EXHIBIT 10.34
SERVICING AGREEMENT
between
IMPERIAL CREDIT INDUSTRIES, INC.
("Servicer")
and
IMPERIAL BANK
("Bank")
October 1, 1999
SERVICING AGREEMENT ("Agreement"), dated as of October 1, 1999, by and
between Imperial Bank, a California banking corporation (the "Bank") and
Imperial Credit Industries, Inc., a California corporation (herein, together
with its successors and assigns, called "Servicer").
PRELIMINARY STATEMENT
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WHEREAS, the Bank and Servicer have entered into an Asset Purchase
Agreement dated October 1, 1999 (the "Asset Purchase Agreement") pursuant to
which Servicer will purchase certain entertainment-related Loans (the "Loans"),
all as more fully set forth in the Asset Purchase Agreement; and
WHEREAS, the parties hereto desire to enter into this Agreement to provide,
among other things, for the servicing of the Loans by Servicer until such Loans
are purchased by Servicer. For its services hereunder, Servicer will be
compensated as set forth in this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the Servicer and the Bank agree as follows:
ARTICLE 1
DEFINITION
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SECTION 1.1 Defined Terms.
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All capitalized term used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Loan Documents for each Loan or in the
Asset Purchase Agreement.
"Agreement" means this Servicing Agreement as originally executed and as
amended or supplemented from time to time in accordance with the terms hereof.
"Bankruptcy Law" means any day other than (i) a Saturday or a Sunday, or
(ii) a day on which banking institutions in the State of California are
authorized or obligated by law or executive order to remain closed.
"Defaulted Loan" shall mean a Loan which is delinquent in payment of any
scheduled Payment or other term of the collateral for the Loan.
"Loan Collateral" shall mean with respect to a Loan, the related security
agreement copyright mortgage and all collateral for the Loan.
"Loan Documents" shall mean with respect to a Loan, those instruments,
agreements, guaranty documents, certificates or other writings, now or hereafter
executed and delivered by
the borrower in respect of such Loan as the same may be modified, amended,
consolidated, continued or extended from time to time.
"Remittance Date" shall mean the 15th day of each month or, if such 15th
day is not a Business Day, the next succeeding Business Day.
ARTICLE 2
ADMINISTRATION AND SERVICING OF LOANS
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SECTION 2.1 Servicer to Act as Servicer.
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(a) Engagement of Servicer. Servicer is hereby authorized to and
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shall service and administer the Loans in accordance with the terms of this
Agreement. Servicer shall have full power and authority, acting alone and
subject only to the specific requirements and prohibitions of this Agreement, to
take any and all actions, or to refrain from taking any such actions and to do
any and all things in connection with such servicing and administration which it
may deem necessary or desirable.
(b) General Servicing Procedures. Servicer agrees that its servicing
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of the Loans shall be carried out in accordance with Bank's past practices.
Without limiting the forgoing, Servicer shall not release or waive the right to
collect the stated, non-default rate of interest on, the unpaid balance of, or
any yield maintenance amount payable in respect of any Loan. Servicer agrees to
furnish Bank, from time to time, with copies of financial statements or audit
reports of Servicer as may be reasonably requested by Bank. Servicer shall
notify Bank (i) if any extension of a scheduled maturity of a Loan is required,
or (ii) if in the judgment of Servicer a Loan has become impaired to the extent
that payment of principal and interest as scheduled will be in default. In such
event, Servicer will provide Bank with Servicer's recommended course of action.
(c) Acceleration of Loans. Subject to Section 2.5 hereof, Servicer
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shall accelerate any Loan and commence foreclosure efforts in respect of any
Loan Collateral securing a Loan which is a Defaulted Loan in accordance with the
terms of the Loan Documents; provided, however, that at least two (2) Business
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days prior to commencing any such foreclosure Servicer shall provide Bank with
notice which describes in writing the basis for commencing such foreclosure and
a reasonable estimate of any costs expected to be incurred in connection with
such foreclosure that will be borne by Bank as owner of the Loan. Bank shall
have two Business Days from receipt of such notice to request Servicer to take
any reasonable action other than or in addition to such foreclosure, within the
limits of applicable law.
Without limiting the generality of the foregoing, but subject to the
provisions of this Agreement, Servicer is hereby authorized and empowered by
Bank to execute and deliver, in Servicer's own name, on behalf of Bank, any and
all instruments of satisfaction or cancellation, or of partial or full release
or discharge, and all other comparable instruments, with respect to the Loans
and with respect to the Loan Collateral, including, without limitation,
consenting to sales,
transfers or encumbrances of the Loan Collateral or assignments and assumptions
of the Loans in accordance with the terms thereof.
(d) Actions to Perfect Security Interests. Servicer shall take all
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actions that are necessary or desirable to maintain continuous perfection and
priority (subject to permitted encumbrances) of the mortgages and security
interests granted by the Borrowers in the Loan Collateral subject to the terms
of Loan Documents and this Agreement, including, but not limited to, obtaining
the execution by the Borrowers and the recording, registering, filing, re-
recording, re-registering and refiling of all mortgages, assignments, security
agreements, financing statements, continuation statements or other instruments
as are necessary to maintain the mortgages and security interests granted by the
Borrowers under the respective Loans. Servicer shall file or cause to be filed
(i) all financing statements on Form UCC-1 and, as may be required by Bank, all
assignments of financing statements on Form UCC.3 and (ii) as may be required by
Bank, all copyright mortgage assignments and assignments of copyright mortgages
as are customarily required to be filed to perfect a security interest in the
Loans.
SECTION 2.2 Collection of Loan Payments and Remittances
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(a) Collection of Payments. Subject to the provisions of Section 2.1
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and 2.5 herein, Servicer shall use its best efforts to cause the collection of
all payments called for under terms and provisions of each Loan. In addition to
any other customary services which Servicer may perform, Servicer shall perform
the following servicing and collection supervision activities:
(1) perform standard accounting services and general record
keeping services with respect to the Loans;
(2) respond to any telephone and written inquiries of Borrowers
concerning the Loans;
(3) keep Borrowers informed of the proper place and method for
making payments with respect to the Loans:
(4) contact Borrowers to effect collection and to discourage
delinquencies in the payment of Loans, doing so by any lawful means, including,
but not limited to, the following:
(i) transmittal of routine past due notices;
(ii) preparing and mailing collection letters;
(iii) contacting delinquent Borrowers by telephone to
encourage payment;
(iv) transmittal of reminder notices to delinquent
Borrowers; and
(v) initiating and pursuing termination or foreclosure
actions deemed necessary by Servicer;
(5) report tax information to Borrowers, if any, as required by
law; and
(6) take such other action as may be necessary or appropriate to
carry out the duties and obligations imposed upon the Servicer pursuant to terms
of this Section 2.2.
(b) Subject to the provisions of the Asset Purchase Agreement, the
Servicer shall make such remittances to Bank as are required under Section 1.6
of the Asset Purchase Agreement.
SECTION 2.3 Records.
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Servicer shall retain all data (including, without limitation, computerized
records) relating directly to or maintained in connection with the servicing of
the Loans at the address of Servicer set forth in Section 6.4 or at such other
place where the servicing offices of Servicer are located, and shall give Bank
access to all data at all reasonable times.
SECTION 2.4 Servicing Compensation.
----------------------
Servicer is providing services under this Agreement as additional
consideration for the Loans to be purchased under the Asset Purchase Agreement.
As a consequence, no additional compensation shall be payable to Servicer for
the performance of its duties and obligations hereunder.
SECTION 2.5 Realization upon Defaulted Loans.
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(a) Acceleration and Foreclosure of Defaulted Loans. In accordance
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with the servicing procedures specified in Section 2.1, Servicer shall
accelerate any Loan, and foreclose upon any Loan Collateral securing a Loan that
is a Defaulted Loan. In connection with the commencement of foreclosure
proceedings against any Loan Collateral securing a Defaulted Loan, Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be consistent with the servicing standards set forth in
Section 2.1 hereof. In addition, Servicer shall comply in all material respects
with all applicable laws in connection with the foreclosure of any Loan
Collateral and may commence and prosecute any proceedings in respect of such
related Loan in the name of and on behalf of Bank. Servicer shall not acquire
any Loan Collateral except on behalf of Bank in connection with a Defaulted
Loan.
(b) Costs and Expenses of Actions Taken in Respect of Defaulted
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Loans. Subject to the following sentence, Bank, as owner of a Defaulted
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Loan, shall be responsible for all reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees) incurred by Servicer in connection with
any action taken in respect of such Loan. Such costs shall be advanced by
Servicer and reimbursed by Bank upon the final disposition of such Defaulted
Loan by Bank, whether through a foreclosure liquidation sale or through sale of
such Loan by Bank.
ARTICLE 3
STATEMENTS AND REPORTS
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SECTION 3.1 Reporting by Servicer.
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Servicer shall ensure that Bank's records contain the following information
with respect to each Loan:
(i) loan number;
(ii) borrower name;
(iii) beginning principal balance;
(iv) principal received;
(v) interest received at the stated rate;
(vi) number of days Loan is owned by Bank for such month;
(vii) total payment to Bank; and
(viii) ending principal balance
ARTICLE 4
THE SERVICER
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SECTION 4.1 Representation and Warranties Concerning Servicer.
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Servicer represents and warrants to Bank, as of the date hereof, as
follows:
(a) Servicer (i) has been duly organized and is validly existing and
in good standing as a corporation organized and existing under the laws of the
State of California, (ii) has qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary
and where failure to so qualify would have a material and adverse effect on its
ability to perform its obligations hereunder, and (iii) has full power,
authority and legal right to own its properties, to carry on its business as
presently conducted, and to enter into and perform it obligations under this
Agreement.
(b) The execution and delivery by Servicer of this Agreement are
within the corporate power of Servicer and have been duly authorized by all
necessary corporate action on the part of Servicer. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict with or
result in a breach of, or continue a default under, any of the provisions of any
law, governmental rule, regulation, judgment, decree or order binding on
Servicer or its properties or the charter or bylaws of Servicer, or any of the
provisions of any indenture, mortgage, contract or other instrument to which the
Servicer is a party or by which it is bound or result in the creation or
imposition of any lien, charge or encumbrance upon any of its property pursuant
to the terms of any such indenture, mortgage, contract or other instrument.
(c) Servicer is not required to obtain the consent of any other party
or consent, license, approval or authorization, or registration or declaration
with, any governmental authority, bureau or agency in connection with the
execution, delivery, performance by Servicer of this Agreement, or validity or
enforceability of this Agreement against Servicer.
(d) This Agreement has been duly executed and delivered by Servicer
and constitutes a legal, valid and binding instrument enforceable against
Servicer in accordance with its terms (subject to applicable Bankruptcy Laws and
to general principles of equity).
(e) Servicer is not in default under any agreement, contract,
instrument or indenture to which Servicer is a party or by which it or its
properties is or are bound, or with respect to any order of any court,
administrative agency, arbitrator or governmental body, which would have a
material adverse effect on the transactions contemplated hereunder, and no event
has occurred which with notice or lapse of time or both would constitute such a
material default with respect to any such agreement, contract, instrument or
indenture, or with respect to any such order of any court, administrative
agency, arbitrator or governmental body.
SECTION 4.2 Servicer's Responsibilities.
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(a) Limitations of Responsibility and Liabilities of Servicer.
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Servicer will have no responsibility under this Agreement other than to render
the services specifically called for hereunder in good faith. Servicer, its
affiliates, its directors, officers, shareholders and employees will not be
liable to Bank or others, except by reason of acts constituting bad faith,
willful misfeasance, gross negligence or reckless disregard of its duties.
(b) Right to Receive Instructions. In the event that Servicer is
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unable to decide between alternative courses of action, or is unsure as to the
application of any provision of this Agreement, or such provision is ambiguous
as to its application, or is, or appears to be, in conflict with any other
applicable provision, or in the event that this Agreement permits any
determination by Servicer or is silent or is incomplete as to the course of
action which Servicer is required to take with respect to a particular set of
facts, Servicer may give notice (in such form as shall be appropriate under the
circumstances) to Bank requesting instruction in accordance with the Asset
Purchase Agreement and, to the extent that Servicer shall have acted or
refrained from acting in good faith in accordance with any such instructions
received from Bank, Servicer shall not be liable on account of such action or
inaction. If Servicer shall not have received appropriate instructions within
two Business Days of such notice (or within such reasonable shorter period of
time as may be specified in such notice) Servicer may, but shall be under no
duty to, take or refrain from taking such action, not inconsistent with this
Agreement, as Servicer shall deem to be in the best interest of Bank, and
Servicer shall have no liability to any person for such action or inaction
except for Servicer's own willful misconduct or gross negligence.
(c) Reliance. Servicer conclusively may rely on and shall be
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protected in acting or refraining from acting when doing so, in each case in
accordance with any signature or other document believed by it to be genuine and
believed by it to be signed by the proper party or parties. Servicer may accept
a certified copy of a resolution of the board of directors or other governing
body of any corporate party as conclusive evidence that such resolution has been
duly adopted by such body and that the same is in full force and effect. As to
any fact or matter the
7
manner or ascertainment of which is not specifically prescribed herein, Servicer
may for all purposes hereof rely on a certificate, signed by the president or
any vice president of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to Servicer for any action taken or
omitted to be taken by it in good faith in reliance thereon.
(d) Use of Agents: Advice of Counsel. In the exercise and
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performance of its duties and obligations hereunder or under the Asset Purchase
Agreement, Servicer (i) may act directly or through agents or attorneys pursuant
to agreements entered into with any of them and Servicer shall not be liable for
the default or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by Servicer with reasonable care; and (ii)
may, at the expense of Servicer, consult with counsel accountants and other
skilled persons to be selected with reasonable care and employed by it, and
Servicer shall not be liable for anything done, suffered or omitted reasonably
and in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled person.
SECTION 4.3 Assignment.
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(a) Servicer may engage a subservicer to perform Servicer's duties
hereunder, or assign this agreement to any Affiliate of Servicer, and Servicer
may resign or engage any other person as subservicer to perform Servicer's
duties hereunder, or assign this Agreement to any other person; provided that
no assignment or resignation shall be effective unless and until a successor
servicer consented to by Bank (which consent shall not be unreasonably withheld)
executes and delivers to Bank an agreement in form and substance reasonably
satisfactory to Bank, which contains an agreement to perform and observe, or in
the case of an assignment or assumption by such successor entity of the due and
punctual performance and observance of each covenant and condition to be
performed or observed by Servicer under this Agreement. From and after such
effectiveness, successor servicer shall be "Servicer" hereunder. Except as
provided in this Section 4.3(a), the Servicer may not assign this Agreement or
any of its rights, powers, duties or obligations hereunder without the prior
consent of Bank, which consent shall not be unreasonably withheld.
(b) The duties and obligations of Servicer under this Agreement shall
continue until this Agreement shall have been terminated as provided in Section
5.1, and shall survive the exercise by Bank of any right or remedy under this
Agreement, or the enforcement by Bank of any provision of this Agreement.
ARTICLES
TERMINATION OF AGREEMENT
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SECTION 5.1 Termination of Agreement.
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The respective duties and obligations of Servicer and Bank created by this
Agreement shall terminate concurrently with the sale by Bank of all Loans. Upon
termination of this Agreement pursuant to this Section 5.1, Servicer shall pay
over to Bank all monies due to Bank pursuant to the Sale Agreement.
ARTICLE 6
MISCELLANEOUS
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SECTION 6.1 Dispute Resolution.
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Any dispute, controversy or claim between the parties relating to, or
arising out of or in connection with this Agreement (or any subsequent
agreements or amendments thereto), including as to its existence,
enforceability, validity, interpretation, performance, breach or damages,
including claims in tort, whether arising before or after the termination of
this Agreement, shall be settled only as follows: First, an authorized business
representative of each party shall meet in an attempt to resolve any dispute. If
the dispute is not resolved by such representatives, then either of Servicer or
Bank may make a written demand for formal dispute resolution, at which time the
dispute will be resolved by binding arbitration in Los Angeles, California,
pursuant to the Commercial Arbitration Rules, as then amended and in effect, of
the American Arbitration Association (the "Rules"), subject to the following:
(a) There shall be one arbitrator, who shall be selected under the
normal procedures prescribed in the Rules.
(b) Subject to legal privileges, each party shall be entitled to
discovery in accordance with the Federal Rules of Civil Procedure.
(c) At the arbitration hearing, each party may make written and oral
presentations to the arbitrator, present testimony and written evidence and
examine witnesses.
(d) The arbitrator's decision shall be in writing, shall be binding
and final and may be entered and enforced in any court of competent
jurisdiction.
(e) No party shall be eligible to receive, and the arbitrator shall
not have the authority to award, exemplary or punitive damages.
(f) Each party to the arbitration shall pay one.half of the fees and
expenses of the arbitrator and the American Arbitration Association.
(g) The arbitrator shall not have the power to amend this Agreement.
SECTION 6.2 Counterpart Execution; Telecopies.
---------------------------------
This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall be an original, but all of which
together shall constitute one agreement binding all of the parties hereto.
Transmission by telecopier of an executed counterpart of this Agreement shall be
deemed to constitute due and sufficient delivery of such counterpart, provided
that the party so delivering such counterpart shall, promptly after such
delivery, deliver the original of such counterpart of this Agreement to the
other party hereto.
SECTION 6.3 Amendments; Waivers.
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No amendment of any provision of this Agreement shall be effective unless
it is in writing and signed by Bank and Servicer and no waiver of any provision
of this Agreement, nor consent to any departure by Bank or Servicer therefrom,
shall be effective unless it is in writing and signed by the party affected
thereby, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure or delay on
the part of either party hereto in exercising any right hereunder shall operate
as a waiver thereof by such party nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.
SECTION 6.4 Notices.
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All notices, demands, requests and other communications required hereunder
shall be in writing arid shall be deemed to have been given: (i) upon delivery
if personally delivered; (ii) upon receipt if sent by facsimile, with receipt
confirmed; (iii) three (3) days after deposit in the United States Mail when
delivered, postage prepaid, by certified or registered mail; or (iv).one (1) day
after deposit with a nationally recognized overnight delivery service marked for
delivery on the next business day, addressed to the party for whom it is
intended at its address hereinafter set forth:
If to Bank:
Imperial Bank
0000 Xxxxx Xx Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
and if to Servicer:
Imperial Credit Industries, Inc.
00000 Xxxxxxxxx Xxxxxxxxx, Xxxx. Xxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, General Counsel
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
Any party may designate a change of address by written notice to least ten
(10) days before such change of address is to become effective. the others,
given at
SECTION 6.5 No Third-Party Beneficiaries.
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This Agreement and each of the provisions hereof (including
representations, warranties and covenants, if any) are solely for the benefit of
Bank and Servicer and the respective successors and permitted assigns of the
foregoing. No provisions of this Agreement or of any of the documents and
certificates executed in connection herewith (including any representations and
warranties) shall be construed as creating in any other person or entity other
than Servicer
and Bank and the respective successors and their permitted assigns any rights of
any nature whatsoever.
SECTION 6.6 Attorneys' Fees.
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In the event any legal action is undertaken in order to enforce or
interpret any provision of this Agreement, the prevailing party in such legal
action, as determined by the court, shall be entitled to receive from the other
party the prevailing party's reasonable attorneys' fees and court costs.
SECTION 6.7 Time of Essence: Context.
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Time is of the essence of this Agreement and of every part hereof. When the
context and construction so require, all words used in the singular herein shall
be deemed to have been used in the plural and the masculine shall include the
feminine and the neuter and vice versa.
SECTION 6.8 Successors and Assigns.
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All of the terms, covenants and conditions contained herein and in the
other documents and certificates executed in connection herewith shall apply to
and be binding upon, and inure to the benefit of Bank and Servicer and their
successors and assigns.
SECTION 6.9 Entire Agreement.
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This Agreement, together with the Asset Purchase Agreement and Assignment
Documents, sets forth the entire understanding between the parties hereto with
respect to the subject matter hereof, superseding all prior written or oral
understandings, and may not be terminated, modified or amended in any way except
by a written agreement signed by each of the parties hereto.
SECTION 6.10 Governing Law.
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Servicer and Bank expressly agree that this Agreement shall be governed by,
interpreted under and construed and enforced in accordance with the laws of the
State of California (without giving effect to California principles of conflicts
of laws). Servicer and Bank each irrevocably submit to the exclusive
jurisdiction of any California state or federal court sitting in the County of
Los Angeles, State of California, over any suit, action or proceeding arising
out of or relating to this agreement.
SECTION 6.11 Severability.
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If any provision in this Agreement is found by a court of competent
jurisdiction to be in violation of any applicable law, and if such court should
declare such provision of this Agreement to be unlawful, void, illegal or
unenforceable in any respect, the remainder of this Agreement shall be
construed as if such unlawful, void, illegal or unenforceable provision were not
contained therein, and the rights, obligations and interests of the parties
hereto under the remainder of this Agreement shall continue in full force and
effect undisturbed and unmodified in any way.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
Imperial Bank, a California corporation
By: _____________________________________
Title: ______________________________
By: _____________________________________
Title: ______________________________
Imperial Credit Industries, Inc., a
California corporation
By: _____________________________________
Title: ______________________________
By: _____________________________________
Title: ______________________________
