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EXHIBIT 6(k)
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (also known as the Originator Loan
Agreement) is made and entered into as of JUNE 2,1997, by and between BORROWER
("BORROWER" shall mean CAPITAL FIRST MORTGAGE CORPORATION, a Texas Corporation)
and LENDER ("LENDER" shall mean Pioneer Commercial Funding Corp., a New York
Corporation).
RECITALS
A. BORROWER is in the mortgage banking business and engages, among
other things, in the financing, sale and servicing of real estate loans.
B. BORROWER has requested (and LENDER has agreed subject to the terms
hereof) that LENDER make financing available to acquire T/D NOTES and DEEDS OF
TRUST (as hereinafter defined) in connection with its business, pending sale of
said T/D NOTES and DEEDS OF TRUST to INSTITUTIONAL INVESTORS (as hereinafter
defined).
C. It is in the best interests of BORROWER to enter into the financing
arrangements with LENDER on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein, the parties hereto agree as follows:
ARTICLE 1 DEFINITIONS.
1.1 ADVANCE means all advances, loans and extensions of credit by
LENDER to or on behalf of BORROWER pursuant to the terms of this AGREEMENT (as
hereinafter defined).
1.2 AGREEMENT means this Loan and Security Agreement, any concurrent or
subsequent rider or exhibit to this Loan and Security Agreement, and any
extensions, supplements, amendments or modifications to this Loan and Security
Agreement and/or to any such rider or exhibit.
1.3 BASE RATE has the meaning set forth in Section 2.3 hereof.
1.4 BUSINESS DAY means any day which is not a Saturday, Sunday, or
other day on which banks in the State of California are authorized or required
to close.
1.5 COLLATERAL has the meaning set forth in Section 2.9 hereof.
1.6 COMMITMENT means an existing written agreement (in form and
substance acceptable to LENDER) of an INSTITUTIONAL INVESTOR to purchase one or
more
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T/D NOTES and DEEDS OF TRUST subject to no condition which in the reasonably
anticipated course of events cannot (in LENDER'S opinion) be fully satisfied
prior to its expiration, and permits consummation of the loan purchase within
sixty (60) days of LENDER'S ADVANCE.
1.7 COMMITMENT PERCENTAGE means the price or yield for which an
INSTITUTIONAL INVESTOR has contracted to purchase a T/D NOTE expressed as a
percentage of the face amount of the said T/D NOTE.
1.8 ELIGIBLE DEED OF TRUST means a deed of trust or mortgage in form
satisfactory to LENDER (a) which secures a T/D NOTE; (b) which encumbers a
completed, one-to-four unit residence in the United States of America; and (c)
the lien of which constitutes a first or second lien on the real property
described therein subject only to PERMITTED ENCUMBRANCES. ELIGIBLE DEED OF TRUST
or mortgage includes Non-Conforming A- through D Products.
1.9 ELIGIBLE T/D NOTE(S) means, at a particular date, each promissory
note evidencing a mortgage loan made or acquired by BORROWER and in which LENDER
has a validly perfected possessory security interest hereunder, subject to all
of the terms of Article 3 hereof having first been fulfilled and performed, and
provided that: (i) the mortgage loan is secured by an ELIGIBLE DEED OF TRUST;
(ii) the principal amount of such mortgage loan, plus any and all other loans
secured by the said residence, does not exceed ninety-five percent (95%) or as
allowed by FHA and/or VA of the appraised value of the said residence, but in no
case to exceed ninety-six percent (96%) (EXCEPT WITH RESPECT TO THE 125%
MORTGAGE PRODUCT DISCUSSED IN SECTION 1.9.1 BELOW); (iii) the final maturity of
such mortgage loan does not exceed thirty (30) years from the date such mortgage
loan is made; (iv) such mortgage loan is then fully disbursed; (v) such mortgage
loan bears interest, payable monthly, at a rate acceptable to LENDER, but in no
event greater than the highest rate allowed by law; (vi) such mortgage loan is
insured or guaranteed by an instrumentality of the United States of America or
by a private mortgage insurer acceptable to LENDER in its sole discretion, after
proper review of the worthiness of the guarantee of the private mortgage insurer
and the acceptability of the private insurer to LENDER'S creditors, and is
insured or guaranteed to the maximum extent consistent with FNMA/FHLMC standards
allowed by the agency or instrumentality which is then insuring or guaranteeing
such mortgage loan (EXCEPT WHERE ALLOWABLE PURSUANT TO SECTION 1.9.2 BELOW);
(vii) title insurance with respect to such mortgage loan is placed with a title
insurer satisfactory to LENDER, other than a subsidiary or affiliate of
BORROWER; (viii) such mortgage loan is not in default beyond any applicable
grace period; (ix) the obligor under said mortgage loan asserts no defenses,
offsets, counterclaims or other right to avoid or reduce liability, and said
obligor is not insolvent, subject to proceedings under the Bankruptcy Code, any
receivership, assignment for the benefit of creditors, or whose credit standing
is not acceptable to LENDER and LENDER has so notified BORROWER; (x) such
mortgage loan
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has been outstanding for less than sixty (60) days; and (xi) with respect to
such mortgage loan, a Commitment has been issued by an INSTITUTIONAL INVESTOR
with such COMMITMENT being held by BORROWER.
1.9.1 LENDER agrees to allow the maximum principal amount of the
mortgage loan set forth in 1.9(ii) above to exceed the limits
therein solely with respect to the 125% Mortgage Product
subject to INSTITUTIONAL INVESTORS' (as defined in Section
1.12 below) preapproval and COMMITMENT.
1.9.2 LENDER agrees to waive the requirements of 1.9(vi) above where
such requirements are not demanded by the INSTITUTIONAL
INVESTOR.
1.10 INDEBTEDNESS means any and all loans, ADVANCES (including the
ADVANCES), overdrafts, debts, liabilities (including, without limitation, any
and all amounts charged to BORROWER'S account pursuant to any agreement
authorizing LENDER to charge BORROWER'S account), obligations, lease payments,
guaranties, covenants and duties owing by BORROWER to LENDER of any kind and
description (whether advanced pursuant to or evidenced by this AGREEMENT); by
any note or other instrument; or by any other agreement between LENDER and
BORROWER and whether or not for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including, without limitation, any debt, liability of
obligation owing from BORROWER to others which LENDER may have obtained by
assignment or otherwise, and further including, without limitation, all interest
not paid when due and all LENDER expenses (including without limitation those
described in Section 9.3 hereof.
1.11 INSOLVENCY PROCEEDING means any proceeding commenced by or against
a person or entity, under any provision of the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency law, including, without
limitation, assignments for the benefit of creditors, formal or informal
moratoriums, compositions or extensions with some or all creditors.
1.12 INSTITUTIONAL INVESTOR means an investor that has entered into a
Commitment and has been approved by LENDER, and includes, without limitation,
the Federal National Mortgage Association, the Government National Mortgage
Association, and the Federal Home Mortgage Corporation.
1.13 LOAN ACCOUNT has the meaning set forth in Section 2.8 hereof.
1.14 MATURITY DATE means, with respect to a particular ADVANCE, the
earliest of: (1) ninety days from the date the ADVANCE was made (With respect to
ADVANCES under Section 2.1 (a)); (ii) sale of the T/D NOTE and DEED OF TRUST
upon which the ADVANCE was made, as provided in Section 4.1 hereof (with respect
to ADVANCES
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under Section 2.1 (a)); and (iii) the date of termination of this AGREEMENT
(with respect to all ADVANCES).
1.15 OVER ADVANCE has the meaning set forth in Section 2.6(a) hereof.
1.16 PERMITTED ENCUMBRANCES means, with respect to a particular DEED OF
TRUST: (1) liens for taxes, assessments, or similar governmental charges not yet
due and payable or still subject to payment without interest or penalty; (2)
zoning restrictions; (3) mineral reservations, easements, covenants, conditions
and restrictions of record which shall neither defeat nor render invalid such
lien made in good faith, none of which materially impairs the merchantability or
value of such property; and (4) such other liens as may have been approved in
writing by LENDER.
1.17 STALE MORTGAGE and STALE MORTGAGE ADVANCE have the meanings set
forth in Section 2.6(b) hereof.
1.18 T/D NOTE has the meaning set forth in Section 2.8(a) hereof.
ARTICLE 2 ADVANCES
2.1 ADVANCES. Upon the request of BORROWER, made at any time and from
time to time during the term hereof, upon the terms and conditions hereof and so
long as no EVENT OF DEFAULT has occurred hereunder, LENDER agrees to lend to
BORROWER with respect to ELIGIBLE T/D NOTES, up to the lesser of (1) the
COMMITMENT PERCENTAGE of such ELIGIBLE T/D NOTE or 100% of the value of the
ELIGIBLE T/D NOTE, whichever is less; (ii) the principal amount outstanding
under said ELIGIBLE T/D NOTE; (iii) the fair market value of said ELIGIBLE T/D
NOTE, as determined by LENDER in its sole discretion; and (iv) BORROWER'S cost
of acquisition (i.e., the purchase price) of said T/D NOTE; provided, however,
that in no event shall ADVANCES under this Section 2.1 exceed a maximum
aggregate amount of $2,000,000.00. The aggregate set forth in this section can
be amended pursuant to the request of BORROWER or LENDER by mutual consent
memorialized by a written addendum to this AGREEMENT.
2.1.1 AUTOMATIC AGGREGATE Overage. In the event that BORROWER
requests ADVANCES in any given quarter that exceed the maximum
aggregate set forth in section 2.1 above, LENDER agrees that
the aggregate set forth in section 2.1 above will
automatically increase; provided, however that the increase
aggregate will not exceed the lesser of (1) 25% of the maximum
aggregate, or (2) BORROWER'S Debt/GAAP Net Worth not greater
than 10 to 1.
2.1.2 If BORROWER chooses to maintain the automatically increased
aggregate pursuant to section 2.1.1 above as the new aggregate
of section 2.1
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above, beyond the quarter in which the increase has occurred,
BORROWER agrees to increase the CD referenced in section
3.1(v) below commensurate with the increased aggregate.
2.2 Notice and Method of Borrowing. Whenever BORROWER desires to obtain
an ADVANCE hereunder, BORROWER shall notify LENDER in writing, received by
LENDER no later than 10:00 a.m. (California time) two (2) Business Days
preceding the day on which the requested ADVANCE is to be made, specifying (1)
the date of such ADVANCE, which shall be a Business Day; and (ii) the aggregate
amount of the ADVANCE. Each such request for an ADVANCE shall be accompanied by
the documents and instruments required under Section 3.2 hereof. LENDER will
advise BORROWER not later than 5:00 p.m. (California time) on the day preceding
the day on which the requested ADVANCE is to be made whether LENDER has approved
or declined such ADVANCE. LENDER upon approval of such ADVANCE will, not later
than 3:00 p.m. (California time) and as soon as practicable on the date of such
ADVANCE, wire the ADVANCE requested directly to the title or escrow company
listed on the ADVANCE request.
2.3 Interest and Processing Fees. Each ADVANCE shall bear interest at
LENDER's then applicable Base Rate (as hereinafter defined), plus two (2)
percentage points until the Maturity Date, and thereafter the interest rate on
such ADVANCE shall increase by an additional three percent (3%) per annum until
repaid. For purposes of this AGREEMENT, the "Base Rate" ("Floating Prime") shall
be the Bank One Texas Prime Rate at the time of the ADVANCE for a loan secured
by the mortgage loan and the documents upon which the ADVANCE is based.
In the event that the Base Rate is from time to time hereafter changed,
adjustment in the rate of interest payable by BORROWER hereunder shall be made
on the effective date of the change in the Base Rate. The LENDER will give
BORROWER written notice of the change the following Business Day. The rate of
interest, as adjusted, shall apply to all INDEBTEDNESS until the BASE RATE is
changed again. All interest chargeable under this AGREEMENT shall be computed on
the basis of a 360-day year for actual days elapsed.
In addition, a $180.00 per loan processing fee is charged upon funding
of each ADVANCE. Each funding by wire will be charged a ten dollars ($10.00)
fee.
FACILITY FEE. A Facility Fee equal to .375 b.p. shall be charged at the
inception of the line and yearly upon renewal of the line.
2.4 Usage Requirement. No usage requirement is required for the term of
this AGREEMENT.
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2.5 Repayment.
(a) Interest. Interest shall be payable monthly, in arrears, commencing
on the date of the first ADVANCE, and continuing on the first day of each
calendar month thereafter until the INDEBTEDNESS is paid in full and this
AGREEMENT is terminated upon the terms hereof; provided, however, that all
accrued and unpaid interest not paid when due, after notice of the amount due,
shall be compounded and shall thereafter bear interest at the rate applicable to
the principal of the outstanding ADVANCE(S). With respect to each installment of
interest not paid within five (5) days from the date of receipt of the monthly
xxxx (which shall be the date of facsimile transmission, or U.S. Mail, whichever
is earlier), LENDER shall have the right to withhold any funds otherwise due to
BORROWER hereunder and apply such sums, in LENDER'S sole discretion, to such
outstanding interest. BORROWER shall pay to LENDER a late fee equal to three
percent (3%) of the amount of the delinquent interest installment if not paid
within five (5) days from the date of receipt of the monthly xxxx (which shall
be the date of facsimile transmission, or U.S. Mail, whichever is earlier),.
LENDER shall deliver its monthly xxxx by the 10th day of each month.
(b) Principal. The unpaid principal with respect to a particular
ADVANCE, shall be due and payable in full upon the MATURITY DATE with respect to
said ADVANCE.
2.6 MANDATORY PREPAYMENTS.
(a) OVER ADVANCES. In the event that, at any time, the INDEBTEDNESS
exceeds the percentage or dollar limitations set forth in Section 2.1.1 hereof
(herein referred to as an "OVER ADVANCE"), BORROWER shall immediately pay to
LENDER, in cash, the amount of such excess.
(b) Stale or Ineligible Mortgages. In the event that a T/D NOTE and/or
the DEED OF TRUST securing it (1) are not sold and the ADVANCE made in
connection therewith is not repaid in full, with interest as provided
hereinabove, on or before the MATURITY DATE thereof, or (ii) at any time
become(s) ineligible, said T/D NOTE and DEED OF TRUST shall automatically be
deemed a STALE MORTGAGE, and any ADVANCE made in connection therewith shall be
deemed a STALE MORTGAGE ADVANCE. Upon a T/D NOTE and DEED OF TRUST becoming a
STALE MORTGAGE, BORROWER shall immediately pay to LENDER, in cash, an amount
equal to the STALE MORTGAGE ADVANCE, plus interest thereon at the rate provided
herein, plus any and all late charges, fees and costs applicable thereto.
(c) Mandatory Prepayments. If a Mandatory Prepayment is required,
BORROWER shall have the right in lieu of payment to eliminate all, or any part
of, the OVER ADVANCE or the STALE MORTGAGE ADVANCE and thereby avoid the
obligation to
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make a Mandatory Prepayment by (1) promptly notifying LENDER in writing of
BORROWER'S intention to assign new ELIGIBLE T/D NOTES and ELIGIBLE DEEDS OF
TRUST so as to offset or decrease the OVER ADVANCE or STALE MORTGAGE ADVANCE,
and (ii) effecting the assignment of the new ELIGIBLE T/D NOTES and DEEDS OF
TRUST promptly, but in no event later than five (5) Business Days after the
occurrence of the OVER ADVANCE or the STALE MORTGAGE ADVANCE. Such assignment
shall be made in compliance with the conditions precedent stated herein. Any
Mandatory Prepayments which BORROWER is required to make pursuant to this
Section 2.6 will not affect any other obligation of BORROWER arising under this
AGREEMENT. Mandatory Prepayments will not be subject to any prepayment premium.
All Mandatory Prepayments shall be applied first to the payment of late charges,
fees and costs, if any, then to accrued and unpaid interest, and the balance
applied to the payment of principal.
2.7 Location for Payments. All payments by BORROWER hereunder shall be
made in lawful money of the United States of America to LENDER at its address as
set forth in Section 9.2 herein below, or at such other place as LENDER shall
designate in writing.
2.8 LOAN ACCOUNT. LENDER shall establish a loan account (the "LOAN
ACCOUNT") for BORROWER. In accordance with customary accounting practice, LENDER
shall debit against the LOAN ACCOUNT all ADVANCES to BORROWER and shall credit
to the LOAN ACCOUNT all payments or prepayments by BORROWER on account of
ADVANCES, and shall from time to time make other appropriate debits and credits
to the LOAN ACCOUNT. The aggregate unpaid debit balance of BORROWER's Loan
Account shall reflect the amount of BORROWER'S INDEBTEDNESS to LENDER from time
to time by reason of ADVANCES made hereunder.
LENDER shall render a statement of account of such aggregate unpaid
balance of BORROWER'S LOAN ACCOUNT monthly, which statement shall be considered
correct and accepted by BORROWER and conclusively binding on BORROWER unless
BORROWER notifies LENDER to the contrary within thirty (30) days from the date
when rendered.
2.9 COLLATERAL. As security for all ADVANCES made hereunder and all
other Indebtedness and obligations of BORROWER to LENDER hereunder and/or under
all documents and instruments executed in connection herewith, BORROWER hereby
grants to LENDER a continuing security interest in the following COLLATERAL
("COLLATERAL") without further assignment or act:
(a) Each promissory note or other evidence of INDEBTEDNESS (referred to
collectively as T/D NOTE") now owned or hereafter acquired by BORROWER except
notes in which other institutions hold perfected security interests to secure
ADVANCEs for warehouse lending purposes, and all instruments and other forms of
payment, all
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general intangibles and accounts, and all proceeds thereunder and therefrom (and
including, without limitation, till servicing rights with respect to the T/D
NOTES), and all books and records relating to any of the above. This shall also
include the specifically identified Notes, the originals of which will be
provided to LENDER to maintain possession;
(b) All collateral, security, liens and security interests now or
hereafter held for each such T/D NOTE, including, without limitation, the
beneficial interest in any related deed of trust or mortgage and all guarantees
thereof except notes in which other institutions hold perfected security
interests to secure advances for warehouse lending purposes;
(c) All present and future title insurance policies insuring any of the
deeds of trust or mortgages except notes in which other institutions hold
perfected security interests to secure advances for warehouse lending purposes;
(d) All present and future COMMITMENTS of INSTITUTIONAL INVESTORS to
purchase a T/D NOTE or T/D NOTES from BORROWER as may be assigned except notes
in which other institutions hold perfected security for warehouse lending
purposes;
(e) All present and future rights of BORROWER under loan administration
agreements and contracts to service T/D NOTES and deeds of trust for its own
account or for the account of third parties ("Servicing Contract(s)");
(f) All present and future money and deposit accounts, and all other
assets of BORROWER in which LENDER receives a security interest or which
hereafter come into the possession, custody or control of LENDER;
(g) All of BORROWER'S present and hereafter acquired accounts,
instruments, documents, chattel paper, notes, general intangibles, inventory,
raw materials, supplies, components, work in process, finished merchandise,
machinery, equipment, furnishings, furniture, fixtures, motor vehicles, tools,
goods, proprietary items, and all accessions, attachments and additions thereto,
and any equipment, fixtures or other property used in the storing, preserving,
identifying, accounting for and shipping or preparing for shipping of inventory;
and
(h) All proceeds, instruments, general intangibles, property, property
rights, privileges and benefits arising out of, from the enforcement of, or in
connection with, the COLLATERAL described in subparagraphs (a) through (g),
above, or any other COLLATERAL;
2.10 TERM. This Agreement shall have a term commencing on the date
hereof and continuing up to and including June 1, 1998, unless renewed by
written consent of
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both parties hereto. Upon termination, all INDEBTEDNESS of BORROWER to LENDER
shall be immediately due and payable in full. Either party can terminate this
AGREEMENT with a 60-day written notice.
Notwithstanding the foregoing, upon the occurrence of an EVENT OF
DEFAULT under Article 7 hereof, LENDER may terminate this AGREEMENT immediately
upon notice given in writing, at which time all INDEBTEDNESS shall become due
and payable. Notwithstanding termination, until all INDEBTEDNESS has been fully
repaid, LENDER shall retain its security interest in all existing COLLATERAL and
COLLATERAL arising thereafter, and BORROWER shall continue to perform all of its
obligations hereunder.
ARTICLE 3 CONDITIONS PRECEDENT
3.1 Conditions Precedent to Borrowing. As conditions precedent to the
making of any ADVANCE under this AGREEMENT, BORROWER shall have validly executed
and delivered to LENDER, in form and substance satisfactory to LENDER and its
counsel, each of the following:
(i) This AGREEMENT, duly executed, together with such other
documents, financing statements, security agreements or other agreements as
LENDER may request;
(ii) Resolution of BORROWER's Board of Directors authorizing any
officer to execute this AGREEMENT and all other documents related to this
AGREEMENT, and further authorizing the borrowings and the granting of the
security interest provided for herein;
(iii) A certificate of good standing showing that BORROWER is in
good standing under the laws of Texas, including any certificates or licenses
required by the banking commission of the State of Texas, and certificates
indicating that BORROWER has qualified to transact business and is in good
standing in all other states where it transacts business; and
(iv) The financial statements referred to in Sections 6.9 and 6.10
of this AGREEMENT.
(v) Documentation acceptable to LENDER evidencing that BORROWER
has pledged a Certificate of Deposit ("CD") in the amount of 1% of the aggregate
set forth in Article 2.1 above naming LENDER as beneficiary of the principal of
the CD and BORROWER as recipient of any interest on the CD.
3.2 Conditions Precedent to Each Advance. As conditions precedent to
the making of each ADVANCE hereunder:
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(a) The BORROWER at the time of such ADVANCE 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 at
the time of such ADVANCE;
(b) BORROWER shall have delivered to LENDER the following, to the
extent appropriate in connection with the particular ADVANCE, each in form and
substance acceptable to LENDER and its counsel:
(i) The copy or copies of Servicing Contract(s), if any, upon
which the request for an ADVANCE is/are based;
(ii) The ELIGIBLE T/D NOTE upon which the request for an ADVANCE
is based, endorsed in blank by BORROWER;
(iii) An Assignment to LENDER of the ELIGIBLE DEED OF TRUST in
recordable form.
(iv) The original ELIGIBLE DEED OF TRUST securing said ELIGIBLE
T/D NOTE or a copy thereof certified by a title company or escrow company
satisfactory to LENDER to be a true copy of the original being recorded;
(v) An Assignment of said ELIGIBLE DEED OF TRUST, in form suitable
to be recorded;
(vi) A copy of the COMMITMENT by which the INSTITUTIONAL INVESTOR
undertakes to purchase such ELIGIBLE T/D NOTE, or other evidence satisfactory to
LENDER of the existence thereof;
(vii) A certified copy of the COMMITMENT of the Federal Housing
Administration, the Veterans Administration or other instrumentality of the
United States or private mortgage insurer, if any, to insure or guarantee such
ELIGIBLE T/D NOTE. LENDER agrees to waive the requirements of this provision
where such requirements are not demanded by the INSTITUTIONAL INVESTOR with
respect to Non-Conforming A through D Mortgage Products subject to
INSTITUTIONAL INVESTORS' preapproval and COMMITMENT.
(viii) A copy of escrow or other instructions to the title
company, if any, covering the transactions;
(ix) Copies of all policies of insurance required under Section
3.4 of this AGREEMENT, and a commitment for title insurance and preliminary
title report
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from a title company or companies acceptable to LENDER (and reflecting only such
exceptions as are acceptable to LENDER);
(x) Loan Request and Disbursement Instructions by BORROWER to
LENDER;
(xi) Disclosure to Mortgagor, as required by federal and/or state
truth-in-lending laws, acknowledged as read and accepted by such mortgagor;
(xii) A copy of an appraisal of the real property covered by the
DEED OF TRUST securing the ELIGIBLE T/D NOTE, prepared by the Federal Housing
Administration, the Veterans' Administration, or such other appraiser as may be
acceptable to LENDER.
(xiii) Such other related documents as LENDER may require.
3.2A. Wet-Borrowing Procedures. "WET BORROWING" shall be defined as the
funding by LENDER to the closing agent of funds requested by BORROWER and
approved by LENDER without delivery of all the documents required by LENDER
pursuant to Section 3.2 hereof. The conditions and procedures of Sections 2.2
and 3.2 apply to WET BORROWING except as follows:
(a) Collateral Documents. A WET BORROWING may be funded before delivery
of all of the required documents listed in 3.2 above if BORROWER faxed to LENDER
a Loan Request and Disbursement Instructions, accompanied by the documents set
forth on the transmittal letter attached as Exhibit "A" to this Agreement.
(b) All documents required by LENDER pursuant to Section 3.2 shall be
delivered to LENDER within forty-eight (48) hours of funding.
3.3 Further Documentation. When received by BORROWER, and in any event
within ninety (90) days from the time of each ADVANCE (to the extent
appropriate), BORROWER shall have delivered to LENDER the following documents
relating to each such ADVANCE, upon request of LENDER:
(a) The original recorded ELIGIBLE DEED OF TRUST securing the ELIGIBLE
T/D NOTE when it becomes available;
(b) An TLTA policy issued by a title company acceptable to LENDER in
advance made against said T/D NOTE), insuring the DEED OF TRUST securing the
assigned ELIGIBLE T/D NOTE to be a first or, with LENDER'S consent, second lien
on the property therein described, subject only to PERMITTED ENCUMBRANCES; and
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(c) A Veteran's Administration Loan Guarantee Certificate or Federal
Housing Administration Certificate of Insurance or a private mortgage insurer
certificate if applicable to insure or guarantee the ELIGIBLE T/D NOTE. LENDER
agrees to waive the requirements of this provision where such requirements are
not demanded by the INSTITUTIONAL INVESTOR with respect to Non-Conforming A-
through D Mortgage Products subject to INSTITUTIONAL INVESTORS' preapproval and
COMMITMENT.
3.4 Hazard Insurance. BORROWER warrants that it will hold in its
custody and will maintain in accordance with LENDER instructions policies or
binders of hazard insurance, in the amount of the assigned T/D NOTES or for the
insurance value of the improvements, whichever is less, covering all property
described in the assigned DEED OF TRUST, written by financially responsible
insurers acceptable to LENDER and its counsel. Insurance affording protection
against loss or damage from fire and other hazards covered by the standard
extended coverage endorsement must be held in amounts sufficient to pay the
mortgage balance in event of a covered loss, or in those instances where the
appraisal made in connection with the mortgage loan provides separate valuations
for land and improvements, in an amount sufficient to cover the full replacement
cost of the improvements. In those areas which have been identified by the
Secretary of Housing and Urban Development as areas having special flood
hazards, insurance coverage in the form of the Standard Flood Insurance Policy
must be held in an amount at least equivalent to the lesser of the outstanding
principal balance of the mortgage; the value of the insurable improvements, if
separate values have been established for land and improvement; or the maximum
of flood insurance available under the Flood Disaster Protection Act on the date
upon which the mortgage loan was closed. Individual policies shall permit
assignment to LENDER and will be delivered to LENDER on demand.
3.5 Reservation by LENDER. LENDER reserves the right, at its option,
and at any time, to reject any and all documents tendered, and/or to refuse to
make an ADVANCE to BORROWER if the conditions set forth herein are not met.
ARTICLE 4 COLLECTION AND APPLICATION OF SECURITY
4.1 Collection. It is contemplated that each ADVANCE will be repaid
from the proceeds of sale to INSTITUTIONAL INVESTORS or other third parties of
the T/D NOTE assigned concurrently with the assignment of such T/D NOTE.
Interest at the rate provided herein shall be billed monthly unless BORROWER is
in default herein under, in which case LENDER has the corresponding remedies
provided in the Loan and Security AGREEMENT.
4.2 Documentation for Assigned T/D NOTES. BORROWER shall promptly
deliver to LENDER, when issued, every original certificate of mortgage guarantee
insurance and
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every original guarantee of a T/D NOTE assigned to LENDER pursuant to the terms
of this AGREEMENT. BORROWER shall also, upon demand of LENDER, deliver to LENDER
any original DEED OF TRUST (not previously delivered) securing an Assigned T/D
NOTES, as well as all applications, financial statements, appraisals, credit
reports, corporate resolutions and other documents of all kinds which are
customarily desired for inspection or transfer incidental to the purchase of a
T/D NOTE by an investor and shall also provide LENDER, upon request, with any
additional documents which are customarily executed by sellers of notes to
INSTITUTIONAL INVESTORS, including, without limitation, any documents which may
be requested by the Veterans Administration, the Federal Housing Administration
or any other federal instrumentality or private insurer issuing mortgage
guarantee insurance or guaranteeing an assigned T/D NOTE in connection with
transfer of the same.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES
To induce LENDER to enter into this AGREEMENT, BORROWER hereby makes
the following representations and warranties, each of which shall: (a) be deemed
to be automatically repeated with each ADVANCE hereunder and shall be true and
accurate at each such time; (b) be conclusively presumed to have been relied on
by LENDER regardless of any investigation made or information possessed by
LENDER; and (copyright) survive the execution and delivery of this AGREEMENT as
well as any documents or instruments executed or delivered pursuant to the terms
hereof.
5.1 Organization and Good Standing. BORROWER is a corporation duly
organized, existing and in good standing under the laws of the State of Texas,
has the power and authority and is duly qualified to transact the business in
which it is engaged and to own its properties; and is in good standing and
qualified to do business in every other jurisdiction in which the nature of its
business makes such qualification necessary. BORROWER has complied with all
applicable laws and regulations in full force and effect, all permits and
licenses which BORROWER is required to possess in each of the jurisdictions in
which BORROWER presently engages in business, and shall be deemed to be
automatically repeated with each new jurisdiction in which BORROWER begins to
engage in business during the term of this AGREEMENT and shall be true and
accurate at each such time.
5.2 Corporate Authority. BORROWER has all requisite power and authority
to execute, deliver and perform this AGREEMENT and all other instruments,
agreements or documents which it is required to execute and deliver pursuant to
this AGREEMENT or in connection herewith, all of the foregoing have been duly
authorized by all required corporate action, and all of the foregoing constitute
the legal, valid and binding obligations of BORROWER enforceable against it in
accordance with their respective terms.
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5.3 Litigation and Claims. There is no litigation, tax claim,
proceedings or dispute pending or threatened against or affecting BORROWER or
its property, nor is BORROWER aware of any facts which may give rise to
litigation, tax claim, proceedings or dispute pending or threatened against or
affecting BORROWER or its property which might result in any material adverse
change in the business or financial condition of BORROWER or in BORROWER's
ability to perform its obligations hereunder or under any note or agreement
required under this AGREEMENT, except for those, if any, previously disclosed in
writing to LENDER.
5.4 Financial Statements. All financial statements, information and
other data furnished by BORROWER to LENDER in connection with this AGREEMENT are
complete and correct, accurately and fairly present the financial condition of
BORROWER as of the date thereof, and have been prepared in accordance with
generally accepted accounting principles consistently applied. There has been no
material adverse change in the financial condition of BORROWER or in its
operations since the date of such financial statements so furnished. BORROWER
has no obligations, liabilities for taxes or other outstanding obligations which
are material in the aggregate, except as disclosed in such statement,
information and data.
5.5 Assignment. BORROWER has good, merchantable and absolute title to
each T/D NOTE assigned to LENDER, and BORROWER has the right and power to
assign, and has validly assigned, to LENDER its interest in all such T/D NOTES
and the DEEDS OF TRUST securing same, and BORROWER has not previously assigned
or encumbered same.
5.6 T/D NOTES. Each T/D NOTE is free of all disputes, offsets and
adverse claims, is not in default, and is a valid, genuine, legally enforceable
and subsisting obligation of its maker, who is legally or otherwise competent to
make the same, in the face amount of the T/D NOTE. No T/D NOTE violates any law
or regulation of the state in which the real property securing such T/D NOTE is
located.
5.7 DEEDS OF TRUST. Each T/D NOTE is secured by a DEED OF TRUST which
is a first or second lien upon the real property therein described subject only
to PERMITTED ENCUMBRANCES. Each DEED OF TRUST is in proper form and bears all
affidavits and acknowledgments required by law as a condition for filing or
recordation, and has been recorded in the office of proper jurisdiction to
establish the priority of said DEED OF TRUST and to give constructive notice
thereof.
5.8 Insurance or Guaranty. T/D NOTES purporting to be eligible for
insurance or guaranty by the Federal Housing Administration, Veterans
Administration or other instrumentality of the United States or private mortgage
insurer are eligible for such insurance or guaranty (except as set forth in
1.9.2 above). LENDER also agrees to waive the requirements of this provision
where such requirements are not demanded by
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the INSTITUTIONAL INVESTOR with respect to Non-Conforming A- through D Mortgage
Products subject to INSTITUTIONAL INVESTORS' preapproval and COMMITMENT.
5.9 Use of Proceeds. Each T/D NOTE assigned complies or will comply in
all respect with the terms of the COMMITMENT relating thereto, and BORROWER will
fully comply with all terms of said COMMITMENT prior to its expiration. The
ADVANCES made by LENDER hereunder shall be used to provide funds to BORROWER for
the sole purpose of making loans pursuant to ELIGIBLE T/D NOTES. Except as may
otherwise be agreed with LENDER the funds advanced hereunder for each real
estate loan evidenced by an assigned T/D NOTE have been or will be fully
disbursed and only to the maker of the T/D NOTE or such other persons or
entities as may be legally entitled to such proceeds. In the event of a default
of any assigned T/D NOTE hereunder, BORROWER will promptly notify LENDER.
5.10 Disclosure. There has been and will hereafter be full compliance
with the Federal Truth in Lending Act and Regulation Z issued thereunder, and
BORROWER hereby agrees to fully indemnify and hold LENDER harmless against any
damage or loss or liability sustained by LENDER as a result of any possible
failure to comply with the provisions of said Acts and Regulations.
5.11 No Defaults. The execution and delivery of the AGREEMENT, the
occurrence of the obligations herein set forth, and the consummation of the
transactions herein contemplated have not resulted and will not result in the
creation of a lien on any property of BORROWER other than as contemplated by
this AGREEMENT, and will not conflict with, result in the breach of any of the
terms, conditions or provisions of, or constitute a default under (and BORROWER
is not now in violation of or in default under) the articles of incorporation or
bylaws of BORROWER, or any bond, debenture, note, contract, indenture, mortgage,
loan agreement, lease or any other evidence of indebtedness, agreement or
instrument to which BORROWER is a party or by which it or any of its properties
may be bound, or result in the violation by BORROWER of any law, order, rule or
regulation of any court or governmental agency or body having jurisdiction over
BORROWER or any of its properties.
5.12 Title and Indemnification. BORROWER has good and marketable title
to its properties and assets, not subject to any security interests other than
those reflected in its current financial statement; BORROWER shall not grant
extensions of time for the payment, or compromise for less than full face value,
or release in whole or in part any person liable for the payment of, or allow
any credit whatsoever against, any portion of the COLLATERAL, except for the
amount of cash to be paid upon any such COLLATERAL or any instrument or document
representing such COLLATERAL; the COLLATERAL, including the accounts and
proceeds resulting from any disposition thereof, will remain free and clear
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of any liens, excepting the liens hereby granted to LENDER, which liens to
LENDER shall at all times be first and prior on the COLLATERAL and as to the
proceeds; BORROWER shall pay and discharge when due, all taxes, levies,
assessments and other charges upon the COLLATERAL and shall defend LENDER
against and save it harmless from, all claims of any persons against LENDER and
this indemnity shall include attorneys' fees and legal expenses, including
out-of-pocket expenses; and LENDER shall not be required to take any steps to
perfect its security interest or lien in the COLLATERAL or to collect or realize
upon the COLLATERAL or any distribution of interest or principal, nor shall loss
of the COLLATERAL or any of the property secured thereby release BORROWER from
any of its obligations hereunder.
5.13 Location of COLLATERAL. The COLLATERAL is to remain, at all
times, in the possession of LENDER or its assigns, and BORROWER may not take
such COLLATERAL from the possession of LENDER or its assigns without the prior
written approval of LENDER.
5.14 BORROWER Expenses and Reimbursement. All sums paid or incurred by
LENDER for and all costs and expenses (including attorneys' fees, legal expenses
and court costs) which LENDER may incur in enforcing or protecting its security
interest or lien on or rights and interest in the COLLATERAL, or any of its
rights or remedies under this or any other agreement between the parties hereto
or in respect of any of the transactions to be had thereunder, shall be
considered as additional Indebtedness owing by BORROWER to LENDER hereunder and,
as such, shall be secured by all the COLLATERAL and the proceeds from the sale,
collection or other disposition thereof and by any and all other collateral,
security, assets, reserves, or funds of BORROWER in or coming into the hands or
inuring to the benefit of LENDER.
5.15 Protection of COLLATERAL: Collection of T/D NOTE Payments. LENDER
shall use due diligence to maintain the T/D NOTE received from the BORROWER.
LENDER shall have no duty or obligation to take any action with respect to the
collection of any payments or other obligations under the T/D NOTES or the
maintenance or administration of the T/D NOTES, or to otherwise act with respect
to the COLLATERAL. BORROWER shall indemnify LENDER and shall hold LENDER
harmless from any liability, fees, costs or expenses with respect to anything
done or omitted to be done, in good faith or upon advice of Lender's counsel, by
LENDER with respect to the T/D NOTES for the COLLATERAL other than that
resulting from LENDER'S gross negligence or intentional misconduct.
ARTICLE 6 COVENANTS OF BORROWER
BORROWER covenants and agrees that so long as BORROWER is indebted to
LENDER or LENDER has any obligation to make ADVANCES hereunder, BORROWER shall:
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6.1 Payment and Performance of Obligations. From time to time as they
become due, pay all installments of principal and interest on ADVANCES made to
such BORROWER pursuant to this AGREEMENT, and promptly pay and discharge all of
its obligations hereunder.
6.2 Books and Accounts. Keep and maintain books and accounts in which
full, true and correct entries of all its dealings and transactions are made, in
accordance with generally accepted accounting principles consistently applied;
and permit representatives of LENDER within normal business hours (including
banks or assignees chosen by LENDER), and as long as no default has occurred
reasonable notice will be given, to visit and inspect BORROWER'S properties and
offices and to examine BORROWER'S books and records, and to take extracts and
copies therefrom, and to discuss its affairs, finances and accounts with its
officers and with its certified public accountants, and to conduct such other
investigations as are relevant and as LENDER may deem appropriate.
6.3 Corporate Existence. Preserve and keep its corporate existence,
rights, qualifications, franchises, permits and licenses in full force and
effect in all states in which any of its properties may be located or in which
the nature of its business requires it to do so, and continually operate its
business, except for periodic shutdowns in the ordinary course of business and
interruptions over which it has no control.
6.4 Taxes and Obligations. Pay and discharge when due any and all
indebtedness, obligations, assessments, taxes, including Federal and state
income taxes and other governmental charges, except such as BORROWER may in good
faith contest or as to which a bona fide dispute may arise provided provision is
made to the satisfaction of LENDER for eventual payment thereof in the event
that it is found that the same is an obligation of BORROWER, and when such
dispute or contest is settled or determined will promptly pay the full amount
then due.
6.5 Insurance. Obtain and keep in full force and effect adequate
insurance covering all risks, casualties and losses usually insured against and
customarily carried by firms engaged in similar businesses, and upon demand of
LENDER, submit schedules, certificates of insurance or duplicate policies
evidencing such coverages.
6.6 Changes in Financial Condition. Promptly ADVISE LENDER of any
material adverse change in its financial condition or operations.
6.7 Laws. Comply with and observe all material provisions of its
Articles of Incorporation and By-Laws and of all laws, regulations, statutes or
ordinances applicable to it or its properties.
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6.8 Litigation. Promptly give notice to LENDER, in writing, of any
actions, suits or proceedings pending, or to its knowledge threatened against
it, involving the possibility of a material adverse effect on its operations or
financial condition.
6.9 Quarterly Statements. Furnish to LENDER concurrently herewith and
within forty-five (45) days after the end of each of its fiscal quarters a
reasonably detailed, unaudited financial statement certified by its chief
financial officer to have been prepared in accordance with generally accepted
accounting principles consistently applied, including a balance sheet and a
profit and loss statement, which fairly and accurately presents its financial
condition at the date of such statement and the results of its operations in the
period covered.
6.10 Annual Statement. Furnish to LENDER concurrently herewith and
within ninety (90) days after the end of each fiscal year, a reasonably
detailed, audited financial statement, including a balance sheet and a
reconciliation of surplus and retained earnings as of the end of such fiscal
year and a statement of source and application of funds and a profit and loss
statement for such year, certified by an independent certified public accountant
of recognized standing, and acceptable to LENDER, to have been prepared in
accordance with generally accepted accounting principles consistently applied.
6.11 Monthly Delinquents. Furnish to LENDER monthly schedules
identifying all loans in default in the warehouse line hereunder.
6.12 Reports. Furnish LENDER with such written reports regarding
BORROWER'S business and status as LENDER may reasonably request.
6.13 Notices. Give LENDER immediate notice of the occurrence of (1) any
EVENT OF DEFAULT hereunder, or any condition, act or event which, with the
giving of notice or the lapse of time or both would constitute an EVENT OF
DEFAULT, (ii) any event by which LENDER will be entitled to receive the proceeds
of any hazard or other insurance, or other proceeds payable to LENDER by the
terms of the DEED OF TRUST securing any T/D NOTE, or any reason of which LENDER
may be entitled to accelerate the maturity of any T/D NOTE, (iii) any change of
BORROWER'S address, and (iv) any change in corporate status or the identity or
authority of officers.
6.14 COMMITMENTS. Fulfill all its obligations and conditions under the
INSTITUTIONAL INVESTOR'S COMMITMENT within the time allowed thereby.
6.15 Restricted FNMA Stock. Not without prior written notice to LENDER,
assign, transfer, pledge, hypothecate or otherwise encumber any shares of FNMA
stock which BORROWER may now own or may hereafter acquire, provided, however,
that
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7.5 Involuntary Insolvency. If an Insolvency Proceeding is commenced
against BORROWER.
7.6 Injunction. If BORROWER is enjoined, restrained or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs.
7.7 Lien, Levy. If a notice of lien, levy or assessment is filed of
record with respect to any material amount or all of BORROWER'S assets by the
United States Government, or any department, agency or instrumentality thereof,
or by any state, county, municipal or other governmental agency, or if any taxes
or debts owing at any time hereafter to any one or more of such entities becomes
a lien, whether xxxxxx or otherwise, upon any or all of the BORROWER'S assets,
and the same is not paid on the payment date thereof.
7.8 Judgment Lien. If a judgment or other claim becomes a lien or
encumbrance in excess of $25,000 upon any or all of BORROWER'S ASSETS, except
for encumbrances permitted by LENDER, in writing.
7.9 Impairment of Guaranties, Subordinations. If any party
subordinating its claims to those of LENDER or any guarantor of or indemnitor
regarding any of BORROWER'S Indebtedness or obligations hereunder dies,
terminates its subordination or guaranty or indemnity agreement, or becomes the
subject of an Insolvency Proceeding.
7.10 Uninsured Loss. Disposition of Encumbrance of COLLATERAL. Loss,
theft, substantial damage, or destruction not fully covered by insurance, of any
of the property or premises secured by the DEEDS OF TRUST for which hazard
insurance was available or sale or encumbrance of any of the COLLATERAL or the
making of any levy, seizure, or attachment thereof or thereon except in all
cases as may be specifically permitted by other provisions of this AGREEMENT.
7.11 Default Under Other Agreements. Any action by BORROWER which
causes or permits any agreement pertaining to the borrowing of money or the
advance of credit to which BORROWER may be a party as borrower to be in default
in excess of $25,000, whether or not that default gives the holder of the
obligation concerned the right to accelerate the indebtedness and whether or not
a default is declared. This includes any other agreement between BORROWER and
LENDER, now existing or hereafter created.
7.12 Lien. If BORROWER shall pledge, hypothecate or otherwise give a
lien on the COLLATERAL or any T/D NOTE to, or if such lien shall be obtained by,
any person other than LENDER or its participants or assigns, except notes used
as collateral for advances made by other institutions for warehouse lending
purposes.
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7.13 Conditions. Breach of any term or condition or warranty of any
trust receipt, certificate or other document relating to T/D NOTES and security
delivered to LENDER hereunder, or otherwise relating to this AGREEMENT.
ARTICLE 8 REMEDIES
8.1 Acceleration of Obligations; Right to Dispose of COLLATERAL. Upon
the occurrence of an EVENT OF DEFAULT as above provided, all or any portion of
the obligations and INDEBTEDNESS due or to become due from BORROWER to LENDER,
whether arising under this AGREEMENT or otherwise, at the option of LENDER, and
without notice or demand by LENDER, shall accelerate and become at once due and
payable; BORROWER will forthwith pay to LENDER in addition to any and all sums
and charges due, the entire principal of and interest accrued on the ADVANCES
and all other INDEBTEDNESS and obligations hereunder. LENDER, thereupon, shall
have all the rights and remedies of a secured party under the California Uniform
Commercial Code ("Code") and all other legal and equitable rights to which it
may be entitled, including, without limitation, the right to collect and apply
payments under the T/D NOTES, and to give direct notice to all obligors under
said T/D NOTES to make payments directly to LENDER. If not previously delivered
to LENDER, LENDER shall have the right to take immediate possession of the T/D
NOTES and may enter any of the premises of BORROWER with or without force or
process of law. BORROWER and LENDER agree that five (5) days notice to BORROWER
of any public or private sale or other disposition of COLLATERAL shall be
reasonable notice thereof, and such sale shall be at such location(s) as LENDER
shall designate in said notice. LENDER shall have the right to bid at such sale
on its own behalf. Out of proceeds arising from any such sale, LENDER shall
retain all costs and charges, including attorneys' fees for advice, counsel, or
other legal services or for pursuing, reclaiming, seeking to reclaim, taking,
keeping, removing and storing COLLATERAL and advertising such COLLATERAL for
sale, selling and any and all other charges and expenses in connection
therewith. Any balance shall be applied upon the INDEBTEDNESS and obligations of
BORROWER to LENDER hereunder; and in the event of deficiency, BORROWER shall
remain liable to LENDER. In the event of any surplus, such surplus shall be paid
to the party entitled by law to same.
In view of the fact that there may not be a readily available market
for the COLLATERAL, or that federal or state securities or other laws may impose
certain restrictions on the method by which the COLLATERAL may be disposed of,
BORROWER agrees that upon the occurrence of an EVENT OF DEFAULT LENDER may, from
time to time, attempt to sell all or any part of the COLLATERAL by a private
placement restricting the bidder and prospective purchasers. In so doing, LENDER
may solicit offers to buy the COLLATERAL, or any part of it, for cash from a
limited number of purchasers deemed by LENDER, in its reasonable judgment, to be
respectable parties who might be interested in purchasing the COLLATERAL, and
the acceptance by LENDER of the highest offer
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obtained thereby shall be deemed to be a commercially reasonable method of
disposition of such COLLATERAL.
8.2 Application of COLLATERAL; Termination of AGREEMENTS. Upon the
occurrence of an EVENT OF DEFAULT, LENDER may also, with or without proceeding
with such sale, or foreclosure or demanding payment of all obligations without
notice, terminate further performance under this AGREEMENT or any other
agreement or agreements between BORROWER and LENDER without further liability or
obligation by LENDER, and may also, at any time, appropriate and apply on any
obligations any and all COLLATERAL in the possession of LENDER, any and all
balances, credits, deposits, accounts, reserves, indebtedness, or other monies
due or owing to lender or held by LENDER hereunder or under any such financing
agreement or otherwise, whether accrued or not. Neither such termination, nor
the termination of this AGREEMENT by lapse of time, the giving of notice, or
otherwise shall absolve, release, or otherwise affect the liability of BORROWER
in respect of transactions had prior to such termination, nor affect any of the
liens, security interests, rights, powers and remedies of LENDER, but they
shall, in all events, continue until all Indebtedness, obligations, and
liabilities of BORROWER to LENDER are satisfied. LENDER shall not, in any
manner, be liable to BORROWER for any failure to make or continue to make any
loans or ADVANCES hereunder.
8.3 Power of Attorney. BORROWER, in the event of default as set forth
in this agreement, hereby makes, constitutes and appoints LENDER, and its agents
and designees, the true and lawful agents and attorneys-in-fact of BORROWER,
with full power of substitution (a) to receive, open and dispose of all mail
addressed to BORROWER relating to the COLLATERAL, (b) In the event of default to
notify and direct the United States Post Office authorities by notice given in
the name of BORROWER and signed on its behalf, to change the address for
delivery of all mail address to BORROWER relating to the COLLATERAL to an
address to be designated by LENDER, and to cause such mail to be delivered to
such designated address where LENDER may open all such mail and remove therefrom
any notes, checks, acceptances, drafts, money orders or other instruments in
payment of the COLLATERAL in which LENDER has a security interest hereunder and
any documents relative thereto, (c) to endorse the name of BORROWER upon any
such notes, checks, acceptances, drafts, money orders, instruments, or other
form of payment representing payments on assigned T/D NOTES and DEEDS OF TRUST
or COMMITMENTS to purchase T/D NOTEs and DEEDS OF TRUST, or on COLLATERAL or
security of any kind and to effect the deposit and collection thereof, and,
further to endorse the name of BORROWER on any other documents otherwise
relating to such COLLATERAL, (d) to sign the name of BORROWER to drafts against
its T/D NOTE obligors, to send notices to such T/D NOTE obligors, (e) to
complete, execute, deliver and record, on behalf of BORROWER, assignments,
notices of assignments, financing statements and other public records and
notices an all other instruments or documents, (f) to do every
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other thing necessary or desirable to effect transfer of a T/D NOTE and DEED OF
TRUST; to take all necessary and appropriate action in BORROWER's name with
respect to ADVANCEs hereunder and servicing of T/D NOTEs and DEEDS OF TRUST; to
commence, prosecute, settle, discontinue, defend or otherwise dispose of any
claim relating to any COMMITMENT, T/D NOTE, DEED OF TRUST or other COLLATERAL,
and (g) to do any and all other things necessary or proper to carry out the
intent of this AGREEMENT and to perfect and to protect the liens and rights of
LENDER created under this AGREEMENT. BORROWER agrees that neither LENDER nor
any of its agents, designees or attorneys-in-fact will be liable for any acts of
commission or omission, or for any error of judgment or mistake of fact or law.
The powers granted hereunder are coupled with an interest and shall be
irrevocable during the term hereof. LENDER shall have the right to settle or
adjust disputes and/or claims in respect to the COLLATERAL with the T/D NOTE
obligors thereon for amounts and upon such terms as LENDER, in its sole
discretion, deems to be advisable in such case crediting BORROWER with only the
proceeds received and collected by Lender. Lender shall have the right to apply
all money or security otherwise due to LENDER to the payment of any of the
ADVANCE or other sums, fees, costs and expenses payable pursuant to this
AGREEMENT at such time or times and in such order of application as LENDER in
its sole discretion may determine.
8.3A Power of Attorney. BORROWER irrevocably appoints LENDER as its
attorney-in-fact (with full power of substitution) for, on behalf of, and the
name of BORROWER to (a) endorse and deliver to any person any check, instrument,
or other document received by Lender that represents payment in respect of any
Collateral, (B) prepare, complete, execute, deliver, and record any assignment
of any mortgage, deed of trust, or trust deed securing any T/D NOTE or DEED OF
TRUST, (c) endorse and deliver or otherwise transfer any T/D NOTE and do every
other thing necessary and appropriate action with respect to any Collateral, (e)
commence, prosecute, settle, discontinue, defend, or otherwise dispose of any
claim relating to any Collateral, and (f) sign that BORROWER'S name wherever
appropriate to effect the performance of this Agreement. This section shall be
liberally, not restrictively, construed to give the greatest latitude to
LENDER's power as the BORROWER'S attorney-in-fact to collect, sell, and deliver
any Collateral and all other documents relating to it. The powers and
authorities conferred on LENDER in this section (g) are discretionary and not
obligatory on the part of LENDER, (h) may be exercised by LENDER through any
person who, at the time of the execution of a particular document, is an
officer of LENDER, and (i) is granted for a valuable consideration coupled with
an interest, and irrevocable until - and all persons dealing with LENDER, any
of its officers acting under this section, or any substitute are fully
protected in treating the powers and authorities conferred by this section as
existing and continuing in full force and effect until advised by LENDER that -
all commitments under the Loan Agreement to extend credit under this AGREEMENT
have been terminated or canceled and the Indebtedness is fully paid and
performed.
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8.4 Remedies Cumulative. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of BORROWER
contained in this AGREEMENT, or in any document referred to herein or contained
in any agreement supplementary hereto or in any schedule or in any guaranty
AGREEMENT given to LENDER or contained in any other agreement between LENDER and
BORROWER, heretofore, concurrently, or hereafter entered into, shall be deemed
cumulative to and not exclusive or in derogation or substitution of any of the
terms, covenants, conditions or agreements of Borrower herein contained.
8.5 The CD referenced in provision 3.1(v) of the Loan and Security
Agreement which is being assigned to LENDER shall only be called upon as
security upon the happening of any Event of Default set forth in Article 7 of
the Loan and Security Agreement. The General Assignment of CD will expire upon
termination of the Loan and Security Agreement only if no Event of Default set
forth in Article 7 is being claimed by LENDER.
ARTICLE 9 MISCELLANEOUS
9.1 Delays and Waivers: No delay or omission to exercise any right,
power or remedy accruing to Lender on any breach or default of BORROWER under
this AGREEMENT shall impair any such right, power or remedy of LENDER, nor shall
it be construed to be a waiver of any such breach or default, or acquiescence in
any such breach or default occurring later; nor shall any waiver of any single
breach or default be considered waiver of any other prior or subsequent breach
or default. Any waiver, permit, consent or approval of any kind by LENDER of any
breach or default under this AGREEMENT, or any waiver by LENDER of any provision
or condition of this AGREEMENT, must be in writing and shall be effective only
to the extent specifically set forth in that writing.
9.2 Address: Except as specifically provided herein, any communications
between the parties or notices provided for in this AGREEMENT may be given by
mailing them first class, postage prepaid, to LENDER and to BORROWER at the
addresses shown below, or to such other addresses as either party may indicate
to the other in writing at the date of this AGREEMENT.
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Any notice or demand shall be deemed to have been given when actually received
if given personally or by facsimile or telex, or, if mailed as provided above,
forty-eight (48) hours after being so deposited in the United States mail:
To BORROWER: CAPITAL FIRST MORTGAGE CORPORATION
Attention: L.H. ("Xxxx") Xxxxx, Jr., or
Xxxxx XxXxxxxx, or
Xxxxx X. Xxxxxxxx
000 Xxxxxxxx Xxxxxx, Xxx 000
Xxxxxx, Xxxxx 00000
Facsimile No.: 512/481-8001
Telephone: 512/000-0000
To LENDER: Pioneer Commercial Funding Corp.
Attn: Xxxxxx Xxxxx, Senior V.P.
0000 Xxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
With a
copy to: Xxxxxx, Xxxxxxxxx & Xxxxx
Attn: Xxxx Xxxxxx, Esq.
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
9.3 Expenses. The obligations of BORROWER hereunder shall survive the
final payment of all INDEBTEDNESS of BORROWER and the resulting termination of
this AGREEMENT. Should LENDER be required to enforce the provisions of this
AGREEMENT or take or defend any legal action against or by BORROWER or any third
party, then LENDER shall be entitled to payment of any and all costs and
reasonable attorneys' fees, whether or not suit is actually commenced.
9.4 Jurisdiction and Venue. This Agreement, and any note or other
instruments or agreements executed in connection with this AGREEMENT, shall be
governed by and construed under the laws of the State of California. The parties
agree that all actions or proceedings arising in connection with this Agreement
shall be tried and litigated, at the election of LENDER, only the state courts
located in the County of Los Angeles, or the federal courts located in the
Central District of California.
9.5 Amendments. This AGREEMENT contains the entire agreement of the
parties hereto and may be amended only by the written consent of both LENDER and
BORROWER.
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9.6 Descriptive Headings. The descriptive headings of the several
sections of this AGREEMENT are inserted for convenience only and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.
9.7 Successors and Assigns. This AGREEMENT shall be binding upon and
inure to the benefit of the respective successors and assignees of LENDER and
BORROWER. BORROWER shall not assign this AGREEMENT or any of its rights, duties
or obligations without the prior written consent of LENDER. LENDER reserves the
right to assign, sell, transfer, negotiate or grant participations in all or any
part of LENDER'S rights, benefits or interests hereunder. In connection
therewith, LENDER may disclose all documents and information which LENDER now
has or may acquire relating to BORROWER or BORROWER'S business, to LENDER'S
funding sources or as may be required for compliance by lender with SEC
regulations for public companies.
9.8 Severability. To the extent any provision of this AGREEMENT is not
enforceable under applicable law, such provision shall be deemed null and void
and shall have no effect on the remaining portions of the AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT as of the
day and year first hereinabove given.
Capital First Mortgage Corporation
By
----------------------------------
L.H. ("Xxxx") Xxxxx, Jr.
Title:
---------------------------------
By
----------------------------------
Xxxxx La Pointe
Title:
---------------------------------
By
----------------------------------
Xxxxx X. Xxxxxxxx
Title:
---------------------------------
By
----------------------------------
, Secretary
-------------------
PIONEER COMMERCIAL FUNDING CORP.
By
----------------------------------
(Lender)
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