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EXHIBIT 10(B)
THIRD AMENDED AND RESTATED
SECURITY AND COLLATERAL AGENCY AGREEMENT
THIS THIRD AMENDED AND RESTATED SECURITY AND COLLATERAL AGENCY
AGREEMENT (the " Security Agreement") is made and dated as of July 25, 1997, by
and among SOURCE ONE MORTGAGE SERVICES CORPORATION, a Delaware corporation (the
"Company"), THE MORTGAGE AUTHORITY, a Delaware corporation ("TMA"), CENTRAL
PACIFIC MORTGAGE COMPANY, a California corporation ("CPM"), THE FIRST NATIONAL
BANK OF CHICAGO, a national banking association, acting in its capacity as
administrative agent for the lenders from time to time participating in the
Credit Agreement (as defined below) (in such capacity, the "Credit Agent"), and
NATIONAL CITY BANK OF KENTUCKY, a national banking association, as collateral
agent for the Secured Parties (as defined below) (in such capacity, the
"Collateral Agent").
RECITALS
A. This Third Amended and Restated Security and Collateral Agency
Agreement amends and restates in its entirety that certain Second Amended and
Restated Security and Collateral Agency Agreement dated as of November 12, 1996
(the "Second Amended Agreement"), by and among the parties hereto and Norwest
Bank Minnesota, N.A., as the Successor Trustee under the Indentures (as defined
in the Second Agreement).
B. Pursuant to that certain Third Amended and Restated Revolving
Credit Agreement of even date herewith (the "Credit Agreement"), the Lenders
agreed to extend credit to the Company, TMA and CPM on the terms and subject to
the conditions set forth therein. The Credit Agreement amends and restates in
its entirety that certain Second Amended and Restated Revolving Credit
Agreement dated as of November 12, 1996 by and among the Company, TMA, CPM,
First Chicago and certain of the other Lenders. Capitalized terms not
otherwise defined herein are used with the same meanings as in the Credit
Agreement.
C. TMA and CPM (each a "Borrowing Subsidiary") are wholly-owned
subsidiaries of the Company. Up to $1,000,000 of the Aggregate Commitment is
available to TMA and up to $50,000,000 of Advances are available to CPM. Also,
portions of the funds loaned to the Company under the Credit Agreement may also
be distributed
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by the Company to the Borrowing Subsidiaries to enable the Borrowing
Subsidiaries to originate or acquire Mortgage Loans, which Mortgage Loans may
constitute a portion of the Collateral.
D. As a condition precedent to the effectiveness of the Credit
Agreement, the Credit Agent has required the execution and delivery of this
Security Agreement in order to, among other things, create a first priority
perfected security interest in the Collateral in favor of the Lenders, the
Non-Lender Balance Banks (to the extent of any Credit Indebtedness owed to such
Non-Lender Balance Banks), the Credit Agent and the Collateral Agent,
(collectively, the "Secured Parties") to secure payment of the Credit
Indebtedness (the "Secured Debt").
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENTS
1. Appointment of Collateral Agent. Each Lender and Non-Lender
Balance Bank has, pursuant to the terms of the Credit Agreement, appointed the
Collateral Agent to act as secured party, agent, bailee and custodian for the
exclusive benefit of the Secured Parties with respect to the Collateral. The
Collateral Agent hereby accepts such appointment and agrees to maintain and
hold, or cause to be maintained and held, all Collateral at any time delivered
to it or any of its subagents as secured party, agent, bailee and custodian for
the exclusive benefit of the Secured Parties. The Collateral Agent, the
Borrowing Subsidiaries and the Company agree that the Collateral Agent is
acting and will act with respect to the Collateral for the exclusive benefit of
the Secured Parties and is not, and shall not at any time in the future be,
subject, with respect to the Collateral, in any manner or to any extent, to the
direction or control of the Company or any Borrowing Subsidiary except as
expressly permitted hereunder and under the other Credit Documents. The
Collateral Agent agrees to act in accordance with this Security Agreement and
in accordance with any written instructions properly delivered pursuant hereto.
Under no circumstances shall the Collateral Agent deliver, or cause to be
delivered, possession of Collateral to the Company or any Borrowing Subsidiary
except in accordance with the express terms of this Security Agreement or the
other Credit Documents.
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2. Delivery and Categorization of Collateral.
(a) Mortgage Loans. The Company and each Borrowing
Subsidiary (each such entity, with respect to any Pledged Item owned by such
entity, is referred to herein as the "Pledgor") shall deliver Collateral
Transmittals to the Collateral Agent from time to time identifying Mortgage
Loans that the Pledgor intends to include in Collateral by delivering to the
Collateral Agent the Required Mortgage Documents (as described on Schedule A
attached hereto) for such Mortgage Loans. Such delivery shall be made prior to
inclusion of such Mortgage Loans in Collateral, other than for AP Mortgages
identified in the Collateral Transmittal and covered by an AP Notice. The
Collateral Agent shall review the Required Mortgage Documents in accordance
with the review steps described on Exhibit 1 hereto.
(b) AP Notices. The Collateral Agent, upon receipt of a
Collateral Transmittal describing the AP Mortgages to be covered by an AP
Notice and an AP Notice as of that date, shall (subject to the eligibility
requirements set forth in the Credit Agreement) include such AP Mortgages as
Eligible Collateral in the Collateral Value Determination (as defined Paragraph
6(a) below). The Pledgor shall deliver the Required Mortgage Documents for
each such AP Mortgage not later than the tenth (10th) Business Day after the
date such AP Mortgage is first so included as an Eligible AP Mortgage. If the
Required Mortgage Documents for any AP Mortgage are not delivered by such 10th
Business Day, the Credit Agent or the Collateral Agent may request that the
Pledgor advise the Collateral Agent and the Credit Agent in writing of the
specific reason that such Required Mortgage Documents were not delivered, and
the Pledgor shall so advise the Collateral Agent and the Credit Agent within 30
days after such request.
(c) Securities. The Pledgor may, from time to time,
deliver Securities to the Collateral Agent or an Approved MBS Custodian and
shall provide such evidence that such Securities are either (a) in a
certificated form, with the certificates evidencing such Securities being
delivered to the Collateral Agent or such Approved MBS Custodian, or (b) in
book entry or uncertificated form with evidence that the Collateral Agent or
such Approved MBS Custodian has been identified as the nominal owner of such
Securities in the records of a Federal Reserve Bank or other institution
authorized by the applicable Federal Agency to maintain
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ownership records in respect of such Securities.
(d) Repurchased Agency Loans and Receivables. The
Company shall identify Repurchased Agency Loans and Receivables from time to
time by providing a list of such items to the Collateral Agent. Such list
shall include statements indicating (i) the identification number of each such
Mortgage Loan, (ii) its unpaid principal balance, (iii) the "paid-to" date for
such Mortgage Loan, (iv) the date on which such Mortgage Loan was purchased by
the Company out of the applicable pool, (v) whether or not such Mortgage Loan
has been reinstated and the payment defaults thereunder cured by the mortgagor,
(vi) the date on which any foreclosure sale with respect to such Mortgage Loan
has occurred, (vii) the status of the related claim against the VA or FHA or
HUD, and (viii) whether the borrower of the Mortgage Loan filed a voluntary
bankruptcy petition or had an involuntary bankruptcy petition filed against it
while the payments on such Mortgage Loan were past due. The Company shall
provide a weekly update of such information to the Collateral Agent by 5:00
p.m. (Chicago time) on the last Business Day of each week with regard to any
Repurchased Agency Loans and Receivables previously identified as being
included in Collateral, which update shall be as of the close of business on
the second to last Business Day of such week, and which information shall be
used for Collateral Value Determinations during the following week. The
Collateral Agent shall have the right at any time at the direction of the
Aggregate Required Lenders, to require the Company to submit all Required
Mortgage Documents and item number 4 from the Additional Required Mortgage
Documents for any Repurchased Agency Loan and Receivable then being included in
Collateral, and the Collateral Agent shall request the submission of such
documents at the direction of the Credit Agent. In addition, the Company shall
provide, at the request of the Collateral Agent or the Credit Agent, claim
forms to FHA or VA or HUD for each such Repurchased Agency Loan and Receivable,
identifying the Collateral Agent as the "investor" thereunder so that any
payments made by FHA or VA or HUD with respect to such Mortgage Loan shall be
paid to the Collateral Agent rather than the Company. In addition, with
respect to those Repurchased Agency Loans and Receivables for which there has
been a foreclosure sale of the underlying property, the Credit Agent shall have
the right to require the Company to provide a new mortgage in favor of the
Collateral Agent on the real estate and improvements that previously secured
such Repurchased Agency Loan and Receivable, all
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in form satisfactory to the Credit Agent and Collateral Agent and at the
Company's sole cost and expense, including the cost of recording such mortgage
if required by the Credit Agent.
(e) Servicing Sale Receivables. The Company may, in
connection with a sale of Servicing Agreements from the Company to a Servicing
Purchaser, pledge the Servicing Sale Receivables due in connection with such
sale to the Collateral Agent as Collateral. If the Company so pledges
Servicing Sale Receivables to the Collateral Agent, the Company shall (i)
deliver to the Credit Agent and the Collateral Agent a complete executed copy
of the related purchase agreement and written confirmation from the Servicing
Purchaser as to the amount of such Pledged Servicing Sale Receivables, (ii)
assign its rights to such Pledged Servicing Sale Receivables to the Collateral
Agent for the benefit of the Secured Parties pursuant to an assignment in form
and content satisfactory to the Required Lenders, and (iii) cause the Servicing
Purchaser of the applicable sold Servicing Agreements to execute an agreement
in form and content satisfactory to the Required Lenders pursuant to which the
Servicing Purchaser shall agree to (A) pay such Pledged Servicing Sale
Receivables directly to the Collateral Agent for the benefit of the Secured
Parties, and (B) provide simultaneous written notice to the Credit Agent and
the Collateral Agent of any claims made against or notices given to the Company
which would constitute an offset to or reduction in the amount of such Pledged
Servicing Sale Receivables.
(f) Identification of Collateral. All Mortgage Loans and
Securities at any time delivered to the Collateral Agent hereunder shall be
held by the Collateral Agent in a fire resistant vault, drawer or other
suitable depositary maintained in accordance with Federal Agency standards and
controlled solely by the Collateral Agent, conspicuously marked to show the
respective interests of the Secured Parties therein and not commingled with any
other assets or property of, or held by, the Collateral Agent. Accordingly, if
(pursuant to Paragraph 7(b) below) the Collateral Agent receives a shipping
request pursuant to which National City Bank of Kentucky is to retain physical
possession of the applicable Mortgage Loans or Securities as an agent for any
Person other than the Secured Parties, the Collateral Agent shall physically
separate such Mortgage Loans or Securities from the remainder of the Collateral
and shall execute any transmittal letters required under Paragraph 7(b) below.
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3. Grant of Security Interest. The Company, with respect to
Collateral owned by the Company, and each Borrowing Subsidiary, with respect to
Collateral owned by the applicable Borrowing Subsidiary, hereby pledges,
assigns and grants to the Collateral Agent for the benefit of the Secured
Parties, a first priority security interest in the property described in
Paragraph 4 below (collectively and severally, the "Collateral"), to secure
payment of the Secured Debt. Furthermore, each AP Notice shall create a
security interest in favor of the Collateral Agent for the benefit of the
Secured Parties in the AP Mortgages identified therein. By delivering an AP
Notice, the Company represents and warrants that each AP Mortgage identified
therein constitutes an Eligible AP Mortgage. The Company agrees that while it
is in possession of any Required Mortgage Documents for an AP Mortgage, it will
hold same in trust and as agent and bailee for the Collateral Agent for the
benefit of the Secured Parties, without authority to make any other disposition
thereof, or of the proceeds thereof. The Company assumes the responsibility
for loss or destruction of any such Required Mortgage Documents until the same
are delivered to the Collateral Agent.
Unless so directed by the Credit Agent when an Event of Default has
occurred and is continuing, the Collateral Agent shall not record the
assignment of mortgage or deed of trust delivered in connection with any
Pledged Mortgage.
4. Collateral. The Collateral shall consist of all right, title
and interest of the Company and the Borrowing Subsidiaries, as applicable, of
every kind and nature, in and to all of the following property, assets and
rights of the Company and the Borrowing Subsidiaries wherever located, whether
now existing or hereafter arising, and whether now or hereafter owned or
acquired by or accruing or owing to the Company or a Borrowing Subsidiary, and
all proceeds and products thereof (including all proceeds in the Settlement
Account and Custodian Settlement Accounts from time to time):
(a) all Pledged Mortgages;
(b) all Pledged Securities;
(c) any commitments or other agreements issued by any
private mortgage insurer or by the FHA or VA to insure or guarantee
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any Pledged Mortgage;
(d) all commitments of FNMA, FHLMC or other Persons to
purchase Pledged Items from the Company or any Borrowing Subsidiary or exchange
Securities with the Company or any Borrowing Subsidiary for Pledged Items;
(e) any options to sell or purchase Securities, future
contracts, or any other interest rate protection products which directly or
indirectly protect the Company or any Borrowing Subsidiary against reductions
in value of such Pledged Items due to changes in mortgage interest rates;
(f) the Settlement Account and any Custodian Settlement
Accounts and any amounts standing to the credit of the Settlement Account and
any Custodian Settlement Accounts then in existence with Approved MBS
Custodians, as described in Paragraph 7(c) of this Security Agreement;
(g) all VA Mortgage Loans or FHA Mortgage Loans (plus any
REO or accounts receivable from FHA or VA resulting therefrom, including
guaranty claims against VA and insurance claims against FHA or HUD) which are
repurchased by the Company from Security holders and pledged to the Collateral
Agent as security for the Secured Debt;
(h) all cash and Cash Equivalents held by the Credit
Agent or Collateral Agent as security for the Secured Debt;
(i) all Pledged Servicing Sale Receivables; and
(j) all property and proceeds related to the foregoing,
including without limitation, the right to service Pledged Mortgages while
owned by the Company or any Borrowing Subsidiary, all files, surveys,
certificates, correspondence, appraisals, computer programs, tapes, disks,
cards, accounting records and other records and data of the Company related to
the Pledged Mortgages, all accounts and general intangibles of whatsoever kind
so related and all documents or instruments delivered to the Credit Agent or
the Collateral Agent in respect of any Pledged Item, including, without
limitation, the right to receive all insurance proceeds and condemnation awards
which may be payable in respect of the premises encumbered by any Pledged
Mortgage.
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5. Collateral Agent's Review of Collateral. Upon any receipt of
Required Mortgage Documents for any Mortgage Loan, the Collateral Agent shall
review the same and verify that:
(a) All Required Mortgage Documents relating to such
Mortgage Loan appear regular on their face (as determined by the Collateral
Agent in its reasonable discretion) and are in the Collateral Agent's
possession; and
(b) The statements set forth on Exhibit 1 hereto are
accurate and complete in all material respects.
If the Collateral Agent notes any exception in the review described in
subparagraph (a) or (b) above or questions, in its reasonable discretion, the
genuineness, regularity, propriety, or accuracy of any item of Collateral, the
Collateral Agent shall not include such item as Eligible Collateral in its next
Collateral Value Determination (as defined in Paragraph 6(a) below) delivered
to the Credit Agent. In the event that the Pledgor has been requested by the
Credit Agent or the Collateral Agent to deliver the "Additional Required
Mortgage Documents" (as described on Schedule B attached hereto) with respect
to any Mortgage Loan, the Collateral Agent shall review and verify such
Additional Required Mortgage Documents consistent with the obligations of the
Collateral Agent above.
6. Collateral Value Determination; Determination Assumptions.
(a) On each Business Day the Collateral Agent shall
compute the value of the Borrowing Base and notify the Credit Agent thereof (a
"Collateral Value Determination") by sending a facsimile copy or electronic
transmission of a report ("Borrowing Base Report") in the form of Schedule C
hereto (or such other form as may be mutually agreed to by the Collateral Agent
and the Credit Agent) prior to 11:00 a.m. (Chicago time). With respect to any
Required Mortgage Documents delivered to the Collateral Agent by 10:00 a.m.
(Chicago time) on any Business Day, the Collateral Agent shall review such
Required Mortgage Documents in the manner set forth in Paragraph 5 above in
time to include the related Mortgage Loans (to the extent they constitute
Eligible Collateral) in the Borrowing Base Report delivered at 11:00 a.m.
(Chicago time) on such Business Day. If the Company or the Credit Agent
reasonably believes that the value of the Borrowing Base has changed since the
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11:00 Borrowing Base Report, the Collateral Agent shall, at the request of the
Company or the Credit Agent made by facsimile prior to 2:00 p.m. (Chicago
time) on any Business Day, recompute the Borrowing Base and notify the Credit
Agent thereof by telephone and by a facsimile transmission of a Borrowing Base
Report. Notwithstanding the foregoing, so long as the security interest in the
Collateral is abated as described in Paragraph 8, the Company shall perform all
of the obligations of the Collateral Agent with respect to determining the
Borrowing Base, and the Collateral Agent shall have no duty to compute the
Borrowing Base or submit Borrowing Base Reports.
(b) In making any Collateral Value Determination or other
calculation involving a determination of the value of the Borrowing Base, the
Collateral Agent shall be permitted to rely, without independent investigation
of the correctness thereof, on:
(1) The information supplied by the Pledgor to
the Collateral Agent on the related Collateral Transmittal, with
respect to the net acquisition cost (including any discounts and
excluding any servicing released premium) of any Mortgage Loan, the
unpaid principal balance of any Mortgage Loan as of the Pledge Date
therefor, and the weighted average purchase price (expressed as a
percentage of par) committed to under those Approved Investor
Commitments which could cover such Mortgage Loan;
(2) The most recent information supplied by the
Company to the Collateral Agent with respect to (i) the number of days
by which payments on any Mortgage Loan constituting Collateral are
past due, (ii) the date of any foreclosure sale or transfer in lieu of
foreclosure with respect to a repurchased Mortgage Loan constituting a
Repurchased Agency Loan and Receivable, (iii) the date of any
reinstatement of any Repurchased Agency Loans and Receivables, (iv)
the value of any REO and accounts receivable (including proceeds of
FHA insurance or VA guaranties) acquired in connection with a
foreclosure sale or a transfer in lieu of foreclosure of Eligible
Repurchased Agency Loans and Receivables, and (v) whether the borrower
of any Mortgage Loan which is included in Repurchased Agency Loans and
Receivables filed a voluntary bankruptcy petition or had an
involuntary bankruptcy petition filed against it while the payments on
such Mortgage Loan were
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past due;
(3) The information supplied by the Company to
the Collateral Agent, whether written or in any other form acceptable
to the Collateral Agent, with respect to a determination as to whether
amounts received in the Settlement Account represent the purchase
price paid for a specific Mortgage Loan or Security and, consequently,
whether the Mortgage Collateral Value of such Mortgage Loan or MBS
Value of such Security should be removed from such calculation;
(4) The most recent information supplied by the
Credit Agent to the Collateral Agent with respect to (i) the amount of
the then current Aggregate Commitment, and (ii) the current balance in
the Settlement Account;
(5) The most recent information supplied by the
Company and the Servicing Purchaser(s) to the Collateral Agent with
respect to the amount of Servicing Sale Receivables; and
(6) Any information supplied by the Credit Agent,
the Company, or any other custodian of any of the Collateral, to the
Collateral Agent unless the Collateral Agent has actual knowledge that
such information is untrue or unreliable.
Furthermore, the Collateral Agent may rely on information
supplied by the Company with respect to the effect of the Borrowing Base
Sublimits on the value of the Borrowing Base attributable to Repurchased Agency
Loans and Receivables, which information shall be supplied by the Company on
the last Business Day of each week with respect to the value of the Borrowing
Base attributable to Repurchased Agency Loans and Receivables as of the close
of the second to last Business Day of such week which information shall be used
by Collateral Agent beginning with the first Collateral Value Determination
made during the following week; provided, however, that the Collateral Agent
shall (on the last Business Day of each month) verify the accuracy of the
information supplied by the Company in the most recent report of such
information and report to the Credit Agent any discrepancies between such
information as supplied by the Company and such information as calculated by
the Collateral Agent. The information as calculated by the Collateral Agent
shall be included in each daily Borrowing Base Report until the Company again
provides its next weekly report of the value of
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the Borrowing Base attributable to Repurchased Agency Loans and Receivables.
(c) The Collateral Agent is hereby authorized by the
Credit Agent to grant temporary waivers of strict compliance by the Company
with the eligibility requirements regarding qualification of any item of
Collateral as Eligible Collateral or with the Borrowing Base Sublimits when the
Collateral Agent deems it appropriate, in its sole discretion, (i) up to any
amount for up to three (3) Business Days, if the satisfaction of such
eligibility requirements or sublimits cannot be independently determined
because of events beyond the reasonable control of the Company (e.g. natural
disasters, transmission failures, etc.), provided that, if such determination
cannot be made for more than one (1) Business Day, the Company certifies in
writing that all such eligibility requirements and sublimits are in fact
satisfied, or (ii) if the aggregate amount of the portion of the Borrowing Base
attributable thereto does not exceed the lesser of (A) $25,000,000 or (B) five
percent (5%) of the Aggregate Commitment at any time; provided that the waivers
permitted under this clause (ii) shall be limited to waivers of Borrowing Base
Sublimits and time limitations set forth in the eligibility requirements (e.g.
number of days eligible in the Aggregate Borrowing Base, number of days out on
Company Trust Receipts, etc.); and further provided that in no event shall any
Pledged Mortgage be included as Eligible Collateral while such Pledged Mortgage
is held by the Company under a Company Trust Receipt if the Company has held
such Pledged Mortgage under a Company Trust Receipt for more than 21 days.
7. Handling of Collateral; Settlement Account.
(a) From time to time until otherwise notified in writing
by the Required Lenders, the Collateral Agent is hereby authorized to release
documentation relating to Mortgage Loans to the Company against a trust receipt
executed by the Company in the form of Exhibit 2 hereto. The Collateral Agent
will maintain all original trust receipts in a vault, drawer or other suitable
depositary with a one hour fire rating maintained in accordance with Federal
Agency requirements and controlled solely by Collateral Agent. The Company
hereby represents and warrants that any request by the Company for release of
Collateral under this subparagraph (a) shall be solely for the purposes of
correcting clerical or other non-substantial documentation problems in
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preparation of returning such Collateral to the Collateral Agent for ultimate
sale or exchange and that the Company has requested such release in compliance
with all terms and conditions of such release set forth herein and in the
Credit Agreement, including, without limitation, Section 4.1(b)(iv) thereof.
(b) Prior to the occurrence of an Event of Default, upon
delivery by the Company to the Collateral Agent of a shipping request
substantially in the form of that attached hereto as Exhibit 3, the Collateral
Agent will transmit, or cause to be transmitted, Mortgage Loans and Securities
held by it or any Approved MBS Custodian as directed by the Company as follows:
(1) If the transmittal is of documentation for
Mortgage Loans or Securities in the possession of the Collateral Agent
or an Approved MBS Custodian in connection with the sale thereof to an
Approved Investor, such transmittal will be under cover of a
transmittal letter substantially in the form of that attached hereto
as Exhibit 4 (or such other form as may be approved by the Credit
Agent or required under any Federal Agency program pursuant to which
the relevant Mortgage Loans or Securities are being shipped), subject
to modification of such Exhibit 4 pursuant to Paragraph 7(g) hereof at
the request of the Agent.
(2) If the transmittal is of documentation for
Mortgage Loans or Securities in connection with the shipment to a
custodian or trustee in connection with the formation of a mortgage
pool supporting a Security (any such Security secured or otherwise
supported by any such Mortgage Loan or Security being referred to
herein as a " Warehouse-Related Security"), such transmittal will be
under cover of a transmittal letter substantially in the form of that
attached hereto as Exhibit 5 (or such other form as may be approved by
the Credit Agent or required if the Security is being issued under any
Federal Agency program), subject to modification of such Exhibit 5
pursuant to Paragraph 7(g) hereof at the request of the Agent, and, in
addition, will be conditioned upon the facts that:
(i) If the Warehouse-Related Security is
being issued under a Federal Agency program, there has been
delivered for the Warehouse-Related Security such
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form as may be required under the Federal Agency program
pursuant to which such Warehouse-Related Security is being
issued (which form shall name the Collateral Agent or an
Approved MBS Custodian (as defined below) as the subscriber
and the Person to whom the Warehouse-Related Security is to be
delivered);
(ii) If the Warehouse-Related Security is
being issued pursuant to a program other than a Federal Agency
program, there has been delivered to and acknowledged by the
trustee and collateral agent or custodian for the underlying
mortgage pool a letter in form acceptable to the Collateral
Agent;
(iii) The Person to whom such
Warehouse-Related Security is to be delivered upon issuance in
exchange for the Mortgage Loans or Securities being shipped is
either (a) a Person approved by the Collateral Agent and the
Credit Agent which has agreed to hold such Warehouse-Related
Security and the proceeds of any sale or other disposition
thereof as custodian, agent and bailee for the benefit of the
Secured Parties pursuant to a custodial agreement
substantially in the form of that attached hereto as Exhibit 6
(a "Custodial Agreement"), (b) the Collateral Agent or an
Affiliate thereof or (c) such other Person as is approved by
the Collateral Agent and the Credit Agent (any Person acting
in such capacity being referred to herein as an "Approved MBS
Custodian");
(iv) There has been delivered to the
Approved MBS Custodian a letter in the form attached to the
Custodial Agreement (Exhibit A to Exhibit 6 hereto); and
(v) At the request of the Agent pursuant to
Paragraph 7(g) hereof, any Warehouse Related Security
delivered to the Collateral Agent or an Approved MBS Custodian
pursuant to subparagraphs (i) through (iv) shall be in a face
amount of not less than the amount of the Aggregate Borrowing
Base which is attributable to the Mortgage Loans so delivered
in exchange for such Warehouse Related Security.
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In no event shall the Collateral Agent have any obligation to obtain written
acknowledgement of receipt from the addressee of any transmittal letter or
other communication sent by the Collateral Agent hereunder.
(c) All amounts payable on account of the sale of Pledged
Items (including, but not limited to, a sale pursuant to a repurchase
agreement) will be instructed to be paid directly by the purchaser to the
Settlement Account or, in the case of Pledged Securities delivered to an
Approved MBS Custodian, to a demand deposit account maintained with such
Approved MBS Custodian (a "Custodian Settlement Account") and, thereafter, to
the Settlement Account as provided in the applicable Custodial Agreement.
Pursuant to Paragraph 3 above the Company has granted a security interest in
and lien upon the Settlement Account and in all Custodian Settlement Accounts
and in any and all amounts at any time held therein as collateral security for
the benefit of the Secured Parties. This Paragraph 7(c) shall constitute
notice to the Collateral Agent and any Approved MBS Custodian of such security
interest pursuant to the Uniform Commercial Code of all relevant jurisdictions
and any other law or regulation requiring such notice. This Paragraph 7(c)
shall further constitute irrevocable notice to the Collateral Agent and any
Approved MBS Custodian that the accounts referred to in Paragraph 4(f) above
are "no access" accounts to the Company and the Collateral Agent except to the
extent expressly permitted hereunder. The Collateral Agent shall hold such
security interest in and lien upon the accounts referred to in Paragraph 4(f)
above and all funds at any time held therein for the benefit of the Secured
Parties with all rights of a secured party under the Uniform Commercial Code of
all relevant jurisdictions.
(d) Prior to the occurrence of an Event of Default, the
Collateral Agent and any Approved MBS Custodian shall take such steps as they
may be reasonably directed from time to time by the Company in writing which
are not inconsistent with the provisions of this Security Agreement and the
other Credit Documents and which the Company deems necessary to enable the
Company to perform and comply with Approved Investor Commitments and with other
agreements for the sale or other disposition in whole or in part of Mortgage
Loans and Securities.
(e) The Collateral Agent may deliver any item of
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Collateral to the Company or any other Person in accordance with the provisions
of the Credit Documents; provided, however, that the Collateral Agent shall not
deliver and shall incur no liability to the Company or any other Person for
refusing to deliver any item of Collateral to the Company or any other Person
(other than under existing Approved Investor Commitments) while an Event of
Default exists if the Collateral Agent has been directed to refrain from so
delivering Collateral by the Required Lenders.
(f) In addition to the releases of Collateral provided
for in subparagraphs (a)-(e) of this Paragraph 7, upon the request of the
Company delivered from time to time to the Credit Agent and the Collateral
Agent, the Collateral Agent shall, with the prior written approval of the
Credit Agent, release Collateral specified in such notice from the lien of this
Security Agreement. The Credit Agent shall give its approval of such release
if, but only if, (i) at the time of such release no Event of Default exists and
no notice of a Default has been issued that has not been cured, and (ii) any
payment under Section 2.14(a) of the Credit Agreement which may be required as
a result of such release has been made (or contemporaneously with such release
shall be made) so that the release of such Collateral will not create a
violation of any Lending Sublimit or Borrowing Base Sublimit, provided, however
that, while an Event of Default exists or while a notice of Default has been
issued but not cured, the Collateral Agent may (A) release pledged Cash
Equivalents which are the subject of reverse repurchase obligations in
connection with the applicable reverse repurchase agreement, and (B) release
Pledged Items in connection with the sale of Pledged Items pursuant to an
existing Approved Investor Commitment if, in either case, the proceeds of such
repurchase or sale are deposited in the Settlement Account. The Collateral
Agent is authorized to execute and deliver to the Company, on behalf of the
Secured Parties, such UCC-3 partial release forms or other evidence as may be
required of any release permitted hereunder.
(g) Notwithstanding the provisions of Paragraph 7(b)
above, at the request of the Agent:
(i) The second sentence of the second full paragraph
of the form of whole loan sale transmittal letter attached
hereto as Exhibit 4 shall be deleted and replaced with the
following sentence:
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"Each of the Mortgage Loans is subject to a security
interest in favor of National City Bank of Kentucky
(the "Collateral Agent") on behalf of the Secured
Parties, which security interest shall be
automatically released upon your remittance of an
amount equal to the greater of (1) the purchase price
for such Mortgage Loan (as set forth on the schedule
attached hereto), and (2) $__________, which is the
mortgage collateral value assigned by the Collateral
Agent to such Mortgage Loan. Such amount shall be
remitted by wire transfer to the following account:",
in which case the amount to be inserted in the blank in clause
two of such revised provision shall be an amount equal to the
amount of the Borrowing Base which is attributable to the
Mortgage Loans being delivered pursuant to the transmittal
letter;
(ii) The second sentence of the second full
paragraph of the form of warehouse related security
transmittal letter attached hereto as Exhibit 5 shall be
deleted and replaced with the following sentence:
"Each of the Mortgage Loans is subject to a security
interest in favor of National City Bank of Kentucky
(the "Collateral Agent") for the benefit of the
Secured Parties, which security interest shall be
automatically released upon the issuance of the
Warehouse-Related Security in accordance with the
terms of the prescribed GNMA, FNMA or FHLMC form
enclosed herewith, which form shall name either the
Collateral Agent or another person designated by the
Collateral Agent as the person to whom the
Warehouse-Related Security is to be delivered and
require that the principal amount of the Warehouse
Related Security be in an amount not less than
$__________, which is the mortgage collateral value
assigned by the Collateral Agent to such Mortgage
Loan.",
in which case the amount to be inserted in the blank in such
revised provision shall be an amount equal to the
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amount of the Borrowing Base which is attributable to the
Mortgage Loans being delivered pursuant to the transmittal
letter.
The Agent may require that the above described modifications be made to all
such transmittal letters or only to transmittal letters to certain Approved
Investors designated by the Agent.
8. Abatement of Security Interest. Upon the occurrence of a
Positive Security Event and so long as each of the Positive Security Conditions
is satisfied and no other Negative Security Event has occurred, the security
interest granted to the Secured Parties pursuant to Paragraph 3 herein shall
xxxxx. The Credit Agent shall advise the Collateral Agent when such abatement
is in effect promptly after the Company notifies the Credit Agent that such a
Positive Security Event has occurred and shall advise the Collateral Agent if
such abatement expires under the terms of the Credit Agreement. The Collateral
Agent shall, at the request of the Company and after the Credit Agent has
confirmed to the Collateral Agent that a Positive Security Event has occurred
and all Positive Security Conditions are satisfied, execute and deliver such
UCC-3 financing statements as may be required to evidence the abatement of any
security interest that shall previously have been perfected by means of the
filing of financing statements. As a condition to such abatement, the Company
and each Borrowing Subsidiary shall execute such UCC-1 financing statements and
other documentation as the Collateral Agent may request to permit the security
interest in the Collateral to be reinstated and perfected by the Collateral
Agent without further action by the Company or any Borrowing Subsidiary if a
Negative Security Event should occur thereafter. Although the Company and the
Borrowing Subsidiaries shall continue to deliver Mortgage Loan files and other
information and documents to the Collateral Agent (in a custodial capacity)
even while the security interest is abated, so long as the security interest is
abated the Company shall perform all of the obligations of the Collateral Agent
as set forth herein with respect to determining the Borrowing Base and
delivering Borrowing Base Reports. During such abatement period, (i) the
remedies pertaining to the Collateral available to the Collateral Agent, the
Secured Parties and the Credit Agent under Paragraphs 16 and 17 or applicable
law shall not be available, (ii) the Company shall perform all of the
obligations of the Collateral Agent with respect to determining the Borrowing
Base, (iii) the Collateral Agent will
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not be required to sell the Collateral or otherwise take any action at the
direction of the Credit Agent to realize upon the Collateral, (iv) the
Collateral Agent shall be required to sell the Collateral or otherwise take any
action with regard to the disposition of the Collateral at the direction of the
Company, and (v) the Collateral shall be deemed not to constitute security
unless and until a Negative Security Event occurs thereafter.
Upon the occurrence of a Negative Security Event, the Company
(with respect to Collateral owned by the Company) and each Borrowing Subsidiary
(with respect to Collateral owned by the Borrowing Subsidiaries) shall be
deemed to have (i) automatically re-pledged and re-granted to the Collateral
Agent for the benefit of the Secured Parties a first priority security interest
in the Collateral to secure payment of the Secured Debt, (ii) consented to the
Collateral Agent's filing of the UCC-1 financing statements and dating and
otherwise completing, filing and/or recording, if necessary, any other
documentation previously provided by the Company or any Borrowing Subsidiary to
the Collateral Agent, and (iii) reaffirmed its appointment of the Collateral
Agent to act as its bailee pursuant to the provisions of Section 9-305 of the
Uniform Commercial Code of any applicable state. Upon notice from the Credit
Agent that a Negative Security Event has occurred, the Collateral Agent shall
be deemed to have been informed of and accepted such appointment and shall file
UCC-1 financing statements executed by the Company and the Borrowing
Subsidiaries and other documentation as the Collateral Agent may request to
permit the security interest in the Collateral to be reinstated. The Company
shall pay or shall reimburse the Collateral Agent for the payment of any filing
costs incurred in connection with the filing of any UCC-1 or UCC-3 statements
pursuant to this Paragraph 8.
9. Reports. The Collateral Agent shall (a) deliver the Borrowing
Base Report at the times and in the manner set forth in Paragraph 6(a) above
and (b) deliver to the Credit Agent, the Company and any Lender which makes a
written request therefor, such other reports and information as any Lender may
from time to time reasonably request. In preparing any such reports the
Collateral Agent shall be entitled to rely, without independent investigation
(other than the review steps described on Exhibit 1 hereto), on information
supplied to the Collateral Agent by the Company.
10. No Reliance. The Collateral Agent shall not be
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responsible to any Secured Party for any recitals, statements, representations
or warranties contained herein or in any other Credit Document; or for the
execution, effectiveness, genuineness, validity, enforceability,
collectability, accuracy, completeness or sufficiency of this Security
Agreement or any other Credit Document or instruments executed and delivered,
or which could have been executed or delivered, in connection with this
Security Agreement or the other Credit Documents, including, without
limitation, the attachment, creation, effectiveness or perfection of the
security interests granted or purported to be granted hereunder in and to the
Collateral.
11. Costs and Expenses. The Collateral Agent shall notify the
Company of all extraordinary costs and expenses of the Collateral Agent
directly relating to the Collateral Agent's performance of this Security
Agreement, and such extraordinary costs and expenses shall be paid promptly by
the Company or, if already paid by the Collateral Agent, the Company promptly
shall reimburse the Collateral Agent therefor. For the purposes of this
provision, extraordinary costs and expenses shall include all costs and
expenses incurred by the Collateral Agent in performance of this Security
Agreement which have not been factored into the computation of the Collateral
Agent's fee (as agreed upon between the Company and the Collateral Agent
pursuant to a separate agreement), including, without limitation, reasonable
expenses of legal counsel to the Collateral Agent to enforce the rights of the
Collateral Agent hereunder.
12. Availability of Documents. The Secured Parties and their
agents, accountants, attorneys and auditors (each an "Inspecting Party") will
be permitted from time to time upon reasonable notice to the Collateral Agent
and the Company, and at such time as may be mutually acceptable to such
Inspecting Party, the Collateral Agent and the Company to examine (to the
extent permitted by applicable law) the files, documents, records and other
papers in the possession or under the control of the Collateral Agent relating
to any or all Collateral and to make copies thereof. Any such activity will be
at the cost and expense of the Secured Party requesting such access, except
that following the occurrence of an Event of Default, all reasonable
out-of-pocket costs and expenses associated with the exercise by the Credit
Agent of its rights under this Paragraph 12 shall be promptly paid by the
Company upon demand of the Credit Agent.
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13. Representations and Warranties. The Company, with respect to
Collateral pledged hereunder by the Company, and each Borrowing Subsidiary,
with respect to Collateral pledged hereunder by any such Borrowing Subsidiary,
hereby represents and warrants that: (a) the Company or the Borrowing
Subsidiary, as applicable, is the sole owner of the Collateral (or, in the case
of after-acquired Collateral, at the time the Company acquires rights in the
Collateral, will be the sole owner thereof), subject only to the rights of
Approved Investors under the Approved Investor Commitments; (b) except for
security interests in favor of the Collateral Agent for the benefit of the
Secured Parties hereunder, no Person has (or, in the case of after-acquired
Collateral, at the time the Company acquires rights therein, will have) any
right, title, claim or interest in, against or to the Collateral and, in any
event, so long as the Collateral Agent complies with the procedures relating to
possession of Collateral set forth in this Security Agreement, the Collateral
Agent shall have a perfected, first priority security interest therein for the
benefit of the Secured Parties; (c) no consent of any Person is required that
has not been obtained for the granting of the security interests provided for
herein, nor will any consent be required for the Collateral Agent to exercise
its rights under this Security Agreement in accordance with the terms of this
Security Agreement (except for consents to assignments of options, futures
contracts or other interest rate protection products in favor of the Secured
Parties from the counterparties thereto, which consents shall not be required
to be obtained unless an Event of Default is continuing or the Required Lenders
request otherwise); (d) to the best of the Company's and the Borrowing
Subsidiary's knowledge, all information heretofore, herein or hereafter
supplied to the Collateral Agent or to any Lender by or on behalf of the
Company with respect to the Collateral is or will be accurate and complete; (e)
the Approved Investor Commitments covering such Collateral may be collaterally
assigned to the Collateral Agent as described herein; and (f) each Mortgage
Loan and Security is, at all dates included in the computation of the value of
the Borrowing Bases, Eligible Collateral.
14. Covenants of the Company and Borrowing Subsidiaries. The
Company and the Borrowing Subsidiaries hereby agree: (a) to procure, execute
and deliver from time to time (unless a Positive Security Event has occurred
and is continuing) any endorsements, assignments, financing statements and
other writings deemed
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necessary or appropriate by the Collateral Agent or the Credit Agent to
perfect, maintain and protect the Collateral Agent's security interest
hereunder and the priority thereof and to deliver promptly to the Collateral
Agent all originals of any Collateral or proceeds thereof consisting of chattel
paper or instruments; (b) not to surrender or lose possession of (other than to
the Collateral Agent), sell, encumber, or otherwise dispose of or transfer, any
Collateral or right or interest therein other than shipment of Mortgage Loans
and Securities under Approved Investor Commitments and as otherwise permitted
under Paragraph 7 above and as otherwise permitted by the Credit Agreement; (c)
except as otherwise contemplated in any Custodial Agreement, not to grant to
any Federal Agency or Approved Investor any other security interest in any
Collateral, or otherwise acknowledge the creation of any ownership rights of
any Federal Agency or Approved Investor with respect to any Collateral unless
and until the Collateral Agent has received the proceeds of such Collateral as
described herein; (d) at all times to account fully for and promptly to deliver
to the Collateral Agent, in the form received, all Collateral or proceeds
thereof received, endorsed to the Collateral Agent or in blank as appropriate
and accompanied by such assignments and powers, duly executed, as the
Collateral Agent or the Credit Agent shall request, and until so delivered all
Collateral and proceeds thereof shall be held in trust for the Collateral Agent
for the benefit of the Secured Parties, separate from all other property of the
Company and the Borrowing Subsidiaries and identified as the property of the
Collateral Agent for the benefit of the Secured Parties; (e) to keep accurate
and complete records of the Collateral and at any reasonable time and at the
Company's expense, upon demand by the Collateral Agent or the Credit Agent, to
exhibit to and allow inspection of the Collateral and the records, reports and
information concerning the Collateral by the Collateral Agent or Credit Agent
(or Persons designated by the Collateral Agent or Credit Agent); (f) to keep
the records concerning the Collateral at the location(s) set forth in Paragraph
27 below and not to remove the records from such location(s) without the prior
written consent of the Collateral Agent and the Credit Agent; (g) not to
materially modify, compromise, extend, rescind or cancel any deed of trust,
mortgage, note or other document, instrument or agreement connected with any
Mortgage Loan pledged under this Security Agreement or any document relating
thereto or connected therewith or consent to a postponement of strict
compliance on the part of any party thereto with any term or provision thereof
in any material respect; (h) to
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keep the Collateral insured against loss, damage, theft, and other risks
customarily covered by insurance, and such other risks as the Collateral Agent
or the Credit Agent may request; (i) to do all acts that a prudent investor
would deem necessary or desirable to maintain, preserve and protect the
Collateral; (j) not knowingly to use or permit any Collateral to be used
unlawfully or in violation of any provision of this Security Agreement, the
Credit Agreement or any applicable statute, regulation or ordinance or any
policy of insurance covering the Collateral; (k) to pay (or require to be paid)
prior to their becoming delinquent all taxes, assessments, insurance premiums,
charges, encumbrances and liens now or hereafter imposed upon or affecting any
Collateral except as otherwise permitted in the Credit Agreement; (l) to notify
the Collateral Agent and the Credit Agent before any such change shall occur of
any change in the Company's name, identity or structure through merger,
consolidation or otherwise; (m) to appear in and defend, at the Company's cost
and expense, any action or proceeding which may affect its title to or the
Collateral Agent's interest for the benefit of the Secured Parties in the
Collateral; and (n) to comply in all material respects with all laws,
regulations and ordinances relating to the possession, operation, maintenance
and control of the Collateral. Notwithstanding the foregoing, (1) the
requirements of clauses (g), (k) and (m) shall not apply to any Collateral
which is not required to be included in the computation of the value of any of
the Borrowing Base in order for the Company to be in compliance with the
requirements of the Credit Agreement unless failure to comply with the
requirements of said subparagraphs would have an adverse effect on the
Collateral which is included in such computation, and (2) the failure of the
Company or any Borrowing Subsidiary to comply with its obligations under this
Paragraph 14 with respect to any Pledged Item shall cause such Pledged Item to
cease to qualify as Eligible Collateral.
15. Collection of Collateral Payments.
(a) The Company or the applicable Borrowing Subsidiary
shall, at its sole cost and expense, use its best efforts to obtain payment,
when due and payable, of all sums due or to become due with respect to any
Collateral ("Collateral Payments" or a "Collateral Payment"), consistent with
all requirements of law and contractual obligations binding upon the Company or
the applicable Borrowing Subsidiary. Upon the request of the Collateral Agent
while an Event of Default exists, the Company or the applicable
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Borrowing Subsidiary will notify and direct any party who is or might become
obligated to make any Collateral Payment, to make payment thereof to the
Collateral Agent (or to the Company or the applicable Borrowing Subsidiary in
care of the Collateral Agent) at such address as the Collateral Agent may
designate. The Company will reimburse the Collateral Agent promptly upon
demand for all out-of-pocket costs and expenses, including reasonable
attorneys' fees and litigation expenses, incurred by the Collateral Agent in
seeking to collect any Collateral Payment.
(b) The Collateral Agent shall, promptly upon receipt of
any funds delivered from any Servicing Purchaser as full or partial payment of
any Pledged Servicing Sale Receivable, deposit such funds into the Collateral
Agent's Settlement Account and notify the Company of the receipt of such funds.
If the Collateral Agent receives any check from a Servicing Purchaser in
payment of Servicing Sale Receivables and such check contains a restrictive
endorsement, the Collateral Agent shall obtain the consent of the Company and
the Credit Agent before cashing any such check.
(c) Following the occurrence of an Event of Default, upon
the request of the Collateral Agent the Company and each Borrowing Subsidiary
will transmit and deliver to the Collateral Agent, forthwith upon receipt and
in the form received, all cash, checks, drafts and other instruments for the
payment of money (properly endorsed where required so that such items may be
collected by the Collateral Agent) which may be received by the Company or any
Borrowing Subsidiary at any time as payment on account of any Collateral
Payment and if such request shall be made, until delivery to the Collateral
Agent, such items will be held in trust for the Collateral Agent for the
benefit of the Secured Parties and will not be commingled by the Company or any
Borrowing Subsidiary with any of their other funds or property. Thereafter,
the Collateral Agent is hereby authorized and empowered to endorse the name of
the Company or the applicable Borrowing Subsidiary on any check, draft or other
instrument for the payment of money received by the Collateral Agent on account
of any Collateral Payment if the Collateral Agent believes such endorsement is
necessary or desirable for purposes of collection.
(d) The Company hereby agrees to indemnify, defend and
save harmless the Collateral Agent and its agents, officers, employees and
representatives from and against all reasonable
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liabilities and expenses on account of any adverse claim asserted against the
Collateral Agent relating to any moneys received by the Collateral Agent on
account of any Collateral Payment (other than as a direct result of the gross
negligence or willful misconduct of the Collateral Agent) and such obligation
of the Company shall continue in effect after and notwithstanding the discharge
of the Credit Indebtedness and/or the release of the security interest granted
in Paragraph 3 above.
16. Authorized Action by Collateral Agent. The Company and each
Borrowing Subsidiary each hereby irrevocably appoints the Collateral Agent as
its attorney-in-fact to do (but the Collateral Agent shall not be obligated to
and shall incur no liability to the Company, any Borrowing Subsidiary or any
Secured Party or any other third party for failure so to do) at any time and
from time to time at the written request and direction, given while an Event of
Default exists, of the Required Lenders, any act which the Company or any
Borrowing Subsidiary is obligated by this Security Agreement to do, and to
exercise such rights and powers as the Company or any Borrowing Subsidiary
might exercise with respect to the Collateral, including, without limitation,
the right to (a) collect by legal proceedings or otherwise and endorse, receive
and receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral; (b)
insure, process, service and preserve the Collateral; (c) transfer the
Collateral to the Collateral Agent's own or its nominee's name; and (d) make
any compromise or settlement, and take any other action it deems advisable with
respect to the Collateral. Notwithstanding the preceding sentence, the
Collateral Agent shall endeavor to take only such actions with respect to the
Collateral as are consistent with general servicing of such Collateral and in
compliance with Federal Agency requirements; provided, however, that the
Collateral Agent shall not be liable to the Company or any Borrowing Subsidiary
for any actions taken by the Collateral Agent absent gross negligence or
willful misconduct. Notwithstanding anything contained herein, in no event
shall the Collateral Agent be required to make any presentment, demand or
protest, or give any notice, and the Collateral Agent need not take any action
to preserve any rights against any prior party or any other person in
connection with the Secured Debt or with respect to the Collateral.
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17. Default and Remedies.
(a) While an Event of Default exists under any Credit
Document, the Collateral Agent shall at the written request and direction of
the Required Lenders, without notice to or demand upon the Company: (a)
foreclose or otherwise enforce the Collateral Agent's security interest for the
benefit of the Secured Parties in the Collateral in any manner permitted by law
or provided for hereunder; (b) sell or otherwise dispose of the Collateral or
any part thereof at one or more public or private sales or at any broker's
board or on any securities exchange, whether or not such Collateral is present
at the place of sale, for cash or credit or future delivery and without
assumption of any credit risk, on such terms and in such manner as the
Collateral Agent may determine; (c) require the Company to assemble the
Collateral and/or books and records relating thereto and make such available to
the Collateral Agent at a place to be designated by the Collateral Agent; (d)
enter into property where any Collateral or books and records relating thereto
are located and take possession thereof with or without judicial process; and
(e) prior to the disposition of the Collateral, prepare it for disposition in
any manner and to the extent the Collateral Agent deems appropriate. Whether
or not the Collateral Agent exercises any right given pursuant to this
Paragraph 17, upon the occurrence of any Event of Default, the Collateral Agent
on behalf of the Secured Parties shall have as to any Collateral all other
rights and remedies provided for herein and all rights and remedies of a
secured party under the Illinois Uniform Commercial Code and, in addition
thereto and not in lieu thereof, all other rights or remedies at law or in
equity existing or conferred upon the Collateral Agent on behalf of the Secured
Parties by other jurisdictions or other applicable law or given to the
Collateral Agent on behalf of the Secured Parties pursuant to any security
agreement, other instrument or agreement heretofore, now, or hereafter given as
security for the Company's obligations hereunder.
(b) The Collateral Agent is authorized, at any such sale,
if it deems it advisable so to do, to restrict the prospective bidders or
purchasers to Persons who will represent and agree that they are purchasing for
their own account, for investment, and not with a view to the distribution or
sale of any of the Collateral. Upon any sale or other disposition pursuant to
this Security Agreement, the Collateral Agent shall have the right
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to deliver, assign and transfer to the purchaser thereof the Collateral or
portion thereof so sold or disposed of and all proceeds thereof shall be
promptly distributed as set forth in Paragraph 18 hereof. Each purchaser at
any such sale or other disposition shall hold the Collateral free from any
claim or right of whatever kind, including any equity or right of redemption of
the Company or any Borrowing Subsidiary, and the Company and the Borrowing
Subsidiaries specifically waive (to the extent permitted by law) all rights of
redemption, stay or appraisal which they have or may have under any rule of law
or statute now existing or hereafter adopted. The Collateral Agent shall give
the Company or the applicable Borrowing Subsidiary only such notice and shall
publish such notice as may be required by the Illinois Uniform Commercial Code
or the Kentucky Commercial Code or by other applicable law of the intention to
make any such public or private sale or sale at broker's board or on a
securities exchange. Any such public sale shall be held at such time or times
within the ordinary business hours and at such place or places permitted by the
Illinois Uniform Commercial Code or the Kentucky Commercial Code. At any such
sale the Collateral may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may determine. The Collateral Agent may
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned. In
case of any sale of all or any part of the Collateral on credit or for future
delivery, (i) the Collateral so sold may be retained by the Collateral Agent
until the selling price is paid by the purchaser thereof, (ii) none of the
Secured Parties shall incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold, and (iii) in case of
any such failure, such Collateral may again be sold as provided herein.
Nothing contained in this Security Agreement shall prohibit any Lender or
Lenders from purchasing the Collateral at such sale.
18. Disposition of Proceeds.
"Net Proceeds" shall mean the proceeds realized upon the sale
or other disposition of any Collateral after deducting therefrom the payment of
the costs and expenses of such sale or disposition, including reasonable
compensation to the Collateral Agent's and Credit Agent's agents and counsel,
and all expenses,
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liabilities and advances made or incurred by any Secured Party acting on
instructions of the Required Lenders. All such costs and expenses shall be
deducted from the proceeds directly related thereto or, in the absence of any
such direct relationship, on a pro rata basis from all types of proceeds
recovered by the Collateral Agent. The total of all Net Proceeds for all
categories of Collateral is referred to as "Aggregate Net Proceeds." To the
extent the Credit Agent is holding any Net Proceeds (e.g. amounts held in the
Settlement Account), the Credit Agent shall notify the Collateral Agent of the
amount of such Net Proceeds in order to enable the Collateral Agent to
calculate the Aggregate Net Proceeds. The Collateral Agent shall distribute to
the Credit Agent for the benefit of the Lenders an amount equal to the
Aggregate Net Proceeds held by the Collateral Agent. The Credit Agent shall
notify the Collateral Agent in writing of the manner in which Aggregate Net
Proceeds shall be delivered to the Credit Agent (e.g. by providing wire
transfer instructions).
19. Waiver. No Secured Party shall incur any liability as a
result of the sale of the Collateral, or any part thereof, at any public or
private sale. The Company and each Borrowing Subsidiary each hereby waives any
claims it may have against any Secured Party arising by reason of the fact that
the price at which the Collateral may have been sold at such private sale was
less than the price which might have been obtained at a public sale or was less
than the aggregate amount of the Secured Debt then outstanding.
20. The Collateral Agent
(a) Collateral Agent's Fee. Compensation of the
Collateral Agent for its services hereunder and reimbursement for any expenses
incurred by it in the performance of its duties hereunder shall be paid by the
Company pursuant to a separate written agreement between the Collateral Agent
and the Company.
(b) Actions by the Collateral Agent. The obligations of
the Collateral Agent hereunder are only those expressly set forth herein. The
Collateral Agent shall be entitled to (but shall not be obligated to) take or
refrain from taking any discretionary powers or actions under this Security
Agreement or any other Credit Document unless and until the Collateral Agent
shall have received the written direction to take or refrain from taking such
action
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from the Required Lenders. The Collateral Agent shall not be required to take
any action hereunder if it shall reasonably determine that by so doing it may
incur criminal or civil liability.
(c) Consultation with Experts. The Collateral Agent may
consult with legal counsel (who may be counsel for the Company), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
(d) Liability of Collateral Agent.
(1) Neither the Collateral Agent nor any of its
directors, officers, agents, or employees shall be liable for any
action taken or not taken by it in connection herewith (i) with the
consent or at the request of the Required Lenders or (ii) in the
absence of its own gross negligence or willful misconduct.
(2) The Collateral Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement,
or other writing (which may be a bank wire, telex or similar writing)
or telephone communication believed by it to be genuine or, in the
case of a writing, to be signed by the proper party or parties.
(e) Indemnification. Subject to the limitations set
forth below, the Lenders shall indemnify the Collateral Agent (to the extent
not reimbursed by the Company) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss or liability
(except such as result from the Collateral Agent's gross negligence or willful
misconduct) that the Collateral Agent may suffer or incur in connection with
this Security Agreement or any action taken or omitted by the Collateral Agent
hereunder (the "Indemnified Amount"). Any Indemnified Amount due to the
Collateral Agent shall be paid by the Lenders pro rata in accordance with their
respective Commitment Percentages.
(f) Knowledge of Defaults. The Collateral Agent shall
not be deemed to have knowledge or notice of the occurrence of any Event of
Default unless the Collateral Agent has received notice
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from a Secured Party or the Company referring to the Credit Agreement, this
Security Agreement describing such Event of Default and stating that such
notice is a "Notice of Default." Following receipt of a Notice of Default, the
Collateral Agent shall assume that the Event of Default is continuing until the
Collateral Agent receives written information to the contrary from the Credit
Agent.
(g) Reports. The Collateral Agent may, at its option
with the approval of the Company and the Credit Agent, alter the format of any
report required hereunder, provided such modified report contains the same
information previously furnished in the unmodified report.
(h) Other Transactions with Company. The Collateral
Agent and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with, the Company or any Subsidiary or Affiliate
of the Company as if it were not the Collateral Agent hereunder.
(i) Resignation/Removal. The Collateral Agent may resign
at any time by giving 90 days prior written notice thereof to the Credit Agent
and the Company. The Collateral Agent agrees to resign within 60 days after
written notice by the Company requesting the resignation of the Collateral
Agent provided that no Event of Default has occurred and is continuing at the
time of such request. In addition, in the event the Collateral Agent fails to
perform its obligations under this Security Agreement in any material manner
and fails to correct its performance within 30 days of receipt of written
notice of such failure given by the Credit Agent at the request of not less
than the Required Lenders, then the Collateral Agent may be removed upon 30
days written notice given by the Credit Agent at the direction of not less than
the Required Lenders. Upon any such resignation or removal: (i) so long as
there has not occurred and is continuing an Event of Default, the Company shall
appoint from among the Lenders (which appointment shall be subject to the
approval of the Required Lenders, such approval not to be unreasonably withheld
or delayed), a successor agent for such Collateral Agent, and (ii) following
the occurrence and during the continuance of an Event of Default, the Required
Lenders shall appoint from among the Lenders, a successor agent for such
Collateral Agent. Following the appointment and acceptance of a successor
Collateral Agent the Credit Agent shall notify the Collateral Agent as to who
the successor Collateral
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Agent is and the Collateral shall be transferred to the new Collateral Agent
within 30 days after such acceptance. If the Company and/or the Required
Lenders, as applicable, are unable to agree on the appointment of a successor
agent prior to the expiration of any of the time periods set forth above, the
Credit Agent (or an Affiliate thereof designated by the Credit Agent) shall be
deemed a successor Collateral Agent until the appointment of and acceptance by
a different successor Collateral Agent, and the Collateral Agent shall be
permitted to transfer all the Collateral held by the Collateral Agent to the
Credit Agent (or an Affiliate thereof designated by the Credit Agent) within 30
days after the of the applicable time period set forth above. Within 30 days
after the appointment of a successor Collateral Agent and the successor's
acceptance of such appointment, that successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent, and the retiring Collateral Agent shall be
discharged from its duties and obligations under this Security Agreement;
provided, however, that the retiring Collateral Agent shall not be discharged
from any liability as a result of its or its directors', officers', agents' or
employees' gross negligence or willful misconduct in connection with the
performance of its duties and obligations under this Security Agreement prior
to the effective date of its resignation or removal. Notwithstanding the
foregoing, the Collateral Agent shall continue to hold the Pledged Items and
the security interest created hereunder for the benefit of the Secured Parties
until such Pledged Items and security interest have been effectively
transferred to the successor agent. After the resignation or removal of any
Collateral Agent hereunder, the provisions of this Security Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Collateral Agent under this Security Agreement.
(j) Representations and Warranties. The Collateral Agent
hereby represents and warrants:
(1) The Collateral Agent is a national banking
association validly existing, in good standing and authorized
to exercise its powers, rights and privileges and is qualified
to do business in all jurisdictions where necessary, and has
all requisite power and authority to perform all of its
obligations under this Security Agreement;
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(2) The execution, delivery and performance by the
Collateral Agent of this Security Agreement and all documents
required hereby to be executed by the Collateral Agent have
been duly authorized by all necessary corporate action and do
not and will not violate any existing provision of any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having
applicability to the Collateral Agent; and
(3) This Security Agreement and all documents required
hereby to be executed by the Collateral Agent have been duly
executed and delivered by the Collateral Agent.
21. Confidentiality. The Collateral Agent agrees to take normal
and reasonable precautions and exercise due care to maintain the
confidentiality of all non-public information provided to it by the Company or
any Borrowing Subsidiary or by any other party on the Company's behalf in
connection with this Security Agreement or the Credit Documents and agrees and
undertakes that neither it nor any of its Affiliates shall disclose any such
information for any purpose or in any manner other than pursuant to the terms
contemplated by this Security Agreement or the Credit Documents. The
Collateral Agent may disclose such information (1) to any Secured Party, (2) at
the request of any regulatory authority or in connection with an examination of
the Collateral Agent or any of its Affiliates by any such authority, (3)
pursuant to subpoena or other court process, (4) when required to do so in
accordance with the provisions of any applicable law, (5) at the express
direction of any other governmental authority of any State of the United States
of America or of any other jurisdiction in which the Collateral Agent or any of
its Affiliates conducts its business, (6) to the Collateral Agent's or any of
its Affiliates' independent auditors, attorneys and other professional
advisors, (7) if such information has become public other than through
disclosure by the Collateral Agent or any of its Affiliates or any Lender, and
(8) in connection with any litigation involving the Collateral Agent or any of
its Affiliates. Notwithstanding the foregoing, the Company authorizes the
Collateral Agent to disclose to any lending institution proposed by the Company
to become a Lender under the Credit Agreement or any prospective or actual
Participants such financial and other information in its possession (i) which
has been delivered to the Collateral Agent pursuant to the Credit
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Documents or which has been delivered to the Collateral Agent by the Company
prior to entering into the Credit Documents or (ii) which is reasonably
necessary to effectuate the purposes of the Credit Agreement and this Security
Agreement, provided that unless otherwise agreed by the Company, such lending
institution or Participant shall agree in writing to keep such information
confidential to the same extent required of the Collateral Agent hereunder.
22. Voting by Required Lenders.
In all cases in which this Security Agreement requires the consent,
approval or direction of the Required Lenders or all of the Lenders with
respect to any action, the Credit Agent shall be responsible for determining
whether the Required Lenders has given such consent, approval or direction and
shall notify the Collateral Agent thereof in writing. The Collateral Agent
shall be entitled to rely without independent verification upon the information
supplied by the Credit Agent with respect to any consent, approval or direction
of the Required Lenders (or all of the Lenders with respect to actions which
require unanimous approval of the Lenders).
23. Binding Upon Successors. All rights of the Collateral Agent
and the Secured Parties under this Security Agreement shall inure to the
benefit of the Collateral Agent and the Secured Parties and their successors
and assigns, and all obligations of the Company and the Borrowing Subsidiaries
shall bind their successors and assigns; provided that neither the Company nor
any Borrowing Subsidiary shall have the right to assign its rights or
obligations under this Security Agreement without the consent of all the
Lenders.
24. Entire Agreement; Severability. This Security Agreement
contains the entire security agreement and collateral agency agreement with
respect to the Collateral among Secured Parties, the Company and the Borrowing
Subsidiaries and supersedes all prior written or oral agreements and
understandings relating thereto. All waivers by the Company or any Borrowing
Subsidiary provided for in this Security Agreement have been specifically
negotiated by the parties with full cognizance and understanding of their
rights. If any of the provisions of this Security Agreement shall be held
invalid or unenforceable, this Security Agreement shall be
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construed as if not containing such provisions, and the rights and obligations
of the parties hereto shall be construed and enforced accordingly.
25. Choice of Law. This Security Agreement shall be construed in
accordance with and governed by the laws of the State of Illinois and, where
applicable and except as otherwise defined herein, terms used herein shall have
the meanings given them in the Illinois Uniform Commercial Code.
26. Place of Business; Records. The Company and each Borrowing
Subsidiary represents and warrants that its principal place of business and
chief executive office is at the address set forth beneath its signature below,
and that its books and records concerning the Collateral are kept at its
principal place of business and chief executive office. Neither the Company
nor any Borrowing Subsidiary shall change its principal place of business and
chief executive office without 30 days' prior written notice to the Credit
Agent and the Collateral Agent.
27. Notice. Except where instructions or notices are expressly
authorized elsewhere in this Security Agreement to be given by telephone or by
other means of transmission, all instructions, notices and other communications
to be given to any party hereto shall be in writing and shall be personally
delivered or sent by certified mail, postage prepaid, private delivery service
or by facsimile, and shall be deemed to be given for purposes of this Security
Agreement on the day (or at the time of day, if applicable) when actually
received by the intended party at its address or facsimile or telephone number
as set forth following its signature below (or as such party may specify to the
other parties in writing).
28. Modification of Agreement. No provisions of this Agreement
may be amended or waived (except for waivers expressly provided for hereunder)
unless such amendment or waiver is in writing and is signed by the Company, the
Collateral Agent if the rights or duties of the Collateral Agent are affected
thereby, and the Credit Agent on behalf of the Lenders. The Credit Agent shall
not consent to any such amendment or waiver without the prior written consent
of
(i) each Lender if such amendment or waiver
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(1) would amend or waive the method of
calculating the Aggregate Borrowing Base; or
(2) releases any Collateral beyond the releases
expressly provided for herein or in the Credit Agreement; or
(3) changes or waives any restriction on the
Company's or any Borrowing Subsidiary's ability to assign its
rights or obligations under any of the Credit Documents; or
(4) changes or waives any provision herein
regarding the indemnification of the Credit Agent, the
Collateral Agent or such Lender; or
(5) changes the definition of Required Lenders
or modifies any requirement for consent by all of the Lenders;
or
(6) changes or waives any provision herein
regarding the allocation among the Secured Parties of any
payments or proceeds received by the Collateral Agent
hereunder; or
(ii) the Required Lenders in the case of all other waivers
or amendments.
29. Consent of Jurisdiction.
THE COMPANY, EACH BORROWING SUBSIDIARY, AND THE COLLATERAL
AGENT EACH HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENTS AND EACH
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION THEY MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE CREDIT AGENT
OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE COMPANY, ANY BORROWING
SUBSIDIARY, OR THE COLLATERAL AGENT IN THE COURTS OF ANY OTHER JURISDICTION.
ANY
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JUDICIAL PROCEEDING BY THE COMPANY, ANY BORROWING SUBSIDIARY, OR THE COLLATERAL
AGENT AGAINST THE CREDIT AGENT OR ANY LENDER OR ANY AFFILIATE OF THE CREDIT
AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY CREDIT DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
30. Waiver of Jury Trial.
EACH PARTY TO THIS SECURITY AGREEMENT HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY CREDIT DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
EXECUTED the day and year first above written.
SOURCE ONE MORTGAGE SERVICES
CORPORATION
By:_____________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
Address for Notices:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attn: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Attn: Vice President/Treasury
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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THE MORTGAGE AUTHORITY, INC.
By:_____________________________________
Name: Xxxxx X. Xxxxx
Title: Vice President/Treasury
Address for Notices:
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, XX 00000-0000
Attn: Vice President/Treasury
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
CENTRAL PACIFIC MORTGAGE COMPANY
By:_____________________________________
Name: Xxxx X. Xxxxxx
Title: Executive Vice President
Address for Notices:
0000 Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx, XX 00000
Attn: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 0000000
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THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association, as Credit
Agent
By:_____________________________________
Name:___________________________________
Title:__________________________________
Address for notices:
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, III,
First Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
NATIONAL CITY BANK OF KENTUCKY, a
national banking association, as
Collateral Agent
By:_____________________________________
Name:___________________________________
Title:__________________________________
Address for notices:
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
The undersigned, as Note Trustee, was a party to that certain Second
Amended and Restated Security and Collateral Agency Agreement, dated as of
November 12, 1996 (the "Second Restated Agreement"), the terms of which are
being amended and restated by the foregoing Third Amended and Restated Security
and Collateral Agency Agreement. The undersigned hereby executes this
Agreement
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for the purpose of confirming that the Noteholders are no longer entitled to be
secured by the Collateral and that therefore the undersigned is no longer a
party to the foregoing Agreement. The undersigned also agrees to execute such
termination agreements, UCC termination statements, and other documents as may
be reasonably requested to further confirm that the Noteholders are no longer
secured by the Collateral.
NORWEST BANK MINNESOTA, N.A., as the
successor trustee under the Indentures
(as defined in the Second Restated
Agreement).
By:_____________________________________
Name:___________________________________
Title:__________________________________
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EXHIBITS AND SCHEDULES
TO
SECURITY AGREEMENT
SCHEDULE DOCUMENT
A Required Mortgage Documents
B Additional Required Mortgage Documents
C Form of Borrowing Base Report
EXHIBIT DOCUMENT
1 Required Review Steps
2 Form of Company Trust Receipt
3 Form of Shipping Request
4 Form of Whole Loan Sale Transmittal Letter
5 Form of Warehouse-Related MBS Transmittal
6 Form of Custodial Agreement
7 Form of Collateral Transmittal - Initial
Mortgage Information
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SCHEDULE A
TO SECURITY AGREEMENT
REQUIRED MORTGAGE DOCUMENTS
1. Original of mortgage note executed in favor of the Company or
the applicable Borrowing Subsidiary (with a complete series of
endorsements from the original payee thereof, through any
subsequent holders to the Company or Borrowing Subsidiary if
purchased by the Company or Borrowing Subsidiary) and endorsed
by an authorized signatory of the Company or the applicable
Borrowing Subsidiary in blank.
2. Recorded Mortgage or deed of trust securing the above mortgage
note. In lieu of a recorded document, the Collateral Agent
may accept a copy certified as being out for recordation by
the escrow company, title insurance company or closing agent,
or in the case of refinanced transactions, a copy of such
mortgage or deed of trust certified by an authorized signatory
of the Company.
3. Assignment of the mortgage or deed of trust by an authorized
signatory of the Company or the applicable Borrowing
Subsidiary in blank, in recordable form and the original or a
copy, certified as being out for recordation by the records
office or escrow or title insurance company or the Company, of
a proper assignment or assignments of the related mortgage or
deed of trust from the original holder, through any subsequent
transferees, to the Company or the applicable Borrowing
Subsidiary.
4. A copy, certified by the title insurance company or the
closing agent, of all applicable and necessary
powers-of-attorney and assumed name certificates.
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SCHEDULE B
TO SECURITY AGREEMENT
ADDITIONAL REQUIRED MORTGAGE DOCUMENTS
1. The original recorded mortgage or deed of trust securing the
mortgage note.
2. Evidence of fire and extended coverage insurance in an amount
not less than the highest of the following: (a) the amount of
the Mortgage Loan, (b) 90% of the insurable value of the
improvements, and (c) an amount sufficient to prevent
co-insurance. The Collateral Agent reserves the right to
obtain a loss payable endorsement in its favor if it so
desires.
3. Evidence of Notice to Customer required by the federal
Truth-in-Lending Law and Federal Reserve Regulation Z.
4. In the case of an FHA mortgage note, an FHA insurance
certificate or a commitment to deliver such; in the case of a
VA mortgage note; a VA guaranty certificate or a commitment to
deliver such and in the case of a conventional mortgage note,
an appraisal.
5. In the case of a conventional mortgage note with a
loan-to-value ratio in excess of 80%, the applicable private
mortgage insurance policy.
6. A certified copy of the preliminary policy of or commitment
for title insurance insuring the mortgage or deed of trust as
a first lien on the property subject thereto written by a
title company and in amount and containing exceptions
satisfactory to the Collateral Agent.
7. Evidence of certificate of completion, as appropriate under
the circumstances.
8. Other documentation as the Collateral Agent may reasonably
deem appropriate, as well as documentation necessary to
fulfill requirements of the Approved Investor Commitments.
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9. Such additional documents as may be necessary in the opinion
of the Collateral Agent to transfer to the Collateral Agent,
for the benefit of the Secured Parties, the title to any
Collateral pledged and/or hypothecated pursuant to the
Security Agreement.
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SCHEDULE C
TO SECURITY AGREEMENT
FORM OF BORROWING BASE REPORT
Date: _______________
Reference is made to that certain Third Amended and Restated Revolving
Credit Agreement among the Company, Borrowing Subsidiaries, The First National
Bank of Chicago, individually and as administrative agent, and the lenders
named therein, dated as of July __, 1997 (the "Credit Agreement"). Capitalized
terms not otherwise defined herein are used with the same meanings as in the
Credit Agreement.
BORROWING BASE:
Eligible Mortgage Loans
(Mortgage Collateral Value):
Eligible Delivered Mortgages $______________
Eligible AP Mortgages $______________
Eligible Pledged Securities
(MBS Value) $______________
Total Pledged Items $______________
Percentage Factor 98%
(A) BORROWING BASE
FROM PLEDGED ITEMS $______________
Eligible Repurchased
Agency Loans and Receivables $______________
Percentage Factor 90%
(B) BORROWING BASE
FROM REPURCHASED AGENCY LOANS
AND RECEIVABLES $______________
Eligible Servicing Sale Receivables $______________
Percentage Factor 75%
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(C) BORROWING BASE
FROM ELIGIBLE SERVICING SALE RECEIVABLES $______________
(D) BALANCE IN SETTLEMENT ACCOUNT $______________
(E) CASH AND CASH EQUIVALENTS $______________
SUM OF (A) - (E) ABOVE $______________
Reconciling Items:
Timing Difference $______________
Loan Detail Difference $______________
BORROWING BASE $______________
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EXHIBIT 1
TO SECURITY AGREEMENT
REQUIRED REVIEW STEPS
1. All submitted documents, are consistent with the related
Collateral Transmittal as to borrower name, loan face amount,
loan type and the Company's or Borrowing Subsidiary's loan
number.
2. The note and mortgage/deed of trust each bears an original
signature or signatures which appear to be those of the person
or persons named as the maker and mortgagor/trustor, or, in the
case of a certified copy of the mortgage/deed of trust, such
copy bears what appears to be a reproduction of such signature
or signatures.
3. Except for (a) the endorsement to the Company or applicable
Borrowing Subsidiary of the note in the event such loan was
purchased by the Company or a Borrowing Subsidiary and (b) the
endorsement in blank of the note by an authorized signatory of
the Company or the applicable Borrowing Subsidiary, neither the
note, the mortgage/deed of trust, nor the assignment(s) of the
mortgage/deed of trust contain any irregular writings which
appear on their face to affect the validity of any such
endorsement or to restrict the enforceability of the document on
which they appear.
4. The note is endorsed in blank by an authorized signatory of the
Company or the applicable Borrowing Subsidiary.
5. The assignment of the mortgage/deed of trust bears an original
signature of an authorized signatory of the Company or the
applicable Borrowing Subsidiary.
6. Such other review steps as the Collateral Agent, in its sole
discretion, deems appropriate.
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EXHIBIT 2
TO SECURITY AGREEMENT
FORM OF COMPANY TRUST RECEIPT
_______________, 19__
The undersigned, SOURCE ONE MORTGAGE SERVICES CORPORATION, a Delaware
corporation (the "Company"), acknowledges receipt from NATIONAL CITY BANK OF
KENTUCKY, acting as agent, bailee and custodian (in such capacity "Collateral
Agent") for the exclusive benefit of the Secured Parties pursuant to the
Security Agreement (as those terms and capitalized terms not otherwise defined
herein are defined in that certain Third Amended and Restated Revolving Credit
Agreement dated as of July ___, 1997, among the Lenders, the Company, the
Borrowing Subsidiaries and The First National Bank of Chicago, as Agent) of the
following described documentation for the identified Mortgage Loans (the
"Collateral Documents"), possession of which is herewith entrusted to the
Company solely for the purpose of correcting documentary defects relating
thereto:
Loan Document
Borrower Name Loan Number Note Amount Delivered
It is hereby acknowledged that a security interest pursuant to the
Illinois Uniform Commercial Code and the Kentucky Commercial Code in the
Collateral hereinabove described and in the proceeds of said Collateral has
been granted to Collateral Agent for the benefit of the Secured Parties
pursuant to the Security Agreement.
In consideration of the aforesaid delivery by Collateral Agent, the
Company hereby agrees to hold said Collateral in trust for Collateral Agent on
behalf of the Secured Parties as provided under and in accordance with all
provisions of the Security Agreement and to return said Collateral to
Collateral Agent no later than the close of business on the fifteenth calendar
day following the date hereof or, if such day is not a Business Day, on the
immediately succeeding Business Day. The Company represents and warrants that
the aforesaid delivery by the Collateral Agent shall not cause any violation of
any of the Borrowing Bases or any other provision of the Credit Agreement.
SOURCE ONE MORTGAGE SERVICES
CORPORATION, a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
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EXHIBIT 3
TO SECURITY AGREEMENT
FORM OF SHIPPING REQUEST
Date:_______________
National City Bank of Kentucky,
as Collateral Agent
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: ________________
This letter is to serve as authorization for you to endorse and ship the
following loans:
Loan Number Borrower Name Note Amount
to the following address under Commitment #__________ (the "Commitment") from
an Approved Investor as follows:
NAME:
ADDRESS:
ATTENTION:
Please endorse the notes as follows:
Please ship the loan documents either by ____________________ or by such other
courier service as we have designated to you as "approved". The courier shall
act as an independent contractor bailee acting solely on your behalf as
Collateral Agent for the Secured Parties (as defined in that certain Third
Amended and Restated Security and Collateral Agency Agreement dated as of July
__, 1997, as the same may be amended, extended or replaced from time to time),
but we acknowledge and agree that you are not responsible for any delays in
shipment caused by courier or any other actions or inactions of the courier,
including, without limitation, any loss of any loan documents; however, because
the Commitment expires on _______________, 199_, we ask that you deliver the
loan documents to the courier no later than _______________, 199_.
Please have the courier xxxx us by using our acct #__________. If you should
have any questions, or should feel the need for additional documentation,
please do not hesitate to call
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48
_______________.
[SOURCE ONE MORTGAGE SERVICES
CORPORATION, a Delaware corporation]
[THE MORTGAGE AUTHORITY, a Delaware
corporation]
[CENTRAL PACIFIC MORTGAGE COMPANY, a
California corporation]
By:________________________________
Name:______________________________
Title:_____________________________
-48-
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EXHIBIT 4
TO SECURITY AGREEMENT
(Direct Investor)
Date:____________
Name of Delivery Service:____________________________________
Airbill No.:____________________
FORM OF WHOLE LOAN SALE TRANSMITTAL LETTER
[LETTERHEAD OF COLLATERAL AGENT]
[Approved Investor]
_________________________
_________________________
Re: Source One Mortgage Services Corporation;
Sale of Mortgage Loans
Attached please find those Mortgage Loans listed separately on the
attached schedule, which Mortgage Loans are owned by SOURCE ONE MORTGAGE
SERVICES CORPORATION (the "Company"), THE MORTGAGE AUTHORITY, ("TMA"), a
wholly-owned subsidiary of the Company, or CENTRAL PACIFIC MORTGAGE COMPANY
("CPM"), a wholly-owned subsidiary of the Company, and are being delivered to
you for purchase.
The Mortgage Loans comprise a portion of the Collateral under (and as
the term "Collateral" and capitalized terms not otherwise defined herein are
defined in) that certain Third Amended and Restated Revolving Credit Agreement
dated as of July__, 1997 by and among the Company, TMA, CPM, The First National
Bank of Chicago, as Agent, and the Lenders thereunder. Each of the Mortgage
Loans is subject to a security interest in favor of National City Bank of
Kentucky (the "Collateral Agent") on behalf of the Secured Parties which
security interest shall be automatically released upon your remittance of the
full amount of the purchase price of such Mortgage Loan (as set forth on the
schedule attached hereto) by wire transfer to the following account:
WIRE INSTRUCTIONS TO SETTLEMENT ACCOUNT:
______________________
______________________
______________________
Pending your purchase of each Mortgage Loan and until payment therefor
is received, the aforesaid security interest therein will remain in full force
and effect, and you shall hold possession of such Collateral and the
documentation evidencing same as custodian, agent and bailee for and on behalf
of the Secured Parties. In the event any Mortgage Loan is unacceptable for
purchase, return the
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rejected item directly to the Collateral Agent at the address set forth below.
The Mortgage Loan must be so returned or sales proceeds remitted in full no
later than [forty-five (45) days][UNLESS DELIVERED TO A GOVERNMENT HOUSING
PROGRAM WHICH IS NOT A FEDERAL AGENCY] [seventy-five (75) days][IN THE CASE OF
DELIVERY TO A GOVERNMENT HOUSING WHICH IS NOT A FEDERAL AGENCY] from the date
hereof. In no event shall any Mortgage Loan be returned or sales proceeds
remitted to the Company, TMA or CPM. If you are unable to comply with the above
instructions, please so advise the undersigned immediately.
NOTE: BY ACCEPTING THE MORTGAGE LOANS DELIVERED TO YOU WITH THIS
LETTER, YOU CONSENT TO BE THE CUSTODIAN, AGENT AND BAILEE FOR THE SECURED
PARTIES ON THE TERMS DESCRIBED IN THIS LETTER. THE UNDERSIGNED, AS COLLATERAL
AGENT, REQUESTS THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE LOANS AND
THIS LETTER BY SIGNING AND RETURNING THE ENCLOSED COPY OF THIS LETTER TO THE
UNDERSIGNED; HOWEVER, YOUR FAILURE TO DO SO DOES NOT NULLIFY SUCH CONSENT.
Sincerely,
NATIONAL CITY BANK of KENTUCKY,
as Collateral Agent
By:________________________________
Title:_____________________________
Address: _________________________
_________________________
_________________________
The undersigned Company agrees to and acknowledges the terms of this
letter and, notwithstanding any contrary understanding with or instructions to
you, the addressee of this letter, the Company instructs you to act according
to the instructions set forth in this letter. These instructions cannot be
altered except by written instructions executed by Collateral Agent. The
Company and the Collateral Agent agree that a counterpart facsimile of this
letter executed by the Company shall suffice as an original of the Company's
agreement to and acknowledgment of the terms of this letter.
SOURCE ONE MORTGAGE SERVICES
CORPORATION, a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
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ACKNOWLEDGEMENT OF RECEIPT
[Approved Investor]
By:_______________________________
Name:_____________________________
Title:____________________________
Date:_____________________________
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EXHIBIT 5
TO SECURITY AGREEMENT
(Pool Formation)
FORM OF WAREHOUSE-RELATED SECURITY TRANSMITTAL LETTER
[COLLATERAL AGENT LETTERHEAD]
Date:___________________
[Certificating Custodian]
_________________________
_________________________
Re: Source One Mortgage Services Corporation;
Shipment of Mortgage Loans for Pool Formation
Attached please find those Mortgage Loans listed separately on the
attached schedule, which are owned by SOURCE ONE MORTGAGE SERVICES CORPORATION,
a Delaware corporation (the "Company"), THE MORTGAGE AUTHORITY, ("TMA") a
wholly-owned Subsidiary of the Company or CENTRAL PACIFIC MORTGAGE COMPANY,
("CPM") a wholly-owned Subsidiary of the Company, and are being delivered to
you, as custodian/trustee (the "Certificating Custodian"), for certification in
connection with the formation of a mortgage pool supporting the issuance of a
mortgage-backed security (the "Warehouse-Related Security") described as
follows: ______________________________.
The Mortgage Loans comprise a portion of the Collateral under (and as
the term "Collateral" and capitalized terms not otherwise defined herein are
defined in) that certain Third Amended and Restated Revolving Credit Agreement
dated as of July __, 1997, by and among the Company, TMA, CPM, The First
National Bank of Chicago, as Agent, and the Lenders. Each of the Mortgage
Loans is subject to a security interest in favor of National City Bank of
Kentucky ("Collateral Agent") for the benefit of the Secured Parties, which
security interest shall be automatically released upon the issuance of the
Warehouse-Related Security in accordance with the terms of the prescribed GNMA,
FNMA or FHLMC form enclosed herewith.
Pending issuance of the Warehouse-Related Security, the aforesaid
security interest in each Mortgage Loan will remain in full force and effect,
and you shall hold such Collateral as custodian, agent and bailee for and on
behalf of the Secured Parties. In the event any Mortgage Loan is unacceptable
for pool formation, return the rejected item directly to the undersigned, as
Collateral Agent, at the address set forth below. Each Mortgage Loan must be
so returned or the Warehouse-Related Security issued no later than [forty-five
(45) days][UNLESS DELIVERED TO A
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GOVERNMENT HOUSING PROGRAM WHICH IS NOT A FEDERAL AGENCY] [seventy-five
(75) days][IN THE CASE OF DELIVERY TO A GOVERNMENT HOUSING WHICH IS NOT A
FEDERAL AGENCY] from the date hereof. In no event shall any Mortgage Loan be
returned or proceeds relating thereto be remitted to the Company, TMA or CPM.
If you are unable to comply with the above instructions, please so advise the
undersigned immediately.
NOTE: BY ACCEPTING THE MORTGAGE LOANS DELIVERED TO YOU WITH THIS
LETTER, YOU CONSENT TO BE THE CUSTODIAN, AGENT AND BAILEE FOR THE SECURED
PARTIES ON THE TERMS DESCRIBED IN THIS LETTER. THE UNDERSIGNED, AS COLLATERAL
AGENT, REQUESTS THAT YOU ACKNOWLEDGE RECEIPT OF THE ENCLOSED MORTGAGE LOANS AND
THIS LETTER BY SIGNING AND RETURNING THE ENCLOSED COPY OF THIS LETTER TO THE
UNDERSIGNED; HOWEVER, YOUR FAILURE TO DO SO DOES NOT NULLIFY SUCH CONSENT.
Sincerely,
NATIONAL CITY BANK OF KENTUCKY, as
Collateral Agent
By:________________________________
Title:_____________________________
Address: _________________________
_________________________
_________________________
ACKNOWLEDGEMENT OF RECEIPT
[Certificating Custodian]
By:_______________________________
Name:_____________________________
Title_____________________________
Date:_____________________________
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EXHIBIT 6
TO SECURITY AGREEMENT
FORM OF CUSTODIAL AGREEMENT
(With Operating Instructions Attached)
_______________, 199_
_________________________
_________________________
_________________________
Re: Source One Mortgage Services Corporation
Ladies and Gentlemen:
The undersigned, National City Bank of Kentucky (the "Collateral Agent")
acts in the capacity as Collateral Agent pursuant to: (1) that certain Third
Amended and Restated Revolving Credit Agreement dated as of July __, 1997 (as
amended from time to time, the "Credit Agreement", and as capitalized terms not
otherwise defined herein are used with the same meaning as in the Credit
Agreement) by and among SOURCE ONE MORTGAGE SERVICES CORPORATION (the
"Company"), THE MORTGAGE AUTHORITY, ("TMA"), CENTRAL PACIFIC MORTGAGE COMPANY
("CPM"), the lenders participating therein (collectively, the "Lenders"), and
the FIRST NATIONAL BANK OF CHICAGO, as agent for the Lenders (the "Credit
Agent"), and (2) that certain Second Amended and Restated Security and
Collateral Agency Agreement (as amended from time to time, the "Security
Agreement") dated concurrently therewith among the Collateral Agent, the
Company, TMA, CPM and the Credit Agent. TMA and CPM are each referred to
herein as a "Borrowing Subsidiary".
The Collateral Agent represents and confirms that it has the power and
authority under the Credit Agreement and the Security Agreement to execute this
Custodial Agreement. The Collateral Agent may execute any of its duties
hereunder by or through agents or attorneys-in-fact of whose appointment you
have been notified in writing.
The Collateral Agent hereby appoints you and you hereby accept
appointment to act as agent, custodian and bailee for the benefit of the
Secured Parties (as defined in the Security Agreement) (in such capacity, the
"Approved MBS Custodian"). In such capacity, you agree to accept delivery only
on a free basis of certain mortgage-backed securities delivered to you from
time to time identified in a letter in the form attached hereto as Exhibit A
(all such mortgage-backed securities delivered to you and so
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identified being referred to herein as "Subject Securities"). This Custodial
Agreement governs your rights and responsibilities as Approved MBS Custodian
with respect to all Subject Securities.
From time to time the security interest of the Collateral Agent may be
abated upon a "Positive Security Event" under the terms of the Credit Agreement
and the Security Agreement. The Collateral Agent will promptly advise you of
any such abatement and issue directions to you regarding the effect of such
event on your duties and obligations hereunder.
The Collateral Agent hereby directs you, as Approved MBS Custodian, to
hold or dispose of Subject Securities deposited with you only in accordance
with the instructions of a person described as an "Authorized Collateral Agent
Representative" on a schedule from time to time delivered to you by the
Collateral Agent (the initial list of such persons being attached hereto as
Schedule I) or otherwise as expressly permitted hereunder, including without
limitation the Company's or any Borrowing Subsidiary's right to direct the sale
or disposition of the Subject Securities as described in the following
paragraph. You are authorized, directed and instructed to act upon all
instructions from persons reasonably believed by you to be genuine and
authorized. Any instruction given hereunder may, in your discretion, be by
telegraph, cable, facsimile or electronic communication which is received by
you.
All Subject Securities are to be held by you in a custodial account
(Account No. __________) maintained with you (the "MBS Custodial Account").
Unless and until you have received written notice to the contrary from the
Collateral Agent at the direction of the Required Lenders (which notice may be
by facsimile transmission) following an Event of Default, you may from time to
time deliver Subject Securities at the direction of the Company, to, but only
to, Approved Investors (as listed on a schedule of "Approved Investors"
delivered to you from time to time by an Authorized Collateral Agent
Representative) against payment of the purchase price therefor.
Notwithstanding the preceding sentence, even after your receipt of notice from
the Collateral Agent that an Event of Default exists, you may deliver Subject
Securities at the direction of the Company, but only to Approved Investors
pursuant to then-existing Approved Investor Commitments. The proceeds of the
sale or other disposition of all Subject Securities are to be held by you in an
account (Account No. __________) maintained with you (the "Custodian Settlement
Account") and transferred by the end of each Business Day to Account No.
19-19210 maintained in the Credit Agent's name at The First National Bank of
Chicago (the "Settlement Account") as follows:
______________________________
______________________________
______________________________
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By executing this Custodial Agreement the Company and the Borrowing
Subsidiaries confirm and the Collateral Agent, the Company and the Borrowing
Subsidiaries notify you that the Company and the Borrowing Subsidiaries have
assigned and granted to the Collateral Agent a security interest in and lien
upon all now existing and hereafter arising right, title and interest
of the Company and the Borrowing Subsidiaries in the MBS Custodial Account, the
Custodian Settlement Account and the Settlement Account and in any and all
investments and proceeds at any time held therein.
Unless and until you have received written notice from an Authorized
Collateral Agent Representative (which notice may be by facsimile transmission)
that there has occurred an Event of Default or Default, you may, at your
election, elect to make advances against Subject Securities held by you in the
MBS Custodial Account pending their sale and delivery to a purchaser thereof,
in accordance with a repo line of credit established between you and the
Company; provided, however, that: (1) any such repo line of credit shall be on
terms and conditions customary for similar lines of credit which you provide to
customers, including, without limitation, as to advance rate and interest
charge; (2) all advances to the Company under such repo line of credit (each, a
"Repo Advance") shall be transferred to the Custodian Settlement Account; and
(3) you hereby waive any and all rights of offset, counterclaim or other
recoupment rights which you may have with respect to any Repo Advance against
the MBS Custodial Account, the Custodian Settlement Account and any Subject
Securities or proceeds thereof at any time held therein (other than the Subject
Securities which are the subject of the Repo Advance). If, but only if and
only to the extent there has been transferred to the Custodian Settlement
Account the proceeds of a given Repo Advance, the rights of the Collateral
Agent in the Subject Securities which are the subject of the Repo Advance are
hereby automatically subordinated to your rights therein as collateral security
for the repayment of such Repo Advance, and upon receipt of such proceeds in
the Settlement Account, such rights of the Collateral Agent shall be
automatically released.
You shall be under no duty to take or omit to take any action with
respect to Subject Securities, except as specifically set forth in this
Agreement and the Operating Instructions attached hereto as Exhibit B, unless
specifically otherwise directed by the Collateral Agent and agreed to by you in
writing. In the event that you shall be uncertain as to your duties or rights
hereunder, you shall be entitled to refrain from taking any action until you
shall be directed otherwise by an order of a court of competent jurisdiction.
In case you should agree to our request and on our behalf to appear in,
prosecute or defend any legal or equitable proceeding either in your own name
or in the name of your nominee, you shall first be indemnified to your
satisfaction (other than
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against your gross negligence and willful misconduct).
By accepting delivery of any Subject Security, you shall be deemed to
have agreed to hold such Subject Security as Approved MBS Custodian hereunder,
free and clear of all liens, claims, interests and rights of offset in your
favor or in favor of persons claiming through you, subject only to the rights
with respect to Repo Advances described above. Until you have been notified in
writing (including by telecopier) by an Authorized Collateral Agent
Representative of the occurrence of an Event of Default, you are hereby
authorized to return Subject Securities to the issuer/transfer agent therefor at
the Company's written request in connection with the reissuance thereof in
smaller denominations; provided, however, that any delivery of Subject
Securities for reissuance shall be covered by a transmittal letter or other
written agreement instructing that the reissued securities be returned directly
to you. In this connection, we acknowledge familiarity with the current
securities industry practice of delivering physical securities against later
payment on the delivery date. Notwithstanding our instructions to deliver
Subject Securities against payment, you are authorized to make delivery of such
physical securities against a temporary receipt (sometimes called a "window
ticket") in lieu of payment. You agree to use your best efforts to obtain
payment therefor during the same business day, but we confirm our assumption of
all risks of payment for such deliveries. You may accept certified checks in
payment for Subject Securities delivered on the Company's instruction and you
shall not be responsible for the risks of collectability of any such checks.
YOU ARE HEREBY IRREVOCABLY INSTRUCTED BY THE COMPANY, EACH BORROWING SUBSIDIARY
AND THE COLLATERAL AGENT THAT ALL PROCEEDS RECEIVED FROM THE SALE OR OTHER
DISPOSITION OF SUBJECT SECURITIES AND ALL REPO ADVANCES, UNTIL OTHERWISE
NOTIFIED IN WRITING BY THE COLLATERAL AGENT, SHALL BE WIRED TO THE SETTLEMENT
ACCOUNT AS PROVIDED ABOVE.
You will provide to the Collateral Agent on a daily basis at or before
9:30 a.m. (Chicago time) a report of the prior day's activity with respect to
the MBS Custodial Account, the Custodian Settlement Account and Repo Advances
made by you hereunder.
You shall not be liable or accountable for any act or omission of
brokers, dealers or agents in connection with this Custodial Agreement. In
carrying out your duties hereunder, you may use such methods or agencies as you
determine in your sole discretion, including your own facilities.
You shall maintain regular business records documenting all instructions
transmitted to you through any authorized means and any response by you. You
are authorized to electronically record any telephone communications with the
Company, any Borrowing Subsidiary or the Collateral Agent arising out of this
Custodial
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Agreement. Your records shall be determinative of the form, content
and time of all the Company's, the Borrowing Subsidiaries' and Collateral
Agent's instructions and any response from you. The record of each instruction
and any response thereto shall be retained by you for at least ninety (90) days
following the date of the instruction. Any claim against you for failure to
properly follow an instruction transmitted by the Company, any Borrowing
Subsidiary or the Collateral Agent must be made in writing and received by you
within sixty (60) days after the date such instruction was received by you.
You shall give the Subject Securities that come into your possession
under this Custodial Agreement the same physical care and safeguards as are
afforded similar property owned by you; provided, however, your responsibility
hereunder is limited to losses occasioned directly by the gross negligence or
willful misconduct of your employees, to the extent of the market value of the
Subject Securities at the date of the discovery of such loss. With respect to
any Subject Securities which you deliver for us to a third party, and with
respect to such delivery, you shall be deemed no more than an "intermediary" as
referenced in Section 8-306(3) of the New York Uniform Commercial Code, and the
only warranty given by you shall be the warranty provided in said Section
8-306(3). In no event shall you be liable for any indirect, special or
consequential loss, even if you have been advised of the possibility of such
loss. You may, at your option, make arrangements for insuring yourselves
against loss from any cause, but you shall not be under any obligation to insure
for our benefit.
Except as expressly set forth above with respect to advances made by you
in connection with "late deliveries" and Repo Advances, none of the Subject
Securities held in the MBS Custodial Account, the funds held at any time in the
Custodian Settlement Account, the Subject Securities or any proceeds of the
sale or other disposition thereof will be subject to any right, charge,
security interest, lien, encumbrance or claim of any kind in your or your
creditors' favor. Any claims for the payment of fees with respect to the safe
custody or administration of Subject Securities or for compensation, expenses,
commitments made by you upon instructions of the Collateral Agent,
reimbursement of taxes incurred by you for the account of the Collateral Agent,
any penalties incurred by or levied or assessed against you resulting from the
Collateral Agent's improper or incorrect instructions, or other liabilities of
the Collateral Agent to you, and for indemnity against any claim or liability
to which you are subjected by reason of any registration of Subject Securities
shall be enforceable solely against the Company and none of the Collateral
Agent, the Credit Agent or any Secured Party shall have any responsibility
therefor (except to the extent any of the foregoing are due to the gross
negligence or willful misconduct of the Collateral Agent, the Credit Agent or
any
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Secured Party, as applicable). The Collateral Agent, the Borrowing
Subsidiaries and the Company agree to make no claim against you except for any
such claims or liabilities arising, or claimed to have arisen, as a result of
your gross negligence or willful misconduct.
The Operating Instructions attached hereto are hereby made part hereof
and any and all capitalized terms defined herein shall have the same meaning
when used therein.
This Custodial Agreement contains the whole of the understanding between
you and the Collateral Agent concerning the subject matter hereof and no
provision hereof shall be modified or altered except in a writing signed by
both you and the Collateral Agent.
This Custodial Agreement shall be governed by the laws of the State of
New York and shall be binding upon the Collateral Agent and upon its successors
and assigns and shall inure to your benefit and your successors and assigns and
shall be deemed continuing until terminated by either the Collateral Agent or
you upon at least sixty (60) days prior written notice to the other.
This letter is made in triplicate and will become an agreement between
you and the Collateral Agent upon your acceptance hereof in the space provided
below at your offices in the State of New York.
NATIONAL CITY BANK OF KENTUCKY, as
Collateral Agent
By:________________________________
Title:_____________________________
AGREED TO AND ACCEPTED:
________________________________,
as Approved MBS Custodian
By:________________________________
Name:______________________________
Title:_____________________________
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ACKNOWLEDGEMENT AND AUTHORIZATION
The Company and the Borrowing Subsidiaries approve the foregoing
Custodial Agreement and authorize the Approved MBS Custodian to act in
accordance with the terms thereof. The Company and the Borrowing Subsidiaries
agree to be bound by the terms of the Custodial Agreement (including all
Exhibits thereto) to the same extent as if a party thereto. The Company and
the Borrowing Subsidiaries each agree to indemnify the Approved MBS Custodian
for, and hold the Approved MBS Custodian harmless against, any loss, liability
or expense in connection with, arising out of or in any way related to the
transaction contemplated and relationship established by the Custodial
Agreement, or any action or omission by the Approved MBS Custodian in
connection with the Custodial Agreement, or any agent, broker or dealer
employed by the Approved MBS Custodian hereunder, including the reasonable
costs and expenses incurred in defending any such claim of liability, except
that neither the Company nor any Borrowing Subsidiary shall be liable for (i)
any loss, liability or expense that is determined by a judgment of a court of
competent jurisdiction that is binding on the Approved MBS Custodian, final and
not subject to review on appeal, to be the direct result of acts or omissions
on the Approved MBS Custodian's part constituting gross negligence or willful
misconduct, or (ii) any claim that is based on the Approved MBS Custodian's
warranty as provided in Section 8-306(3) of the New York Uniform Commercial
Code.
SOURCE ONE MORTGAGE SERVICES
CORPORATION, a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
THE MORTGAGE AUTHORITY, a Delaware
corporation
By:________________________________
Name:______________________________
Title:_____________________________
CENTRAL PACIFIC MORTGAGE COMPANY, a
California corporation
By:________________________________
Name:______________________________
Title:_____________________________
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EXHIBIT A
TO CUSTODIAL AGREEMENT
FORM OF LETTER TO APPROVED MBS CUSTODIAN
To: _________________________,
as Approved MBS Custodian
Re: Source One Mortgage Services Corporation;
Custodial and Collateral Agency Instructions
Ladies and Gentlemen:
Reference is made to the attached schedule relating to a
letter/certification to a transfer agent/trustee for the issuance of the
Security described more particularly therein, which Security is supported by a
pool of residential mortgage loans and/or mortgage-backed securities including
mortgage loans and/or mortgage-backed securities in which the undersigned as
collateral agent (in such capacity, the "Collateral Agent"), acting under that
certain Third Amended and Restated Security and Collateral Agency Agreement
dated as of July __, 1997, as amended, extended or replaced from time to time,
holds a first priority perfected security interest. The attached schedule is
(i) Delivery Schedule Form 11705 in the case of GNMA Securities, (ii) Delivery
Schedule Form 996 in the case of FHLMC Securities, (iii) Delivery Schedule Form
2014 in the case of FNMA Securities, or (iv) a form containing substantially
similar information in the case of any other Securities. Pursuant to the
letter/certification, the transfer agent/trustee has been instructed to deliver
such Security to you. You are hereby notified that the Collateral Agent and
the Secured Parties named therein have a first perfected security interest in
the Security and in all proceeds of the sale or other disposition thereof and
in all accounts into which said proceeds may be deposited.
This letter will confirm your agreement to hold such Security as a
"Subject Security" under and on terms and conditions set forth more
particularly in that certain Custodial Agreement, dated as of _______________,
199_ between you and the Collateral Agent.
Very truly yours,
NATIONAL CITY BANK OF KENTUCKY, as
Collateral Agent
By:________________________________
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The undersigned agree to and acknowledge the terms of this letter and,
notwithstanding any contrary understanding with or instructions to you, the
addressee of this letter, the undersigned instruct you to act according to the
instructions set forth in this letter. These instructions cannot be altered
except by written instructions executed by Collateral Agent.
SOURCE ONE MORTGAGE SERVICES
CORPORATION, a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
THE MORTGAGE AUTHORITY, a Delaware
corporation
By:________________________________
Name:______________________________
Title:_____________________________
CENTRAL PACIFIC MORTGAGE COMPANY, a
______________ corporation
By:________________________________
Name:______________________________
Title:_____________________________
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EXHIBIT B
TO CUSTODIAL AGREEMENT
OPERATING INSTRUCTIONS
These Operating Instructions are attached to and made a part of the
Custodial Agreement between National City Bank of Kentucky and
___________________, dated as of _______________, 199_ (as amended from time to
time, the "Custodial Agreement"). Terms defined therein shall have their same
meanings when used herein.
1. From time to time GNMA, FNMA and FHLMC Subject Securities will
be issued at the request of the Company or a Borrowing Subsidiary and credited
to your account with the Federal Reserve Bank of New York ("FRBNY") (in the
case of FNMA and FHLMC Subject Securities) or your account with the
Participants Trust Company ("PTC") (in the case of GNMA Subject Securities) (in
each case, to be held by you for the account of the Collateral Agent) in
accordance with the Code of Federal Regulations (in the case of FNMA and FHLMC
Subject Securities) or the rules of PTC (in the case of GNMA Subject
Securities). Upon your receipt of confirmation that such Subject Securities
have been deposited into your account with FRBNY (in the case of FNMA and FHLMC
Subject Securities) or your account with PTC (in the case of GNMA Subject
Securities), you shall promptly issue to the Collateral Agent and the Company
your confirmation that (1) you have received such confirmation of the Fedwire
(in the case of FNMA and FHLMC Subject Securities, which confirmation will
include the number of Subject Securities deposited into your account with
FRBNY) or from PTC (in the case of GNMA Subject Securities), (2) you have made
appropriate entries on your books reflecting the interests of the Company or
the applicable Borrowing Subsidiary as beneficial owner and the Collateral
Agent as secured party with respect to such Subject Securities, and (3) there
are no security interests or any rights or claims of any third party in such
Subject Securities in your favor or known to you which have priority over the
security interest of the Collateral Agent in such Subject Securities. You
shall be under no obligation to ensure or verify that Securities identified in
transmittal letters (in the form of Exhibit A to the Custodial Agreement) are
in fact credited to your account(s), but you shall be obligated only to report
your actual receipt of Subject Securities to the Collateral Agent and the
Company in accordance with the provision of this Instruction 1.
2. With respect to the delivery or transfer of Subject Securities
which you hold for the account of the Collateral Agent, you are hereby
authorized to act only upon instructions from the Collateral Agent or, to the
extent permitted by the Custodial Agreement, by the Company. Upon notification
to you by the
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Collateral Agent at the direction of the Required Lenders following an "Event
of Default" under the Credit Agreement, no third party, including without
limitation the Company and the Borrowing Subsidiaries, may direct you to make
any delivery or transfer of such Subject Securities other than Subject
Securities to be delivered pursuant to then-existing Approved Investor
Commitments.
3. The proceeds of redemptions, collections and other receipts,
including dividend and interest income, shall be credited to the Custodial
Settlement Account upon collection or payment.
4. You are to notify the Collateral Agent and the Company upon
receipt of notice by you of any call for conversion, redemption, subscription
rights or similar proceeding affecting the Subject Securities held in the
relevant account (any of the foregoing being referred to herein as "Account
Proceedings"), and shall take such action in respect thereof as you may be
directed in writing by the Collateral Agent; provided, however, that you shall
have no duty or responsibility to notify the Company or the Collateral Agent of
any Account Proceedings which do not appear in The Wall Street Journal (New
York Edition), The Standard & Poor's Called Bond Record for Preferred Stocks,
Financial Daily Called Bond Service, The Xxxxxx Services or official
notifications from the Depository Trust Company or such other publications
which you may deem reasonable from time to time. All solicitation fees payable
to you as agent in connection with such event will be retained by you unless
specifically agreed to the contrary by you.
5. You are authorized and empowered in the name and on behalf of
the Collateral Agent and the Company to execute any certificates of ownership
or other reports which you are or may hereafter be required to execute and
furnish under any regulation of the Internal Revenue Service, or other
authority of the United States, insofar as the same are required in connection
with any property which is now or may hereafter be in your possession by virtue
of the Custodial Agreement and these Operating Instructions, claiming no
exemptions on behalf of the Collateral Agent or the Company. In the
preparation of such reports, the status of the Collateral Agent is to be
described as a bank, trust company or financial institution, as the case may
be, domiciled in the United States. The Collateral Agent agrees to notify you
immediately in writing of any change in such status.
6. All mail communications which are to be furnished or forwarded
hereunder to the Collateral Agent or the Company shall be addressed to such
party at the last address on your records, provided that in case you in your
sole discretion shall determine that an emergency exists, you may use such
other means of communication as you shall deem advisable.
7. You are under no duty to supervise, recommend or advise
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the Collateral Agent relative to the investment, purchase, sale, retention
or other disposition of any property held hereunder unless specifically provided
for by the Custodial Agreement.
8. With respect to any direction to receive securities in
transactions not placed through you, you shall have no duty or responsibility
to advise the Company of non-receipt, or to take any steps to obtain delivery
of securities from any brokers or dealers. All dealer concessions made to you
will be retained by you unless specifically agreed to the contrary by you.
9. Notwithstanding anything herein to the contrary, unless
instructions are received from the Collateral Agent, specifying a different
destination than the address listed on your records for the Collateral Agent,
within ten (10) days of the receipt of any termination notice, you shall have
the right to transfer all securities and other property held by you or any
depositary in connection with the Custodial Agreement or registered in your
name to the Collateral Agent at the address listed on your records.
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SCHEDULE I
TO CUSTODIAL AGREEMENT
AUTHORIZED COLLATERAL AGENT REPRESENTATIVES
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EXHIBIT 7
TO SECURITY AGREEMENT
COLLATERAL TRANSMITTAL -- INITIAL MORTGAGE INFORMATION
1. CUSTOMER NAME ______________________________
2. LOAN NUMBER _________________________________
3. MORTGAGOR ___________________________________
SURNAME ONLY
4. AP STATUS CODE _______________________________
5. DEPOSIT DATE _________________________________
6. ORIGINAL NOTE AMOUNT $_____________________
7. ACQUISITION COST $____________________________
8. TAKE-OUT VALUE $_____________________________
9. NOTE DATE OR CONVERSION DATE _____________
10. NOTE RATE ____________________________________
11. LOAN TYPE (i.e. a group category (e.g. GNMA 15, FNMA/FHLMC 30, etc.) set
forth on Exhibit F to the Credit Agreement)
_______________________
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