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Exhibit 10.54
SECURITY AND COLLATERAL AGENCY AGREEMENT
THIS SECURITY AND COLLATERAL AGENCY AGREEMENT (the "Security
Agreement") is made and dated as of June 20, 1997, by and among MEGO MORTGAGE
CORPORATION, a Delaware corporation (the "Borrower"), THE FIRST NATIONAL BANK OF
CHICAGO, a national banking association, acting in its capacity as
administrative agent for the lenders from time to time participating in the
Credit Agreement (as defined below) (in such capacity, the "Agent"), and FIRST
CHICAGO NATIONAL PROCESSING CORPORATION, a Delaware corporation, as collateral
agent for the Secured Parties (as defined below) (in such capacity, the
"Collateral Agent").
RECITALS
A. Pursuant to a Credit Agreement dated as of even date herewith among
the Borrower, the lenders named therein (the "Lenders") and the Agent (as
amended from time to time, the "Credit Agreement") the Lenders agreed to extend
credit to the Borrower on the terms and subject to the conditions set forth
therein. Capitalized terms not otherwise defined herein are used with the same
meanings as in the Credit Agreement.
B. As a condition precedent to the effectiveness of the Credit
Agreement, the Borrower is required to execute and deliver this Security
Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Appointment of Collateral Agent. Pursuant to the terms of the Credit
Agreement, each Lender has appointed the Collateral Agent to act as secured
party, agent, bailee and custodian for the exclusive benefit of the Lenders, the
Agent and the Collateral Agent with respect to the Collateral. The Lenders, the
Agent and the Collateral Agent are hereinafter referred to collectively and
severally as the "Secured Parties". The Collateral Agent hereby accepts such
appointment and agrees to maintain and hold all Collateral at any time delivered
to it as secured party, agent, bailee and custodian for the exclusive benefit of
the Secured Parties. The Collateral Agent and the Borrower agree that the
Collateral Agent is acting and will act with respect to the Collateral for the
exclusive benefit of the Secured Parties and is not, and shall not at any time
in the future be, subject, with respect to the Collateral, in any manner or to
any extent, to the direction or control of the Borrower except as expressly
permitted hereunder and under the other Loan Documents. The Collateral Agent
agrees to act in accordance with this Security Agreement and in accordance with
any written instructions properly delivered pursuant hereto. Under no
circumstances shall the Collateral Agent deliver possession of Collateral to the
Borrower except in accordance with the express terms of this Security Agreement
or the other Loan Documents or as instructed by the Agent.
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2. Delivery and Categorization of Collateral.
(a) General. The Borrower shall deliver Collateral Transmittals to
the Collateral Agent from time to time identifying Qualifying Loans that the
Borrower intends to include in Collateral by delivering to the Collateral Agent
the Required Qualifying Loan Documents (as described on Schedule A attached
hereto) for such Qualifying Loans. Such delivery shall be made prior to
inclusion of such Qualifying Loans in Collateral, other than for AP Qualifying
Loans identified in the applicable Collateral Transmittal and covered by an
Agreement to Pledge. The Collateral Agent's responsibility to review the
Required Qualifying Loan Documents is limited to the review steps described on
Exhibit 1 hereto, said review of the Required Qualifying Loan Documents
delivered on any Business Day to be completed before the opening of business of
the Collateral Agent on the next succeeding Business Day.
(b) Agreements to Pledge. The Collateral Agent, upon receipt of a
Collateral Transmittal describing the AP Qualifying Loans to be covered by an
Agreement to Pledge and an Agreement to Pledge as of that date, shall include
such AP Qualifying Loans as Eligible Collateral in the Collateral Value
Determination (as defined in Paragraph 6(a) below). The Borrower shall deliver
the Required Qualifying Loan Documents for each such AP Qualifying Loan not
later than the seventh (7th) Business Day after the Pledge Date of such AP
Qualifying Loan. When a delivery of what purports to be the Required Qualifying
Loan Documents for an AP Qualifying Loan is received by the Collateral Agent on
a given Business Day such AP Qualifying Loan shall no longer be treated as an AP
Qualifying Loan for purposes of the maximum amount of AP Qualifying Loans that
can be included in Eligible Collateral, and shall be included in any Collateral
Value Determination or other calculation involving the value of the Borrowing
Base on such Business Day prior to reviewing the same hereunder on the
assumption that such AP Qualifying Loan is Eligible Collateral, and provided
that such Required Qualifying Loan Documents are reviewed in accordance with the
steps described on Exhibit 1 hereto before the opening of business of the
Collateral Agent on the next succeeding Business Day.
(c) Identification of Collateral. All Qualifying Loans at any time
delivered to the Collateral Agent hereunder shall be held by the Collateral
Agent in a fire resistant vault, drawer or other suitable depositary maintained
and controlled solely by the Collateral Agent, conspicuously marked to show the
respective interests of the Secured Parties therein and not commingled with any
other assets or property of, or held by, the Collateral Agent.
3. Grant of Security Interest. The Borrower hereby pledges and assigns
to the Collateral Agent for the benefit of the Secured Parties, and grants to
the Collateral Agent for the benefit of the Secured Parties a first priority
security interest in, the property described in Paragraph 4 below (collectively
and severally, the "Collateral") to secure payment of the Obligations.
4. Collateral. The Collateral shall consist of all right, title and
interest of the Borrower, of every kind and nature, in and to all of the
following property, assets and rights of the Borrower wherever located, whether
now existing or hereafter arising, and whether now or hereafter owned, acquired
by or accruing or owing to the Borrower, and all proceeds and products thereof:
(a) all Pledged Qualifying Loans, whether Eligible Collateral or
Ineligible Collateral (unless released in accordance with Section 8.3 of the
Credit Agreement), including all Required Qualifying Loan Documents related
thereto;
(b) any commitments or other agreements issued by the FHA to insure
any Pledged Qualifying Loan;
(c) the Settlement Account and all uncollected deposits into the
Settlement Account;
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(d) all property related to the foregoing, including without
limitation, the right to service Pledged Qualifying Loans while owned by the
Borrower, all accounts and general intangibles of whatsoever kind so related and
all documents or instruments delivered to the Collateral Agent in respect of any
Pledged Qualifying Loans, including, without limitation, the right to receive
all insurance proceeds and condemnation awards which may be payable in respect
of the premises encumbered by any Mortgage securing a Pledged Qualifying Loan;
and
(e) all proceeds and products of any of the foregoing.
5. Collateral Agent's Review of Collateral. Upon any receipt of
Required Qualifying Loan Documents for any Qualifying Loan, the Collateral Agent
shall review the same and verify that:
(a) All Required Qualifying Loan Documents relating to such
Qualifying Loan appear regular on their face and are in the Collateral Agent's
possession; and
(b) The statements set forth on Exhibit 1 hereto are accurate and
complete in all respects.
Such verification for Collateral delivered during any period covered by a
collateral report referred to in Paragraph 8 below shall be set forth in such
report. If the Collateral Agent notes any exception in the review described in
subparagraph (a) or (b) above or questions, in its reasonable discretion, the
genuineness, regularity, propriety, or accuracy of any item of Collateral, the
Collateral Agent shall note the same as Ineligible Collateral in its next
Collateral Value Determination delivered to the Agent. In the event that the
Borrower has been requested by the Agent and the Collateral Agent to deliver the
"Additional Required Qualifying Loan Documents" (as described on Schedule B
attached hereto) with respect to any Qualifying Loan, the Collateral Agent shall
review and verify such Additional Required Qualifying Loan Documents consistent
with the obligations of the Collateral Agent above.
6. Collateral Value Determination; Determination Assumptions.
(a) On each Business Day, the Collateral Agent shall compute the
value of the Borrowing Base (a "Collateral Value Determination") and notify the
Agent thereof.
(b) In making any Collateral Value Determination or other
calculation involving a determination of the value of the Borrowing Base, the
Collateral Agent shall be permitted to rely, without independent investigation
of the correctness thereof, on:
(1) The most recent information supplied by, or at the direction
of, the Borrower to the Collateral Agent, pursuant to the Credit
Agreement with respect to Uncleared Loan Funding Checks;
(2) The information supplied by the Borrower to the Collateral
Agent on the related Collateral Transmittal, with respect to the net
acquisition cost (including any discounts and excluding any servicing
released premium) of any Qualifying Loan, the unpaid principal balance
of any Qualifying Loan as of its Pledge Date, the weighted average
purchase price used in the related Collateral Value calculation, the
loan-to-value ratio of such Qualifying Loan, if secured and not a Title
I Qualifying Loan, at origination and the amount of full or partial
principal prepayments made on account of any Qualifying Loan; and
(3) The information supplied by the Borrower to the Collateral
Agent, whether written or in any other form acceptable to the
Collateral Agent, with respect to a determination as to whether amounts
received in the Settlement Account represent the purchase price paid
for a specific Qualifying Loan and, consequently, whether the
Collateral Value of such Qualifying Loan should be removed from such
calculation.
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7. Handling of Collateral; Settlement Account.
(a) From time to time until otherwise notified by the Required
Lenders (by telephone, telegraph or otherwise), the Collateral Agent is hereby
authorized to release documentation relating to Qualifying Loans to the Borrower
against a trust receipt executed by the Borrower in the form of Exhibit 2
hereto. The Collateral Agent will maintain all original trust receipts in a
vault, drawer or other suitable depositary with a one hour fire rating
maintained and controlled solely by Collateral Agent. The Borrower hereby
represents and warrants that any request by the Borrower for release of
Collateral under this subparagraph (a) shall be solely for the purposes of
correcting clerical or other non-substantial documentation problems in
preparation of returning such Collateral to the Collateral Agent for ultimate
sale or exchange and that the Borrower has requested such release in compliance
with all terms and conditions of such release set forth herein and in the Credit
Agreement, including, without limitation, the sublimit contained in clause
(vii)(1) of the definition of Eligible Qualifying Loan.
(b) Prior to the occurrence of a Default, upon delivery by the
Borrower to the Collateral Agent of a shipping request substantially in the form
of that attached hereto as Exhibit 3, the Collateral Agent will transmit
Qualifying Loans held by it as directed by the Borrower as follows:
(1) If the transmittal is of documentation for Qualifying Loans
in the possession of the Collateral Agent in connection with the sale
thereof to an Approved Investor, such transmittal will be under cover
of a transmittal letter substantially in the form of that attached
hereto as Exhibit 4, subject to modification of such Exhibit 4 pursuant
to Paragraph 7(f) hereof at the request of the Agent.
(2) If the transmittal is of documentation for Qualifying Loans
in connection with the shipment to a custodian or trustee for the
formation of a mortgage pool supporting a Security (any such Security
supported by any such Qualifying Loans being referred to herein as a
"Warehouse-Related Security"), such transmittal will be under cover of
a transmittal letter substantially in the form of that attached hereto
as Exhibit 5, subject to modification of such Exhibit 5 pursuant to
Paragraph 7(f) hereof at the request of the Agent.
In no event shall the Collateral Agent have any obligation to obtain written
acknowledgement of receipt from the addressee of any transmittal letter or other
communication sent by the Collateral Agent hereunder.
(c) All amounts payable on account of the sale of Pledged Qualifying
Loans (including, but not limited to, a sale pursuant to a repurchase agreement)
will be instructed to be paid directly by the purchaser to the Settlement
Account. Pursuant to Paragraph 3 above the Borrower has granted a security
interest in and lien upon the Settlement Account and in any and all amounts at
any time held therein as collateral security for the benefit of the Secured
Parties. This Paragraph 7(c) shall constitute notice to the Collateral Agent of
such security interest pursuant to the Uniform Commercial Code of all relevant
jurisdictions and any other law or regulation requiring such notice. This
Paragraph 7(c) shall further constitute irrevocable notice to the Collateral
Agent that the Settlement Account is a "no access" account to the Borrower and
the Collateral Agent except to the extent expressly permitted hereunder. The
Collateral Agent shall hold such security interest in and lien upon the
Settlement Account and all funds at any time held therein for the benefit of
Secured Parties with all rights of a secured party under the Uniform Commercial
Code of all relevant jurisdictions.
(d) Prior to the occurrence of a Default, the Collateral Agent shall
take such steps as it may be reasonably directed from time to time by the
Borrower in writing (or by telephone confirmed in writing if so required by the
recipient of such direction) which are not inconsistent with the provisions of
this Security Agreement and the other Loan Documents and which the Borrower
deems necessary to enable the Borrower to perform and comply with Approved
Investor Commitments and with other agreements for the sale or other disposition
in whole or in part of Qualifying Loans.
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(e) Following the occurrence of a Default, the Collateral Agent
shall not, and shall incur no liability to the Borrower or any other Person for
refusing to, deliver any item of Collateral to the Borrower or any other Person
(other than under existing Approved Investor Commitments) without the express
prior written consent and at the direction of all of the Lenders under Section
9.1 of the Credit Agreement.
(f) Notwithstanding the provisions of Paragraph 7(b) above, the
Agent may, at any time, require that the following modification be made to all
of its transmittal letters or only to transmittal letters to certain Approved
Investors designated by the Agent:
(i) The second sentence of the second full paragraph of the form
of whole loan sale transmittal letter attached hereto as Exhibit 4 and
the second sentence of the second full paragraph of the form of
warehouse related security transmittal letter attached hereto as
Exhibit 5 shall be deleted and each replaced with the following
sentence:
"Each of the Qualifying Loans is subject to a security interest
in favor of First Chicago National Processing Corporation (the
"Collateral Agent") on behalf of the Secured Parties, which
security interest shall be automatically released upon your
remittance of an amount equal to the greater of (1) the purchase
price for such Qualifying Loans (as set forth on the schedule
attached hereto), and (2) $________, which is the collateral
value assigned by the Collateral Agent to such Qualifying Loans.
Such amount shall be remitted by wire transfer to the following
account:",
in which case the amount to be inserted in the blank in clause two of
such revised provision shall be an amount equal to the amount of the
Borrowing Base which is attributable to the Qualifying Loans being
delivered pursuant to the transmittal letter; and
8. Report. The Collateral Agent shall deliver to the Borrower and the
Lenders: (a) on or before the seventh day of each month, a collateral report in
substantially the same form of that attached hereto as Exhibit 6 with respect to
the status of the value of the Borrowing Base as of the date of the most recent
Borrowing Base Certificate provided by the Borrower pursuant to the Credit
Agreement, and (b) from time to time, such other reports and information as the
Required Lenders may from time to time reasonably request. In preparing any such
reports the Collateral Agent shall be entitled to rely, without independent
investigation (other than the review steps described on Exhibit 1 hereto), on
information supplied to the Collateral Agent by the Borrower. The Collateral
Agent may, with the approval of the Borrower and the Agent, alter the format of
any report required hereunder, provided such modified report contains the same
information previously furnished in the unmodified report.
9. No Reliance. The Collateral Agent shall not be responsible to any
Secured Party for any recitals, statements, representations or warranties
contained herein or in any other Loan Document; or for the execution,
effectiveness, genuineness, validity, enforceability, collectability, accuracy,
completeness or sufficiency of this Security Agreement or any other Loan
Document or instruments executed and delivered, or which could have been
executed or delivered, in connection with this Security Agreement or the other
Loan Documents, including, without limitation, the attachment, creation,
effectiveness or perfection of the security interests granted or purported to be
granted hereunder in and to the Collateral. The Collateral Agent shall be
entitled to refrain from exercising any discretionary powers or actions under
this Security Agreement or any other Loan Document until the Collateral Agent
shall have received the prior written consent of one hundred percent (100%) of
the Lenders to such action.
10. Costs and Expenses. The Collateral Agent shall notify the Borrower
of all extraordinary costs and expenses of the Collateral Agent directly
relating to the Collateral Agent's performance of this Security Agreement, and
such extraordinary costs and
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expenses shall be paid promptly by the Borrower or, if already paid by the
Collateral Agent, the Borrower promptly shall reimburse the Collateral Agent
therefor. For the purposes of this provision, extraordinary costs and expenses
shall include, without limitation, expenses of legal counsel to the Collateral
Agent and the expenses of the Collateral Agent in furnishing any additional
reports and information requested by the Required Lenders pursuant to Paragraph
8(b) above.
11. Availability of Documents. Each Lender and its agents, accountants,
attorneys and auditors will be permitted from time to time upon reasonable
notice to the Collateral Agent and the Borrower, and at such time as may be
mutually acceptable to such Lender, the Collateral Agent and the Borrower (but
in no event later than two weeks after such Lender's original requested date) to
examine (to the extent permitted by applicable law) the files, documents,
records and other papers in the possession or under the control of the
Collateral Agent relating to any or all Collateral and to make copies thereof.
Prior to the occurrence of a Default, any such activity will be at the cost and
expense of the Lender conducting such activity; following the occurrence of a
Default, all reasonable out-of-pocket costs and expenses associated with the
exercise by Secured Parties of their rights under this Paragraph 11 shall be
promptly paid by the Borrower upon demand of any Lender made through the Agent.
12. Covenants of the Borrower. The Borrower hereby agrees: (a) to
procure, execute and deliver from time to time any endorsements, assignments,
financing statements and other writings reasonably deemed necessary or
appropriate by the Collateral Agent to perfect, maintain and protect its
security interest hereunder and the priority thereof and to deliver promptly to
the Collateral Agent all originals of any Collateral or proceeds thereof
consisting of chattel paper or instruments (provided that the Borrower may
retain originals of the completion certificates for home improvement loans and
any other original documents which the Borrower is obligated by applicable law
or regulation to retain); (b) not to surrender or lose possession of (other than
to the Collateral Agent), sell, encumber, or otherwise dispose of or transfer,
any Collateral or right or interest therein other than shipment of Qualifying
Loans under Approved Investor Commitments and as otherwise permitted under
Paragraph 7 above and as otherwise permitted by the Credit Agreement; (c) at all
times to account fully for and promptly to deliver to the Collateral Agent, in
the form received, all Collateral or proceeds thereof received, endorsed to the
Collateral Agent as appropriate and accompanied by such assignments and powers,
duly executed, as the Collateral Agent shall reasonably request, and until so
delivered all Collateral and proceeds thereof shall be held in trust for the
Collateral Agent for the benefit of the Secured Parties; (d) at any reasonable
time, upon demand by the Collateral Agent, to exhibit to and allow inspection by
the Collateral Agent (or Persons designated by the Collateral Agent) of the
Collateral and the records concerning the Collateral; (e) to keep the records
concerning the Collateral at the location(s) set forth in Paragraph 22 below and
not to remove such records from such location(s) without thirty (30) days prior
written notice to the Collateral Agent; (f) at the reasonable request of the
Collateral Agent, to place on each of its records pertaining to the Collateral a
legend, in form and content satisfactory to the Collateral Agent, indicating
that such Collateral has been assigned to the Collateral Agent for the benefit
of the Secured Parties; (g) to keep the Collateral insured against loss, damage,
theft, and other risks customarily covered by insurance, and such other risks as
the Collateral Agent may reasonably request; (h) to do all acts that a prudent
investor would deem necessary or desirable to maintain, preserve and protect the
Collateral; (i) not knowingly to use any Collateral or permit any Collateral to
be used unlawfully or in violation of any provision of this Security Agreement
or the Credit Agreement or any applicable statute, regulation or ordinance or
any policy of insurance covering the Collateral; (j) to pay (or require to be
paid) prior to their becoming delinquent all taxes, assessments, insurance
premiums, charges, encumbrances and liens now or hereafter imposed upon or
affecting any Collateral (excluding those imposed on or affecting any real
estate securing the Pledged Qualifying Loans) except as otherwise permitted by
the Credit Agreement; (k) to notify the Collateral Agent before any such change
shall occur of any change in the Borrower's name, identity or structure through
merger, consolidation or otherwise; (l) to appear in and defend, at the
Borrower's cost and expense, any action or proceeding which may affect its title
to or the Collateral Agent's interest for the benefit of the Secured Parties in
the Collateral unless the failure to do so would not have a Material Adverse
Effect; (m) to keep accurate and complete records of the Collateral and to
provide the Collateral Agent with such records and such reports and information
relating to the Collateral as the Collateral Agent may reasonably request from
time to time; and (n) to comply with all laws, regulations and ordinances
relating to the possession, operation, maintenance and
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control of the Collateral. Notwithstanding the foregoing, the requirements of
subclauses (a) through (j) and (l) through (n) shall not apply to any Collateral
which is not required to be included in the computation of the value of the
Borrowing Base in order for the Borrower to be in compliance with the
requirements of the Credit Agreement and the failure of the Borrower to comply
with its obligations under such subclauses with respect to any Pledged
Qualifying Loans of Collateral shall cause such Pledged Qualifying Loans to
become Ineligible Collateral.
13. Collection of Collateral Payments.
(a) The Borrower shall, at its sole cost and expense, endeavor to
obtain payment, when due and payable, of all sums due or to become due with
respect to any Collateral ("Collateral Payments" or a "Collateral Payment"),
consistent with all requirements of law and contractual obligations binding upon
the Borrower. Upon the request of the Collateral Agent following the occurrence
of a Default and acceleration of the Obligations (and subject to the
requirements of applicable law), the Borrower will notify and direct any party
who is or might become obligated to make any Collateral Payment to make payment
thereof to the Collateral Agent (or to an FHA Title I Approved Mortgagee
designated by the Collateral Agent or to the Borrower in care of the Collateral
Agent) at such address as the Collateral Agent may designate. The Borrower will
reimburse the Collateral Agent promptly upon demand for all reasonable
out-of-pocket costs and expenses, including reasonable attorneys' fees and
litigation expenses, incurred by the Collateral Agent in seeking to collect any
Collateral Payment.
(b) Following the occurrence of a Default and acceleration of the
Obligations, upon the request of the Collateral Agent the Borrower will transmit
and deliver to the Collateral Agent, forthwith upon receipt and in the form
received, all cash, checks, drafts and other instruments for the payment of
money (properly endorsed where required so that such items may be collected by
the Collateral Agent or an FHA Title I Approved Mortgagee designated by the
Collateral Agent) which may be received by the Borrower at any time as payment
on account of any Collateral Payment and if such request shall be made, until
delivery to the Collateral Agent, such items will be held in trust for the
Collateral Agent for the benefit of the Secured Parties and will not be
commingled by the Borrower with any of its other funds or property. Thereafter,
the Collateral Agent is hereby authorized and empowered to endorse the name of
the Borrower on any check, draft or other instrument for the payment of money
received by the Collateral Agent on account of any Collateral Payment if the
Collateral Agent believes such endorsement is necessary or desirable for
purposes of collection.
(c) The Borrower hereby agrees to indemnify, defend and save
harmless the Collateral Agent and its agents, officers, employees and
representatives from and against all liabilities and reasonable expenses on
account of any adverse claim asserted against the Collateral Agent relating to
any moneys received by the Collateral Agent on account of any Collateral Payment
(other than as a direct result of the gross negligence or willful misconduct of
the Collateral Agent) and such obligation of the Borrower shall continue in
effect after and notwithstanding the discharge of the Obligations and/or the
release of the security interest granted in Paragraph 3 above.
14. Authorized Action by Collateral Agent. The Borrower hereby
irrevocably appoints the Collateral Agent as its attorney-in-fact to do (but the
Collateral Agent shall not be obligated to and shall incur no liability to the
Borrower or any third party for failure so to do) at any time and from time to
time at the request and direction of the Required Lenders, given after the
occurrence of a Default and, except in the case of clause (b) of this sentence,
after acceleration of the Obligations (which request and direction must be in
writing if so requested by the Collateral Agent), any act which the Borrower is
obligated by this Security Agreement to do, and to exercise such rights and
powers as the Borrower might exercise with respect to the Collateral, including,
without limitation, the right to (a) collect by legal proceedings or otherwise
and endorse, receive and receipt for all dividends, interest, payments, proceeds
and other sums and property now or hereafter payable on or on account of the
Collateral; (b) insure, process, service and preserve the Collateral; (c)
transfer the Collateral to the Collateral Agent's own or its nominee's name; and
(d) make any compromise or settlement, and take any other action it deems
advisable with respect to the Collateral. Notwithstanding anything contained
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herein, in no event shall the Collateral Agent be required to make any
presentment, demand or protest, or give any notice and the Collateral Agent need
not take any action to preserve any rights against any prior party or any other
person in connection with the Obligations or with respect to the Collateral.
15. Default and Remedies.
(a) Upon the occurrence of a Default and following the acceleration
of the Obligations, the Collateral Agent shall at the request and direction of
the Agent on behalf of the Required Lenders (which request and direction must be
in writing if so requested by the Collateral Agent), without notice to or demand
upon the Borrower: (a) foreclose or otherwise enforce the Collateral Agent's
security interest for the benefit of the Secured Parties in the Collateral in
any manner permitted by law or provided for hereunder; (b) sell or otherwise
dispose of the Collateral or any part thereof at one or more public or private
sales or at any brokers board or on any securities exchange, whether or not such
Collateral is present at the place of sale, for cash or credit or future
delivery and without assumption of any credit risk, on such terms and in such
manner as the Collateral Agent may determine; (c) require the Borrower to
assemble the Collateral and/or books and records relating thereto and make such
available to the Collateral Agent at a place to be designated by the Collateral
Agent; (d) enter into property where any Collateral or books and records
relating thereto are located and take possession thereof with or without
judicial process; and (e) prior to the disposition of the Collateral, prepare it
for disposition in any manner and to the extent the Collateral Agent deems
appropriate. Whether or not the Collateral Agent exercises any right given
pursuant to this Paragraph 15, upon the occurrence of any Default and following
the acceleration of the Obligations, the Collateral Agent on behalf of the
Secured Parties shall have as to any Collateral all other rights and remedies
provided for herein and all rights and remedies of a secured party under the
Illinois Uniform Commercial Code and, in addition thereto and not in lieu
thereof, all other rights or remedies at law or in equity existing or conferred
upon the Collateral Agent on behalf of the Secured Parties by other
jurisdictions or other applicable law or given to the Collateral Agent on behalf
of the Secured Parties pursuant to any security agreement or other instrument or
agreement heretofore, now, or hereafter given as security for the Borrower's
obligations hereunder.
(b) Upon any sale or other disposition pursuant to this Security
Agreement, the Collateral Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral or portion thereof so sold or
disposed of and all proceeds thereof shall be promptly transmitted to the Agent
for allocation to the Secured Parties in accordance with the Credit Agreement.
Each purchaser at any such sale or other disposition shall hold the Collateral
free from any claim or right of whatever kind, including any equity or right of
redemption of the Borrower, and the Borrower specifically waives (to the extent
permitted by law) all rights of redemption, stay or appraisal which it has or
may have under any rule of law or statute now existing or hereafter adopted. The
Collateral Agent shall give the Borrower only such notice and shall publish such
notice as may be required by the Illinois Uniform Commercial Code or by other
applicable law of the intention to make any such public or private sale or sale
at broker's board or on a securities exchange, provided that the Collateral
Agent shall give the Borrower not less than 10 days prior notice of such sale.
Any such sale shall be held at such time or times within the ordinary business
hours and at such place or places permitted by the Illinois Uniform Commercial
Code. The Collateral Agent agrees that Title I Qualifying Loans included in
Collateral shall be sold only to purchasers which are (or have trustees or
custodians holding such Title I Qualifying Loans which are) licensed to accept a
transfer of the FHA insurance reserve applicable to such Title I Qualifying
Loans. At any such sale the Collateral may be sold in one lot as an entirety or
in separate parcels, as the Collateral Agent may determine. The Collateral Agent
may adjourn any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for the sale, and such
sale may be made at any time or place to which the same may be so adjourned. In
case of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the selling price is paid by the purchaser thereof, neither the Collateral
Agent, the Agent nor the Lenders shall incur any liability in case of the
failure of such purchaser to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may again be sold as provided herein.
Nothing contained in this Agreement shall prohibit any Lender or Lenders from
purchasing the Collateral at
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such sale.
16. Waiver. Neither the Agent, the Collateral Agent nor any Lender
shall incur any liability as a result of the sale of the Collateral, or any part
thereof, at any public or private sale. The Borrower hereby waives (to the
extent permitted by law) any claims it may have against the Agent, the
Collateral Agent and any Lender arising by reason of the fact that the price at
which the Collateral may have been sold at such private sale was less than the
price which might have been obtained at a public sale or was less than the
aggregate amount of the Obligations then outstanding.
17. Resignation/Removal. The Collateral Agent may resign at any time by
giving sixty (60) days prior written notice thereof to the Lenders and the
Borrower. The Collateral Agent also agrees to resign (i) within sixty (60) days
after written notice by the Borrower requesting the resignation of the
Collateral Agent, provided that no Default has occurred and is continuing at the
time of such request, or (ii) in the event it or one of its affiliates ceases to
be a Lender under the Credit Agreement. In addition, in the event the Collateral
Agent fails to perform its obligations under this Agreement in any material
manner and fails to correct its performance within thirty (30) days of written
notice of such failure given by not less than the Required Lenders, then the
Collateral Agent may be removed upon thirty (30) days written notice given by
not less than the Required Lenders. Upon any such resignation or removal: (1) so
long as there has not occurred and is continuing a Default, the Borrower shall
appoint from among the Lenders (which appointment shall be subject to the
approval of the Required Lenders, such approval not to be unreasonably withheld
or delayed), and (2) following the occurrence and during the continuance of a
Default, the Required Lenders shall appoint from among the Lenders, a successor
agent for such Collateral Agent. If the Borrower and/or Required Lenders, as
applicable, are unable to agree on the appointment of a successor agent by a
date 10 days prior to the effective date of such resignation or removal, as the
case may be, the retiring agent shall appoint one of the Lenders as a successor
agent for the Lenders. Any such successor agent shall succeed to the rights,
powers and duties of the retiring agent and the term "Collateral Agent" shall
mean such successor agent effective upon its appointment, and the former agent's
rights, powers and duties shall be terminated, without any other or further act
or deed on the part of such former agent or any of the parties to this Security
Agreement or any of the other Loan Documents or successors thereto.
Notwithstanding the foregoing, the Collateral Agent shall continue to hold the
Pledged Qualifying Loans and the security interest created hereunder for the
benefit of the Secured Parties until such Pledged Qualifying Loans and security
interest have been effectively transferred to a successor agent. After the
resignation or removal of any Collateral Agent hereunder as Collateral Agent,
the provisions of this Security Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Collateral Agent under
this Security Agreement.
18. Confidentiality. The Collateral Agent agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all non-public information provided to it by the Borrower or by any other party
on the Borrower's behalf in connection with this Security Agreement or the other
Loan Documents and agrees and undertakes that neither it nor any of its
Affiliates shall disclose any such information for any purpose or in any manner
other than pursuant to the terms contemplated by this Security Agreement or the
other Loan Documents. The Collateral Agent, its Affiliates and their respective
employees, officers and directors may disclose such information (1) at the
request of any regulatory authority or in connection with an examination of such
Person by any such authority, (2) pursuant to subpoena or other court process,
(3) when required to do so in accordance with the provisions of any applicable
law, (4) at the express direction of any other governmental authority of any
State of the United States of America or of any other jurisdiction in which such
Person conducts its business, (5) to such Person's independent auditors,
attorneys and other professional advisors, (6) if such information has become
public other than through disclosure by such Person or any Lender, (7) in
connection with any litigation involving such Person, and (8) to any Affiliate
of such Person. Notwithstanding the foregoing, the Borrower authorizes the
Collateral Agent to disclose to any lending institution proposed by the Borrower
to become a Lender under the Credit Agreement or any prospective or actual
Participants such financial and other information in its possession (i) which
has been delivered to the Collateral Agent pursuant to the Loan Documents or
which has been delivered to the Collateral Agent by the Borrower prior to
entering into the Loan
-9-
10
Documents or (ii) which is reasonably necessary to effectuate the purposes of
the Credit Agreement and this Security Agreement, provided that unless otherwise
agreed by the Borrower, such lending institution or Participant shall agree to
keep such information confidential to the same extent required of the Collateral
Agent hereunder.
19. Binding Upon Successors. All rights of the Collateral Agent and the
other Secured Parties under this Security Agreement shall inure to the benefit
of the Collateral Agent and the other Secured Parties and their successors and
assigns, and all obligations of the Borrower shall bind its successors and
assigns.
20. Entire Agreement; Severability. This Security Agreement contains
the entire security agreement and collateral agency agreement with respect to
the Collateral among Secured Parties and the Borrower. All waivers by the
Borrower provided for in this Security Agreement have been specifically
negotiated by the parties with full cognizance and understanding of their
rights. If any of the provisions of this Security Agreement shall be held
invalid or unenforceable, this Security Agreement shall be construed as if not
containing such provisions, and the rights and obligations of the parties hereto
shall be construed and enforced accordingly.
21. Choice of Law. This Security Agreement shall be construed in
accordance with and governed by the laws of the State of Illinois and, where
applicable and except as otherwise defined herein, terms used herein shall have
the meanings given them in the Illinois Uniform Commercial Code.
22. Place of Business; Records. The Borrower represents and warrants
that its chief place of business is at the address set forth beneath its
signature below, and that its books and records concerning the Collateral are
kept at its chief place of business in Xxxx County, Georgia and at the offices
of PEC in Las Vegas, Nevada.
23. Notice. Any written notice, consent or other communication provided
for in this Security Agreement shall be delivered or sent as provided in the
Credit Agreement.
EXECUTED the day and year first above written.
MEGO MORTGAGE CORPORATION, a Delaware
corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address: 0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association, as Agent
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
-10-
11
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, a Delaware corporation, as
Collateral Agent
By:
--------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-11-
12
EXHIBITS AND SCHEDULES
TO
SECURITY AGREEMENT
SCHEDULE DOCUMENT
-------- --------
A Required Qualifying Loan Documents
B Additional Required Qualifying Loan Documents
EXHIBIT DOCUMENT
------- --------
1 Required Review Steps
2 Form of Trust Receipt
3 Form of Shipping Request
4 Form of Whole Loan Sale Transmittal Letter
5 Form of Warehouse-Related Security Transmittal
6 Form of Collateral Report
-12-
13
SCHEDULE A
TO SECURITY AGREEMENT
REQUIRED QUALIFYING LOAN DOCUMENTS
1. Original of note or retail installment contract executed in
favor of the Borrower (endorsed or assigned to the Borrower if
purchased by the Borrower) and endorsed by the Borrower in
blank or, in the case of retail installment contracts,
accompanied by an executed separate assignment in blank.
2. Unless such Qualifying Loan is unsecured, the mortgage or deed
of trust securing the above note or retail installment
contract. In lieu of a recorded document, the Collateral Agent
may accept a copy certified by an Authorized Officer of the
Borrower.
3. Unless such Qualifying Loan is unsecured, an assignment of the
mortgage or deed of trust by the Borrower in blank in
recordable form and originals or copies, certified by an
Authorized Officer of the Borrower, of proper assignments of
the related mortgage or deed of trust from the original
holder, through any subsequent transferees, to the Borrower.
4. For Title I Qualifying Loans, an executed Transfer of Note
Report to a nominee of the Collateral Agent which is licensed
to accept a transfer of the FHA insurance reserve applicable
to such Title I Qualifying Loans, completed in full except for
the box requiring the FHA case number, which may be a single
blanket Transfer of Note Report with a schedule of all Pledged
Title I Qualifying Loans to be attached by the Collateral
Agent so long as such a blanket form is acceptable to HUD.
-13-
14
SCHEDULE B
TO SECURITY AGREEMENT
ADDITIONAL REQUIRED QUALIFYING LOAN DOCUMENTS
1. Except for unsecured Qualifying Loans, the original mortgage or deed of
trust securing the note or retail installment contract.
2. Except for secured or unsecured Title I Qualifying Loans, evidence of fire
and extended coverage insurance in an amount not less than the highest of
the following: (a) 90% of the insurable value of the improvements, and (b)
an amount sufficient to prevent co-insurance. The Collateral Agent
reserves the right to obtain a loss payable endorsement in its favor if it
so desires.
3. Evidence of Notice to Customer required by the federal Truth-in-Lendingh
Law and Federal Reserve Regulation Z.
4. For Title I Qualifying Loans, premium xxxxxxxx and FHA case numbers,
together with evidence of payment of such premiums, all when available.
5. Except for unsecured Qualifying Loans, a title report on the related
Property written by a title company and containing exceptions satisfactory
to the Collateral Agent.
6. Either a copy of the certificate of completion or a property inspection
report certified by the Borrower for all home improvement or combined home
improvement/debt consolidation loans, as required by the Borrower's
underwriting standards attached as Schedule 5 to the Credit Agreement.
7. Other documentation as the Collateral Agent may reasonably deem
appropriate, as well as documentation necessary to fulfill requirements of
the Approved Investor Commitments.
8. Such additional documents as may be necessary in the opinion of the
Collateral Agent to transfer to the Collateral Agent, for the benefit of
the Secured Parties, the title to any Collateral pledged and/or
hypothecated pursuant to the Security Agreement.
-14-
15
EXHIBIT 1
TO SECURITY AGREEMENT
REQUIRED REVIEW STEPS
1. All submitted documents are consistent with the related Collateral
Transmittal as to borrower name, loan face amount, loan type and the
Borrower's loan number.
2. The note or retail installment contract, as the case may be, the
mortgage/deed of trust (if applicable) and each intervening assignment (if
applicable) each bears an original signature or signatures which appear to
be those of the person or persons named as the maker and
mortgagor/trustor, or, in the case of a certified copy of the
mortgage/deed of trust and intervening assignment, such copy bears what
appears to be a reproduction of such signature or signatures.
3. Except for (a) the endorsement to the Borrower of the note in the event
such loan was purchased by the Borrower and (b) the endorsement in blank
of the note by the Borrower, neither the note, the retail installment
contract, the mortgage/deed of trust (if applicable), nor the
assignment(s) of the mortgage/deed of trust (if applicable) contain any
irregular writings which appear on their face to affect the validity of
any such endorsement or to restrict the enforceability of the document on
which they appear.
4. The note is endorsed in blank or the assignment of retail installment
contract by the Borrower to the Collateral Agent bears an original
signature, as applicable.
5. The assignment by the Borrower to the Collateral Agent of any
mortgage/deed of trust, if applicable, bears an original signature.
-15-
16
EXHIBIT 2
TO SECURITY AGREEMENT
FORM OF TRUST RECEIPT
_______________, 19__
The undersigned, MEGO MORTGAGE CORPORATION, a Delaware corporation (the
"Borrower"), acknowledges receipt from FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, acting as agent, bailee and custodian (in such capacity "Collateral
Agent") for the exclusive benefit of the Lenders pursuant to the Security
Agreement (as those terms and capitalized terms not otherwise defined herein are
defined in that certain Credit Agreement dated as of June 20, 1997, among the
Lenders, the Borrower and the Agent, as amended from time to time), of the
following described documentation for the identified Qualifying Loans (the
"Collateral Documents"), possession of which is herewith entrusted to the
Borrower solely for the purpose of correcting documentary defects relating
thereto:
Loan Document
Borrower Name Loan Number Note Amount Delivered
------------- ----------- ----------- -------------
It is hereby acknowledged that a security interest pursuant to the
Illinois Uniform Commercial Code in the Collateral hereinabove described and in
the proceeds of said Collateral has been granted to Collateral Agent for the
benefit of the Secured Parties pursuant to the Security Agreement.
The Borrower hereby represents and warrants that the aggregate value
included in the Borrowing Base on account of the Qualifying Loans for which the
Collateral Documents are requested to be released hereunder plus all other
Qualifying Loans which are currently released to the Borrower pursuant to
similar trust receipts does not exceed two percent (2%) of the current Aggregate
Commitment.
In consideration of the aforesaid delivery by Collateral Agent (or by its
duly appointed sub-agent), the Borrower hereby agrees to hold said Collateral in
trust for Collateral Agent on behalf of the Secured Parties as provided under
and in accordance with all provisions of the Security Agreement and to return
said Collateral to Collateral Agent no later than the close of business on the
fifteenth calendar day following the date hereof or, if such day is not a
Business Day, on the immediately succeeding Business Day.
MEGO MORTGAGE CORPORATION, a Delaware
corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-16-
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EXHIBIT 3
TO SECURITY AGREEMENT
FORM OF SHIPPING REQUEST
Date:
-------------
FIRST CHICAGO NATIONAL PROCESSING CORPORATION,
as Collateral Agent
0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Manager
This letter is to serve as authorization for you to endorse and ship the
following loans:
Loan Number Borrower Name Note Amount
to the following address under Commitment #__________ (the "Commitment") from an
Approved Investor as follows:
NAME:
ADDRESS:
ATTENTION:
Please endorse the notes as follows:
Please ship the loan documents either by ____________________ or by such other
courier service as we have designated to you as "approved". The courier shall
act as an independent contractor bailee acting solely on your behalf as
Collateral Agent for the Secured Parties (as defined in that certain Credit
Agreement dated as of June 20, 1997, by and among the Borrower, The First
National Bank of Chicago, as agent and certain lenders, as the same may be
amended, extended or replaced from time to time and to which reference is made
for the definitions of all capitalized terms used herein), but we acknowledge
and agree that you are not responsible for any delays in shipment caused by the
courier or any other actions or inactions of the courier, including, without
limitation, any loss of any loan documents; however, because the Commitment
expires on _______________, 199__, we ask that you deliver the loan documents to
the courier no later than _______________, 199__.
-17-
18
Please have the courier xxxx us by using our acct #__________. If you should
have any questions, or should feel the need for additional documentation, please
do not hesitate to call _______________.
MEGO MORTGAGE CORPORATION, a Delaware
corporation
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-18-
19
EXHIBIT 4
TO SECURITY AGREEMENT
(Direct Investor)
FORM OF WHOLE LOAN SALE TRANSMITTAL LETTER
------------------------------------------
[LETTERHEAD OF COLLATERAL AGENT]
Date: Name of Delivery Service:
------------------ ------------------------
Airbill No.:
------------------------
[Approved Investor]
-----------------
------------------------------
------------------------------
Re: Mego Mortgage Corporation; Sale of Qualifying Loans
Attached please find those Qualifying Loans listed separately on the
attached schedule, which Qualifying Loans are owned by MEGO MORTGAGE CORPORATION
(the "Borrower") and are being delivered to you for purchase.
The Qualifying Loans comprise a portion of the Collateral under (and as
the term "Collateral" and capitalized terms not otherwise defined herein are
defined in) that certain Credit Agreement dated as of June 20, 1997 by and among
the Borrower, the Agent and the Lenders thereunder, as amended from time to
time. Each of the Qualifying Loans is subject to a security interest in favor of
the undersigned on behalf of the Secured Parties which security interest shall
be automatically released upon your remittance of the full amount of the
purchase price of such Qualifying Loan (as set forth on the schedule attached
hereto) by wire transfer to the following account of the Borrower:
WIRE INSTRUCTIONS TO SETTLEMENT ACCOUNT:
----------------------------------------
----------------------------------------
----------------------------------------
Pending your purchase of each Qualifying Loan and until payment
therefor is received, the aforesaid security interest therein will remain in
full force and effect, and you shall hold possession of such Collateral and the
documentation evidencing same as custodian, agent and bailee for and on behalf
of the Secured Parties. In the event any Qualifying Loan is unacceptable for
purchase, return the rejected item directly to the Collateral Agent at the
address set forth below. The Qualifying Loan must be so returned or sales
proceeds remitted in full no later than twenty-five (25) days from the date
hereof. In no event shall any Qualifying Loan be returned or sales proceeds
remitted to the Borrower. If you are unable to comply with the above
instructions, please so advise the undersigned immediately.
NOTE: BY ACCEPTING THE QUALIFYING LOANS DELIVERED TO YOU WITH THIS
LETTER, YOU CONSENT TO BE THE CUSTODIAN, AGENT AND BAILEE FOR THE SECURED
PARTIES ON THE TERMS DESCRIBED IN THIS LETTER. THE UNDERSIGNED, AS COLLATERAL
AGENT, REQUESTS THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED QUALIFYING LOANS
AND THIS LETTER BY SIGNING AND RETURNING THE ENCLOSED COPY OF THIS LETTER TO THE
UNDERSIGNED; HOWEVER, YOUR FAILURE TO DO SO DOES NOT NULLIFY SUCH CONSENT.
-19-
20
Sincerely,
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, as Collateral Agent
By:
----------------------------------------
Title:
-------------------------------------
Address: 0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
The undersigned Borrower agrees to and acknowledges the terms of this
letter and, notwithstanding any contrary understanding with or instructions to
you, the addressee of this letter, the Borrower instructs you to act according
to the instructions set forth in this letter. These instructions cannot be
altered except by written instructions executed by Collateral Agent.
MEGO MORTGAGE CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ACKNOWLEDGEMENT OF RECEIPT
[Approved Investor]
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Date:
---------------------------
-20-
21
EXHIBIT 5
TO SECURITY AGREEMENT
(Pool Formation)
FORM OF WAREHOUSE-RELATED SECURITY TRANSMITTAL LETTER
[COLLATERAL AGENT LETTERHEAD]
Date:_______________
[Pool Custodian]
-------------------------
-------------------------
Re: Mego Mortgage Corporation;
Shipment of Qualifying Loans for Pool Formation
Attached please find those Qualifying Loans listed separately on the
attached schedule, which are owned by MEGO MORTGAGE CORPORATION, a Delaware
corporation (the "Borrower"), and are being delivered to you, as
custodian/trustee (the "Pool Custodian"), in connection with the sale of such
Qualifying Loans to a depositor as a part of the formation of a mortgage pool
supporting the issuance of a mortgage-backed security.
The Qualifying Loans comprise a portion of the Collateral under (and as
the term "Collateral" and capitalized terms not otherwise defined herein are
defined in) that certain Credit Agreement dated as of June 20, 1997, by and
among the Borrower, the Agent and the Lenders, as amended from time to time.
Each of the Qualifying Loans is subject to a security interest in favor of
Collateral Agent for the benefit of the Secured Parties, which security interest
shall be automatically released upon your remittance of the full amount of the
purchase price of such Qualifying Loan (as set forth on the schedule attached
hereto) by wire transfer to the following account of Borrower:
WIRING INSTRUCTIONS TO SETTLEMENT ACCOUNT:
---------------------------------
---------------------------------
---------------------------------
Pending your remittance of such amount, the aforesaid security interest
in each Qualifying Loan will remain in full force and effect, and you shall hold
such Collateral as custodian, agent and bailee for and on behalf of the Secured
Parties. In the event any Qualifying Loan is unacceptable for pool formation,
return the rejected item directly to the undersigned, as Collateral Agent, at
the address set forth below. Each Qualifying Loan must be so returned or the
proper amount remitted to the Collateral Agent no later than twenty-five (25)
days from the date hereof. In no event shall any Qualifying Loan be returned or
proceeds relating thereto be remitted to the Borrower. If you are unable to
comply with the above instructions, please so advise the undersigned
immediately.
NOTE: BY ACCEPTING THE QUALIFYING LOANS DELIVERED TO YOU WITH THIS
LETTER, YOU CONSENT TO BE THE CUSTODIAN, AGENT AND BAILEE FOR THE SECURED
PARTIES ON THE TERMS DESCRIBED IN THIS LETTER. THE UNDERSIGNED, AS COLLATERAL
AGENT, REQUESTS THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED QUALIFYING LOANS
AND THIS LETTER BY SIGNING AND RETURNING THE ENCLOSED COPY OF THIS LETTER TO THE
UNDERSIGNED; HOWEVER, YOUR FAILURE
-21-
22
TO DO SO DOES NOT NULLIFY SUCH CONSENT.
Sincerely,
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, as Collateral Agent
By:
------------------------------------
Title:
----------------------------------
Address: 0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
ACKNOWLEDGEMENT OF RECEIPT
[Pool Custodian]
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Date:
-------------------------------
-22-
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EXHIBIT 6
TO SECURITY AGREEMENT
FORM OF COLLATERAL REPORT
BORROWING BASE $ AMOUNT LIMIT OVER LIMIT
-------------- ---------------------------------------------
Eligible Title I Qualifying Loans (97%) ---------- ---------- ----------
plus Eligible Conventional HI/DC Qualifying Loans
---------- ---------- ----------
(a) Non-HLTV Loans
---------- ---------- ----------
(b) HLTV Loans
---------- ---------- ----------
equals Borrowing Base before status limits
---------- ---------- ----------
Status Limits
---------- ---------- ----------
(a) Eligible Conventional HI/DC Qualifying
Loans with FICOs of 600 to 620
(6% of Aggregate Commitment)
---------- ---------- ----------
(b) Agreements to Pledge
(greater of (i) 15% of Aggregate
Commitment or (ii) $9,000,000)
---------- ---------- ----------
(c) Trust Receipts (2% of Aggregate Commitment)
---------- ---------- ----------
(d) Unsecured Title I Qualifying Loans
(5% of Aggregate Commitment)
---------- ---------- ----------
(e) Unsecured Conventional HI/DC
Qualifying Loans
(5% of Aggregate Commitment)
---------- ---------- ----------
Borrowing Base after status limits
plus Unrestricted Balance in Settlement Account
in excess of $100,000*
----------
less Ucleared Loan Funding Checks
----------
equals Adjusted Borrowing Base
----------
less Coverage Requirement (Facility Outstandings)
----------
equals Borrowing Base excess/(shortfall)
----------
* After deduction of proceeds from disposition of Eligible Collateral
included in Borrowing Base calculation for the Business Day such
proceeds are received, to avoid duplication.
-23-
