WAREHOUSE CREDIT AND SECURITY AGREEMENT
THIS WAREHOUSE CREDIT AND SECURITY AGREEMENT (this "Agreement"), dated as
of the Commencement Date set forth below is between PRINCAP MORTGAGE WAREHOUSE,
INC., a Delaware corporation (the "Lender") and the Borrower identified below.
ARTICLE I.
BASIC LOAN TERMS; OTHER DEFINED TERMS
The following terms shall have the following definitions whenever used in
this Agreement.
1.1. Borrower: Westmark Mortgage Corporation
X Corporation State: California
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Limited Partnership State:
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General Partnership State:
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Proprietorship State:
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1.2. Borrower's ▇▇▇ ▇.▇. ▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇: Florida Zip: 33483
1.3. Guarantor: None
1.4. Guarantor's
Address:
1.5 Lender's Two ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Phone/Fax ▇▇▇-▇▇▇-▇▇▇▇/▇▇▇-▇▇▇-▇▇▇▇
1.6. Basic Interest Rate: Prime Rate plus 2%
1.7. Default Interest Rate: Basic Interest Rate plus 2%
1.8. Commencement Date: October 26, 1997
1.9. Termination Date: One year from Commencement Date.
1.10. Advance Repayment Period: Ninety (90) days from Origination
1.11. Maximum Credit Availability $10,000,000
Subject to the following sublimits on Advances:
Not to exceed $350,000 per Mortgage Loan
Not to exceed an aggregate of $350,000 per Mortgagor.
Not to exceed two Mortgage Loans per Mortgagor outstanding at any time.
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(The above sublimits shall apply unless prior approval to exceed the
same is obtained from the Lender).
Not to exceed 98% of Committed Purchase Price
Not to exceed 98% of Mortgage Loan as of Origination
Not to exceed 30% of Maximum Credit Availability, when aggregated
with all other Wet Advances outstanding.
1.12. Minimum Deposit: $5,000.00
1.13. Facility Fees:
A. One/twelth of 0.25% per annum of the unused portion of the
Maximum Credit Availability payable on the last Business Day of each month for
each month that less than 50% of the Maximum Credit Availability has been
advanced.
B. $140. per Advance Request; or, if not received at least one
(1) Business Day prior to Origination, $190. per Advance Request.
1.14. Advance: An advancement of the proceeds of the Loan made available
to Borrower under this Agreement.
1.15. Advance Request: The written request for an Advance made by
Borrower to Lender in the form of Exhibit "A" accompanied by all of the
following:
(a) Originally executed Promissory Note of Borrower.
(b) Loan Purchase Commitment issued by an Approved Investor in an
amount sufficient to repay in full the Advance, together with interest accrued
thereon through the date of sale, and otherwise on terms and conditions
satisfactory to Lender in its sole discretion.
(c) An assignment of the Mortgage by the Borrower in recordable
form but for completion of the name and address of the assignee and, if not yet
available, Mortgage recordation information.
1.16. Affiliate: Any Person or entity that, now or hereafter, directly or
indirectly through one or more intermediaries, controls, is controlled by or is
under common ownership or control with any Obligor. For purposes of this
definition, the terms "control," "controls" and "controlled" shall refer to the
power to determine the management or policies of a Person, whether resulting
from an official position or capacity with such Person, direct or indirect
beneficial ownership of at least twenty percent (20%) of the voting securities
or other equity interests of such Person, or otherwise.
1.17. Agency. FNMA, FHLMC or GNMA, as applicable (all as defined in the
list of Approved Investors attached).
1.18. Applicable Requirements: The requirements set forth in Lender's
Warehousing Guide together with all laws, rules, regulations and official
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publications of any federal, state or local government or and any agency,
department, bureau, board, commission or instrumentality of any of the
foregoing now existing or hereafter created including, without limitation: all
federal, state, local and foreign laws, statutes, rules, regulations, licensing
requirements, ordinances, codes, rules, orders, opinions and directives that
may be applicable to the solicitation, origination, credit analysis,
settlement, transfer, assignment, servicing, administration, disposition and
collection of Mortgage Loans, and all amendments and supplements thereto in
effect as of the time of reference, including: (a) the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
National Affordable Housing Act; (b) the Equal Credit Opportunity Act; (c) the
Fair Credit Reporting Act; (d) Truth-in Lending Act (including Regulation Z);
(e) Real Estate Settlement Procedures Act; (f) the Fair Debt Collection
Practice Act; (g) Unfair Trade Practices Acts; (h) the, ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act; (i) Financial Institutions Reform, Recovery and
Enhancement Act; (j) Home Mortgage Disclosure Act; (k) laws relating to
consumer protection, loan and appraisal disclosure, usury, fair housing, debt
collection, unfair or deceptive acts or practices; (1) public notice and
recordation acts; (m) the Internal Revenue Code; (n) the National Housing Act;
and (o) the Serviceman's Readjustment Act. Also included are the rules,
regulations, directives and instructions of or concerning an Agency, HUD, FHA
or VA including, without limitation, the requirements of the Agency guides, the
Agency agreements, federal regulations promulgated by HUD under the National
Housing Act, federal regulations promulgated by the VA under the Serviceman's
Readjustment Act and handbooks, circulars, notices, bulletins and other
communications of any of the foregoing to the extent applicable as of the time
of reference.
1.19. Approved Investor: A Person identified on Exhibit "B" or such
other Person as Lender approves in writing after Lender's review of Financial
Statements and other information pertaining to the creditworthiness of the
Approved Investor as Lender may request.
1.20. Agreement: This agreement, together with all exhibits, amendments,
modifications and supplements hereto as may be in effect from time to time.
1.21. Bailee Letter: The letter setting forth the terms and conditions
under which Lender will permit Collateral Documents to be released to the
custody of Approved Investor for purposes of inspecting same to determine
conformance with the terms of the Loan Purchase Commitment. Lender's standard
form of Bailee Letter is attached as Exhibit "C".
1.22. Borrower Authorization: The completed certification of Borrower in
the appropriate form (corporate, partnership or proprietorship, as the case may
be) attached as Exhibit "D" including all required attachments.
1.23. Business Day: Any day upon which Chase Manhattan Bank or other
depositary for the Collection Account is open for business.
1.24. Collection Account: The cash collateral account maintained by
Lender with Chase Manhattan Bank, as collateral agent (including its
successors in such capacity, the "Collateral Agent") on behalf of one or more
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persons that may from time to time own an interest in any Promissory Note
pursuant to the Collateral Agency Agreement dated as of March 21, 1994 between
Lender and Chemical Bank, predecessor to Chase Manhattan Bank, as Collateral
Agent, which Collateral Agency Agreement provides, among other things, that
Lender has assigned to Collateral Agent (a) all rights to receive payments
under, or with respect to, any Promissory Note or other Loan Document; and (b)
all remittances under any Loan Purchase Commitment or any Collateral Documents,
all of which must be deposited directly into the Collection Account by
electronic transfer of immediately available funds as follows:
Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Attention: Global Securities and Trust
New York
ABA Routing #▇▇▇▇▇▇▇▇▇ for further credit to:
Princap Mortgage Warehouse, Inc.
Collection Account #323-309348
1.25. Collateral: Collectively, all of the following:
(a) all Mortgage Loans originated in whole or in part by Advances
made under this Agreement or which otherwise are, or are required to be, pledged
or delivered to Lender under this Agreement, and all Collateral Documents which
are, or are required to be, pledged or delivered to Lender under this Agreement
including, in each case, without limitation: the original Mortgage Note
evidencing each Mortgage Loan and each Mortgage securing each Mortgage Note;
(b) all Loan Purchase Commitments, all rights of Borrower to
enforce the Loan Purchase Commitments and all rights to receive payment for, or
other proceeds of the sale of, any Mortgage Loan under any Loan Purchase
Commitment or otherwise as a result of the sale, transfer or other assignment of
any Mortgage Loan, all proceeds of sales deposited in the Collection Account and
all funds in the Maintenance Account from whatever sources;
(c) all rights of Borrower to service any Mortgage Loan and to
receive any payment or compensation for the servicing of any Mortgage Loan and
all rights to receive any payments under any Mortgage Loan; and
(d) all accounts, contract rights, general intangibles, cash,
securities, certificates, documents, instruments, claims, demands, files,
databases, electronic and other information pertaining to any of the
above mentioned items and all proceeds of the foregoing.
1.26. Collateral Documents: Collectively, all of the following:
(a) The original Mortgage Note evidencing the Mortgage Loan
endorsed in blank by Borrower;
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(b) The original recorded Mortgage securing the Mortgage Note (or,
until the original recorded Mortgage is returned from recordation, a
photocopy of the original Mortgage, certified by the Settlement Agent to be a
true copy of the original instrument submitted for recording);
(c) Marked-up commitment of a title insurance company satisfactory
to Lender to issue an ALTA loan policy insuring the Mortgage as first priority
lien (unless Lender has specifically agreed in writing to a lesser priority) in
an amount not less than the principal amount of the Mortgage Loan;
(d) Certificates of casualty or hazard insurance naming Borrower
and Lender (as their interests may appear), as mortgagee and loss payee;
(e) Policies or certificates of private mortgage insurance;
(f) Credit report on the Mortgagor;
(g) Appraisal of the real property described in the Mortgage;
(h) HUD-1 Settlement Sheet;
(i) Mortgage Loan application executed as of origination;
(j) Copies of all statements (including disclosure statements),
certifications and other forms required under Applicable Requirements; and
(k) Such other documents as are customarily desired for inspection
or transfer incidental to the purchase of a Mortgage Note by an institutional
investor and any additional documents which are customarily executed by the
seller of a Mortgage Note to an institutional investor and maintained in the
related Mortgage Loan file.
1.27. Committed Purchase Price: The purchase price which the Approved
Investor has agreed to pay for a Mortgage Loan under the terms of the applicable
Loan Purchase Commitment.
1.27a Eligible Mortgage Loan:
(1) No Mortgage Loan shall be considered to be an "Eligible Mortgage
Loan" under the Agreement unless it (i) complies in all respects with the
requirements set forth in Section 1.39 of the Agreement, and (ii) complies in
all respects with following additional requirements:
(a) Is secured by a residential 1-4 family dwelling.
(b) Is a first or second lien.
(c) Has a maximum loan principal not in excess of any limit or
sublimit as stated in Section 1.11, unless approved in advance by the Lender.
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(d) Is deliverable to the Approved Investor which issued the
Loan Purchase Commitment within the time permitted thereby, which in no case may
exceed 90 days from the Advance Date.
(2) In addition, a Mortgage Loan shall not qualify as an
"Eligible Mortgage Loan" if any of the following statements are true with regard
to such Mortgage Loan:
(a) It fails to meet any of the above requirements.
(b) Is a Mortgage Loan to an officer, principal, manager or
Guarantor of the Borrower.
(c) Is a Mortgage Loan not generally saleable in the secondary
market.
(d) Is a Mortgage Loan which, at closing, requires an escrow
of any funds for any purpose, other than the following: immediate payment of
debts due, or for future payment of taxes, insurance or mortgage insurance
premiums, when same become due.
1.28. Encumbrance: Any mortgage, lien, pledge, adverse claim, charge,
security interest or other encumbrance in or on, or any interest or title of any
vendor, lessor, lender to, or other secured party of the Person under any
conditional sale or other title retention agreement or capital lease with
respect to, any property or asset of the Person.
1.29. Event of Default: An occurrence described in Article VII of this
Agreement.
1.30. Financial Statements: True, correct and complete copies of the
balance sheet of the Person designated and related statement of income,
statement of cash flows and such other financial statements in such detail as
Lender may reasonably request, together with notes thereto, which: (a) present
fairly the financial position of the Person and the results of its operations as
of the end of the applicable period; (b) are in the form furnished by Lender or
is otherwise in form satisfactory to the Lender; and (c) unless otherwise
specified in this Agreement or otherwise approved by Lender in writing, are
prepared by an independent certified public accountant in accordance with
generally accepted accounting principles, and accompanied by the opinion,
satisfactory in form and substance to Lender, of an independent certified public
accountant satisfactory to Lender.
1.31. Financing Statements: The UCC-1 Financing Statements to be executed
by Borrower for filing not later than the Commencement Date in the appropriate
filing offices of the State and County identified in Borrower's Address or, if
the address identified in Article I is not the principal place of business of
Borrower, or Borrower conducts its business in other names, or if other filings
are necessary or appropriate to perfect Lender's security interest in the
Collateral, then, such other offices as are identified in Schedule 1.31 attached
to this Agreement.
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1.32. Indebtedness: Any obligation for borrowed money, including (a) any
obligation owed for all or any part of the purchase price of property or other
assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current
liabilities and incurred in respect of property purchased in the ordinary course
of business; (b) any capital lease obligation; and (c) any reimbursement
obligations and other obligations under any letter of credit, currency swap
agreement, interest rate swap, cap, collar or floor agreement or other interest
rate management devise, or any forward sale or purchase agreement for foreign
currencies.
1.33. Judgment: A final judgment or judgment, or order or orders, of any
judicial authority or governmental entity issued against Borrower or other
Obligor or which otherwise affects any of the Collateral.
1.34. Loan: The credit facility, in an amount not to exceed the Maximum
Credit Availability, being made available by Lender to Borrower under the terms
and conditions of this Agreement and the other Loan Documents.
1.35. Loan Documents: Collectively, this Agreement, each and every
Promissory Note, the Surety Agreement, the Financing Statements and all
agreements, amendments, certificates, financing statements, schedules, reports,
notices, and exhibits now or hereafter executed or delivered in connection with
any of the foregoing, as may be in effect from time to time.
1.36. Loan Purchase Commitment: The valid, legally binding and enforceable
commitment of an Approved Investor to purchase the Mortgage Loan which is, or is
proposed to be, Collateral for an Advance for a Committed Purchase Price and on
other terms and conditions which are satisfactory to Lender in its sole
discretion. Subject to Lender's prior written approval, which may be given or
withheld in Lender's sole discretion, the commitment of another Person as
Approved Investor may be substituted for the original Loan Purchase Commitment,
as Collateral for the Loan, should the original Approved Investor fail or refuse
to perform under the Loan Purchase Commitment.
1.37. Maintenance Account: The demand deposit account in the name of
Borrower established at Chase Manhattan Bank as to which an authorized
representative of Lender shall be a signatory with power of withdrawal.
1.38. Mortgage: The mortgage, deed of trust or other security instrument
properly executed by all owners of the real property described in the Mortgage,
duly acknowledged by a notary public or other official authorized to take
acknowledgments under Applicable Requirements, in appropriate form for
recordation and in a form which complies with all Applicable Requirements and
which creates a first (unless otherwise approved by Lender in writing) mortgage
lien on a fully completed 1-4 family residential dwelling unit. The Mortgage
shall include, as appropriate, condominium, cooperative, or planned unit
development riders and non-uniform provisions appropriate for the state in which
the real property described in the Mortgage is located.
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1.39. Mortgage Loan: A loan which has been or is proposed to be originated
by Borrower to a Person who is not an obligor or an Affiliate of an Obligor and
funded in whole or in part by the proceeds of an Advance; which will be secured
by a mortgage upon origination; which is fully funded at Origination; which has
been originated in full compliance with Applicable Requirements; which is the
subject of a Loan Purchase Commitment issued by an Approved Investor; which
satisfies all conditions of purchase under the Loan Purchase Commitment; and
which is an Eligible Mortgage Loan as defined in Section 1.27a above.
1.40. Mortgage Note: The original promissory note evidencing a Mortgage
Loan executed by all owners of the real property described in the Mortgage in a
form which complies with all Applicable Requirements and all conditions of
purchase under the Loan Purchase Commitment.
1.41. Mortgagor: Individually and collectively, any and all Persons
executing a Mortgage Note, Mortgage or other Collateral Documents securing a
Mortgage Loan.
1.42. Obligations: Collectively, all obligations of the Obligors:
(a) To pay the principal, interest, Facility Fees and any other
liabilities of Borrower to Lender under this Agreement and the other Loan
Documents in accordance with their respective terms;
(b) To satisfy all other direct or indirect liabilities of any
Obligor to Lender with respect to the Loan, the Loan Documents and the
Collateral whether now existing or hereafter incurred, whether or not evidenced
by any note or other instrument, matured or unmatured, direct, absolute or
contingent, joint or several, including any extensions, modifications, renewals
thereof and substitutions therefor;
(c) To repay Lender all amounts advanced by Lender hereunder or
otherwise on behalf of any Obligor under or with respect to any Loan Document or
any of the Collateral; and
(d) To reimburse Lender, on demand, for all of Lender's expenses and
costs, including the reasonable fees and expenses of its counsel, in connection
with the negotiation, preparation, administration, amendment, modification, or
enforcement of this Agreement, any Loan Document, any Collateral Document or any
Loan Purchase Commitment, including all amounts payable under the reimbursement
and indemnity provisions set forth in Article IX of this Agreement.
1.43. Obligors: Collectively, Borrower, any one or more Persons
identified as a Guarantor, and any other Person who, now or hereafter, becomes
directly or indirectly liable under any Loan Document.
1.44. Origination: The date a Mortgage Loan is funded by an Advance.
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1.45. Person: Any individual, corporation, partnership, association,
limited liability company, joint-stock company, trust, unincorporated
organization, joint venture, court or governmental or political subdivision or
agency thereof.
1.46. Prime Rate: The annual rate of interest published in the wall Street
Journal from time to time as the "prime" rate of interest charged by commercial
banks from time to time as a reference rate (or a rate equivalent to the
foregoing) with the understanding that such rates may merely serve as basis upon
which effective rates of interest are calculated for loans making reference
thereto and that such rates are not necessarily the lowest or best rate at which
such banks calculate interest or extend credit. The Prime Rate shall change for
purposes of this Agreement and each Promissory Note as such announced or
published rate changes.
1.47. Promissory Note: Each promissory note of Borrower, in the form of
Exhibit "E" attached to this Agreement, properly executed and evidencing
Borrower's Obligation to repay Borrower's requested Advance together with
interest thereon.
1.48. Settlement Agent: A title insurance company approved by Lender in
writing or, if authorized under a closing protection letter issued by an
approved title insurance company to Lender, an attorney-at-law or other Person
identified by Borrower as the proposed Settlement Agent in the Advance Request
provided such Person has been approved by Lender in writing and authorized by
Lender under Lender's Settlement Instructions.
1.49. Settlement Instructions: The letter from Lender to the Settlement
Agent setting forth the terms and conditions under which the Settlement Agent is
authorized to receive, hold and disburse the Advance to, or for the benefit of,
Borrower by funding the Mortgage Loan origination and to act as custodian of the
Mortgage Note for delivery to Lender the next Business Day after Origination.
Lender's standard form of Settlement Instructions is attached to this Agreement
as Exhibit "IF".
1.50. Surety Agreement: The Guaranty and Surety Agreement dated as of the
Commencement Date and each and every Guaranty and Surety Agreement, or
reaffirmation of Guaranty and Surety Agreement, executed by Persons identified
as Guarantor and delivered to Lender as a condition of an Advance. Lender's
standard form of Surety Agreement is attached to this Agreement as Exhibit
"G".
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1.51. Warehousing Guide. The manual issued by Lender containing the
warranties, representations, procedures and requirements of Borrower in
fulfilling its obligations to Lender under this Agreement.
1.52. Wet Advance, An Advance made to Settlement Agent for disbursement
for the benefit of Borrower but, as to which, the Mortgage Note has not been
physically delivered to the custody of Lender. An Advance ceases to be a Wet
Advance upon delivery of the Mortgage Note to the custody of Lender.
ARTICLE II.
THE LOAN; LOAN ADVANCEMENT
2.1. The Loan. Lender shall make the Loan available to Borrower upon the
terms and conditions of this Agreement and the other Loan Documents.
2.2. Request for Advance. Borrower shall make request for Advances by
submission to Lender at Lender's Address set forth in Article I of a fully
completed Advance Request accompanied by the Promissory Note, the Loan Purchase
Commitment and other items required under the definition for Advance Request set
forth in Article I or in the form of Advance Request attached. If the Advance
Request is not received by Lender at least one (1) Business Day prior to the
scheduled Origination, Borrower shall pay to Lender an additional Facility Fee
for expedited service as set forth in Article I.
2.3. Lender's Approval. Lender is not obligated to advance the Loan as
requested in the Advance Request unless and until Lender has received, and found
satisfactory in all respects, all Loan Documents and all information pertaining
to the Collateral and the Collateral Documents including, without limitation,
the Loan Purchase Commitment. The aggregate amount of Advances outstanding at
any one time shall not exceed the maximum Credit Availability set forth in
Article I and the amount of any Advance shall, unless approved in writing by
Lender, be subject to the sublimits established under Article I and such other
limitations as may be imposed by Lender as a condition of making the Advance.
2.4. Interest. The outstanding principal balance of the Loan from time to
time shall bear interest at the Basic Interest Rate. If an Advance is not repaid
in full, together with accrued interest thereon, within the applicable Advance
Repayment Period, the outstanding balance of the Advance will thereafter bear
interest at the Default Interest Rate. Upon the occurrence of an Event of
Default, or earlier upon the Termination Date, the entire outstanding balance of
the Loan will commence to bear interest at the Default Interest Rate until
Lender receives payment in full of all obligations. All computations of interest
under this Agreement or any Promissory Note shall be made by Lender on the basis
of a year of 360 days for the actual number of days elapsed.
2.5. Repayment of Advances. Each Advance, together with all accrued but
unpaid interest thereon, is due and payable in full, by electronic
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transfer of immediately available funds to the Collection Account, on the
earlier to occur of: (a) the date the Committed Purchase Price is due and
payable under the Loan Purchase Commitment or, if earlier, the date payment is
made; and (b) the expiration of the Advance Repayment Period.
2.6. Pledge of Collection Account. Borrower irrevocably and
unconditionally assigns to Lender the right to direct payment of the entire
Committed Purchase Price to the Collection Account; assigns and pledges to
Lender a first priority, fully perfected security interest in the proceeds of
sales of Mortgage Loans and other cash or non-cash items paid, remitted or
otherwise deposited with respect to Mortgage Loans or other Collateral Documents
whether in the Collection Account or the Maintenance Account or otherwise; and
grants to Lender the absolute and unconditional right to set off against, or
otherwise withdraw from funds deposited with respect to Borrower in the
Collection Account or the Maintenance Account: (a) the amount of the Advance or
Advances with respect to which funds have been remitted to the Collection
Account; (b) Facility Fees owing with respect to such Advance or Advances: (c)
accrued but unpaid interest with respect to such Advances; and (d) any other
obligations not paid as and when due to Lender. No funds deposited in the
Collection Account shall be subject to any Encumbrance except the security
interest of Lender. Payments (including proceeds realized from the sale or other
disposition of the Collateral) deposited into the Collection Account shall be
applied to interest, principal, Facility Fees and other Obligations under any
Loan Document in such order and amounts as are satisfactory to the Lender. Upon
satisfaction in full of all obligations then due and owing to Lender, Lender
shall remit any remaining proceeds of remittances deposited into the Collection
Account by transfer to the Maintenance Account. No funds in the Maintenance
Account shall be commingled with any other funds of Borrower or any other
Person.
2.7. Voluntary, Mandatory Prepayments. Borrower shall have the right to
prepay the Loan at any time, in whole or in part. If, at any time, the aggregate
amount of Borrower's outstanding obligations exceeds the Maximum Credit
Availability or the amount of any Advance exceeds the sublimits established for
such Advance under Article I, Borrower shall repay to Lender, within ten (10)
days after notice, the amount of such excess.
2.8. Termination Date. The entire outstanding principal balance of the
Loan, all interest accrued but unpaid thereon, and any other Obligations due by
any obligor to Lender shall be immediately due and payable in full on the
Termination Date. No further Advances are available to Borrower from and after
the Termination Date unless Borrower and Lender enter into a written amendment
of this Agreement extending the Termination Date.
ARTICLE III.
SECURITY AGREEMENT; LOAN DOCUMENTATION
3.1. Grant of Security Interest. As security for the prompt payment,
performance, satisfaction and discharge as and when due of all Obligations,
Borrower hereby assigns, delivers, pledges and grants to Lender a first
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priority, fully perfected lien upon, and security interest in and to, all of the
Collateral including, without limitation, the Mortgage Loans, the Collateral
Documents, the Loan Purchase Commitment, all rights of Borrower to funds in the
Collection Account or the Maintenance Account and all proceeds of the
Collateral.
3.2. Power of Attorney. Borrower hereby constitutes and appoints the
Lender as its true and lawful attorney, irrevocably, with full power to act,
require, demand, receive, compound and give acquittance for any and all monies
and claims for monies due or to become due under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith, to file any claims or take any action or institute any proceedings
which Lender may deem to be necessary or advisable to enforce Borrower's rights
in, to or under any of the Collateral, which appointment as attorney is coupled
with an interest. Upon request of Lender at any time, Borrower shall execute and
deliver such power or powers, duly executed by Borrower and in recordable form
for the jurisdictions in which Mortgage Assignments may be recorded, as may be
necessary or appropriate to exercise the rights and remedies of Lender under
this Agreement including the right to record individual Mortgage Assignments,
effectuate the sale under the Loan Purchase Commitment, or otherwise realize
upon the Collateral.
3.3. Loan Documentation Prior to Commencement Date. On or before the
Commencement Date, Borrower shall execute and deliver to Lender, or cause to be
executed and delivered to Lender, this Agreement, the Surety Agreement, the
Financing Statements and all other Loan Documents and shall have delivered to
Lender satisfactory evidence of all of the following:
(a) Insurance. Certificates addressed to Lender evidencing
commercial general liability insurance and, if required under Applicable
Requirements, errors and omissions insurance, fidelity bonds and other insurance
in form and amounts satisfactory to Lender.
(b) minimum Deposit. Establishment of the Maintenance Account in an
amount not less than the Minimum Deposit set forth in Article I of this
Agreement.
(c) Borrower Authorization. The Borrower Authorization together
with certificates evidencing the good standing of Borrower, the due
authorization and proper licensure of Borrower to enter into the Loan Documents
and to engage in the business of origination of Mortgage Loans in all
jurisdictions in which it engages in such business.
(d) Payments; Reimbursements. Payment in full of any costs and
expenses of Lender in connection with the negotiation and preparation of the
Loan Documents and making of the Loan including all filing and recording fees,
search, examination and certification fees and charges, attorneys' fees, and
costs of reproduction and transmittal.
3.4. Loan Documentation Prior to Each Advance. Prior to each Advance,
Borrower shall execute and deliver to Lender, or cause to be executed and
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delivered to Lender, the Advance Request, the Promissory Note, the Loan Purchase
Commitment, Borrower's instructions to the Settlement Agent and any other
Collateral, Collateral Documents or other information or documentation required
to be delivered by Lender as a condition of making the Advance. Funding of each
Advance shall be made by electronic transfer of funds to the account of the
Settlement Agent under Lender's Settlement Instructions and the instructions
delivered to Settlement Agent by Borrower which shall include, among other
things: (a) receipt by Settlement Agent of the Mortgage Note, Mortgage and
Collateral Documents required to be delivered as conditions of funding of the
Mortgage Loan under Borrower's settlement instructions; (b) custody of the
Mortgage Note for delivery to Lender (together with the HUD-1 settlement sheet
and other documentation required under Lender's Settlement Instructions) the
next Business Day following origination; and (c) custody of the Mortgage for
recordation in applicable recording offices promptly after Origination. Borrower
acknowledges that Lender's Settlement Instructions require the Settlement Agent
to return the Advance to Lender if origination does not occur within one
Business Day after receipt of the Advance.
3.5. After Orgination. Borrower shall do all things necessary or
appropriate to cause the Mortgage Loan to be purchased by Approved Investor for
the Committed Purchase Price not later than the expiration of the Advance
Repayment Period or, if earlier, the expiration of the Loan Purchase Commitment.
Lender agrees to cooperate with Borrower and Approved Investor by conditional
delivery of the Mortgage Note to Approved Investor, for purposes of inspection
only, under the terms and conditions of Lender's Bailee Letter.
(a) If ten (10) Business Days prior to the earlier to occur of (i)
expiration of the Loan Purchase Commitment for the Mortgage Loan; or (ii) the
date the first installment of principal and interest is due on the Mortgage
Loan, Borrower has not requested Lender to deliver the Mortgage Note to
Approved Investor for inspection; or Borrower has not delivered a complete
package of Collateral Documents (other than the Mortgage Note) to Approved
Investor for inspection, Borrower shall notify Lender of the reason for the
delay and the steps Borrower will take to correct any deficiencies causing the
delay. Upon demand of Lender at any time prior to receipt of payment in full of
the Committed Purchase Price to the Collection Account, Borrower shall deliver,
or cause to be delivered, the Collateral Documents to Lender or, if so directed
by Lender, to an Approved Investor.
(b) Unless the Committed Purchase Price has been paid in full to
the Collection Account, the Mortgage Note delivered under Lender's Bailee Letter
must be returned to Lender, and the other Collateral Documents must be returned
to Borrower, prior to the earlier to occur of (i) the expiration of the Advance
Repayment Period; or (ii) twenty (20) calendar days after the date of Lender's
Bailee Letter. All costs and expenses incurred by Lender arising from or related
to the sale of the Mortgage Loan shall be borne by Borrower including, without
limitation, all express delivery charges to deliver Collateral Documents to, or
retrieve the same from, the Approved Investor.
13
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
To induce Lender to execute and deliver this Agreement and to make the
Loan available to Borrower, Borrower represents and warrants to Lender that, as
of the date of this Agreement, the date of each Advance, and the date of any
renewal or extension (if any) of the Termination Date:
4.1. Good Standing; Authorization. The information pertaining to
Borrower's legal status set forth in Article I is true, correct and complete.
Borrower has all requisite power, and has obtained and maintains in full
compliance with Applicable Requirements, all licenses and approvals required to
originate Mortgage Loans in all jurisdictions in which it conducts such
business. The execution, delivery and performance of this Agreement, each
Promissory Note, the Loan Purchase Commitment, the Collateral Documents and any
other Loan Documents have been duly authorized by all requisite proceedings on
the part of Borrower.
4.2. Compliance with Laws and Other Agreements. Borrower, the Mortgage
Loans and the Collateral Documents are in compliance with all Applicable
Requirements and all requirements of the Approved Investor. Borrower has not
received, and has no knowledge of, any order or notice of any violation or claim
of violation of any Applicable Requirement or any matter which would permit the
Approved Investor to decline to purchase the Mortgage Loan. Borrower has
received a copy of Lender's Warehousing Guide as of the Commencement Date and
has complied, and will comply, in all material respects with the requirements of
the Warehousing Guide and other Applicable Requirements.
4.3. No Conflict; Governmental Approvals. The execution, delivery, and
performance of this Agreement, the Loan Purchase Commitment, the Collateral
Documents and each of the Loan Documents will not (a) conflict with, violate,
constitute a default under, or result in a breach of any Applicable Requirement;
or (b) conflict with or result in a breach of any provision of Loan Purchase
Commitment or other agreement or instrument binding upon the Borrower.
4.4. Financial Position. The Financial Statements delivered to Lender by
any obligor are true, correct and complete as of the date of such Financial
Statements for the period covered thereby.
(a) Borrower has no Indebtedness other than as shown in the most
recent Financial Statements delivered to Lender.
(b) Borrower has no investment, whether by stock purchase, capital
contribution, loan advance, purchase of property or otherwise in any Person,
other than as shown in the most recent Financial Statements delivered to Lender.
(c) Since the date of the most recent Financial Statements
delivered to Lender, there has not been any material adverse change in the
14
business, operations, properties or financial position of Borrower or the
Approved Investor under a Loan Purchase Commitment. Borrower does not know of
any fact (other than matters of a general economic or political nature) which
materially adversely affects or, so far as the Borrower can now reasonably
foresee, will materially adversely affect, the origination or sale of any
Mortgage Loan or the business, operations, properties or financial position of
Borrower or the performance by Borrower of its obligations under this Agreement
and the other Loan Documents.
4.5. Encumbrances. All of the Collateral is owned by Borrower free and
clear of all Encumbrances except the Loan Documents.
4.6. Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of Borrower, threatened against or
affecting Borrower before any court, arbitrator, or other governmental
authority.
4.7. Valid, Binding and Enforceable. This Agreement, the Loan Documents
and the Collateral Documents have been duly and validly executed and delivered
by the parties thereto (other than Lender) and constitute the valid and legally
binding obligations of such parties enforceable in accordance with their
respective terms. No default or event which, but for the giving of notice or
passage of time, or both, would constitute an Event of Default has occurred and
is continuing uncured.
4.8. Priority of Security Interests. The county and state identified in
Borrower's Address in Article I is the location of the principal place of
business of Borrower and, unless otherwise specified in Schedule 1.31, those
locations are the only locations in which the Financing Statements must be filed
to perfect the security interest granted to Lender in the Collateral. Unless
otherwise specified in Schedule 1.31, Borrower does not do business under any
other names. Upon the filing of the Financing Statements in those locations,
Lender will have a valid and perfected first-priority security interest in all
of the Collateral for all the Obligations free and clear of all Encumbrances.
4.9. No Untrue Statements. Neither this Agreement, the Loan Documents nor
any other document, certificate or statement furnished or to be furnished by
Borrower or by any other party to Lender in connection herewith contains, or at
the time of delivery will contain, any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
ARTICLE V.
AFFIRMATIVE COVENANTS
Borrower hereby covenants and agrees that from the Commencement Date and
until satisfaction in full of the Obligations, unless Lender shall otherwise
consent in writing, Borrower shall do the following:
15
5.1. Use of Advance. Use the proceeds of each Advance only to fund the
Mortgage Loan described in the Advance Request submitted to Lender for such
Advance.
5.2. Financial Reporting. Furnish to Lender:
(a) Financial Statements of Borrower and each Person identified as
Guarantor within ninety (90) days after the end of each fiscal year of Borrower
or Guarantor, as the case may be. Financial Statements of Guarantor need not be
audited or prepared by an independent certified public accountant.
(b) Within fifteen (15) days after filing, a photocopy of the
signed federal income tax return of the Borrower including all accompanying
schedules.
(c) Within fifteen (15) days after filing, a photocopy of the
signed federal income tax return of each Person identified as Guarantor
including all accompanying schedules,
(d) Not later than the fifth (5th) day of each calendar month in
which Advances are outstanding, a servicing report certified as true by the
chief financial officer of Borrower indicating payments received on account of
unsold Mortgage Loans (or any delinquency in payment), amounts withheld for tax
and insurance escrows, and the principal and interest remitted to Lender.
(e) Not later than fifteen (15) days after the end of each quarter,
unaudited Financial Statements of Borrower for the quarter then-ended.
(f) Such other information as is reasonably requested by Lender to
determine the financial condition of any Obligor or any Person proposed to be an
Approved Investor.
5.3. Maintenance Account. Maintain the Maintenance Account at all times
funded with the Minimum Deposit.
5.4. Collateral Documents. Originate each Mortgage Loan in full compliance
with Applicable Requirements. Cause the Settlement Agent to take custody of the
Mortgage Note and deliver same to Lender on the next Business Day following the
Origination. Maintain custody of all other Collateral Documents in good
condition and forward same to Lender for inspection under the Loan Purchase
Commitment promptly after Origination. Promptly after Origination, cause each
Mortgage to be properly recorded in the appropriate filing office of the
jurisdiction in which the real property described in the Mortgage is located. Do
all things necessary to fulfill each condition precedent to purchase under the
Loan Purchase Commitment. Cure any deficiencies in the Collateral Documents at
Borrower's sole cost and expense.
5.5. Minimum Net Worth. Maintain a minimum net worth (aggregated for both
Borrower and Guarantor) at all times not less than the greater of (a)
16
such amount, if any, as is required under Applicable Requirements; or (b)
$250,000.
5.6. Management. Furnish to Lender within five (5) days of any election or
appointment of officers or directors, written notice of any change in the
persons who from time to time become principals, officers or directors of
Borrower.
5.7. Servicing. Until such time as the Mortgage Loan is sold to the
Approved Investor, service the Mortgage Loan in accordance with all Applicable
Requirements, maintain tax and insurance escrows in accordance with Applicable
Requirements, and remit all principal and interest received on account of the
Mortgage Loan to Lender. Deliver to Lender in accordance with the Warehousing
Guide all post-closing documentation as and when required thereunder. Cause
insurance to be maintained as required under the Collateral Documents and the
Applicable Requirements naming Borrower and Lender (as their interests may
appear), as mortgagee.
5.8. Notices. Notify Lender of any default under the Loan Purchase
Commitment or any Collateral Documents; any Judgment against any obligor or
affecting any Collateral; any bankruptcy or insolvency proceeding commenced by
or against any obligor; any event or occurrence which would, if not cured within
the applicable notice or grace period, constitute an Event of Default under the
Loan Documents or the Collateral Documents; and any change in the principal
place of business of Borrower.
5.9. Further Actions. Cooperate and join with Lender, at its own expense,
in taking all such further actions as Lender, in its sole judgment, shall deem
necessary to effectuate the provisions of the Loan Documents and to perfect or
continue the perfected status of all Encumbrances granted to Lender pursuant to
the Loan Documents and the Collateral Documents, including, without limitation,
the execution, delivery and filing of financing statements, amendments thereto
and continuation statements, the delivery of chattel paper, documents or
instruments to Lender.
ARTICLE VI.
NEGATIVE COVENANTS
Borrower hereby covenants and agrees that from the Commencement Date until
satisfaction in full of the Obligations, it will not do any one or more of the
following without first obtaining the written consent of Lender:
6.1. Identity. Change its name, enter into or effect any merger,
consolidation, share exchange, division, conversion, reclassification,
reorganization or recapitalization, or other transaction of like effect, or
dissolve.
6.2. Transfer. Sell or transfer any of the Collateral (except to the
Approved Investor upon payment of the Committed Purchase Price to the Collection
Account) or permit or suffer any Encumbrance (other than the Loan Documents)
upon the Collateral.
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6.3. Agreements. Modify, terminate or fail to enforce the Loan
Purchase Commitment or any Collateral Documents.
6.4. Collection Account. Ask, demand, receive or take any payment under
any Loan Purchase Commitment or otherwise with respect to the sale or transfer
of any Mortgage Loan except by direct payment of the full Committed Purchase
Price to the Collection Account.
6.5. Affiliates. Pay to any obligor or Affiliate of any Obligor any fees,
compensation, or other sums from proceeds of any Advance or any mortgage Loan
except pursuant to a written agreement approved in writing by Lender.
ARTICLE VII.
EVENTS OF DEFAULT
An event of default ("Event of Default") under this Agreement shall be
deemed to exist if any one or more of the following events occurs and is
continuing, whatever the reason therefor:
7.1. Failure to Pay. Any principal, interest, fees or other Obligations
requiring payment or deposit of money under this Agreement or any of the Loan
Documents is not paid or deposited as and when due, whether upon the expiration
of the Advance Repayment Period, the Termination Date, acceleration, or
otherwise.
7.2. Invalidity. The validity, binding nature of, or enforceability of
any material term or provision of any of the Loan Documents, any Collateral
Documents or the Loan Purchase Commitment is disputed by, on behalf of, or in
the right or name of any Person or any material term or provision of any such
document is found or declared to be terminated, invalid, avoidable, or
nonenforceable by any court of competent jurisdiction.
7.3. False warranties; Breach of Representations. Any warranty or
representation made by any Obligor in this Agreement or any other Loan Document
or in any Advance Request or other writing delivered under or pursuant to this
Agreement or any other Loan Document, or in connection with any provision of
this Agreement or related to the transactions contemplated hereby shall prove to
have been false or incorrect or breached in any material respect on the date as
of which made.
7.4. Judgments. Issuance of a Judgment; (a) affecting any of the
Collateral; or (b) against any Obligor which, when aggregated with any other
Judgments, exceeds Fifty Thousand Dollars ($50,000.00) outstanding at any one
time; or (c) which would have a material adverse effect on the ability of any
obligor to conduct its business.
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7.5. Bankruptcy; Insolvency; Liquidation; Death.
(a) Any Obligor becomes insolvent, or generally fails to pay, or is
generally unable to pay, or admits in writing its inability to pay, its debts as
they become due or applies for, consents to, or acquiesces in, the appointment
of a trustee, receiver or other custodian for such Obligor, or a substantial
part of its property, or makes a general assignment for the benefit of
creditors.
(b) Any Obligor commences any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any state or federal bankruptcy
or insolvency law, or any dissolution or liquidation proceeding.
(c) Any bankruptcy, reorganization, debt arrangement, or other case
or proceeding under any state or federal bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is involuntarily commenced against or in
respect of any Obligor, or an order for relief is entered in any such
proceeding.
(d) A trustee, receiver, or other custodian is appointed for any
substantial part of such Obligor's property.
(e) The death of any Obligor.
7.6. Breach of Covenants or Conditions. If, and to the extent not included
in any of the occurrences listed above, any Obligor fails to perform or observe
any term, covenant, agreement or condition in this Agreement or any of the other
Loan Documents or is in violation of or non-compliance with any provision of
this Agreement or any of the Loan Documents, and has not remedied and fully
cured such non-performance, non-observance, violation of or non-compliance
within fifteen (15) days after Lender has given written notice thereof to such
Obligor; provided, however, that during such fifteen (15) day period Lender's
obligations to make Advances to Borrower shall be suspended.
ARTICLE VIII.
REMEDIES
Upon the occurrence of an Event of Default, Lender shall have the right,
in its sole discretion, to pursue any one or more of the following rights and
remedies, without notice to any Obligor:
8.1. Further Advances. Refuse to make any further Advances.
8.2. Acceleration. Declare immediately due and payable the entire unpaid
principal balance of the Loan, all interest and fees accrued and unpaid thereon,
and all other amounts and Obligations payable by Borrower under this Agreement
and the other Loan Documents, all without protest, presentment, demand, or
further notice of any kind to Borrower, all of which are expressly waived by
Borrower.
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8.3. Set-Off. Apply to the then unpaid balance of the Obligations any
items or funds held by Lender, any funds of Borrower in the Collection Account
or the Maintenance Account and any and all deposits (whether general or special,
time or demand, matured or unmatured, fixed or contingent, liquidated or
unliquidated) now or hereafter maintained by Borrower with Lender, and any other
indebtedness at any time held or owing by Lender to or for the credit or the
account of Borrower. Lender is hereby authorized to charge any such account or
indebtedness for any amounts due to Lender. Such right of set-off shall exist
whether or not Lender shall have made any demand under this Agreement, any
Promissory Note or any other Loan Document and whether or not the Loan and the
other obligations are matured or unmatured. Borrower hereby confirms Lender's
lien on such accounts and right of set-off, and nothing in this Agreement shall
be deemed any waiver or prohibition of such lien and right of set-off.
8.4. UCC Remedies. Transfer the Mortgage Loan to Lender's name by
recordation of the Mortgage assignment; sell the Mortgage Loan and the
Collateral Documents to any one or more Persons on commercially reasonable terms
acceptable to Lender at one or more public or private sales; and otherwise
exercise all rights of a secured party under the Uniform Commercial Code then in
effect in the jurisdiction in which the Collateral is located.
8.5. Other Remedies. Enforce the Loan Purchase Commitment, collect
payments under the Collateral Documents, and otherwise proceed to protect and
enforce its rights under this Agreement and the other Loan Documents by
exercising such remedies as are available to Lender in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any provision contained in this Agreement or any of
the other Loan Documents or in aid of the exercise of any power granted in this
Agreement or any of the other Loan Documents.
ARTICLE IX.
MISCELLANEOUS
9.1. Remedies Cumulative; No Waiver. The rights, powers and remedies of
Lender provided in this Agreement and the other Loan Documents are cumulative
and not exclusive of any right, power or remedy provided by law or equity, and
no failure or delay on the part of Lender in the exercise of any right, power,
or remedy shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or remedy preclude other or further exercise
thereof, or the exercise of any other right, power or remedy.
9.2. Notices. Every notice and communication under this Agreement or any
of the other Loan Documents shall be in writing and shall be given by either (a)
hand-delivery, (b) first class mail (postage prepaid), (c) nationally recognized
overnight commercial courier, or (d) telecopy or other means of electronic
transmission, if confirmed promptly by any of the methods specified in clauses
(a), (b) and (c) of this sentence, to Borrower's Address or Lender's Address, as
the case may be, set forth in Article I. Notice given by telecopy or other means
of electronic transmission shall be deemed to have been given and received when
sent. Notice by overnight courier shall be
20
deemed to have been given and received on the date scheduled for delivery.
Notice by mail shall be deemed to have been given and received three (3)
calendar days after the date first deposited in the United States Mail. Notice
by hand delivery shall be deemed to have been given and received upon delivery.
A party may change its address by giving written notice to the other party as
specified herein.
9.3. Costs, Expenses and Attorneys' Fees. Whether or not the transactions
contemplated by this Agreement and the other Loan Documents are fully
consummated, Borrower shall promptly pay (or reimburse, as Lender may elect) all
costs and expenses which Lender has incurred or may hereafter incur in
connection with the negotiation, preparation, reproduction, interpretation and
enforcement of this Agreement, the other Loan Documents or the Collateral
Documents, the collection of all amounts due hereunder and thereunder, and any
amendment, modification, consent or waiver which may be hereafter requested by
Borrower or otherwise required. Such costs and expenses shall include, without
limitation, the fees and disbursements of counsel to Lender, the costs of
appraisal fees, searches of public records, costs of filing and recording
documents with public offices, and similar costs and expenses incurred by
Lender. Upon the occurrence of an Event of Default, such costs shall also
include the fees of any accountants, consultants or other professionals retained
by Lender. Borrower's reimbursement obligations under this section shall survive
any termination of this Agreement.
9.4. Survival of Covenants. This Agreement and all covenants, agreements,
representations and warranties made herein and in any certificates delivered
pursuant hereto shall survive the making of the Loan and the execution and
delivery of each Promissory Note and, subject to other provisions of this
Article IX, shall continue in full force and effect until all of the Obligations
have been fully paid, performed, satisfied and discharged.
9.5. Counterparts; Effectiveness. This Agreement may be executed in any
number of counterparts and by the different parties on separate counterparts.
Each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
9.6. Headings. The headings of sections have been included herein for
convenience only and shall not be considered in interpreting this Agreement.
9.7. Payment Due On A Day Other Than A Business pay. If any payment due or
action to be taken under this Agreement or any Loan Document falls due or is
required to be taken on a day which is not a Business Day, such payment or
action shall be made or taken on the next succeeding Business Day and such
extended time shall be included in the computation of interest.
9.8. Judicial Preceedings. Each party to this Agreement agrees that any
suit, action or proceeding, whether claim or counterclaim, brought or instituted
by any party hereto or any successor or assign of any party, on or with respect
to this Agreement or any of the other Loan Documents or the dealings of the
parties with respect hereto, or thereto, shall be tried only
21
by a court and not by a jury. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. Further, each party waives any right it may have to claim or
recover, in any such suit, action or proceeding, any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC
AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT LENDER WOULD NOT EXTEND CREDIT TO
BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS
AGREEMENT.
9.9. Governing Law. This Agreement shall be construed in accordance with
and governed by the internal laws of the State of New Jersey, Neither this
Agreement nor any Promissory Note shall be construed to require payment of
interest in an amount which exceeds the maximum interest rate permitted under
applicable laws.
9.10. Integration. This Agreement and the other Loan Documents constitute
the sole agreement of the parties with respect to the subject matter hereof and
thereof and supersede all oral negotiations and prior writings with respect to
the subject matter hereof and thereof.
9.11. Amendment and Waiver. No amendment of this Agreement, and no waiver
of any one or more of the provisions hereof shall be effective unless set forth
in writing and signed by the parties hereto.
9.12. Successors and Assigns. This Agreement i) shall be binding upon
Borrower and Lender and their respective successors and assigns, and ii) shall
inure to the benefit of Borrower and Lender and their respective successors and
assigns, provided, however, that Borrower may not assign its rights hereunder or
any interest herein without the prior written consent of Lender, and any such
assignment or attempted assignment by Borrower shall be void and of no effect
with respect to Lender.
9.13. Severability of Provisions. Any provision in this Agreement that is
held to be inoperative, unenforceable, voidable, or invalid in any jurisdiction
shall, as to that jurisdiction, be ineffective, unenforceable, void or invalid
without affecting the remaining provisions in any other jurisdiction, and to
this end the provisions of this Agreement are declared to be severable.
9.14. Consent to Jurisdiction and Service of Process. Borrower irrevocably
appoints each and every officer of Borrower as its attorneys upon whom may be
served, by regular or certified mail at the address for notices furnished under
this Article IX, any notice, process or pleading in any action or proceeding
against it arising out of or in connection with this Agreement or any of the
other Loan Documents. Borrower hereby (a) consents that any action or proceeding
against it be commenced and maintained in any court within the State of New
Jersey or in the United States District Court for the District of New Jersey by
service of process on any such officer; (b) agrees that the courts of the State
of New Jersey and the United States District Court for the District of New
Jersey shall have jurisdiction with respect to
22
the subject matter hereof and the person of Borrower and the Collateral; and
(c) waives any objection that such Borrower 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. Notwithstanding the foregoing, Lender, in
its absolute discretion, may also initiate proceedings in the courts of any
other jurisdiction in which Borrower may be found or in which any of its
properties or the Collateral may be located.
9.15. Surrender. If, after receipt of any payment of all or any part of
the obligations, Lender is compelled to surrender such payment to any Person or
entity for any reason (including, without limitation, a determination that such
payment is void or voidable as a preference or fraudulent conveyance, an
impermissible setoff, or a diversion of trust funds), then this Agreement and
the other Loan Documents shall continue in full force and effect, and Borrower
shall be liable for, and shall indemnify, defend and hold harmless Lender with
respect to the full amount so surrendered including Lender's costs and expenses
under the indemnity set forth in Section 9.16 below.
9.16. Indemnification. Borrower shall indemnify, defend and hold harmless
Lender and its officers, directors, employees and agents with respect to any and
all claims, expenses, demands, losses, costs, fines or liabilities of any kind,
including reasonable attorneys' fees and costs, arising from or in any way
related to i) the acts or omissions of Borrower or any Obligor under, pursuant
to, or related to this Agreement and the other Loan Documents; ii) any Obligor's
breach or violation of any representation, warranty, covenant or undertaking
contained in this Agreement or the other Loan Documents; iii) any Obligor's
failure to comply with all Applicable Requirements; and iv) any claims arising
from or related to the Collateral.
9.17. Survival. Any reimbursement or indemnification obligation contained
in this or any other Loan Document shall survive termination of this Agreement
or payment in full of the Loan. Without limiting the foregoing, the provisions
of Sections 9.3, 9.15 and 9.16 of this Agreement shall survive the termination
of this Agreement and the other Loan Documents and shall be and remain effective
notwithstanding the payment of the obligations, the cancellation of any
Promissory Note, the release of any Encumbrance securing the obligations or any
other action which Lender may have taken in reliance upon its receipt of such
payment. Any cancellation of any Promissory Note, release of any Encumbrance or
other such action shall be deemed to have been conditioned upon any payment of
the Obligations having become final and irrevocable.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their duly authorized representatives and delivered as of the
Commencement Date.
PRINCAP MORTGAGE WAREHOUSE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
-----------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
President
Westmark Mortgage Corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: C.E.O
(Corporate Seal)
By: /s/ ▇▇▇▇▇▇ Story III
-----------------------
Name: ▇▇▇▇▇▇ Story III
Title: President
Attest: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
-------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
Secretary
24
TRANSMITTAL INFORMATION AND DOCUMENTS TO BE DELIVERED TO PMW TO ADVANCE FUNDS
Exhibit "A"
---------------------------
(Date)
PrinCap Mortgage Warehouse, Inc.
Two ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Home Owner's Name: Address:
--------------------- ----------------------------------------------------------------------
Advance Date: Interest Rate: Loan Purchase Comm. Exp:
-------------- --------------- -----------------------------------
Loan #: Pts. or Discount: Amortization Term.#
-------------------- -------------- ---------------------------------------
Mortgage Amt: Approved Investor: Purpose of Loan:
-------------- ----------------- -------------------------------------
Advance Amount: Committed Purchase Price: Acquisition: Refi:
--------------- ------------------ -------------- ----------
Gentlemen:
We hereby request an advance under our warehouse line of credit for the above
mortgage loan and, in support thereof, we enclose the following documents:
(check off)
---- 1. Fully executed Promissory Note with original authorized signature
(Exhibit "E").
---- 2. Originally executed Assignment of Mortgage, in blank, in proper
form for recordation
---- 3. Copy of unexecuted Mortgage Note showing that original has been
endorsed as follows: "Pay to the order of _______________________
(leave blank), without recourse _________________________________
(signed by authorized signature)".
---- 4. Copy of completed form of Mortgage (1st page, Legal, last page, and
all Riders in full)
---- 5. Copy of Take Out commitment from Approved Investor covering this
loan
---- 6. Wire instructions for funding (See Form 20)
---- 7. Copy of Seller's Settlement Instruction Letter (Exhibit "F") as
sent to Settlement Agent
---- 8. Copy of our Settlement Agent's closing protection letter is on file
with you____or is supplied herewith____(check applicable)
---- 9. Original Airbill complete with approved Investor's address.
We hereby certify that the information set forth in this certification is true,
correct and complete and that the mortgage loan for which is advancement is
requested complies in all respects with the requirements of the Agreement and
the Loan Purchase Commitment.
Very truly yours,
By: (Authorized Signature)
-------------------------------------
25
EXHIBIT "B"
APPROVED INVESTORS
(List here the name, address, Phone number and contact person for all investors
to whom you will be selling loans you expect to fund with your line of credit)
27
EXHIBIT "B" ATTACHMENT
1. Household Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
2. The Money Store
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇-▇▇▇-▇▇▇-▇▇▇▇
3, Mortgage Corporation of America (MCA)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇. #▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇-▇▇▇-▇▇▇-▇▇▇▇
4. Master Financial Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇-▇▇▇-▇▇▇-▇▇▇▇
5. Green Tree Mortgage Services
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. #▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Contact: ▇▇▇ ▇▇▇▇▇▇▇
▇-▇▇▇-▇▇▇-▇▇▇▇
6. GE Capital Home Equity Services
Three Executive Campus
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
EXHIBIT "C"
STANDARD FORM OF BAILEE LETTER
BAILEE LETTER
----------------------
----------------------
Attention:
Re: (Insert Name of Borrower] (the "Originator")
Gentlemen:
Princap Mortgage Warehouse, Inc. ("Princap") is the holder of a security
interest in the enclosed original mortgage note and other mortgage loan
documents (collectively, the "Collateral") now or hereafter delivered to you by
Originator or Princap for your inspection prior to purchase of the Collateral by
you pursuant to a certain loan purchase commitment (the "Loan Purchase
Commitment") between you and the Originator.
Princap delivers the Collateral to you to be held by you as bailee and, by
your receipt of the Collateral, you agree to hold the Collateral as bailee, for
the benefit of Princap as secured party pursuant to applicable provisions of the
Uniform Commercial Code and the terms of this Bailee Letter.
Your obligations as bailee with respect to the Collateral shall terminate
without further action on the part of Princap at the time you purchase the
Collateral by remitting in full the purchase price specified in the Loan
Purchase Commitment (the "Committed Purchase Price") by wire transfer of
immediately available funds to our account specified below and such funds have
been received in such account or, if earlier, upon your re-delivery of the
Collateral to us at the address set forth below or such other address as you
are notified by Princap in writing. Until the Committed Purchase Price is
received by Princap, the Collateral remains subject to the liens and security
interests granted by the Originator to Princap. You are not authorized to
deliver or release the Collateral to any other person (including, without
limitation, the Originator) other than Princap.
INSTRUCTIONS FOR WIRE TRANSFER OF FUNDS:
Chase Manhattan Bank
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
Attn: Global Securities and Trust
New York
ABA Routing #▇▇▇▇▇▇▇▇▇
To the further credit of
Princap Mortgage Warehouse, Inc.
Collection Account #323-309348
28
INSTRUCTIONS FOR RE-DELIVERY OF COLLATERAL
Princap Mortgage Warehouse, Inc.
Two ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Until receipt of the Committed Purchase Price, Princap reserves the right
at any time, upon written notice to you, to require immediate delivery and
return of the Collateral to us at the address set forth above. In any event,
unless the Committed Purchase Price has been received, you agree to redeliver
and return the Collateral to Princap no later than the date which is twenty (20)
calendar days after the date of this letter without any notice,' demand or other
action by us.
Princap also holds an assignment of, and security interest in,
Originator's rights under the Loan Purchase Commitment including, without
limitation, the right to receive payment of the Committed Purchase Price and the
right of prior approval of any adjustment in the Committed Purchase Price.
If you are in agreement with the foregoing, please have the enclosed copy
of this letter executed by your authorized officer and return it to the address
of Princap set forth above. In the event that the foregoing is not acceptable to
you, please deliver and return to us immediately the Collateral at the address
of Princap set forth above by overnight courier delivery. If Princap does not
receive a copy of this letter executed by you, then you shall be deemed to have
accepted possession of the Collateral as bailee for Princap, the secured party,
effective the date first written above.
Very truly yours
PRINCAP MORTGAGE WAREHOUSE, INC.
By:
------------------------------------
Agreed to and accepted as of
the date set forth above:
-------------------------------
By:
---------------------------
Name:
Title:
29
EXHIBIT "D-1"
BORROWER AUTHORIZATION (CORPORATE)
(Disregard if Borrower is not a corporation)
I, the undersigned secretary of Westmark Mortgage Corporation a California
corporation ("Borrower") do hereby certify that I am the Secretary of Borrower
and that, as such, I am authorized to execute this Certificate on behalf of
Borrower, and I further certify that at a meeting of the Board of Directors of
Borrower, duly and regularly called and held, a quorum being present throughout,
the following resolutions were unanimously adopted and recorded in the minute
books of Borrower, kept by me, and are in accord with and pursuant to the
Articles of Incorporation and By-Laws of Borrower, true copies of which are
attached hereto as, respectively, Exhibits "A" and "B", and such Articles of
Incorporation and By-Laws are now in full force and effect. I further certify
that attached hereto as Exhibit "C" is a certification issued by the authorized
officer of the state in which the Borrower is incorporated attesting to the
subsistence and good standing of Borrower.
RESOLVED, that Borrower is hereby authorized and directed to enter into a
warehouse credit and security transaction in the amount of ten million
($10,000,000) (the "Loan") with Princap Mortgage Warehouse, Inc. ("Lender") as
set forth in the Warehouse Credit and Security Agreement attached hereto, and do
all things necessary or appropriate to enter into and perform its obligations
thereunder.
FURTHER RESOLVED, that the President, any Vice-President or other proper
officer of Borrower are authorized and directed to execute and deliver in the
name of Borrower and on its behalf all documents required to be delivered by
Borrower in connection with the Loan and do all other acts in the name of
Borrower and in its behalf, as are necessary or proper in order for the
transactions contemplated in the Commitment to be consummated in accordance with
their respective terms.
FURTHER RESOLVED, that any officer shall be authorized to execute on
behalf of the corporation an Incumbancy Certificate in a form satisfactory to
the Lender, containing the names and original signatures of those officers and
employees or agents of the corporation who shall be authorized to execute
certain documents and other items on behalf of the corporation, which execution
shall be fully effective and bind the corporation in the context thereof. Said
Incumbancy Certificate may be changed or modified at any time and shall be fully
effective if signed on behalf of the corporation by any officer. Any Incumbancy
Certificate previously executed by this corporation is hereby ratified and
shall remain in full force and effect until changed or modified.
I further certify that each of the following persons has been duly elected
and qualified to hold and currently holds the office set forth opposite his name
below and that the signature of each such person appearing opposite his name
below in his own true signature:
30
Name Office Signature
---- ------ ---------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Chief Executive Officer /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Story III President /s/ ▇▇▇▇▇▇ Story III
▇▇▇▇▇▇▇ ▇▇▇▇ Secretary /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ Treasurer /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of
Borrower to be affixed as of
-------------------------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇▇▇▇
Secretary
(Corporate Seal)
31
EXHIBIT "E"
Promissory Note
Mortgage Loan Amount: $ Date of Promissory Note:
---------------- ---------------
THE UNDERSIGNED BORROWER ("Borrower") hereby agrees to pay to the order of
PRINCAP MORTGAGE WAREHOUSE, INC., a Delaware corporation ("Lender") the amount
of the Advance made by Lender at the request of Borrower to fund the Mortgage
Loan Amount set forth above, together with interest thereon from the date of
advancement at the Basic Interest Rate set forth in the Warehouse Credit and
Security Agreement dated ________ between Borrower and Lender (the "Agreement").
Reference is made to the Agreement for the terms and conditions under which the
Advance has been made, the period within which payment is due, the Default
Interest Rate and the place and manner of payment. Capitalized terms used and
not otherwise defined in this Promissory Note shall have the respective meanings
given to those terms in the Agreement.
Upon the occurrence of an Event of Default (as defined in the Agreement)
the entire principal of this Promissory Note, together with accrued but unpaid
interest thereon, and any other obligations of Borrower or other Obligors to
Lender shall become immediately due and payable in full. Borrower waives
presentment for payment, demand, protest, notice of protest, notice of dishonor
or other notice of any kind.
Borrower hereby reconfirms to Lender that all representations and
warranties of Borrower set forth in the Agreement are true, correct and complete
as if remade as of the Date of this Promissory Note set forth above.
This Promissory Note is a "Loan Document" as defined in the Agreement.
This Promissory Note may not be changed orally or by course of conduct but only
by an agreement in writing signed by the party against whom enforcement of any
waiver, change, consent, modification, or discharge is sought.
This Promissory Note has been accepted by Lender in the State of New
Jersey and shall be governed by the internal laws of the State of New Jersey.
Nothing contained in this Promissory Note or any other Loan Document shall
require the Borrower to pay, or Lender to accept, interest in an amount which
would subject Lender to penalty under applicable law. In the event that the
payment of any interest due under this or any other Loan Document would subject
Lender to penalty under applicable law, then, ipso facto, the obligation of
Borrower to make such payment shall be reduced to the highest rate then
permitted under applicable law without penalty.
Time is of the essence of Borrower's obligations under this Note.
All notices, requests, statements, offers, acceptances, requests for
consents or other writings required or permitted to be given or furnished under
this Promissory Note shall be given in accordance with the applicable provisions
contained in the Agreement.
34
IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower has
executed and delivered this Promissory Note to Lender as of the Date of
Promissory Note set forth above.
Name of Borrower:
-----------------------------------------
By:
-------------------------------------
Name:
Title:
35
EXHIBIT "F"
LENDER'S SETTLEMENT INSTRUCTIONS
Date:
-------------------------------
Settlement Agent:
----------------------------------
Address:
----------------------------------
Telefax:
----------------------------------
Settlement Acct:
----------------------------------
Originator:
----------------------------------
Mortgagor:
----------------------------------
Mortgage Loan Amount: $ Advance Amount: $
-------------- -----------------------
This is to advise you that, at the request of the Originator identified
above, Princap Mortgage Warehouse, Inc. ("Princap") will, within one Business
Day of the date of this letter, deposit by electronic transfer of funds into
your Settlement Account identified above, the Advance Amount identified above.
The Advance Amount is to be used to fund the residential mortgage loan to the
Mortgagor identified above in the Mortgage Loan Amount identified above and for
no other purposes.
By acceptance of the Advance Amount you agree to act as agent for Princap
to take custody of the originally executed Mortgage Note on behalf of Princap
and deliver the Mortgage Note, with a complete and accurate photocopy of the
fully executed HUD-1 Settlement Statement, to Princap at the address set forth
below, by nationally recognized express delivery service on the next day (other
than Saturday, Sunday or bank holiday) (a "Business Day") following the date the
Mortgage Loan is funded:
Princap Mortgage Warehouse, Inc.
Two ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If, within one Business Day after the Advance Amount is deposited into
your Settlement Account, the Advance Amount is not disbursed to fund the closing
with the Mortgagor, you must return the Advance Amount not later than 2:00 p.m.
EST/EDT on the second Business Day following receipt, by electronic transfer of
immediately available funds, to the following account:
Chase Manhattan Bank
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
Attn: Global Securities and Trust
New York, NY
ABA Routing #▇▇▇▇▇▇▇▇▇
To the further credit of
Princap Mortgage Warehouse, Inc.
Collection Account #323-309348
Re: [Name of Originator]
---------------------------------
36
Please contact the undersigned (telephone: ▇▇▇-▇▇▇-▇▇▇▇ (telefax:
609-770-1920) if further instructions are required.
Very truly yours,
PRINCAP MORTGAGE WAREHOUSE, INC.
By:
-----------------------------------
37
