EXHIBIT 10.42
REVOLVING CREDIT AND COLLATERAL LOAN AGREEMENT
REVOLVING CREDIT AND COLLATERAL LOAN AGREEMENT dated as of September 6,
1988, by and between Xxxxxx Mortgage Corporation, a California corporation
(hereinafter called "Company"), and IMPERIAL BANK (hereinafter called "Bank").
In consideration of the mutual covenants and agreements contained
herein, Company and Bank agree as follows:
Section 1. DEFINITIONS
1.1 Defined Terms. All terms defined in this Agreement shall have the
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defined meanings when used herein or in any note, certificate, report or other
document made or delivered pursuant to this Agreement, unless the context
otherwise requires. The following terms shall have the following meanings.
'Agreement' means this Revolving Credit and Collateral Loan Agreement as
originally executed and as the same may from time to time be amended or
supplemented.
'Business Day' means any day other than a Saturday, Sunday, or holiday
on which banks in the State of California are authorized by law to close.
'Collateral' means all property referred to and described in Section 2.6
hereof.
'Deed of Trust' means a deed of trust or mortgage in form satisfactory
to Bank (a) which secures a Mortgage Note and (b) the lien of which constitutes
a first lien on the real property described therein subject only to (i) liens
for taxes, assessments, or similar governmental charges not yet due and payable,
(ii) zoning restrictions, (iii) mineral reservations, easements, covenants,
conditions and restrictions of record which shall neither defeat nor render
invalid such lien, nor materially impair the merchantability, or value of such
real property, and (iv) such other exceptions to title as have been approved in
writing by Bank.
'Event of Default' means any event described in Section 8.1 hereof.
'FHA' means the Federal Housing Administration and any successor
thereto.
'FHA Mortgage' means a mortgage loan within acceptable limits insured by
the FHA.
'FHLMC' means the Federal Home Loan Mortgage Corporation and any
successor thereto.
'GNMA' means the Government National Mortgage Association and any
successor thereto.
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`Investor' means a bank, trust company, savings and loan association,
pension fund, governmental authority, insurance company, investment company, or
securities broker or dealer, designated by Company and approved by Bank.
`Investor Commitment' means an existing, written agreement, in form and
substance satisfactory to Bank, to Company from an Investor to purchase Mortgage
Loans.
`VA' means the Veterans' Administration and any successor thereto.
`VA Mortgage' means a mortgage loan within acceptable limits guaranteed
by the VA.
`Mortgage Loan' means any loan evidenced by a Mortgage Note.
`Mortgage Note' means a negotiable promissory note executed by a bona
fide third party who has the capability to contract, payable to Company in
monthly installments, matures in thirty (30) years or less, and is secured by a
Deed of Trust on such real property described therein.
`Person' means a corporation, association, partnership, trust,
organization, business, individual or government or governmental agency or
political subdivision thereof.
`Prime Rate' means the floating commercial loan base or reference rate
of interest announced by Bank from time to time as its 'Prime Rate'.
`Revolving Loan' and 'Revolving Loans' mean any or all of the loans from
Bank to Company established pursuant to this Agreement.
`Revolving Note' means the Company's promissory note issued to Bank
pursuant to Section 2.2 hereof with appropriate insertions.
`Servicing Portfolio' means a number of mortgage notes serviced by
Company for the purpose of processing payments thereon on behalf of the owner
thereof, for which service Company is paid a fee.
`Tangible Net Worth' shall mean the excess of all of the Company's
assets (excluding any value for goodwill, trademarks, patents, copyrights,
organization expense and other similar intangible items) over all its
liabilities as determined and computed in accordance with generally accepted
accounting principles consistently applied.
`Total Debt' shall mean the total of all items of indebtedness,
obligation or liability which in accordance with generally accepted accounting
principles consistently applied would be included in determining total
liabilities as shown on the liability side of a balance sheet of the Company at
the date as of which Total Debt is to be determined.
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Section 2. AMOUNT AND TERMS OF CREDIT
2.1 Revolving Loans. Subject to the terms and conditions of this
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Agreement, Bank agrees to make loans (herein the 'Revolving Loan') to which
amounts shall not exceed the sum of Five Million and No/100 Dollars ($5,000,000)
in the aggregate outstanding at any one time. Bank's obligation to make the
Revolving Loans shall terminate on the maturity date set forth in the Revolving
Note as described in Section 2.2 hereof subject to any renewal extension of the
Revolving Note.
2.2 Revolving Note. The obligation of Company to repay the Revolving
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Loans shall be evidenced by a Revolving Note, payable as set forth in Sections
2.4 and 2.5 hereof, all amounts outstanding becoming finally due and payable as
specified in the Revolving. Note if not paid before. Bank shall record the
principal amount of the initial Revolving Loan on the schedule annexed to the
Revolving Note. Additional Revolving Loans made by Bank and payments and
prepayments of principal with respect to the Revolving Note shall be evidenced
by notations made by Bank on the schedule annexed to the Revolving Note showing
the date and amount of each Revolving Loan, payment or prepayment of principal.
The aggregate unpaid amount of Revolving Loans set forth on the schedule annexed
to the Revolving Note or in the records of Bank shall be presumptive evidence of
the principal amount owing and unpaid on the Revolving Note.
2.3 Interest. The Revolving Note shall bear interest upon the unpaid
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principal balance from its date at a fluctuating rate per annum equal to Bank's
Prime Rate plus One and One-half percent (P + 1 1/2%), due and payable on the
thirtieth (30th) day of each month, commencing October 30, 1988, and at maturity
of the Revolving Note or on termination of this Agreement, on which date all
interest remaining unpaid shall be due and payable. Should interest not be paid
before the first day of the succeeding month, it shall thereafter bear like
interest as the principal. All interest shall be calculated on the basis of a
year of 360 days and the actual number of days. Any change in the interest rate
on the Revolving Note resulting from a change in the Prime Rate shall become
effective as of the day on which such change in the Prime Rate shall become
effective.
2.4 Regular Principal Payments. The amount received directly by
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Company or from sale of said Mortgage Loans to any designated government or
institutional investor or by any other collection of any principal amount shall
be due and payable to Bank immediately following such receipt for application
to unpaid principal and interest on the Revolving Loans.
2.5 Payment of Principal on Demand. Company will pay Bank on demand the
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full amount of any outstanding Revolving Loan in the event that:
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A. Said Revolving Loan shall be outstanding for more than 120 days.
B. Any default shall occur with respect to the corresponding Mortgage
Loan.
2.6 Collateral. As security for the Revolving Loans and any other
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obligations of Company under this Agreement, Company does hereby pledge, assign
and hypothecate to Bank, and grant to Bank a security interest in, the
following:
A. Mortgage Notes, Deeds of Trust, documents and other property as
shall be deposited with or held by Bank or its agent in trust for Bank pursuant
to this Agreement, the Mortgage Loans evidenced thereby and the proceeds
thereof;
B. All hazard insurance policies, title insurance policies, and any
proceeds thereof, and any condemnation proceeds;
C. All files, surveys, certificates, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records and all other
records, information and data of Company relating to the Mortgage Loans assigned
hereunder;
D. Any and all deposit accounts maintained by Company with Bank; and
E. Any other property and proceeds thereof that may from time to time
hereafter be delivered by Company to Bank or to its agent to be held in trust
for Bank pursuant to this Agreement.
F. Any and all assets of Company, real or personal.
G. All Investor Commitments covering the Mortgage Loans assigned
hereunder to the extent that the granting of a security interest in same shall
not violate any restrictions against assignment contained in said investor
commitments, and in the proceeds resulting from sales by Company pursuant
thereto.
2.7 Limitations on Amounts Funded. In no event shall any advance under
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the Revolving Loan exceed the maximum investor commitment ceiling of the
corresponding Mortgage Loan assigned hereunder, as those ceilings may change
from time to time. Bank reserves the right to approve any changes in these
ceilings.
2.8 Transmittal of Mortgage Loans.
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A. So long as no Event of Default shall occur or exist, Bank may, in
its discretion, deliver or release any Mortgage Loan constituting Collateral and
all related documents to Company so that Company may transmit such documents to
the appropriate investor for purchase in accordance with the Purchase Contract
or Investor Commitment.
B. Transmittal shall be in such form as shall be satisfactory to
Bank, including, without limitation, (a) Company's execution and delivery of a
Trust Receipt with appropriate insertions for any Mortgage Loan released to
Company, and (b) written
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notice to Bank from any officer of Company authorized to request a Revolving
Loan specified herein.
C. In the case of Mortgage Loans, the approved investor shall
immediately return all loan documents to Bank if payment is not made within
fifteen (15) days from the date of transmittal by Bank of Company, and Company
shall immediately return all loan documents to Bank if transmittal to an
approved investor is not completed within three (3) days from the date of
transmittal by Bank. Payments received from approved investors shall be applied
first to the satisfaction of Company's obligations under this Agreement, and
charges in connection therewith, and the remainder, if any, shall be paid to
Company.
2.9 Redemption of Collateral. So long as no Event of Default shall
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occur or exist, Company may redeem, free from any security interest of Bank, any
Mortgage Loan constituting Collateral and all related documents upon payment to
Bank of the principal amount of the Revolving Loan advanced therefor plus
interest accrued thereon.
2.10 Disbursement of Revolving Loans. Bank shall fund according to a
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funding schedule submitted by Company into a pre-designated funding account
maintained by Company at bank.
2.11 Holiday Payments. If any payment to be made by Company hereunder or
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under the Revolving Note shall become due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in computing any interest in respect of such
payment.
Section 3. CONDITIONS OF LENDING
3.1 Conditions Precedent to Borrowing. Bank shall not be obligated to
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lend to Company and no Revolving Loan shall be made to Company under this
Agreement unless the following conditions precedent have been satisfied:
A. Company shall comply, and shall have complied, with all of the
covenants, representations and warranties under this Agreement and no Event of
Default shall have occurred and be continuing.
B. Company shall have validly executed and delivered to Bank in form
and substance satisfactory to Bank the following:
1. A corporate resolution of the Board of Directors of Company
authorizing the execution of this Agreement, the Revolving Note, and any and all
other documents related to this Agreement;
2. This Agreement duly executed;
3. The Revolving Note duly executed;
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4. A corporate resolution of the Board of Directors of
Guarantor authorizing the execution of the Continuing Guaranty;
5. The Continuing Guaranty duly executed;
6. Such other documents as Bank may reasonably request or as
otherwise specified herein in order to effect fully the purposes of this
Agreement.
3.2 Conditions Precedent to First Borrowing and Each Subsequent
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Borrowing. The obligation of Bank to make each Revolving Loan hereunder is
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subject to the following conditions:
A. Each Mortgage Loan constituting Collateral is on completed,
improved, 1-4 family residential property in such jurisdictions as may be
approved by Bank; is secured by a first lien on said property; is a FNMA, FHLMC,
GNMA, or HUD Quality Mortgage and is qualified as a saleable loan directly under
Company's Seller/Servicer status with FNMA, FHLMC, GNMA, HUD, or institutional
investors designated and approved by Bank. There shall exist no default under
any assigned Mortgage Note or corresponding Mortgage Loan, and each Mortgage
Loan must be approved by Bank for use as Collateral hereunder;
B. Bank shall have received the following in form and substance
satisfactory to Bank:
1. Original Mortgage Note endorsed in blank by Company;
2. Assignment to Bank of the Deed of Trust. Such Assignment
shall be recorded at Bank's discretion;
3. Certified Copy of the Deed of Trust;
4. An appraisal of the property securing the corresponding
Mortgage Note; and
5. A funding schedule completed by Company.
6. Other documentation as Bank may reasonably require.
C. 1. All loans on leasehold interest must conform to FHLMC
guidelines.
2. For each jumbo loan, up to a maximum of $500,000 per loan, a
written approval of the specific loan by the investor and a maximum loan to
value rate of 80%.
Section 4. COMPANY'S REPRESENTATIONS AND WARRANTIES
Company makes the following representations and warranties which shall
be deemed to be continuing representations and warranties so long as any credit
hereunder shall be available and until payment in full of the Revolving Note:
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4.1 Existence and Rights. Company is a corporation duly organized and
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existing in good standing under the laws of the State of California without
limit as to the duration of its existence; Company has corporate powers and
adequate authority, rights and franchises to own its property and to carry on
its business as now conducted, and is duly qualified and in good standing in
each State in which the character of its business makes such qualification
necessary; Company has the corporate power and adequate authority to make and
carry out this Agreement and to issue the Revolving Note as herein provided;
and Company's chief executive office is located in the State of California.
4.2 Agreement and Revolving Note Authorized. The execution, delivery
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and performance of this Agreement, and the execution and delivery of the
Revolving Note are duly authorized and do not require the consent or approval of
any governmental body or other regulatory authority; are not in contravention of
or conflict with any law or regulation or any term or provision of its Articles
of Incorporation or bylaws; and this Agreement is, and the Revolving Note when
delivered for value received will be, the valid, binding and legally enforceable
obligations of Company in accordance with their terms.
4.3 No Conflict. The execution, delivery and performance of this
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Agreement and of the Revolving Note will not breach or constitute a default
under any agreement, indenture, undertaking or other instrument to which Company
is a party or by which it or any of its property may be bound or affected, and,
other than in favor of Bank, such execution, delivery and performance will not
result in the creation or imposition of (or the obligation to create or impose)
any lien, charge or encumbrance on, or security interest in, any of its property
pursuant to the provisions of any of the foregoing.
4.4 Litigation. There is no litigation or other proceeding pending or,
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to the knowledge of Company, threatened against or affecting it or its
properties which, if determined adversely to Company, would have a materially
adverse effect on the financial condition, properties or operations of Company,
and it is not in default with respect to any order, writ, injunction, decree or
demand of any court or other governmental or regulatory authority.
4.5 Financial Condition. The opening balance sheet of Company as of
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June 30, 1988, a copy of which has heretofore been delivered to Bank by
Company, and all other statements and data submitted in writing in connection
with the request for the credit granted by this Agreement are true and correct,
and said balance sheet truly represents the financial condition of Company as at
the date thereof, and have been
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prepared in accordance with generally accepted accounting principles on a basis
consistently maintained. Since said date there have been no changes in the
assets or liabilities or financial condition of Company other than changes in
the ordinary course of business, and no such changes have been materially
adverse changes. Company has no knowledge of any liabilities, contingent or
otherwise, at said date not reflected in said balance sheet, and Company has not
entered into any commitments or contracts which are not reflected in said
balance sheet, other than in the ordinary and normal course of its business,
which may have a materially adverse effect upon its financial condition,
operations or business as conducted.
4.6 Tax and Renegotiation. Company's federal income tax liability has
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been finally determined for all years to and including fiscal 1987, and Company
has no liability for renegotiation of profits; all applicable state franchise
and income taxes have been paid.
4.7 Regulations G, T, & U. Company is not engaged principally or as one
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of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any margin stock (as defined within Regulations G, T,
& U of the Board of Governors of the Federal Reserve System), and not more than
twenty-five (25%) of the value of the Company's assets and other property
consists of such margin stock.
4.8 Other Regulations. Neither Company nor any affiliate thereof is
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subject to any statute or regulation restricting the ability of Company or any
affiliate thereof to incur indebtedness or encumber its respective properties.
4.9 Compliance With Real Estate Legislation. Any Mortgage Loan
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constituting Collateral will have been made in compliance with the following
laws and any regulations promulgated thereunder, including the making of all
required disclosures correctly to all Persons entitled to receive them within
the time specified by such law or rules.
A. Real Estate Settlement Procedures Act of 1974;
B. Equal Credit Opportunity Act - Regulation B;
C. Truth In Lending Act - Regulation Z.
Further, Company is fully familiar with the requirements of the laws of the
applicable jurisdiction which assigned Mortgage Loans originate with regard to
fair lending practices, and all Mortgage Loans which are assigned to secure
Revolving Loans hereunder shall be made in strict compliance with the provisions
of any act, law or regulation which governs lending practices in the applicable
jurisdiction.
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4.10 FNMA, FHLMC, GNMA, or HUD Eligibility of Company. Company is an
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approved seller/servicer of Mortgage Notes to FNMA, FHLMC, GNMA, or HUD in the
FNMA, FHLMC, GNMA, or HUD regions in which it operates and meets all applicable
FNMA, FHLMC, GNMA, or HUD regulations so as to be able to originate, purchase,
and service Mortgage Notes sold to FNMA, FHLMC, GNMA, or HUD.
4.11 Title to Notes and Mortgages. At the time of their assignment to
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Bank as Collateral, the Mortgage Notes and Deeds of Trust will be held by
Company as the true and lawful owner thereof, each Mortgage Note will evidence a
bona fide indebtedness incurred by the maker thereof in the amount of such
Mortgage Note, and each Deed of Trust will represent a valid first lien on the
property described therein. There are, or will be, no defenses, counterclaims,
or setoffs to the knowledge of Company which may be asserted against the
Mortgage Notes or the holder thereof. All financial information relating to the
Collateral, submitted by Company to Bank, whether previously or in the future,
is or will be true and correct.
4.12 Compliance with Commitments. Each Mortgage Loan assigned
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hereunder will comply in all respects with underwriting standards of FNMA,
FHLMC, GNMA, HUD, or institutional investor designated and approved by Bank as
amended from time to time.
4.13 Loans in Special Flood Hazard Areas. Company will not make,
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increase, extend or renew any Mortgage Loan secured by real property located or
to be located in a Special Floor Hazard Area so designated by the Secretary of
Housing and Urban Development if said Mortgage Loan is to be assigned as
Collateral under this Agreement, unless the community in which such area is
situated is then participating in the National Flood Insurance Program, and the
property covered by the related Deed of Trust is insured under such program.
Section 5. BANK'S REPRESENTATIONS
5.1 Nonreliance. Bank is not relying on or looking to any capital
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stock or other security (as defined in Regulation U of the Board of Governors of
the Federal Reserve System) now or hereafter owned by Company for the repayment
of the Revolving Loans.
5.2 Investment Intent. Bank is making the Revolving Loans and
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receiving the Revolving Note for its own account and not with a view to the
distribution thereof subject, nevertheless, to any requirement that its property
shall at all times be within its control, and subject further to Bank's right
(reserved hereby) to sell participations in the Revolving Note.
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Section 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the Revolving Note, unless Bank
shall otherwise consent in writing, Company shall do all of the following:
6.1 Corporate Rights and Facilities. Maintain and preserve its
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corporate existence and all rights, privileges, franchises and other authority
adequate for the conduct of its business; maintain its properties, equipment and
facilities in good order and repair; conduct its business in an orderly manner
without voluntary interruption; and maintain its chief executive office in the
State of California.
6.2 Insurance. Maintain insurance with responsible insurance carriers
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against such risks and in such amounts as is customarily carried by similar
businesses, including, without limitation, errors and omissions, fire, public
liability, property damage, workers' compensation and interruption of business
insurance.
6.3 Taxes and Other Liabilities. Pay and discharge, before the same
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become delinquent and before penalties accrue thereon, all taxes, assessments
and governmental charges upon or against it or any of its properties, and all
its other liabilities at any time existing, except to the extent and so long as:
A. The same are being contested in good faith and by appropriate
proceedings in such manner as not to cause any materially adverse effect upon
its financial condition or the loss of any rights of redemption from any sale
thereunder; and
B. It shall have set aside on its books reserves (segregated to the
extent required by generally accepted accounting principles) adequate with
respect thereto.
6.4 Other Taxes and Charges. Pay all governmental charges or taxes
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(except income, franchise or other similar taxes) at any time payable or ruled
to be payable in respect of the existence, execution or delivery of this
Agreement or the existence or issuance of the Revolving Note by reason of any
existing or hereafter enacted federal or state statute.
6.5 Records and Report. Maintain a system of accounting in accordance
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with generally accepted accounting principles on a basis consistently
maintained; permit representatives of Bank to have access to and to examine its
properties, books and records at all reasonable times; and furnish at Company's
expense to the Bank:
A. As soon as available, and in any event within 45 days after the
close of each quarter of the first three quarters of each fiscal year of
Company, commencing with the quarter ending September 30, 1988, a balance sheet,
profit and loss statement and reconciliation of capital accounts of Company as
at the close of such quarter and covering operations for the portion of
Company's fiscal year ending on the last day of
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such quarter, all in reasonable detail and stating in comparative form the
figures for the corresponding date and period in the previous fiscal year,
prepared in accordance with generally accepted accounting principles on a basis
consistently maintained by Company and certified by an appropriate officer of
Company, subject, however, to year-end audit adjustments;
B. As soon as available, and in any event within 90 days after the
close of each fiscal year respectively, a balance sheet, profit and loss
statement and reconciliation of capital accounts of Company as at the close of
and for such fiscal year, all in reasonable detail and stating in comparative
form the figures as at the close of and for the previous fiscal year, audited by
and with the unqualified opinion of certified public accountants satisfactory to
Bank;
C. Promptly after thereof by Company, copies of any detailed audit
reports submitted to Company by independent accountants in connection with each
annual or interim audit of the accounts of the Company made by such accountants.
D. Currently with delivery of the documents provided for in Section
6.5.B hereof, a certificate of the President and Executive Vice President of
Company, stating that Company has performed and observed each and every covenant
contained in this Agreement to be performed by it and that no Event of Default
has occurred and no condition then exists which constitutes an Event of Default
hereunder or would constitute such an Event of Default upon the giving of
notice, the lapse of time, or both, specified herein; or, if any such event has
occurred or any such condition exists, specifying the nature thereof; and
E. Such other information relating to the affairs of Company as Bank
may reasonably request from time to time.
6.6 Notice of Certain Events. Promptly notify Bank in writing of the
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occurrence of any (a) Event of Default hereunder or event which would become an
Event of Default hereunder upon giving of notice, the lapse of time, or both;
(b) event which entitles Bank to accelerate the maturity of any Mortgage Note;
(c) event which entitles Bank to receive the proceeds of any insurance policies
associated with any Mortgage Loan assigned hereunder; (d) event which entitles
Bank to receive any proceeds payable to Bank by the terms of the Deed of Trust
securing any Mortgage Note; (e) assignment, transfer, pledge or other
encumbrance of any shares of FNMA, FHLMC, GNMA, or HUD stock which Company owns
or may hereafter acquire and which are restricted from sale under any existing
or future Investor servicing agreement; (f) contemplated sale, assignment,
transfer, pledge or other encumbrance of twenty-five percent (25%) or more of
Company's affiliate (Western States Servicing Corp.) total Servicing Portfolio;
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executive headquarters; (h) change in the name or trade name of Company; or (i)
event which entitles Bank to payment on demand of any Revolving Loan as set
forth in Section 2.5.1 hereof.
6.7 Bank Expenses. Pay all out-of-pocket expenses and processing fees
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to the Bank in connection with the administration and enforcement of this
Agreement and the Revolving Loans and security therefor, or any waiver or
amendment of any provision hereof. Company agrees to indemnify Bank from and
hold it harmless against any transfer taxes, documentary taxes, assessments or
charges made by any governmental authority by reason of the execution, delivery
and performance of this Agreement, the Revolving Loans and security therefor.
The obligations of Company under this Section 6.7 shall survive payment of any
Revolving Loan and assignment of any rights hereunder.
6.8 Regulatory Compliance. Originate Mortgage Loans in compliance with
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all applicable federal, state and local laws and regulations, including without
limitation those specified in Section 4.9 hereof, and, at Bank's request provide
Bank with an opinion of counsel for Company with respect to the matters set
forth in Section 4.1, 4.2, 4.3, 4.7, 4.8, and 4.9 hereof and such other matters
as Bank shall reasonably request.
Section 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that so long as any credit hereunder shall
be available and until payment in full of the Revolving Note, Company shall not
do any of the following without the written consent of Bank:
7.1 Type of Business. Make any substantial change in the present
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character of its business.
7.2 Loans and Investments. Lend money or extend credit other than in
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the ordinary and normal course of its business as presently conducted; invest
other than in (a) direct obligations of the United States Government, (b)
interest bearing certificates of deposit issued by any commercial banking
institution or savings and loan association with total assets of not less than
One Hundred Fifty Million Dollars ($150,000,000.00) and organized under the laws
of the United States or any State thereof, (c) prime commercial paper rated
Prime 1 or higher by Xxxxx, X-0 or higher by Standard and Poors, and F-1 or
higher by Fitch, (d) stock of FNMA, and (e) GNMA securities.
7.3 Sale of Business. Sell any assets except in the ordinary and
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normal course of its business as now conducted; or sell, lease, assign, or
transfer any substantial part of its business or fixed assets, or twenty-five
percent (25%) or more of its affiliate's total Servicing Portfolio, or any
property or other assets necessary for the
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continuance of its business as now conducted, including, without limitation, the
selling of any property or other asset accompanied by the leasing bank of the
same.
7.4 Regulations G, T, and U. Use the proceeds of the Revolving Loans,
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directly or indirectly, to purchase or carry any margin stock (within the
meaning of Regulations G, T, and U of the Board of Governors of the Federal
Reserve System) or extend credit to others for the purpose of purchasing or
carrying, directly or indirectly, any margin stock.
7.5 Transfers, Encumbrances, and Subordination of Collateral.
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Transfer, further encumber or subordinate Company's interest in any of the
collateral, including without limitation the real property described in the
Deeds of Trust assigned hereunder.
7.6 Liens. Create, incur, assume, or permit to exist any lien,
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security interest; pledge, assignment, encumbrance or charge of any kind, except
in favor of Bank, of or on twenty-five percent (25%) or more of its total
Servicing Portfolio or any accounts maintained with Bank.
7.7 Other Borrowers. Incur any indebtedness, other than normal
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accruals and operating expenses.
Section 8. EVENTS OF DEFAULT
8.1 Events of Default. Events of Default, as used herein, means any
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one or more of the following events:
A. Failure to Pay Note. Failure to pay any installment of principal
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of, or interest on, the Revolving Note when due or any other monetary
obligations as required hereunder.
B. Default in Other Agreements. Failure to pay, or any default on the
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payment of, any principal of or any interest on any indebtedness of Company, or
any breach with respect to any term of any evidence of such indebtedness, or of
any loan agreement, mortgage, indenture or other agreement relating thereto,
whether or not waived by the note holder or obligee.
C. Breach of Covenant. Failure of Company to perform any other terms
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or condition of this Agreement binding upon Company.
D. Breach of Representation or Warranty. Any of Company's
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representations or warranties made herein or any statement or certificate at any
time given in writing pursuant hereto or in connection herewith shall be false
or misleading in any material respect.
E. Bankruptcy or Insolvency. A court having jurisdiction shall enter
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a decree or order for relief in respect of the Company in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or
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appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Company, or for any substantial part of its
properties, or ordering the winding up or liquidation of its affairs; or the
Company shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case under any such law, or
shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or similar official) of
the Company, or for any substantial part of its properties, or shall make any
general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due or shall take any corporate action in furtherance
of any of the foregoing.
F. Judgments, Attachments. Any money judgment, writ or warrant of
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attachment, or similar process shall be entered or filed against Company or any
of its assets and shall remain unvacated, unbonded or unstayed for a period of
30 days or in any event later than five days prior to the date of any proposed
sale thereunder.
8.2 Remedies Upon Default.
---------------------
A. Upon the occurrence of an Event of Default, automatically upon the
happening of any Event of Default specified in Section 8.1.E hereof, and with
respect to the other Events of Default at its option, without demand,
presentment or notice, all of which hereby are expressly waived by Company, Bank
(or the holder of the Revolving Note) may exercise one or more of the following
remedies:
1. Terminate all credit hereunder and all obligations of Bank
to make any Revolving Loan hereunder.
2. Declare the Revolving Note to be immediately due and
payable, whereupon it shall be due and payable.
3. Notify all obligors on or under the Collateral that the same
has been assigned to Bank and that all payments thereon are to be made directly
to Bank or such other party as may be designated by Bank; settle, compromise, or
release, in whole or in part, any amounts owing on the Collateral or any portion
thereof by any obligor on terms acceptable to Bank; enforce payment and
prosecute any action or proceeding with respect to any and all Collateral;
extend the time of payment, make allowances and adjustments and issue credits in
Bank's name or in the name of the Company; where any such Collateral is in
default, foreclose on, and enforce security interests in, such Collateral by any
available judicial procedure or with judicial process and sell property acquired
as a result of such foreclosure; pay, purchase, contest, interplead or
compromise any encumbrance, charge or lien which in the judgment of Bank appears
to be prior or superior to Bank's interest.
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4. Act as servicer of each item of collateral requiring
servicing and perform all obligations required in connection with FNMA, FHLMC,
GNMA, or HUD Commitments, or contract with a third party to so act or perform,
such third party's fees to be paid by Company.
5. Proceed in the foreclosure of Bank's security interest in
the Collateral in any manner permitted by law or provided for herein, and
exercise all rights and remedies under the Uniform Commercial Code including
selling the Collateral at public or private sale, without having the Collateral
at the place of sale, and upon terms and in such manner as Bank may determine,
and Bank may purchase same at any such sale. Bank may retain the Collateral in
full satisfaction of the indebtedness secured thereby.
6. Exercise any and all other rights and remedies of Bank as it
shall deem appropriate at law, in equity, or otherwise.
B. Upon any Event of Default hereunder and any default by any party
obligated under any of the Collateral, Bank may, but shall not be obligated to
(a) collect by legal proceedings all interest, principal payments and other sums
payable on account of such Collateral, (b) grant extensions of time, (c) make
any compromise or settlement it seems desirable with respect to such Collateral,
(d) waive or release security, (e) foreclose by any appropriate means any
Mortgage Loan which is in default, (f) pursue any other rights and remedies
available to Company, and/or (g) require Company to pursue, in its own name but
for the benefit of Bank, any one ore more of the remedies described in (a)
through (f) above.
If any Mortgage Loan shall be foreclosed pursuant to the preceding
sentence, such foreclosure may be by judicial or non-judicial sale, and Bank
shall be entitled to direct the order and manner of sale and cause the sale to
be made on any terms and conditions it deems appropriate and to apply all cash
proceeds of the sale (after deduction of expenses of sale) to the balance owing
on the Revolving Note. Without limiting the generality of the foregoing, Bank
may bid all or a portion of the indebtedness owing under the Mortgage Note and
may become the purchaser of and take title to the property securing the
Mortgage Loan. In such event, Company shall receive credit against the balance
owing on the Revolving Note only to the amount of the indebtedness bid by Bank,
and in connection with any such sale, Company hereby waives any defenses or
benefits that may be derived from California Code of Civil Procedure Sections
580 (a), 580 (d), or 726 or any similar laws of any other jurisdiction and all
suretyship defenses.
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C. Bank shall have the right to enforce one or more remedies
hereunder successively or concurrently, and any such action shall not stop or
prevent Bank from pursuing any further remedy which it may have hereunder or by
law.
8.3 Application of Proceeds. Any money collected by Bank pursuant to
-----------------------
Section 8.2 hereof (whether by means of voluntary payment, foreclosure, or
otherwise) shall be promptly applied as follows unless otherwise required by
provision of applicable law:
A. First, to the payment of all expenses incurred by Bank under this
Agreement and in enforcing its rights hereunder, including without limitation
all costs and expenses of collection, attorneys' fees, court costs, and
foreclosure expenses.
B. Next, to the payment of all Revolving Loans due and unpaid by
Company to Bank (including interest accrued on the Revolving Note).
C. Next, to the payment of any other amounts owed by Company to Bank
under this Agreement.
D. Next, to Company.
It is expressly understood between the parties hereto that Bank's
ability to collect any deficiency on the Revolving Note shall in no way be
impaired by the above-referenced application of proceeds.
Section 9. MISCELLANEOUS
9.1 Survival of Warranties. All agreements, representations and
----------------------
warranties made herein shall survive the execution and delivery of this
Agreement, the making of the Revolving Loans hereunder and the execution and
delivery of the Revolving Note.
9.2 Failure of Indulgence Not Waiver. No failure or delay on the part
--------------------------------
of Bank or any holder of the Revolving Note in the exercise of any power, right
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing under this Agreement and the Revolving Note are cumulative to,
and not exclusive of, any rights or remedies otherwise available.
9.3 Modification. This Agreement and the Revolving Note may not be
------------
amended, waived or modified in any manner without the written consent of Bank
and Company.
9.4 Notices. Except as otherwise expressly provided herein, any notice
-------
herein required or permitted to be given shall be in writing and may be
personally served or sent by United States mail and shall be deemed to have been
given when deposited in the United States mail, registered, with postage prepaid
and properly addressed. For
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the purposes hereof, the addresses of the parties hereto (until notice of a
change thereof served as provided in this Section 9.4) shall be as follows:
XXXXXX MORTGAGE CORPORATION
000 Xxxxx Xxxxxxxx Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
IMPERIAL BANK
0000 Xxxxx XxXxxxxxx Xxxx., Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xx, Vice President
9.5 Separability. In case any provision in this Agreement or in the
------------
Revolving Note shall be invalid, illegal or unenforceable, such provision shall
be severable from the remainder of such contact and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
9.6 Applicable Law. This Agreement, the Revolving Note, all documents
--------------
provided for herein and the rights and obligations of the parties thereto shall
be governed by the laws of the State of California. The Bank retains all of its
rights under federal law, including those relating to the charging of interest
rates.
9.7 Assignability. This Agreement is not assignable.
-------------
9.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
9.9 Section Headings. The various headings used in this Agreement are
----------------
inserted for convenience only and shall not affect the meaning or
interpretations of this Agreement or any provision hereof.
9.10 Further Assurances. At any time or from time to time upon the
------------------
request of Bank, Company will execute and deliver such further documents and do
such other acts and things as Bank may reasonably request in order to effect
fully the purposes of this Agreement and the Revolving Note and to provide for
the payment of the Revolving Loans and interest thereon in accordance with the
terms and this Agreement and the Revolving Note.
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9.11 Indemnity by Company.
--------------------
A. Company agrees to indemnify, save and hold harmless Bank and its
directors,officers, agents, and employees (collectively the 'indemnitees') from
and against:
1. any and all writs, subpoenas, claims, demands, actions, or
causes of action of any Person which may be served on or asserted against any
indemnitee if the writ, subpoena, claim, demand, action, or cause of action that
the Person has, serves on or asserts against the company or of any of its
officers or employees arises from the enforcement of this agreement; and
2. any and all liabilities, losses, costs, or expenses
(including without limitation reasonable attorneys' fees) that any indemnitee
suffers or incurs as a result of the service or assertion of any writ, subpoena,
claim, demand, action, or cause of action specified in Section 9.11.A.1.
B. Performance and/or payment of any obligation or liability of
Company to any indemnitee as provided for herein shall be and hereby is secured
by the Collateral.
9.12 Power of Attorney. Company does hereby make, constitute and
-----------------
appoint Bank its irrevocable, true and lawful attorney with the power to endorse
the name of company upon any checks or other evidence of payment that may come
into the possession of Bank, upon Mortgage Notes and deeds of Trust
constituting Collateral hereunder; to endorse the name of Company upon any
document or instrument relating to the Collateral, including, but not limited
to, deeds, trust deeds, subordinations, releases, reconveyances and modification
agreements; in its name or otherwise, to demand, xxx for, collect and give
acquittances for, any and all moneys due or to become due upon the Collateral;
to compromise, prosecute or defend any action, claim or proceeding with respect
thereto; and to do any and all things necessary and proper to carry out the
purposes herein contemplated. Company further agrees, upon request of Bank, to
execute powers of attorney in recordable form and deliver same to Bank.
9.13 Termination. Either party may terminate this Agreement by giving
-----------
written notice to the other party at least 120 days in advance of such
termination date. In the event of any termination of this Agreement, either
automatically or by notice, the terms of this Agreement shall remain in full
force and effect until the Revolving Note and all other obligations to Bank
hereunder have been paid and/or performed in full.
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This Agreement is executed on behalf of the parties by duly authorized
representatives as of the date first above written.
BY:
______________________________________
Xxxxxx Xxxxxx, Chairman of the Board
IMPERIAL BANK
BY: /s/ XXXX X. XX
--------------------------------------
Xxxx X. Xx, Vice President
BY: /s/ XXXXXXX XXXXX
--------------------------------------
Xxxxxxx Xxxxx, Senior Vice President
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This Agreement is executed on behalf of the parties by duly authorized
representatives as of the date first above written.
BY: /s/ XXXXXX XXXXXX
------------------------------------
Xxxxxx Xxxxxx, Chairman of the Board
IMPERIAL BANK
BY:
____________________________________
Xxxx X. Xx, Vice President
BY:
____________________________________
Xxxxxxx Xxxxx, Senior Vice President
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