with Document Defects may be corrected by the Servicer pursuant to Section 3.4 hereof;
(f) The definition of Maximum Facility Amount in Section 1.1 of the Loan Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
"Maximum Facility Amount" means $150,000,000.00, as such amount may be reduced pursuant to Section 2.1(c).
(g) Article II, Section 2.1(b) of the Loan Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
The Borrower may, from time to time by written request to the Lenders and the Administrative Agent (each such notice being an "Extension Request") given not later than 90 days and not sooner than 120 days prior to each Annual Extension Date, request an extension of the then applicable Annual Extension Date. If the Lenders and the Administrative Agent consent, in their sole discretion, to such Extension Request, then (x) the Drawdown Termination Date shall not occur as of the then applicable Annual Extension Date and (y) the Annual Extension Date shall be extended as described in the definition of "Annual Extension Date." Any such extension may be accompanied by such additional fees as the parties shall mutually agree. Notwithstanding anything else to
the contrary, the Drawdown Termination Date shall occur automatically, without further action on the part of the Lenders or the Administrative Agent, on each Annual Extension Date unless an Extension Request has been granted pursuant to this paragraph.
(h) Section 3.4 of the Loan Agreement is hereby amended by (i) deleting the title and replacing it with "Correction of Mortgage Notes and other Principal Mortgage Documents", (ii) adding an (A) at the beginning of the first paragraph and (iii) adding the following subsection (B) at the end of Section 3.4:
(B) the Collateral Agent notifies the Servicer that a Document Defect in a Principal Mortgage Document (other than a Mortgage Note) needs to be corrected then the Servicer shall correct such Document Defect and deliver the corrected Principal Mortgage Document to the Collateral Agent within 14 days. Unless the corrected Principal Mortgage Document is delivered to the Collateral Agent within 14 days of such notice, the Collateral Value attributed to the related Mortgage Loan shall be zero beginning on the 15th calendar day; provided, however, that the Collateral Value attributable to such Mortgage Loan will be reinstated promptly upon the subsequent delivery of the corrected Principal Mortgage Document to the Collateral Agent.
Section 3. Amendments to the Repurchase Agreement
(a) The definition of Facility Termination Date in Section 1.1. of the Repurchase Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
"Facility Termination Date" means the earliest to occur of (a) July 3, 2005, subject to the limitation set forth in Section 2.1(b) of the Loan Agreement, (b) the date on which the Maximum Facility Amount is terminated by the Borrower pursuant to Section 2.1(d) of the Loan Agreement, (c) the date of termination of the Facility pursuant to Section 7.1 hereof and (d) the date, on or after the occurrence of an Event of Default, determined pursuant to Section 8.1 of the Loan Agreement.
(b) The definition of Maximum Facility Amount in Section 1.1. of the Repurchase Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
"Maximum Facility Amount" means $150,000,000.00, as such amount may be reduced pursuant to Section 2.1(c) of the Loan Agreement.
Section 4. Operative Documents in Full Force and Effect as Amended.
Except as specifically amended hereby, all of the provisions of the Operative Documents and all of the provisions of all other documentation required to be delivered with respect thereto shall remain in full force and effect from and after the date hereof.
Section 5. Miscellaneous.
(a) This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute a novation of any Operative Document, but shall constitute an amendment thereof. The parties hereto agree to be bound by the terms and conditions of each Operative Document, as amended by this Amendment, as though such terms and conditions were set forth herein.
(b) The descriptive headings of the various sections of this Amendment are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.
(c) This Amendment may not be amended or otherwise modified except as provided in each respective Operative Agreement.
(d) This Amendment and the rights and obligations of the parties under this amendment shall be governed by and construed and interpreted in accordance with the laws of the state of New York without reference to its conflict of laws provisions.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties have agreed to and caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.
ISSUER AGREED: ATLANTIC ASSET SECURITIZATION CORP. By: Credit Lyonnais New York Branch, as Attorney-in-Fact By: /s/ Gary M. Miller -------------------------------------- Name: Title: ADMINISTRATIVE AGENT AGREED: CREDIT LYONNAIS NEW YORK BRANCH By: /s/ Gary M. Miller -------------------------------------- Name: Title: BANK AGREED: CREDIT LYONNAIS NEW YORK BRANCH By: /s/ Gary M. Miller -------------------------------------- Name: Title: |
COLLATERAL AGENT AGREED: U.S. BANK NATIONAL ASSOCIATION. By: /s/ Kathleen M. Connor -------------------------------------- Name: Title: SERVICER AGREED: CH MORTGAGE COMPANY I, LTD. By: CH Mortgage Company GP, Inc., its general partner By: /s/ Mark C. Winter -------------------------------------- Name: Title: BORROWER AGREED: CH FUNDING, LLC By: /s/ Mark C. Winter -------------------------------------- Name: Title: |
EXHIBIT 10.43
SECOND OMNIBUS AMENDMENT
THIS SECOND OMNIBUS AMENDMENT (this "Amendment"), dated as of November 25, 2002, is entered into, by and among CH FUNDING, LLC, as the Borrower (the "Borrower"), ATLANTIC ASSET SECURITIZATION CORP., as the Issuer ("Atlantic"), CREDIT LYONNAIS NEW YORK BRANCH, as a Bank and as the Administrative Agent (the "Administrative Agent"), U.S. BANK NATIONAL ASSOCIATION, as the Collateral Agent ("U.S. Bank"), and CH MORTGAGE COMPANY I, LTD., as the Servicer (the "Servicer"). Capitalized terms used and not otherwise defined herein are used as defined in the related Operative Documents (as defined below).
RECITALS
WHEREAS, CH Mortgage Company I, Ltd., as the Seller, and CH Funding, LLC, as the Purchaser, entered into that certain Master Repurchase Agreement and Addendum to the Master Repurchase Agreement incorporated therein, dated as of July 9, 2002, as amended by the Omnibus Amendment, dated as of August 26, 2002, by and among the parties hereto (the "First Omnibus Amendment") (as the same may be amended, restated, supplemented or modified from time to time, the "Repurchase Agreement");
WHEREAS, the Borrower, the Administrative Agent and U.S. Bank entered into that certain Collateral Agency Agreement, dated as of July 9, 2002, as amended by the First Omnibus Amendment (the "Collateral Agency Agreement");
WHEREAS, the Borrower, Atlantic Asset Securitization Corp., as the Issuer, Credit Lyonnais New York Branch, as a Bank and as the Administrative Agent, and CH Mortgage Company I, Ltd., as the Servicer, have entered into a Loan Agreement dated as of July 9, 2002, as amended by the First Omnibus Amendment (as the same may be amended, restated, supplemented or modified from time to time, the "Loan Agreement"; the Repurchase Agreement, the Collateral Agency Agreement and the Loan Agreement, collectively the "Operative Documents");
WHEREAS, the parties to the Operative Documents hereto desire to amend the Operative Documents to make additional amendments;
NOW, THEREFORE, the parties agree as follows:
Section 1. Amendment to Collateral Agency Agreement. The definition of Maximum Facility Amount in Exhibit D-1 of the Collateral Agency Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
"Maximum Facility Amount" means $200,000,000.00, as such amount may be reduced pursuant to Section 2.1(c) of the Loan Agreement.
Section 2. Amendment to the Loan Agreement. The definition of Maximum Facility Amount in Section 1.1 of the Loan Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
"Maximum Facility Amount" means $200,000,000.00, as such amount may be reduced pursuant to Section 2.1(c).
Section 3. Amendment to the Repurchase Agreement. The definition of Maximum Facility Amount in Section 1.1. of the Repurchase Agreement is hereby amended by deleting it in its entirety and replacing it with the following:
"Maximum Facility Amount" means $200,000,000.00, as such amount may be reduced pursuant to Section 2.1(c) of the Loan Agreement.
Section 4. Operative Documents in Full Force and Effect as Amended.
Except as specifically amended hereby, all of the provisions of the Operative Documents and all of the provisions of all other documentation required to be delivered with respect thereto shall remain in full force and effect from and after the date hereof.
Section 5. Miscellaneous.
(a) This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall not constitute a novation of any Operative Document, but shall constitute an amendment thereof. The parties hereto agree to be bound by the terms and conditions of each Operative Document, as amended by this Amendment, as though such terms and conditions were set forth herein.
(b) The descriptive headings of the various sections of this Amendment are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.
(c) This Amendment may not be amended or otherwise modified except as provided in each respective Operative Agreement.
(d) This Amendment and the rights and obligations of the parties under this amendment shall be governed by and construed and interpreted in accordance with the laws of the state of New York without reference to its conflict of laws provisions.
IN WITNESS WHEREOF, the parties have agreed to and caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.
ISSUER AGREED: ATLANTIC ASSET SECURITIZATION CORP. By: Credit Lyonnais New York Branch, as Attorney-in-Fact By: /s/ Gary M. Miller --------------------------------- Name: Title: ADMINISTRATIVE AGENT AGREED: CREDIT LYONNAIS NEW YORK BRANCH By: /s/ Gary M. Miller --------------------------------- Name: Title: BANK AGREED: CREDIT LYONNAIS NEW YORK BRANCH By: /s/ Gary M. Miller --------------------------------- Name: Title: COLLATERAL AGENT AGREED: U.S. BANK NATIONAL ASSOCIATION. By: /s/ Kathleen M. Connor --------------------------------- Name: Title: SERVICER AGREED: CH MORTGAGE COMPANY I, LTD. By: CH Mortgage Company GP, Inc., its general partner By: /s/ Mark C. Winter --------------------------------- Name: Title: |
BORROWER AGREED: CH FUNDING, LLC By: /s/ Mark C. Winter ------------------------------- Name: Title: |
EXHIBIT 21.1
SUBSIDIARIES OF D.R. HORTON, INC.
As of September 30, 2002
STATE OF INCORPORATION NAME OR ORGANIZATION DOING BUSINESS AS 2 C Development Co., LLC California AP LHI, Inc. California AP WP Operating Corporation Delaware AP WP Partners, L.P. Delaware AP Western GP Corporation Delaware APLAM, LLC California Allegra, LLC California Ameritex Mortgage Company, L.L.C. Texas C. Richard Dobson Builders, Inc. Virginia Dobson Builders CH Funding, LLC Delaware CH Investments of Texas, Inc. Delaware CHM Partners, LP Texas CH Mortgage Company Colorado CH Mortgage Company GP, Inc. Delaware CH Mortgage Company LP, Inc. Delaware CH Mortgage Company I, Ltd. Texas CHI Construction Company Arizona CHTEX of Texas, Inc. Delaware Century Title Agency, Inc. Arizona Continental Homes, Inc. Delaware Continental Homes of Florida, Inc. Florida Continental Homes, D.R. Horton Homes Continental Homes of Texas, L.P. Texas Milburn Homes & Continental Homes Continental Residential, Inc. California Continental Homes Continental Traditions, LLC Arizona Continental Homes |
STATE OF INCORPORATION NAME OR ORGANIZATION DOING BUSINESS AS Custom Title, LLC Maryland Cypress Road, L.P. California D.R. Horton, Inc. - Birmingham Alabama Regency Homes D.R. Horton, Inc. - Chicago Delaware D.R. Horton, Inc. - Denver Delaware Trimark Communities D.R. Horton, Inc. - Dietz-Crane Delaware Dietz-Crane Homes D.R. Horton, Inc. - Foundation Texas D.R. Horton, Inc. - Greensboro Delaware Arappco Homes D.R. Horton, Inc. - Jacksonville Delaware D.R. Horton, Inc. - Louisville Delaware Mareli Development & Construction D.R. Horton, Inc. - Los Angeles Delaware D.R. Horton Los Angeles Holding Company, Inc. California D.R. Horton Management Company, Ltd. Texas D.R. Horton, Inc. - Minnesota Delaware Joe Miller Homes D.R. Horton, Inc. - New Jersey Delaware SGS Communities D.R. Horton, Inc. - Portland Delaware RMP Properties D.R. Horton, Inc. - Sacramento California D.R. Horton San Diego Holding Company, Inc. California D.R. Horton - Schuler Homes, LLC Delaware D.R. Horton - Emerald, Ltd. Texas Emerald Homes, Emerald Builders & Dietz-Crane Homes D.R. Horton - Texas, Ltd. Texas D.R. Horton, Inc. - Torrey Delaware Torrey DHI Ranch, Ltd. Texas DRH Cambridge Homes, Inc. California DRH Cambridge Homes, LLC Delaware DRH Capital Trust I Delaware DRH Capital Trust II Delaware DRH Capital Trust III Delaware |
STATE OF INCORPORATION NAME OR ORGANIZATION DOING BUSINESS AS DRH Colorado Realty, Inc. Delaware DRH Construction, Inc. Delaware DRH Insurance Agency, Inc. Texas DRH Life Insurance Agency, Inc. Texas DRH Mortgage, LLC Texas DRH Properties, Inc. Arizona DRH Realty Company, Inc. California DRH Regrem III, Inc. Delaware DRH Regrem IV, Inc. Delaware DRH Regrem V, Inc. Delaware DRH Regrem VII, LP Texas DRH Regrem VIII, LLC Delaware DRH Southwest Construction Company, Inc. California DRH Title Company of Colorado, Inc. Colorado DRH Title Company of Florida, Inc. Florida DRH Title Company-Minnesota, Inc. Delaware DRH Title Company - Southeast, Inc. Delaware DRH Title Company of Texas, Ltd. Texas DRH Tucson Construction, Inc. Delaware DRHFS Mortgage Reinsurance, Ltd. Turks & Caicos DRHI, Inc. Delaware D.R. Horton Desert Ridge Phase I Partners Arizona Encore II, Inc. Arizona Encore Venture Partners, L.P. Delaware Encore Venture Partners II (California), L.P. Delaware Encore Venture Partners II (Texas), L.P. Delaware Fairway Farms LLC Delaware GP-Encore, Inc. Arizona Golden Fox LLC Colorado |
STATE OF INCORPORATION NAME OR ORGANIZATION DOING BUSINESS AS Grande Realty Incorporated New Jersey Greywes LLC California HPH Homebuilders LP 1995 California HPH Homebuilders LP 1996 California HPH Homebuilders 2000 L.P. California Haskell Canyon Partners, L.P. California Haskell Canyon Partners II, L.P. California Iao Partners Hawaii KDB Homes, Inc. Delaware Continental Homes Kaomalo LLC Hawaii LAMCO Housing, Inc. California Livermore Homebuilders L.P. California Meadows I, Ltd. Delaware Meadows II, Ltd. Delaware Meadows IV, Inc. Texas Meadows V, Ltd. Delaware Meadows VIII, Ltd. Delaware Meadows IX, Inc. New Jersey Meadows X, Inc. New Jersey Melmort Co. Colorado Melody Homes, Inc. Delaware Metro Star Canyon LLC Colorado Metro Title, LLC Virginia Millwood JV II Texas Continental Homes & Milburn Homes Oakley-Avalon LP California Paseo Del Sol 4000, L.L.C. California Continental Homes Porter GP LLC Delaware Principal Title Company, Ltd. Texas Ranch-Southpointe II LLC Colorado |
STATE OF INCORPORATION NAME OR ORGANIZATION DOING BUSINESS AS Reilly Carslbad LLC Delaware Reilly Homes Madison LLC Delaware SGS Communities at Battleground, LLC New Jersey SGS Communities SGS Communities at Grand Quay, LLC New Jersey SGS Communities SHA Construction LLC Delaware SHLR of California, Inc. California SHLR of Colorado, Inc. Colorado SHLR of Nevada, Inc. Nevada SHLR of Utah, Inc. Utah SHLR of Washington, Inc. Washington SRHI LLC Delaware SSHI LLC Delaware Schuler Homes of Arizona LLC Delaware Schuler Homes of California, Inc. California Schuler Homes of Oregon, Inc. Oregon Schuler Homes of Washington, Inc. Washington Stafford Homes Schuler Mortgage, Inc. Delaware Schuler Realty of Arizona, LLC Delaware Schuler Realty of Hawaii, Inc. Hawaii Surprise Village North, LLC Arizona Arizona Traditions The Club at Pradera, Inc. Delaware Tracy, LLC Delaware Travis County Title Company Texas Venture Management of South Carolina, LLC South Carolina Vertical Construction Corporation Delaware Schuler Homes WPH-Camino Ruiz, LLC Delaware |
STATE OF INCORPORATION NAME OR ORGANIZATION DOING BUSINESS AS WPH-Copper Canyon, LLC Delaware WPH-HPH LLC Delaware WPH-Oxnard Coastal, LLC Delaware WPH-Palmer Del Valle, LLC Delaware WPH-Porter, LLC Delaware WPH-SAL1, L.P. California WPH-SAL2, L.P. California WPH Management Co., Inc. California Waiakoa Estates Subdivision Joint Venture Hawaii Western Pacific Brea Development, LLC Delaware Western Pacific Funding, Inc. California Western Pacific Housing, Inc. Delaware (f/k/a Schuler Homes Holdco, Inc.) Western Pacific Housing Management, Inc. California (f/k/a Western Pacific Housing, Inc.) Western Pacific Housing-Antigua, LLC Delaware Western Pacific Housing-Ashland Park Delaware Western Pacific Housing-Aviara, L.P. California Western Pacific Housing-Boardwalk, LLC Delaware Western Pacific Housing-Broadway, LLC Delaware Western Pacific Housing Co. California Western Pacific Housing-Canyon Park, LLC Delaware Western Pacific Housing-Camarillo I, LLC Delaware Western Pacific Housing-Carmel, LLC Delaware Western Pacific Housing-Carrillo, LLC Delaware Western Pacific Housing-Communications Hill, LLC Delaware |
STATE OF INCORPORATION NAME OR ORGANIZATION DOING BUSINESS AS Western Pacific Housing-Copper Canyon, LLC Delaware Western Pacific Housing-Coto Venture, L.P. California Western Pacific Housing-Creekside, LLC Delaware Western Pacific Housing-Culver City, L.P. California Western Pacific Housing-Del Valle, LLC Delaware Western Pacific Housing-Lomas Verdes, LLC Delaware Western Pacific Housing-Lost Hills Park, LLC Delaware Western Pacific Housing-Lyons Canyon Partners, LLC Delaware Western Pacific Housing-McGonigle Canyon LLC (Carlsbad Delaware II) Western Pacific Housing-Modesto 54, LLC Delaware (f/k/a Western Pacific Housing-Laurel Crest II, LLC) Western Pacific Housing-Mountaingate, L.P. California Western Pacific Housing-Norco Estates, LLC Delaware Western Pacific Housing-Oso, L.P. California Western Pacific Housing-Pacific Park II, LLC Delaware Western Pacific Housing-Park Avenue East, LLC Delaware Western Pacific Housing-Park Avenue West, LLC Delaware Western Pacific Housing-Playa Vista, LLC Delaware Western Pacific Housing-Poinsettia, L.P. California Western Pacific Housing-River Ridge, LLC Delaware Western Pacific Housing-Robinhood Ridge, LLC Delaware Western Pacific Housing-SDG, LLC California Western Pacific Housing-Santa Fe, LLC Delaware Western Pacific Housing-Scripps, L.P. California Western Pacific Housing-Scripps II, LLC Delaware |
STATE OF INCORPORATION NAME OR ORGANIZATION DOING BUSINESS AS Western Pacific Housing-Seacove, L.P. California Western Pacific Housing-Studio 528, LLC Delaware Western Pacific Housing-Terra Bay Duets, LLC Delaware Western Pacific Housing-Torrance, LLC Delaware Western Pacific Housing-Torrey Commercial, LLC Delaware Western Pacific Housing-Torrey Meadows, LLC Delaware Western Pacific Housing-Torrey Multi-Family, LLC Delaware Western Pacific Housing-Torrey Village Center, LLC Delaware Western Pacific Housing-Ventura I, LLC Delaware Western Pacific Housing-Vineyard Terrace, LLC Delaware Western Pacific Housing-Westlake II, L.P. California Western Pacific Housing-Windemere, LLC (Glacier) Delaware Western Pacific Housing-Windflower, L.P. California |
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following registration statements on Forms S-3 and S-4 and related prospectuses and in the following registration statements on Form S-8 of D.R. Horton, Inc. of our report dated November 8, 2002 with respect to the consolidated financial statements of D.R. Horton, Inc. included in this Annual Report (Form 10-K) for the year ended September 30, 2002.
Form S-3 Registration No. 333-76175 Registration No. 333-57388 Registration No. 333-84088 Form S-4 Registration No. 333-56491 Registration No. 333-89344 Registration No. 333-73888 Registration No. 333-89348 Form S-8 Registration No. 333-48874 Registration No. 333-83162 Registration No. 333-3572 Registration No. 333-47767 Registration No. 333-51473 Registration No. 333-72423 Registration No. 333-69694 Registration No. 333-90988 Registration No. 333-89346 /s/ Ernst & Young LLP Fort Worth, Texas December 9, 2002 |