AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (this "Security
Agreement"), dated as of April 30, 2000, is by and between NEW CENTURY MORTGAGE
CORPORATION, a California corporation (the "Company"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association ("USBNA"), as collateral agent (in
such capacity, together with any successor Agent hereunder, the "Agent") for (A)
the Lenders (as defined below), (B) U.S. Bancorp Leasing & Financial, as
successor in interest to FBS Business Finance Corp. (the "Lessor"), as lessor
under any present or future leases of equipment by the Lessor, as lessor, to the
Company or New Century Financial Corporation ("NCFC"), as lessee, or as lender
under any present or future loan by the Lessor, as lender, to the Company or
NCFC, as borrower, secured by equipment, and (C) the Subordinated Noteholder (as
defined below).
RECITALS:
A. The Company, the lenders party thereto (the "Lenders") and the Agent
are party to the Fourth Amended and Restated Credit Agreement dated as of May
26, 1999 (as the same has heretofore been amended and as may hereafter be
amended, modified, extended or restated and in effect from time to time, the
"Credit Agreement").
B. The Lessor has leased, and may from time to time hereafter lease,
equipment to the Company or NCFC, or make loans to the Company or NCFC secured
by equipment.
C. USBNA has extended and has agreed to extend subordinated loans to the
Company under a Subordinated Loan Agreement (as the same may hereafter be
amended, modified, extended or restated and in effect from time to time, the
"Subordinated Loan Agreement") and a Second Amended and Restated Subordinated
Promissory Note in the principal amount of $40,000,000 (as the same may
hereafter be amended, modified, extended or restated and in effect from time to
time, the "Subordinated Note"), both of even date herewith.
D. It is a condition precedent to the agreement of USBNA to loan or
advance additional monies under such Subordinated Loan Agreement and the
Subordinated Note that the Company and the Agent execute and deliver this
Security Agreement to amend and restate the Pledge and Security Agreement dated
as of May 29, 1998, as amended, from the Grantors to the Agent (the "Existing
Pledge Agreement").
E. The Company finds it advantageous, desirable and in the Company's best
interest to comply with the requirement that the Existing Pledge Agreement be
amended and restated pursuant to this Security Agreement.
Accordingly, the Company and the Agent hereby agree to amend and restate
the Existing Pledge Agreement as follows:
Section 1. DEFINITIONS
Each capitalized term used herein which is not otherwise defined
herein shall have the meaning ascribed to such term in the Credit Agreement,
including Exhibit E thereto. In addition, the following terms shall have the
following respective meanings:
"Agreement to Pledge": an agreement to pledge substantially in the
form of Attachment 1 hereto.
"Bailee Letter": a letter substantially in the form of Attachment 2
hereto.
"Closing Agent": with respect to any Mortgage Loan, the title
company or other Person performing the functions of a title company in
connection with the closing of such Mortgage Loan.
"Collateral": as defined in Section 2 hereof.
"Collateral Identification Letter": a letter substantially in the
form of Attachment 3 hereto.
"Collections": as defined in Section 2(h) hereof.
"FIRREA Qualifying Appraisal": with respect to any Pledged Mortgage
Loan, an appraisal of the real estate securing such Pledged Mortgage Loan
which meets the requirements of the applicable appraisal regulations under
Title XI of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, including, without limitation, the appraisal regulations
applicable to mortgage warehousing loans (but if said regulations do not
require an appraisal with respect to a Pledged Mortgage Loan, then no
appraisal shall be required with respect thereto hereunder).
"Lease Agreement": each and any agreement for the lease of equipment
or for the making of a loan secured by equipment now existing or at
anytime entered
into between the Lessor, as lessor or lender, and the Company or NCFC, as
lessee or borrower.
"Lease Obligations": all of the obligations now or hereafter arising
owed by the Company or NCFC to Lessor in connection with any lease of
equipment or loan secured by equipment.
"Loan Detail Listing": a loan detail listing substantially in the
form of Attachment 4 hereto, which data may be electronically transmitted.
"Obligor": a person or other entity who now or hereafter is or
becomes liable to the Company with respect to any of the Collateral.
"Pledged Mortgage Loans": Mortgage Loans deemed to have been
delivered to the Agent as provided in Section 4.01 hereof and Mortgage
Loans delivered to the Agent as provided in Section 4.02 hereof.
"Related Mortgage-backed Security": a Mortgage-backed Security,
whether certificated or uncertificated, that represents an interest in, or
is secured by, any Mortgage Loans that were Pledged Mortgage Loans at the
time of formation of the related pool, unless the Agent's security
interest for the benefit of the Secured Parties in such Pledged Mortgage
Loan is released as provided herein prior to or simultaneously with the
issuance of such Mortgage-backed Security.
"Secured Parties" shall mean the Agent, the Lenders, the Lessor, and
the Subordinated Noteholder.
"Subordinated Note" shall have the meaning assigned to it in the
Recital C hereto.
"Subordinated Note Obligations" shall mean the obligations of the
Company to pay principal and interest on the Subordinated Note and all
fees, costs, expenses and indemnities for which the Company is liable in
connection therewith.
"Subordinated Noteholder" shall mean USBNA and any subsequent holder
of the Subordinated Note.
"Transmittal Letter": a transmittal letter substantially in the form
of Attachment 5 hereto.
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"Trust Receipt": a trust receipt substantially in the form of
Attachment 6 hereto.
"Wet Funding Clearing Account": such accounts of the Company with
the Agent as may be designated from time to time by the Agent, which shall
be under the sole dominion and control of the Agent.
Section 2. PLEDGE
As collateral security for the due and punctual payment and
performance of all of the Obligations, Lease Obligations and Subordinated Note
Obligations, the Company does hereby pledge, hypothecate, assign, transfer and
convey to the Agent, for the benefit of the Secured Parties, and grants to the
Agent, for the benefit of the Secured Parties, a security interest in and to,
the following described property (the "Collateral"):
(a) all right, title and interest of the Company in and to the
Pledged Mortgage Loans and Related Mortgage-backed Securities and all
promissory notes, participation agreements, participation certificates, or
other instruments or agreements which evidence the Pledged Mortgage Loans
and Related Mortgage-backed Securities;
(b) all right, title and interest of the Company in and to all
Mortgage Notes, Mortgages and other notes, real estate mortgages, deeds of
trust, security agreements, chattel mortgages, assignments of rent and
other security instruments whether now or hereafter owned, acquired or
held by the Company which evidence or secure (or constitute collateral for
any note, instrument or agreement evidencing or securing) any of the
Pledged Mortgage Loans;
(c) all right, title and interest of the Company in and to all
financing statements perfecting any security interest securing any Pledged
Mortgage Loan or property securing any Pledged Mortgage Loan;
(d) all right, title and interest of the Company in and to all
guaranties, mortgage insurance policies and other instruments by which the
persons or entities executing the same guarantee or insure, among other
things, the payment or performance of the Pledged Mortgage Loans;
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(e) all right, title and interest of the Company in and to all title
insurance policies, title insurance binders, commitments or reports
insuring or relating to any Pledged Mortgage Loan or property securing any
Pledged Mortgage Loan;
(f) all right, title and interest of the Company in and to all
surveys, bonds, hazard and liability insurance policies, participation
agreements and any other agreement, instrument or document pertaining to,
affecting, obtained by the Company in connection with, or arising out of,
the Pledged Mortgage Loans;
(g) all right, title and interest of the Company in and to all
Take-Out Commitments and other agreements to purchase any Pledged Mortgage
Loans or Related Mortgage-backed Securities;
(h) all right, title and interest of the Company in and to all
collections on, and proceeds of or from, any and all of the foregoing
(hereinafter collectively called "Collections");
(i) all right, title and interest of the Company in and to any other
asset of the Company which has been or hereafter at any time is delivered
to the Agent or any Secured Party for the purpose of being pledged
hereunder;
(j) all files, surveys, certificates, correspondence, appraisals,
computer programs, tapes, discs, cards, accounting records, and other
records, information, and data of the Company relating to the Pledged
Mortgage Loans and Related Mortgage-backed Securities (including all
information, data, programs, tapes, discs and cards necessary to
administer and service the Pledged Mortgage Loans and Related
Mortgage-backed Securities);
(k) all balances, credits and deposits of the Company contained in
the Collateral Account and in the Wet Funding Clearing Account;
(l) all right, title and interest of the Company in and to any
Hedging Arrangements entered into to protect the Company against changes
in the value of any of the Pledged Mortgage Loans or changes in the
interest rate applicable to the Loans, including, without limitation, all
rights to payment arising under such Hedging Arrangements; and
(m) any and all balances, credits, deposits, accounts or moneys of,
or in the name of, the Company representing or evidencing the foregoing or
any proceeds thereof, and any and all proceeds of any of the foregoing.
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Section 3. REPORTS CONCERNING EXISTING COLLATERAL AND HEREAFTER ACQUIRED
COLLATERAL
From time to time hereafter as reasonably requested by the Agent,
the Company will promptly give a written report to the Agent describing and
listing each document, instrument or other paper which evidences, secures,
guarantees, insures or pertains to any item of the Collateral whether now or
hereafter owned, acquired or held by the Company. Such written report shall
contain sufficient information to enable the Agent to identify each such
document, instrument or other paper. The Company (a) upon the request of the
Agent, shall promptly provide additional information concerning, or a more
complete description of, each such document, instrument or other paper and (b)
at the request of the Agent, shall promptly deliver the same to the Agent.
Section 4. DELIVERY OF COLLATERAL DOCUMENTS
4.01 Delivery of Mortgage Loans. A Mortgage Loan shall be deemed to
have been delivered and pledged to the Agent for the benefit of the Secured
Parties under this Security Agreement when:
(a) the Agent has received, with respect to such Mortgage Loan, (i)
an Agreement to Pledge, duly completed and executed by the Company, (ii) a
Collateral Identification Letter duly completed and executed by the
Company and (iii) a Loan Detail Listing, duly completed; and
(b) either
(i) a wire transfer of funds from the Wet Funding Clearing
Account has been initiated for the purpose of funding the
origination or purchase of such Mortgage Loan;
(ii) a draft drawn upon the Agent for the purpose of funding
the origination or purchase of such Mortgage Loan has been received
by the Agent and has cleared the Agent's payment process; or
(iii) a draft drawn upon the Agent for the purpose of funding
the origination or purchase of such Mortgage Loan
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has been accepted by the Agent, or the Agent has otherwise assured
payment thereof.
The documents referred to in clause (a) of the preceding sentence shall be
transmitted to the Agent by telecopier or electronic data transmission not later
than 3:30 p.m. (Minneapolis time) on the applicable Borrowing Date selected for
funding such Mortgage Loan, and the originally executed copies of such documents
shall be delivered to the Agent by courier on the following Business Day.
4.02 Delivery of Pledged Mortgage Loan Documentation. The Company
shall deliver to the Agent, with respect to each Pledged Mortgage Loan, the
following described instruments and documents within seven Business Days after
the Borrowing Date on which the applicable Warehousing Loan was made for the
purpose of funding such Mortgage Loan:
(a) the original Mortgage Note evidencing such Pledged Mortgage
Loan,duly endorsed in blank as follows:
"Pay to the order of
_____________________________________,
without recourse
NEW CENTURY MORTGAGE CORPORATION
By
-----------------------------------
Title "
-------------------------------
(b) a copy of the Mortgage securing such Pledged Mortgage Loan,
certified by the Closing Agent to be a true and exact copy of the original
Mortgage as submitted for recording;
(c) a duly executed appropriate assignment of said Mortgage in blank
and in recordable form;
(d) if there are any intermediate assignments of said Mortgage, two
copies of each such assignment, certified by the Closing Agent or the
Company to be a true and exact copy of the original thereof as submitted
for recording;
(e) if any of the foregoing documents was executed on behalf of a
party thereto by another Person under a power of attorney, a copy of the
original
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executed copy of such power of attorney, certified by the Closing Agent to
be a true and exact copy of the original thereof;
(f) if requested by the Agent, a copy of the Company's closing
instructions to the Closing Agent for such Pledged Mortgage Loan,
containing the language set forth on Exhibit G to the Credit Agreement,
and a Transmittal Letter listing all documents being delivered to the
Agent;
(g) if requested by the Agent, a copy of the Closing Agent's
Settlement Statement for such Mortgage Loan; and
(h) if requested by the Agent, a completed Company Worksheet
Concerning Applicability of Section 32 of Regulation Z (12 CFR Section
226.32) and, if said Section 32 applies, copies of the disclosure and
other related documentation delivered to the mortgagor, or executed by the
mortgagor, evidencing compliance with said Section 32.
In the event the Company complies with all of the requirements of this Section
4.02 with respect to a Mortgage Loan, such Mortgage Loan shall be deemed pledged
to the Agent for the benefit of the Secured Parties under this Security
Agreement even if the requirements of Section 4.01 hereof have not been
satisfied.
4.03 Delivery of Additional Mortgage Loan Documents Upon Request.
Within five Business Days after receiving a written request from the Agent to
deliver the same with respect to any Pledged Mortgage Loan, the Company shall
deliver to the Agent the following:
(a) All original guaranties, assignments of rents and other
instruments and documents relating to security for and payment of such
Pledged Mortgage Loan, together with duly executed assignments thereof;
(b) A mortgagee's title insurance policy (or commitment therefor) in
the form of an American Land Title Association standard policy (revised
coverage, most recent form) from a substantial and reputable title
insurance company acceptable to the Agent in favor of the Company insuring
the lien of the Mortgage securing such Pledged Mortgage Loan (subject only
to such liens and encumbrances as are generally acceptable to reputable
lending institutions, mortgage investors and securities dealers) or, if
such a mortgagee's title policy (or commitment therefor) is generally not
available in the state in which the real
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property subject to such Mortgage is located, an opinion of an attorney
reasonably acceptable to the Agent to the effect that the Mortgage
securing such Pledged Mortgage Loan is a valid first lien free and clear
of all other liens, encumbrances and restrictions except such as are
generally acceptable to reputable lending institutions, mortgage investors
and securities dealers;
(c) Evidence satisfactory to the Agent that the premises covered by
the Mortgage securing such Pledged Mortgage Loan is insured against fire
and perils of extended coverage for an amount at least equal to the lesser
of (i) 80% of the outstanding principal balance of such Pledged Mortgage
Loan or (ii) the full replacement cost of such premises;
(d) With respect to such Pledged Mortgage Loan and each Related
Mortgage-backed Security, copies of the applicable Take-Out Commitment and
all documents and instruments called for thereunder, together with a
certificate signed by an officer of the Company that, as of the date of
delivery thereof, such Pledged Mortgage Loan and all documentation
therefor satisfies all requirements and conditions of the applicable
Take-Out Commitment;
(e) Originals, or photocopies, as the Agent may request, of surveys
(or plat maps, if surveys are not available) and all other instruments,
documents and other papers pertaining to such Pledged Mortgage Loan which
are in the possession or control of the Company or which the Company has
the right to possess or control;
(f) The original of each Mortgage referred to Section 4.02(b)
hereof, together with satisfactory evidence of its recordation, or, if the
original recorded Mortgage has not been returned to the Company by the
applicable recording officer, a copy of the original recorded Mortgage
certified as a true and exact copy thereof by the applicable recording
officer;
(g) Evidence satisfactory to the Agent that the Company has obtained
and maintains in its files, as agent for the Agent and the Secured
Parties, a FIRREA Qualifying Appraisal with respect to such Pledged
Mortgage Loan, which evidence may include, but is not limited to, a copy
of such FIRREA Qualifying Appraisal certified by the Company to be a true
and exact copy of the original thereof as maintained in the Company's
files; and
(h) copies of all truth-in-lending disclosures showing compliance
with Regulation Z of the Board of Governors of the Federal Reserve System
and copies
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of all disclosures under the Real Estate Settlement Procedures Act of
1974, as amended.
4.04 Form of Assignments. All assignments executed and delivered by
the Company pursuant to this Section 4 shall be in form satisfactory for
recording in the real estate records of the applicable jurisdiction and in form
and substance acceptable to and approved by the Agent.
4.05 Effect of Transmittal Letters. Any Transmittal Letter delivered
to the Agent hereunder, together with the documents accompanying such
Transmittal Letter, shall conclusively be presumed to have been delivered to the
Agent on behalf of the Company notwithstanding that such Transmittal Letter
shall not have been signed or submitted by a person who has been authorized in
writing to do so by the Company through its Board of Directors or otherwise.
4.06 Endorsement and Delivery of Checks, Etc. The Company will from
time to time whenever an Event of Default exists, upon the request of the Agent,
endorse and deliver to the Agent any draft, check, note or other writing which
evidences a right to the payment of money which constitutes Collateral.
4.07 Defects in Collateral Documentation; Loss of Collateral Value.
A Pledged Mortgage Loan which has been delivered to the Agent under this
Security Agreement in accordance with Section 4.01 or Section 4.02 hereof shall
be and remain Collateral which is subject to the lien and security interest
granted to the Agent under Section 2 hereof until such Pledged Mortgage Loan is
sold to an Investor in accordance with Sections 10.02 and 10.03 hereof (in which
case the proceeds thereof, including, without limitation, any Related
Mortgage-backed Security, shall constitute Collateral) or released pursuant to
Section 10.04 hereof or until this Security Agreement terminates in accordance
with Section 21 hereof, notwithstanding (a) any defect in any document delivered
to the Agent pursuant to Section 4.01, 4.02, or 4.03 hereof, (b) the failure of
such Pledged Mortgage Loan to have or continue to have Warehousing Collateral
Value, (c) the failure of the Company to make timely delivery of any document
required to be delivered to the Agent under Section 4.02 hereof, (d) the failure
of the Company to make timely delivery of any document required to be delivered
to the Agent under Section 4.03 hereof, or (e) any other fact, circumstance,
condition or event whatsoever. For purposes of the preceding sentence, the
funding of the origination or purchase of a Pledged Mortgage Loan from the
proceeds of a Warehousing Loan and/or the assignment of Warehousing Collateral
Value to such Pledged Mortgage Loan by the Agent shall be deemed to be
conclusive evidence of the delivery of such Pledged Mortgage Loan under
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Section 4.01 hereof, notwithstanding any subsequent determination by the Agent
that the documentation delivered for such Pledged Mortgage Loan was incomplete
or defective in any respect or that such Pledged Mortgage Loan should not have
been assigned Warehousing Collateral Value.
Section 5. REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants that: (a) all of the
representations and warranties set forth in the Credit Agreement and the
Subordinated Loan Agreement are true and correct; (b) the Company is or will be
the legal and equitable owner of the Collateral and its interests therein are or
will be free and clear of all liens, security interests, charges and
encumbrances of every kind and nature (other than as created hereunder or under
Take-Out Commitments or under assignments to purchasers under such Take-Out
Commitments); (c) no financing statement or other evidence of lien covering any
of the Collateral is or will be on file in any public office other than
financing statements filed with respect to the Company as debtor and the Agent,
for the benefit of the Secured Parties, as secured party; (d) the Company has
good right, power and lawful authority to pledge, assign and deliver the
Collateral in the manner hereby done or contemplated; (e) no consent or approval
of any governmental body, regulatory authority, person, trust, or entity is or
will be (i) necessary to the validity or enforceability of the rights created
hereunder or (ii) required prior to the assignment, transfer and delivery of any
of the Collateral to the Agent; (f) to the Company's knowledge, no material
dispute, right of setoff, counterclaim or defense exists with respect to all or
any part of the Collateral; (g) this Security Agreement constitutes the legal,
valid and binding obligation of the Company enforceable against the Company and
the Collateral in accordance with its terms (subject to limitations as to
enforceability which might result from bankruptcy, reorganization, arrangement,
insolvency or other similar laws affecting creditors' rights generally); (h) in
making and closing each Pledged Mortgage Loan, the Company has or will have
fully complied in all material respects with, and all collateral documents
delivered with respect to such Pledged Mortgage Loan comply or will comply in
all material respects with, all applicable federal, state and local laws,
regulations and rules, including, but not limited to, (i) usury laws, (ii) the
Real Estate Settlement Procedures Act of 1974, (iii) the Equal Credit
Opportunity Act, (iv) the Federal Truth in Lending Act, (v) Regulation Z of the
Board of Governors of the Federal Reserve System (including, without limitation,
Section 32 thereof, to the extent applicable) and (vi) all other consumer
protection and truth-in-lending laws which may apply, and in each case with the
regulations promulgated in connection therewith, as the same may be amended from
time to time; and the Company shall maintain sufficient
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documentary evidence in its files with respect to such Pledged Mortgage Loans to
substantiate such compliance; (i) the Company has obtained or will obtain prior
to the delivery of any Mortgage Loan to the Agent in accordance with Section
4.01 hereof, and will maintain in its files as agent for the Agent and the
Secured Parties, a FIRREA Qualifying Appraisal with respect to such Mortgage
Loan; (j) immediately upon (i) the execution and delivery of the Credit
Agreement, the Notes and the other Loan Documents, (ii) the acquisition by the
Company of rights in a Mortgage Loan funded by a Warehousing Loan, and (iii) the
execution and delivery to the Agent of an Agreement to Pledge and related
Collateral Identification Letter and Loan Detail Listing in connection with such
Mortgage Loan, the Agent, for the benefit of the Secured Parties, will have a
valid and perfected first priority security interest in such Mortgage Loan and
in the related Mortgage Note and Mortgage evidencing and securing such Mortgage
Loan (without the Agent taking possession of said Mortgage Note) for a period of
21 days from the date such Warehousing Loan is made for the purpose of funding
such Mortgage Loan; (k) upon the delivery of the Mortgage Note evidencing a
Pledged Mortgage Loan to the Agent as contemplated by Section 4.02 hereof, the
Agent, for the benefit of the Secured Parties, shall have a valid and perfected
first priority security interest in such Pledged Mortgage Loan, without regard
to the 21-day temporary perfection period referred to in clause (j) of this
sentence; (l) immediately upon (i) the execution and delivery of the Credit
Agreement, the Notes and the other Loan Documents, (ii) the acquisition by the
Company of rights in such Collateral and (iii) the filing with the Secretary of
State of California of a financing statement showing the Company as debtor and
the Agent for the benefit of the Secured Parties as secured party and describing
the Collateral, the Agent, for the benefit of the Secured Parties, shall have a
valid and perfected first priority security interest in the Collateral which is
other than as described in clauses (j) and (k) of this Section 5, to the extent
that a security interest in such other Collateral can be perfected by filing a
financing statement; (m) each Pledged Mortgage Loan has been fully advanced and
is a first lien on the premises described therein; (n) each Pledged Mortgage
Loan complies with all requirements of this Security Agreement and the Credit
Agreement applicable thereto; (o) except as described in the reports provided by
the Company to the Agent and the Lenders pursuant to Section 4.01 of the Credit
Agreement, or as otherwise disclosed to the Agent and the Secured Parties, there
is no monetary default existing under any Pledged Mortgage Loan that remains in
effect on the date the Compliance/Borrowing Base Certificate for the month in
which such default occurred is required to be delivered to the Agent and the
Lenders pursuant to Section 4.01(c)(ii) of the Credit Agreement and, to the
knowledge of the Company, there is no other default existing under any Pledged
Mortgage Loan; and (p) all Pledged Mortgage Loans secured by properties located
in special flood hazard areas designated by the Secretary of Housing
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and Urban Development are and shall continue to be covered by flood insurance
under the National Flood Insurance Program.
Section 6. POSSESSION OF COLLATERAL; STANDARD OF CARE
The Agent shall exercise reasonable care in the custody and
preservation of the Collateral, shall keep the documents delivered to it in
connection with Pledged Mortgage Loans at a facility protected against fire and
shall keep the Collateral separate from similar collateral furnished by third
parties. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any of the Collateral in its possession if it takes
such action for that purpose as the Company requests in writing, but failure of
the Agent to comply with any such request shall not itself be deemed a failure
to exercise reasonable care, and no failure of the Agent to preserve or protect
any rights with respect to such Collateral not so requested by the Company shall
be deemed a failure to exercise reasonable care in the custody or preservation
of such Collateral. The Agent shall also be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Agent
accords its own property of like kind.
Section 6A. AGENT'S DUTIES
The powers conferred on the Agent hereunder are solely to protect
its interest in the Collateral, for the benefit of the Secured Parties, and
shall not impose any duty upon it to exercise any such powers. Except for the
safekeeping of any Collateral in its possession and the accounting for monies
and for other properties actually received by it hereunder, the Agent shall have
no duty, as to any Collateral, as to ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Collateral, whether or not the Agent has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any Persons or any other rights pertaining to any Collateral.
Section 7. COLLECTIONS ON COLLATERAL BY THE COMPANY; ACCOUNTING
Until the Agent gives notice to the Company pursuant to the
penultimate sentence of this Section 7 or exercises its rights under Section 8
or 13 hereof, the Company shall be entitled to receive all Collections and use
the same in the normal course of business. Upon notice from the Agent to the
Company given after the occurrence and during the continuation of an Event of
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Default or an Unmatured Event of Default, the Company shall furnish to the Agent
not later than the tenth Business Day after the end of each month a report on
all Collections received during the preceding month and provide the same
accounting therefor as the Company customarily furnishes the permanent investors
therein, including with respect to Collections on each Pledged Mortgage Loan:
(a) the name of the Obligor(s), (b) the Company's loan number for such Pledged
Mortgage Loan, (c) the current principal balance of such Pledged Mortgage Loan,
(d) the current escrow balance with respect to such Pledged Mortgage Loan, (e)
the number and amount of past due payments on such Pledged Mortgage Loan and (f)
the amount of the collections received during such month with respect to such
Pledged Mortgage Loan, itemized to show (i) principal portion, (ii) interest
portion and (iii) portion thereof representing amounts paid in escrow for real
estate taxes and insurance.
Upon notice from the Agent to the Company given after the occurrence
and during the continuation of an Event of Default or of an Unmatured Event of
Default, the Company shall hold all collections representing principal payments
and prepayments and interest and escrows for real estate taxes and insurance in
trust for the Secured Parties and shall promptly remit the same to the Agent.
All amounts representing the principal payments and prepayments and interest
delivered to the Agent pursuant to the preceding sentence shall be deposited in
the Collateral Account and all amounts representing real estate taxes and
insurance escrows delivered to the Agent pursuant to the preceding sentence
shall be deposited in an escrow account with any bank satisfactory to the
Company and the Agent, to be held as Collateral for, or applied to, the
Obligations, the Lease Obligations and the Subordinated Note Obligations.
Section 8. COLLECTIONS ON COLLATERAL BY THE AGENT
Upon the occurrence and during the continuation of an Event of
Default or an Unmatured Event of Default, the Agent may at any time and from
time to time, notify and direct any or all Obligors with respect to any of the
Collateral thereafter to make all payments on such Collateral directly to the
Agent, regardless of whether the Company was previously making collections
thereon. The Agent shall promptly account to the Company for all such payments
received by the Agent. Each Obligor making such payment to the Agent shall be
fully protected in relying on the written statement of the Agent that the Agent
then holds the security interests herein granted and assigned, which entitle the
Agent to receive such payment, and the receipt of the Agent for such payment
shall be full acquittance therefor to the Obligor making such payment.
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Section 9. DEFAULTED LOANS; COLLECTION AND FORECLOSURE PROCEEDINGS
If the Company wishes to institute collection or foreclosure
proceedings with respect to a Pledged Mortgage Loan, it shall substitute other
Collateral so that it is entitled pursuant to the terms of the Credit Agreement
to a release of such Pledged Mortgage Loan. If the Company does not own
sufficient other Collateral to obtain a release of such Pledged Mortgage Loan,
then so long as an Event of Default or an Unmatured Event of Default has not
occurred and is continuing, the Agent, upon written request of the Company, will
deliver, upon such terms and conditions as the Agent in its sole discretion may
establish, to an attorney at law, as the agent of the Agent, to the extent
necessary for the purpose of enabling said attorney to institute, in the name of
the Company or the Agent, or in their names or in the names of their nominees,
as the Agent may determine, collection and/or foreclosure proceedings on any
Pledged Mortgage Loan in default the following: (a) the promissory note or other
instrument evidencing such Pledged Mortgage Loan in default and (b) the mortgage
or deed of trust, if any, that secures such promissory note, or other Collateral
needed by said attorney in connection with such collection and/or foreclosure
proceedings in such manner and in such form as the Agent deems necessary or
desirable to preserve its security interest for the benefit of the Secured
Parties in such Collateral, provided such Collateral and all proceeds of any
such collection and/or foreclosure efforts shall remain subject to this Security
Agreement and the security interests granted herein and all such proceeds shall
be delivered to the Agent as and when and in the form received to the extent
required by the terms of the Credit Agreement. The Company hereby covenants and
agrees that, without first obtaining the prior written consent of the Agent, it
will not request or accept any discount on, or any conveyance, endorsement,
transfer or assignment of any right, title or interest in and to any of the
real, personal or mixed properties sold, pledged, mortgaged, hypothecated,
assigned, transferred, set over or conveyed to the Agent for the benefit of the
Secured Parties as security for any of the promissory notes or other instruments
or agreements which evidence Pledged Mortgage Loans in lieu of foreclosure
proceedings if, after giving effect to any such proposed transaction, the
Borrowing Base would be less than the aggregate unpaid principal amount of the
outstanding Warehousing Loans. At such time as such delivery of the Collateral
is no longer required in connection with said collection and/or foreclosure
efforts, to the extent such Collateral has not been released pursuant to this
Security Agreement, the same shall be reassigned and redelivered to the Agent.
Section 10. SALES AND RELEASES OF COLLATERAL
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10.01 Redelivery of Collateral for Correction. If no Event of
Default or Unmatured Event of Default exists, the Agent may redeliver to the
Company, for correction, any instrument or document which constitutes or relates
to any of the Collateral; provided, that any such redelivery shall be made
against a Trust Receipt duly completed and executed by the Company requiring,
within 21 days after the redelivery thereof to the Company, the return to the
Agent of each such instrument and document. The Company shall deliver to the
Agent each such instrument and document as soon as it has completed the
correction thereof and, in any event, within 21 days after its receipt thereof.
10.02 Delivery for Sale of Pledged Mortgage Loans. If no Event of
Default or Unmatured Event of Default exists, the Company may direct the Agent
to, and the Agent will, transmit on behalf of the Company Pledged Mortgage
Loans, accompanied by a duly completed and executed Bailee Letter, to an
Investor who has issued a Take-Out Commitment or a custodian for such Investor
that is acceptable to the Agent. All sale proceeds transferred to the Agent
pursuant to such Bailee Letter and all Mortgage Notes and other documents
returned to the Agent pursuant to such Bailee Letter shall remain a part of the
Collateral unless and until released pursuant to Section 10.04 of this Security
Agreement. If required by the applicable Take-Out Commitment, Pledged Mortgage
Loans may be duly assigned of record to the issuer of such Take-Out Commitment
subject to reassignment if not purchased and with beneficial title to any such
assigned Pledged Mortgage Loans being subject to the above-stated escrow
condition. All Pledged Mortgage Loans which are so transmitted or otherwise
delivered but not paid for shall constitute Collateral and shall, subject to the
limits contained herein, be included in determining the Borrowing Base. The
proceeds received by the Agent from the sale of any Pledged Mortgage Loans
pursuant to this Section 10.02 shall be deposited by the Agent in the Collateral
Account and shall be promptly applied to the payment of principal of the Notes;
provided, however, that if an Event of Default has occurred and is continuing,
such proceeds shall be applied in accordance with Section 17 hereof.
10.03 Formation of Pools. The Agent may, from time to time in its
sole discretion, at the request of the Company, transmit Pledged Mortgage Loans
to a custodian that is acceptable to the Agent in connection with the issuance
of Mortgage-backed Securities and the formation of pools of Mortgage Loans,
subject, however, to the provisions of Sections 6A and 22 hereof. The Agent and
its designated agent shall be entitled to rely on the written instructions of
the Company in this regard and shall have no obligation to act in the absence of
such written instructions.
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10.04 Release of Particular Collateral.
(a) If no Event of Default or Unmatured Event of Default has
occurred which is continuing, the Agent shall, at the written request of
the Company, release its security interest for the benefit of the Lenders
in any item of Collateral specified by the Company in such written
request, provided that, after giving effect to such requested release, the
Borrowing Base (including therein the Warehousing Collateral Value of any
Collateral given in substitution for the Collateral to be released) shall
not be less than the aggregate principal amount outstanding under the
Notes. If the Company requests and is entitled to a release of a Pledged
Mortgage Loan pursuant to the preceding sentence, the Agent shall promptly
redeliver to the Company or its designee (i) the Mortgage Note evidencing
such Pledged Mortgage Loan endorsed without recourse upon, or
representation or warranty by, the Agent or any Secured Party and (ii) a
reassignment, without recourse upon, or representation or warranty by, the
Agent or any Secured Party, of any part of the Collateral that secures
such Mortgage Note.
(b) Whether or not the Company, by the terms of this Section 10.04,
is entitled to a release of the Agent's security interest for the benefit
of the Secured Parties in the Collateral, the Agent shall release such
security interest in any Pledged Mortgage Loan to the extent necessary to
permit the Company to execute any full or partial release of any mortgage,
deed of trust, security agreement, financing statement or other security
instrument or deed which the Company is contractually obligated to release
upon payment thereof or of a minimum release price, provided the Company
arranges to have such payment remitted directly by the applicable Obligor
or closing agent to the Agent for application upon the unpaid principal
amount outstanding under the Notes, unless an Event of Default has
occurred which is continuing, in which case such payment shall be applied
as provided in Section 17 hereof.
(c) Upon the Agent's receipt of the proceeds from the sale of a
Pledged Mortgage Loan delivered to an Investor pursuant to Section 10.02
hereof or to a pool custodian pursuant to Section 10.03 hereof, the
security interest of the Agent for the benefit of the Secured Parties in
such Pledged Mortgage Loan and in the Mortgage Note and other documents
related thereto shall terminate without further action by the Agent.
(d) Upon the Agent's receipt of the proceeds from the sale of a
Related Mortgage-backed Security representing an interest in, or which is
secured by, Pledged Mortgage Loans delivered pursuant to Section 10.03
hereof, the security
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interest of the Agent for the benefit of the Secured Parties in such
Related Mortgage-backed Security and in such Pledged Mortgage Loans shall
terminate without further action by the Agent.
Section 11. FURTHER ASSURANCES
The Company, upon the request of the Agent, will promptly correct
any patent defect, error or omission which may be discovered in the contents of
this Security Agreement or in the execution hereof and will do such further acts
and things, and execute, acknowledge, endorse and deliver such further
instruments, agreements, schedules and certificates, including, but not limited
to, notes, mortgages, deeds of trust, assignments, chattel mortgages, security
agreements and financing statements covering the title to any real, personal or
mixed property now owned or hereafter acquired by the Company and now or
hereafter constituting Collateral, schedules and certificates respecting all or
any of the Collateral at the time subject to the security interest hereunder,
the items or amounts received by the Company in full or partial payment, or
otherwise as proceeds, of any of the Collateral and supplements to and
amendments of this Security Agreement, that the Agent may at any time and from
time to time reasonably request in connection with the administration or
enforcement of this Security Agreement or related to the Collateral or any part
thereof or in order to assure and confirm unto the Agent the rights, powers and
remedies hereunder or to subject all of the real, personal or mixed properties
now owned or hereafter acquired by the Company and now or hereafter constituting
Collateral to, or to confirm or clearly establish that all of said properties
are subject to and encumbered by, a lien to secure the due and punctual payment
of the Obligations, any Lease Obligations or the Subordinated Note Obligations.
Any such instrument, agreement, schedule or certificate shall be executed by a
duly authorized officer of the Company and shall be in such form and detail as
the Agent may reasonably specify. Promptly upon the request of the Agent, the
Company will xxxx, or permit the Agent to xxxx in a reasonable manner, the
Company's books, records and accounts showing or dealing with the Collateral
with a notation clearly setting forth that the Collateral has been assigned to
the Agent, for the benefit of the Secured Parties, which notation shall be in
form and substance satisfactory to the Agent.
The Company will do all acts and things, and will execute and file
or record all instruments (including mortgages, pledges, assignments, security
agreements, financing statements, amendments to financing statements,
continuation statements, etc.) required or reasonably requested by the Agent to
establish, perfect, maintain and continue the perfection and priority of the
security interest of the Agent, for the benefit of the Secured Parties, in the
Collateral and will pay the costs and expenses of: all filings and recordings,
including taxes thereon; all searches necessary or reasonably deemed
18
necessary by the Agent to establish and determine the validity and the priority
of such security interest of the Agent; and also to satisfy all other liens
which in the reasonable opinion of the Agent prejudice, imperil or otherwise
affect the Collateral or the existence or priority of such security interest. A
carbon, photographic or other reproduction of this Security Agreement or of a
financing statement shall be sufficient as a financing statement and may be
filed in lieu of the original in any or all jurisdictions which accept such
reproductions.
The Company shall give at least 30 days' prior written notification
to the Agent of the opening of a new place of business where any of the
Collateral or records relating thereto are to be located and of any change in
the location of its chief executive office. The Company will not permit any
Collateral to be located in any state (and, if any county filing is required, in
any county) in which a financing statement covering such Collateral is required
to be, but has not in fact been, filed to perfect the Agent's security interest,
for the benefit of the Secured Parties, in such Collateral.
Section 12. COVENANTS OF THE COMPANY
So long as this Security Agreement shall remain in effect, the
Company will (a) defend the right, title and interest of the Agent, for the
benefit of the Secured Parties, in the Collateral against the claims and demands
of all Persons; (b) not amend, modify, or waive any of the terms and conditions
of, or settle or compromise any claim in respect of, any Collateral in a manner
which would materially adversely affect the interests of the Agent, for the
benefit of the Secured Parties; (c) not sell, assign, transfer, or otherwise
dispose of, or grant any option with respect to, or pledge or otherwise
encumber, or release, any of the Collateral or any interest therein except in a
manner whereby the Agent alone would be entitled to receive the proceeds
therefrom; (d) notify the Agent and the Secured Parties monthly of any default
that continues beyond any applicable notice or grace period under any Pledged
Mortgage Loan which has Warehousing Collateral Value; (e) maintain, or cause to
be maintained, in its chief executive office or in the offices of a computer
service bureau approved by the Agent, for the processing of Mortgage Notes and
Mortgage-backed Securities, originals, or copies if the original has been
delivered to the Agent, of its Mortgage Notes and all files, surveys,
certificates, correspondence, appraisals, computer programs, tapes, discs,
cards, accounting records and other records, information and data, relating to
the Collateral, and give the Agent written notice of the place where such
records, information and data will be maintained; and (f) maintain sufficient
documentary evidence in its files with respect to each Pledged Mortgage Loan to
substantiate compliance with all applicable federal,
19
state and local laws, regulations and rules, including but not limited to those
specified in Section 5(h) hereof.
Section 13. AGENT APPOINTED ATTORNEY-IN-FACT
The Company hereby appoints the Agent the Company's
attorney-in-fact, with full power of substitution, to submit any Pledged
Mortgage Loan or Mortgage-backed Security which constitutes Collateral and
related documents to a purchaser under a Take-Out Commitment and for the purpose
of carrying out the provisions of this Security Agreement and taking any action
and executing in the name of the Company without recourse to the Agent or any
Lender any instrument, including, but not limited to, the instruments described
in Section 2 hereof, which the Agent may deem necessary or advisable to
accomplish the purpose hereof, which appointment is irrevocable and coupled with
an interest. Without limiting the generality of the foregoing, the Agent shall
have the right and power to receive, endorse and collect checks and other orders
for the payment of money made payable to the Company representing any payment or
reimbursement made under, or pursuant or with respect to, the Collateral or any
part thereof and to give full discharge for the same. The Agent agrees that it
shall not, without further instructions of the Company, exercise the foregoing
power of attorney unless an Event of Default or Unmatured Event of Default has
occurred and is continuing. Whether or not an Event of Default or an Unmatured
Event of Default shall have occurred or be continuing, the Company hereby
authorizes the Agent in its discretion at any time and from time to time to (i)
complete or cause to be completed any assignment of real estate mortgage or deed
of trust which heretofore was, or hereafter at any time may be, executed and
delivered by the Company to the Agent so that such assignment describes a real
estate mortgage or deed of trust which is security for any Pledged Mortgage Loan
now or hereafter at any time constituting Collateral and (ii) complete or cause
to be completed any other assignment or endorsement that was delivered in blank
hereunder.
Section 14. EVENTS OF DEFAULT; REMEDIES
If one or more Events of Default shall occur and be continuing, then
the Agent, in addition to any and all other rights and remedies which it may
then have hereunder, under the Credit Agreement or any other Loan Document, or
under any other instrument, or which the Agent or the Secured Parties may have
at law, in equity or otherwise, may, at its option, (a) in the name of the
Company, or otherwise, demand, collect, receive and receipt for, compound,
compromise, settle and give acquittance for, and prosecute and discontinue any
suits or proceedings in respect of any or all of the Collateral; (b) take any
action which the Agent may deem necessary or desirable in order
20
to realize on the Collateral, including, without limitation, the power to
perform any contract, endorse in the name of the Company without recourse to the
Company any checks, drafts, notes or other instruments or documents received in
payment of or on account of the Collateral; (c) enter upon the premises where
any of the Collateral not in the possession of the Agent is located and take
possession thereof and remove the same, with or without judicial process; (d)
reduce the claims of the Agent or the Secured Parties to judgment or foreclosure
or otherwise enforce the security interests herein granted and assigned, in
whole or in part, by any available judicial procedure; (e) after notification,
if any, provided for herein (the Company agreeing that, to the extent notice of
sale shall be required at law, at least ten days' prior notice to the Company of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification), sell, lease, or
otherwise dispose of, at the office of the Agent, on the premises of the
Company, or elsewhere, all or any part of the Collateral, in its then condition
or following any commercially reasonable preparation or processing, and any such
sale or other disposition may be as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts at any exchange, broker's
board, or at any of the Agent's offices or elsewhere, for cash, or credit, or
for future delivery, without assumption of any credit risk, and upon such other
terms as the Agent may deem commercially reasonable (it being agreed that the
sale of any part of Collateral shall not exhaust the power of sale granted
hereby, but sales may be made from time to time, and at any time, until all the
Collateral has been sold or until all Obligations, Lease Obligations and
Subordinated Note Obligations have been fully paid and performed, and it being
further agreed that the Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given, and that the Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was adjourned), and at any such sale it
shall not be necessary to exhibit any of the Collateral; (f) at its discretion,
surrender any policies of insurance on the Collateral consisting of real or
personal property owned by the Company and receive the unearned premiums, and in
connection therewith the Company hereby appoints the Agent as the agent and
attorney-in-fact for the Company to collect such premiums; (g) at its
discretion, retain the Collateral in satisfaction of the Obligations, the Lease
Obligations and the Letter of Credit Obligations whenever the circumstances are
such that the Agent and the Secured Parties are entitled to do so under the Code
(as defined below) or otherwise; (h) exercise any and all other rights, remedies
and privileges which the Agent may have under this Security Agreement, or any of
the other promissory notes, assignments, mortgages, deeds of trust, chattel
mortgages, security agreements, transfers of lien, and any other instruments,
documents, and agreements executed and delivered pursuant to the terms hereof or
pursuant to the terms of the Credit Agreement; and (i) exercise any other remedy
21
available to it as a secured party under the Uniform Commercial Code of the
State of Minnesota or of any other pertinent jurisdiction (the "Code"). The
Company acknowledges and agrees that (x) a private sale of the Collateral
pursuant to any Take-Out Commitment or other arrangement entered into by the
Company shall be deemed to be a sale of the Collateral in a commercially
reasonable manner and (y) the Collateral is intended to be sold and none of the
Collateral is a type or kind intended by the Company to be held for investment
or any purpose other than for sale.
Section 15. WAIVERS
The Company, for itself and all who may claim under the Company, as
far as the Company now or hereafter lawfully may, also waives all right to have
all or any portion of the Collateral marshalled upon any foreclosure hereof and
agrees that any court having jurisdiction over this Security Agreement may order
the sale of all or any portion of the Collateral as an entirety. Any sale of, or
the grant of options to purchase (for the option period thereof or after
exercise thereof), or any other realization upon, all or any portion of the
Collateral under clause (e) of Section 14 hereof shall operate to divest all
right, title, interest, claim and demand, either at law or in equity, of the
Company in and to the Collateral so sold, optioned or realized upon, and shall
be a perpetual bar both at law and in equity against the Company and against any
and all persons claiming or attempting to claim the Collateral so sold, optioned
or realized upon or any part thereof, from, through and under the Company. No
delay on the part of the Agent in exercising any power of sale, lien, option or
other right hereunder and no notice or demand which may be given to or made upon
the Company with respect to any power of sale, lien, option or right hereunder
shall constitute a waiver thereof, or limit or impair the right of the Agent,
any Lender, the Lessor or the Subordinated Noteholder to take any action or to
exercise any power of sale, lien, option or any other right under this Security
Agreement, the Credit Agreement, any other Loan Document, any lease agreement,
the Subordinated Loan Agreement, the Subordinated Note or otherwise, nor shall
any single or partial exercise thereof, or the exercise of any power, lien,
option or other right under this Security Agreement or otherwise, all without
notice or demand (except as otherwise provided by the terms of this Security
Agreement), prejudice their rights against the Company in any respect. Each and
every remedy given the Agent or any Secured Party shall, to the extent permitted
by law, be cumulative and shall be in addition to any other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.
Section 16. NOTICE OF SALE OF COLLATERAL
22
The Company acknowledges and agrees that Mortgage Loans and
Mortgage-backed Securities are property of a type customarily sold on a
recognized market, and that accordingly the Agent may (a) sell or otherwise
dispose of the Collateral without notification, advertisement, or other notice
of any kind, and (b) purchase the Collateral at a private sale thereof. To the
extent notice of sale or other disposition of any of the Collateral is required
by law, it is agreed that notice sent or given not less than ten (10) calendar
days prior to the taking of the action to which the notice relates is reasonable
notification and notice of the purposes of this Section 16. All notices and
other communications provided for in this Security Agreement shall be given to
the parties at their respective addresses described in Section 19.
Section 17. APPLICATION OF PROCEEDS
Until the Company has paid all Obligations, Lease Obligations and
Subordinated Note Obligations in full, any and all proceeds ever received by the
Agent from any sale or other disposition of the Collateral, or any part thereof,
or the exercise of any other remedy pursuant to Section 8 hereof or by virtue of
Section 14 hereof, shall be applied by the Agent as follows:
FIRST, ratably to the payment of the costs and expenses of the Agent
and the Secured Parties in connection with the enforcement of this
Security Agreement (including, without limitation, any costs or expenses
related to the sale or other disposition of the Collateral) and the
reasonable fees and out of pocket expenses of counsel employed in
connection therewith, to the payment of all costs and expenses incurred by
the Agent in connection with the administration of this Security Agreement
and to the payment of all advances made by the Agent and the Secured
Parties for the account of the Company hereunder, to the extent that such
costs, expenses and advances have not been reimbursed to the Agent and the
Secured Parties, as the case may be;
SECOND, to the payment in full of the principal of and any Balances
Deficiency Fees, Usage Fees, facility fees and interest on the Notes;
THIRD, to the payment of all other Obligations, as provided in the
Credit Agreement, as the Agent or the Lenders may determine;
FOURTH, to the payment in full of the Lease Obligations, as provided
in the Lease Agreements, or otherwise, in such order as the Lessor may
determine;
23
FIFTH, to the payment in full of the Subordinated Note Obligations
until all of the Subordinated Note Obligations have been paid in full;
SIXTH, the balance (if any) of such proceeds shall be paid to the
Company, its successors or assigns, or as a court of competent
jurisdiction may direct; provided, that if such proceeds are not
sufficient to satisfy the Obligations, the Lease Obligations and the
Subordinated Note Obligations in full, the Company shall remain liable to
the Agent, the Lenders, the Lessor and the holder(s) of the Subordinated
Note, as applicable, for any deficiency.
The Company hereby agrees to pay all expenses incurred by the Agent or the
Secured Parties in the collection of the Collateral, including the reasonable
attorneys' fees incurred in connection therewith by the Agent or the Secured
Parties.
Section 18. AMENDMENTS AND MODIFICATIONS.
No amendment to this Security Agreement, waiver of any provision of
this Security Agreement or consent to any departure by the Company therefrom
shall in any event be effective unless the same shall be in writing and signed
or consented to in writing by the Agent (with the consent of the Required
Lenders, the Lessor and the Subordinated Noteholder), and any such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.
Section 19. NOTICES.
Except as otherwise specifically provided for herein, all notices
and other communications provided for herein shall be in writing (including
teletransmission communication) and, unless otherwise required herein or by law,
shall be teletransmitted, mailed or delivered to the intended recipient at the
"Address for Notices" specified (i) in the case of the Agent or the Lenders, in
the Credit Agreement, (ii) in the case of the Company, in the Credit Agreement,
(iii) in the case of the Lessor, by the Lessor to the Company from time to time,
and (iv) in the case of the Subordinated Noteholder, in the Subordinated Loan
Agreement. All notices and other communications hereunder shall be effective
when transmitted by telex or telecopier, delivered or, in the case of a mailed
notice or notice sent by overnight courier, upon receipt thereof as conclusively
evidenced by the signed receipt therefor, in each case given or addressed as
aforesaid.
Section 20. INDEMNIFICATION AND COSTS AND EXPENSES
24
The Company will (a) pay all reasonable out-of-pocket expenses,
including, without limitation, any recording or filing fees, fees of title
insurance companies in connection with records or filings, costs of mortgage
insurance policies and endorsements thereof and mortgage registration taxes (or
any similar fees or taxes), incurred by the Agent or any Secured Party in
connection with (i) the enforcement and administration of this Security
Agreement (whether or not the transactions hereby contemplated shall be
consummated), and (ii) the enforcement of the rights of the Agent and the
Secured Parties in connection with this Security Agreement, including, without
limitation, the reasonable fees and disbursements of counsel for the Agent and
the Secured Parties; (b) pay, and hold the Agent and the Secured Parties
harmless from and against, any and all present and future stamp and other
similar taxes with respect to the foregoing matters, and save the Agent and the
Secured Parties harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes; and (c)
pay, and indemnify and hold harmless the Agent and the Secured Parties from and
against, any and all liabilities, obligations, losses, damages, penalties,
judgments, suits, costs, expenses and disbursements of any kind whatsoever (the
"Indemnified Liabilities") which may be imposed on, incurred by or asserted
against any of them in any way relating to or arising out of this Security
Agreement or any of the transactions contemplated hereby or thereby, WHETHER OR
NOT THE SAME ARE CAUSED BY THE SIMPLE NEGLIGENCE OF THE AGENT OR ANY SECURED
PARTY, unless the same are caused by the gross negligence or willful misconduct
of the Agent or such Secured Party, as the case may be. The undertakings of the
Company set forth in this Section 20 shall survive the payment in full of the
Obligations, the Lease Obligations, the Subordinated Note Obligations, and the
termination of this Security Agreement, the Credit Agreement, the other Loan
Documents, all Lease Agreements, the Subordinated Loan Agreement and the
Subordinated Note.
Section 21. TERMINATION
This Security Agreement shall terminate when all the Obligations,
Lease Obligations and Subordinated Note Obligations have been fully and
indefeasibly paid and performed and the Commitments, all Lease Agreements and
the Subordinated Loan Agreement have expired, at which time the Agent shall
reassign and redeliver, without recourse upon, or representation or warranty by,
the Agent or any Secured Party and at the expense of the Company, to the
Company, or to such other Person or Persons as the Company shall designate,
against receipt, such of the Collateral (if any) as shall not have been sold or
otherwise disposed of by the Agent pursuant to the terms hereof, of the Credit
Agreement, the other Loan Documents, any Lease Agreement, the Subordinated Loan
Agreement and the Subordinated Note, and shall still be held by the Agent,
together
with appropriate instruments of reassignment and release; provided, however,
that this Security Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Obligations, the Lease
Obligations, or the Subordinated Note Obligations is rescinded or must otherwise
be returned by the Agent or any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Company or otherwise, all as
though such payment had not been made.
Section 22. NON-ASSUMPTION OF LIABILITY; NO FIDUCIARY RESPONSIBILITY
Nothing herein contained shall relieve the Company from performing
any covenant, agreement or obligation on the part of the Company to be performed
under or in respect of any of the Collateral or from any liability to any party
or parties having an interest therein or impose any liability on the Agent or
any Secured Party for the acts or omissions of the Company in connection with
any of the Collateral. The Agent and the Secured Parties shall not assume or
become liable for, nor shall any of them be deemed or construed to have assumed
or become liable for, any obligation of the Company with respect to any of the
Collateral, or otherwise, by reason of the grant to the Agent, for the benefit
of the Secured Parties, of security interests in the Collateral. While the Agent
shall use reasonable care in the custody and preservation of the Collateral as
provided in Section 6 hereof, the Agent shall not have any fiduciary
responsibility to the Company with respect to the holding, maintenance or
transmittal of the Collateral delivered hereunder.
Section 23. WAIVERS, ETC.
No failure on the part of the Agent to exercise, and no delay in
exercising, any power or right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any power or right preclude any other or
further exercise thereof or the exercise of any other power or right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 24. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL
THIS SECURITY AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAW, BUT NOT THE LAW OF
CONFLICTS, OF THE STATE OF
MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. THE COMPANY HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION AND VENUE OF ANY MINNESOTA
STATE OR FEDERAL COURT SITTING IN HENNEPIN OR XXXXXX COUNTIES, STATE OF
MINNESOTA, FOR ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
SECURITY AGREEMENT, AND THE COMPANY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
MINNESOTA STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.
THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO, THE DEFENSE OF AN INCONVENIENT FORUM AND VENUE OBJECTIONS TO THE
MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING. THE COMPANY HEREBY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED
OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 19 OF THIS SECURITY
AGREEMENT, AND SERVICE SO MADE SHALL BE DEEMED COMPLETED ON THE THIRD BUSINESS
DAY AFTER SUCH SERVICE IS DEPOSITED IN THE MAIL. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE AGENT, ANY LENDER, THE LESSOR, THE SUBORDINATED NOTEHOLDER OR ANY
OTHER INDEMNIFIED PERSON TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
THE COMPANY AND THE AGENT HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 25. MISCELLANEOUS
(a) Benefit of Agreement. This Security Agreement shall be binding
upon and inure to the benefit of the Company and the Agent and their
respective successors and assigns, and shall inure to the benefit of the
Secured Parties and their respective successors and assigns, except that
the Company may not assign or transfer any of its rights or obligations
under this Security Agreement without the prior written consent of the
Secured Parties.
(b) Successor Collateral Agent. In the event a successor Agent is
appointed pursuant to the Credit Agreement, such successor Agent shall
also succeed to the duties and responsibilities of the Agent hereunder.
From and after the payment in full of all of the Obligations and the
termination of the Commitments, the Agent under the Credit Agreement at
the time of such payment and termination shall remain the Agent hereunder
until the Lease Obligations and the Subordinated Note Obligations have
been paid in full and all Lease Agreements and the Subordinated Note
Agreement have been terminated; provided, however, that if any Person
other than USBNA is the Agent hereunder at such time, USBNA may direct
that such Person resign as Agent and appoint USBNA as successor Agent
hereunder.
(c) No Commitment by Lessor or Subordinated Noteholder. Nothing in
this Security Agreement shall be construed as a commitment on the part of
the Lessor to lease any equipment or make any loan, or on the part of the
Subordinated Noteholder to extend any loan pursuant to the Subordinated
Loan Agreement or the Subordinated Note, under any existing agreement or
otherwise, to or for the account of the Company or NCFC.
(d) Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants made by the Company to the Agent
or any Secured Party in connection with this Security Agreement shall
survive the execution and delivery of this Security Agreement. All
statements contained in any certificate or other instrument delivered to
the Agent or any Secured Party pursuant to this Security Agreement shall
be deemed representations, warranties and covenants hereunder of the
Company.
(e) Headings. Section headings in this Security Agreement are for
convenience of reference only, and shall not govern the interpretation of
any of the provisions of this Security Agreement.
(f) Execution in Counterparts. This Security Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and either of the parties hereto
may execute this Security Agreement by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be executed as of the day and year first above written.
NEW CENTURY MORTGAGE
CORPORATION
By /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Its EVP/COO
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U.S. BANK NATIONAL ASSOCIATION,
as Agent
By /s/ Xxxxx Xxxxxxx
-----------------------------------
Its
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[Signature Page to Amended and Restated Pledge and Security Agreement]
