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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: July 10, 1998
SOURCE ONE MORTGAGE SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-2011419
(State or other jurisdiction of 1-2898 (I.R.S. employer
incorporation or organization) (Commission file No.) identification no.)
27555 Farmington Road, Farmington Hills, Michigan 48334-3357
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (248) 488-7000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits.
Item 601
Regulation S-K
Exhibit Reference
Number Exhibit Description
10 Mortgage Warehousing Loan Agreement dated as of April 18, 1998 by and
between PNC Bank National Association and Central Pacific Mortgage.
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Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Source One Mortgage Services Corporation
Date: July 10, 1998 By: /s/ MICHAEL C. ALLEMANG
-----------------------
Michael C. Allemang
Executive Vice President, Chief Financial Officer
and Director
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NO.
10 Mortgage Warehousing Loan Agreement dated as of April 18, 1998 by and
between PNC Bank National Association and Central Pacific Mortgage.
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EXHIBIT 10
MORTGAGE WAREHOUSING LOAN AGREEMENT
CENTRAL PACIFIC MORTGAGE
AND
PNC BANK, NATIONAL ASSOCIATION
as of April 15, 1998
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TABLE OF CONTENTS
<TABLE>
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PAGE
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ARTICLE 1. DEFINITIONS
A. Defined Terms...................................................................................3
B. Index to Other Defined Terms....................................................................8
C. Other Definitional Provisions...................................................................8
ARTICLE 2. TERMS OF THE CREDIT
A. Commitment......................................................................................9
B. Purpose of the Credit Facility..................................................................9
C. Note............................................................................................9
D. Procedure for Advance against Underlying Loans..................................................9
E. Procedure for Advance Against Mortgage-Backed Securities........................................9
F. Payment Procedure..............................................................................10
G. Non-Use Fee....................................................................................10
ARTICLE 3. COLLATERAL
A. Collateral.....................................................................................10
B. Deliveries to PNC Relative to Underlying Loans.................................................11
[1] Single-Family Document Funding........................................................11
[2] Single-Family Wet Settlement Funding..................................................11
C. Deliveries to PNC Relative to Mortgage-Backed Securities.......................................11
D. Review of Documentation........................................................................12
E. Evidence of Purchase Commitments...............................................................12
F. Release of Documentation for Correction........................................................12
G. Delivery to Qualified Investors................................................................13
H. Notification of Repayment......................................................................14
ARTICLE 4. CONDITIONS PRECEDENT
A. Conditions Precedent to Initial Funding........................................................14
[1] Resolutions...........................................................................14
[2] Organizational Documents..............................................................14
[3] Legal Opinion as to Borrower..........................................................15
[4] Report of Financing Statements........................................................15
[5] Compliance Certificate................................................................15
[6] List of Other Credit Facilities.......................................................15
[7] Funding Application...................................................................15
[8] List of Investors.....................................................................15
[9] Closing Agents........................................................................15
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[10] Field Examination.....................................................................15
[11] Evidence of Insurance.................................................................15
[12] Licenses..............................................................................15
[13] Loan Documents and Other Conditions...................................................15
B. Conditions Precedent to Subsequent Advances....................................................16
ARTICLE 5. COVENANTS
A. Affirmative Covenants..........................................................................16
[1] Payments of Indebtedness..............................................................16
[2] Examination by PNC....................................................................16
[3] Financial Statements and Reports of Borrower..........................................16
[a] Annual Audited Financial Statements, Auditors'
Report Thereon, and Auditors' Certificate....................................16
[b] Quarterly Financial Statements...............................................16
[c] Quarterly Compliance Certificate.............................................16
[d] Other Reports................................................................17
[4] Books and Records.....................................................................17
[5] Insurance.............................................................................17
[6] Compliance with Laws..................................................................17
[7] Taxes and Assessments.................................................................17
[8] Corporate Existence...................................................................17
[9] Events of Default and Notice..........................................................17
[10] Other Loan Agreements.................................................................17
[11] Payment of Indebtedness; Compliance with Agreements...................................17
[12] Management............................................................................18
[13] ERISA.................................................................................18
[14] Other Acts............................................................................18
[15] Notification..........................................................................18
B. Financial Covenants............................................................................18
[1] Minimum GAAP Net Worth................................................................18
[2] Maximum Leverage Ratio................................................................18
C. Negative Covenants.............................................................................18
[1] No Other Loan Facilities..............................................................18
[2] No Unapproved Investor................................................................19
[3] No Merger.............................................................................19
[4] Guaranties............................................................................19
[5] Financial Accommodations Regarding Affiliates.........................................19
[6] Dividends.............................................................................19
[7] Fiscal Year, Method of Accounting.....................................................19
[8] Business..............................................................................19
[9] Use of Proceeds.......................................................................19
[10] Actions with Respect to Underlying Loan Documentation.................................19
[11] Transactions with Affiliates..........................................................20
</TABLE>
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[12] Liens.................................................................................20
[13] Change of Principal Office............................................................20
ARTICLE 6. REPRESENTATION AND WARRANTIES
A. Existence......................................................................................20
B. Subsidiaries...................................................................................20
C. No Restrictions on Performance.................................................................20
D. Proper Execution...............................................................................21
E. Legal Proceedings; Taxes.......................................................................21
F. ERISA..........................................................................................21
G. No Misrepresentations..........................................................................21
H. Inducement to PNC..............................................................................22
ARTICLE 7. DEFAULTS AND REMEDIES
A. Events of Default..............................................................................22
[1] Payments..............................................................................22
[2] Covenants and Agreements..............................................................22
[3] Accuracy of Statements................................................................22
[4] Judgments.............................................................................22
[5] Borrower's Solvency...................................................................22
[6] Termination of Suspension of Business.................................................23
[7] Other Indebtedness....................................................................23
[8] Material Adverse Change...............................................................23
[9] Loan Documents........................................................................23
[10] Default on Other Indebtedness.........................................................23
[11] Insecurity............................................................................23
B. Remedies Upon Default..........................................................................23
[1] Acceleration..........................................................................23
[2] Advances; Termination of Agreement....................................................24
[3] Judgment..............................................................................24
[4] Offsets...............................................................................24
[5] Rights Under Collateral Agreements....................................................24
[6] Foreclosure...........................................................................24
[7] Possession............................................................................24
[8] Collection of Accounts................................................................24
[9] Performance by PNC....................................................................24
[10] Suspension of Payment.................................................................25
C. Rights Cumulative..............................................................................25
ARTICLE 8. MISCELLANEOUS
A. Interpretation.................................................................................25
B. Notices........................................................................................25
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C. Governing Law..................................................................................26
D. Section Titles.................................................................................26
E. Severability...................................................................................26
F. Integration....................................................................................26
G. Successors and Assigns.........................................................................26
</TABLE>
Exhibits
A -- Mortgage Loan Warehousing Note
B -- Mortgage Loan Warehousing Security Agreement
C-1 -- Funding Application - Warehouse Advance
C-2 -- Funding Application - Wet Funding Advance
D -- Officer's Certificate of Compliance
E -- Trust Receipt
F -- Shipping Schedule
G-1 -- Bailee Letter -- Document Custodian
G-2 -- Bailee Letter -- Direct Investor
H -- Financing Statement
I -- Closing Agenda
J -- Resolutions for Extensions of Credit and Incumbency Certificate
K -- Officer's Certificate
L -- Form of Opinion of Counsel to Borrower
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Central Pacific Mortgage
MORTGAGE WAREHOUSING LOAN AGREEMENT
(Warehousing Lines)
THIS MORTGAGE WAREHOUSING LOAN AGREEMENT (this "Agreement") is
made and entered into as of April 15, 1998, by and between PNC BANK, NATIONAL
ASSOCIATION ("PNC"), a national banking association, with an office and place of
business at 500 West Jefferson Street, Louisville, Kentucky 40202 (Attention:
Warehouse Lending) and CENTRAL PACIFIC MORTGAGE ("Borrower"), a California
corporation, with its chief executive office at 5750 Sunrise Boulevard, Suite
250, Citrus Heights, California 95610.
Certain terms expressed in initial capital letters used in
this Agreement are defined in context and shall have the meanings so defined
whenever used herein. An index to such terms is contained in Section 1B hereof.
Certain other terms used in this Agreement are defined in Article 1 hereof. All
such terms shall have the meanings assigned to them, unless the context
otherwise requires.
INTRODUCTION:
A. Borrower is in the business of originating, acquiring and
selling loans secured by Mortgages on real property (each a "Mortgage Loan"),
including Mortgage Loans secured by Mortgages on single-family (1 to 4 family)
residence premises ("Single-Family Mortgage Loans"). In the ordinary course of
Borrower's business, Mortgage Loans it makes or acquires are intended to be sold
to responsible long-term investors or pledged or otherwise transferred to secure
mortgage-backed securities ("Mortgage-Backed Securities") that are then sold to
such investors.
Certain Mortgage-Backed Securities created by Borrower are
issued or guaranteed by GNMA pursuant to Section 306(g) of the National Housing
Act, as amended, FNMA pursuant to the National Housing Act, as amended, or FHLMC
pursuant to the Emergency Home Finance Act of 1970, as amended (collectively,
"Agency Securities"). Borrower obtains commitments from long-term investors or
representatives of long-term investors, including recognized dealers in the
secondary mortgage market and FNMA and FHLMC (when they are purchasing for their
own account), to purchase Mortgage Loans or Agency Securities or other types of
Mortgage-Backed Securities issued on the basis of pools of Mortgage Loans
("Mortgage Pools") originated or acquired by Borrower. Such commitments obligate
the investor or dealer to purchase Mortgage Loans or Agency Securities or other
Mortgage-Backed Securities at a specific price on or before a specified time.
All of such commitments are hereinafter referred to as "Purchase Commitments,"
which term shall include all Purchase Commitments issued by FNMA, FHLMC and
other investors or dealers ("Investors"). FNMA, FHLMC and other substantial and
reputable Investors approved by PNC are hereafter referred to as "Qualified
Investors."
B. In order to finance its origination and acquisition of
Single-Family Mortgage Loans, Borrower has applied to PNC for loans under this
Agreement. Each advance of loan funds will be used by Borrower to finance or
refinance the origination or acquisition of Single-Family Mortgage Loans and the
holding of such loans until they are sold, delivered or pledged in connection
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with the issuance of Agency Securities or other Mortgage-Backed Securities
directly or indirectly backed by such Mortgage Loans.
PNC requires that in order for Borrower to obtain an Advance,
Borrower must deliver to PNC, in pledge to PNC under the Security Agreement:
[1] the instruments and other documents evidencing
and securing one of the following types of first priority Single-Family
Mortgage Loans:
[a] Single-Family Mortgage Loans insured by
FHA under the National Housing Act, as amended, or Title V of
the Housing Act of 1949, as amended, or guaranteed by VA under
the Servicemen's Readjustment Act of 1944, as amended, or
Chapter 37 of Title 38 of the United States Code, or with
respect to which there are current, binding and enforceable
commitments for such insurance issued by FHA or for such
guaranties issued by VA, together with all rights and
interests related to such Mortgage Loans ("Government-Backed
Mortgage Loans");
[b] Single-Family Mortgage Loans made on a
conventional basis not insured or guaranteed by FHA or VA
("Conventional Mortgage Loans") that comply with all
applicable requirements for purchase under either the FNMA or
the FHLMC standard form of conventional mortgage purchase
contract and any supplement thereto then in effect, together
with all rights and interests related to such Mortgage Loans
("Conforming Conventional Mortgage Loans"); or
[c] Single-Family Mortgage Loans that would
be Conforming Conventional Mortgage Loans in all other
respects but that exceed the maximum individual loan limits of
FNMA and FHLMC, together with all rights and interests related
to such Mortgage Loans ("Jumbo Conventional Mortgage Loans");
or
[2] GNMA, FNMA or FHLMC Mortgage-Backed Securities,
when delivered upon issuance based on Single-Family Mortgage Loans or
Multi-Family Mortgage Loans originally pledged hereunder, together with
all rights and interests related to such Mortgage-Backed Securities.
The Underlying Loans and Mortgage-Backed Securities, when duly
pledged and delivered under the Security Agreement, together with the related
Purchase Commitments and all related property, rights and interests, and certain
accounts and general intangibles, and the proceeds thereof, all as more fully
set forth in Section 1 of the Security Agreement, constitute the Collateral.
Sufficient Warehousing Collateral is required to be pledged as necessary to
maintain the Loan Value in the amount required to collateralize the amount of
Advances outstanding under this Agreement. Each Underlying Loan and
Mortgage-Backed Security must be covered by a Purchase Commitment from a
Qualified Investor and must conform to the representations and warranties set
forth in the Security Agreement. The Underlying Notes and Mortgage-Backed
Securities and other instruments included in the Collateral, the proceeds
thereof, and all other funds in the Funding Account are to be treated as "cash
collateral" as that term is defined in Section 363(a) of the Bankruptcy Code.
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Now therefore, in consideration for the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, PNC and Borrower agree
as follows:
ARTICLE 1.
DEFINITIONS
A. Defined Terms. As used in this Agreement, the following terms
shall have the following meanings, unless the context otherwise requires.
"Advance" shall mean a disbursement by PNC of any sum to
Borrower in connection with this Agreement.
"Affiliate" shall mean a Person directly or indirectly
controlling, controlled by, or under common control with Borrower and includes
without limitation Guarantor and any other shareholder, director or executive
officer of Borrower.
"Agency" shall mean GNMA, FNMA or FHLMC and "Agencies" shall
be the collective reference to them.
"Business Day" shall mean a day on which PNC is open for
business at its office in Louisville, Kentucky.
"Closing Agent" shall mean a major, nationally recognized
title insurance company or its duly authorized agent who shall act as closing
agent or closing attorney in connection with one or more Underlying Loans.
"Collateral" shall mean the property and rights relative
thereto more particularly described in Section 1 of the Security Agreement.
"Commitment Amount" shall mean $25,000,000.
"Credit Facility" shall mean the aggregate principal amount
available to Borrower under this Agreement.
"Custodian" shall mean any Person holding Underlying Notes and
related documents for the benefit of PNC as secured lender to Borrower and may
include PNC itself.
"Document Funding" shall mean the funding of an Advance
relative to an Underlying Loan based upon Borrower's delivery to PNC of those
items set forth in Section 3B[1] of this Agreement.
"Events of Default" shall mean any of the events specified in
Section 7A of this Agreement.
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"FHA" shall mean the Federal Housing Administration, or its
successor.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation,
or its successor.
"FNMA" shall mean the Federal National Mortgage Association,
or its successor.
"Funding Account" shall mean the non-interest bearing demand
deposit account established by Borrower with PNC to be used for:
[1] the deposit of:
[a] proceeds of Advances by PNC;
[b] any sums by Borrower;
[2] the withdrawal by Borrower of proceeds of Advances.
"Funding Application" shall mean Borrower's request for an
Advance and certificate relative to an Underlying Loan, to be in the form of
Exhibit C-1 hereto for Document Funding for Single-Family Mortgage Loans or in
the form of Exhibit C-2 hereto for Wet Settlement for Single- Family Mortgage
Loans.
"GAAP" shall mean generally accepted accounting principles
consistently applied as in effect at the time of application of the provisions
hereof so as to reflect properly the financial condition, and the results of
operations and cash flows, of Borrower; provided, that wherever in this
Agreement principles of accounting different from those required by GAAP are
specified, the principles of accounting so specified in this Agreement shall
govern.
"GAAP Net Worth" of a Person shall mean the excess of the
total assets of such Person (excluding from such assets any indebtedness to such
Person of any shareholder or Affiliate) over the total debt of such Person,
determined in accordance with GAAP.
"GNMA" shall mean the Government National Mortgage
Association, or its successor.
"Ineligible Loan" shall mean any:
[1] Government-Backed Mortgage Loan, Conforming
Conventional Mortgage Loan, or Jumbo
Conventional Mortgage Loan that has not been
purchased by a Qualified Investor within one
hundred twenty (120) days of PNC's initial
Advance with respect thereto;
[2] Underlying Loan for which the documentation
required by this Agreement has not been
delivered to PNC within the period
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prescribed herein seven (7) Business Days
after the related Advance in the case of an
Underlying Loan funded through Wet
Settlement);
[3] Underlying Loan in a principal amount
exceeding $600,000;
[4] Underlying Loan dated more than ninety (90)
days prior to the date it is pledged
hereunder;
[5] Underlying Loan that has been shipped to an
Investor and not purchased within forty-five
(45) days from the date of shipment;
[6] Underlying Loan that has become delinquent;
and
[7] Underlying Loan that is not covered by an
effective Purchase Commitment.
"Insured Closing Letter" shall mean a letter addressed to PNC
from a major, nationally recognized title company acceptable to PNC assuming
certain responsibilities to PNC relative to actions or omissions by such title
company and its agents in closing Underlying Loans.
"Loan" shall mean at any time the aggregate outstanding
principal amount of all Advances made hereunder evidenced by the Note.
"Loan Documents" shall mean this Agreement, the Note, the
Security Agreement, related financing statements, certificates and any and all
other instruments now or hereafter executed and delivered by Borrower in
connection with the Credit Facility, as any of the foregoing may be amended or
supplemented from time to time.
"Loan Value" shall mean the sum of:
[1] with respect to Government-Backed Mortgage
Loans, Conforming Conventional Mortgage
Loans, and Jumbo Conventional Mortgage Loans
that are not Ineligible Loans subject to a
Purchase Commitment from PNC Mortgage
Company, 100% of the lesser of [x] Par or
[y] the Takeout Price;
[2] with respect to Government-Backed Mortgage
Loans, Conforming Conventional Mortgage
Loans, and Jumbo Conventional Mortgage Loans
that are not Ineligible Loans subject to a
Purchase Commitment from a Qualified
Investor other than PNC Mortgage Company,
98% of the lesser of [x] Par or [y] the
Takeout Price;
[3] with respect to Mortgage-Backed Securities
subject to a Purchase Commitment from PNC
Mortgage Company, 100% of the Loan
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Value of the Underlying Loans backing such
Mortgage-Backed Securities calculated
according to clause [1] preceding; and
[4] with respect to Mortgage-Backed Securities
subject to a Purchase Commitment from a
Qualified Investor other than PNC Mortgage
Company, 98% of the Loan Value of the
Underlying Loans backing such
Mortgage-Backed Securities calculated
according to clause [1] preceding;
provided, however, that:
"Par" shall mean, with respect to any Underlying
Loan, the lowest of [i] the actual outstanding amount
of such Underlying Loan, [ii] the amount advanced to
the mortgagor less any discount given or points paid
or deducted at closing or [iii] in the case of a
purchased Underlying Loan not originated by Borrower,
the net purchase price actually remitted to the
seller of such Underlying Loan and, for the purposes
of clause [iii] of this definition, "net purchase
price" shall mean the purchase price of such
Underlying Loan less any brokerage fees or
commissions paid, if any, and less servicing released
premiums paid, if any; and
"Takeout Price" shall mean the purchase price of an
Underlying Loan based on the required yield under the
applicable mandatory delivery Purchase Commitment
held by Borrower.
"Material Adverse Effect" shall mean any material adverse
influence on or change relative to [i] the validity or enforceability of any
Loan Document, [ii] the business, operations and assets of Borrower, [iii] the
Collateral, or [iv] Borrower's ability to fulfill its obligations under any Loan
Document.
"Maximum Loan Amount" shall mean the lesser of [x] the
Commitment Amount or [y] the Loan Value.
"Mortgage" shall mean a mortgage, deed of trust, deed to
secure debt and any other form of security instrument used to create a lien or
other encumbrance upon real property as security for debt.
"Net Collected Balances" shall mean collected balances
maintained by Borrower with PNC in the Funding Account exclusive of [i] reserve
requirements and [ii] the costs and expenses to PNC in establishing and
maintaining such account and other activity charges, including without
limitation deposit insurance assessments.
"Note" shall mean the Mortgage Loan Warehousing Note to be
executed by Borrower in the form of Exhibit A hereto and all renewals,
modifications and extensions thereof.
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"Officer's Certificate of Compliance" shall mean a certificate
substantially in the form of Exhibit D hereto, executed by a duly authorized
officer of Borrower.
"Person" shall mean any natural person, corporation,
partnership, limited liability company, trust, estate or government or political
subdivision.
"Purchase Proceeds" shall mean the proceeds of the sale of an
Underlying Loan or Mortgaged-Backed Security to an Investor.
"Security Agreement" shall mean the Mortgage Loan Warehousing
Security Agreement to be executed by Borrower in the form of Exhibit B attached
hereto and all amendments and modifications thereof.
"Sublimit" shall mean the reference to the Wet Settlement
Sublimit.
"Subsidiary" shall mean any corporation, association,
partnership, trust or other entity the majority interest of which is directly or
indirectly owned or controlled by Borrower.
"Termination Date" shall mean April , 1999 or such later date
as may be designated by PNC by written notice from PNC to Borrower (it being
understood that in no event shall PNC be under any obligation to extend the
Termination Date beyond the date specified above or any extension thereof by
PNC).
"Underlying Loans" shall mean Government-Backed Mortgage
Loans, Conforming Conventional Mortgage Loans, and Jumbo Conventional Mortgage
Loans, for which Advances have been made by PNC.
"Underlying Mortgages" shall mean Mortgages securing
Underlying Loans.
"Underlying Notes" shall mean promissory notes evidencing
Underlying Loans.
"VA" shall mean the Department of Veterans Affairs, or its
successor.
"Warehousing Collateral" shall have the meaning ascribed to it
in the Security Agreement.
"Wet Settlement" shall mean the funding of an Advance for an
Underlying Loan that is a Single-Family Mortgage Loan based upon Borrower's
submission to PNC of a Funding Application by facsimile transmission and
Borrower's subsequent delivery to PNC of those items set forth in Section 3B[2]
of this Agreement.
"Wet Settlement Sublimit" shall mean the maximum aggregate
amount outstanding at any time of Advances that have been made to fund
Underlying Loans pursuant to Wet Settlement, which such amount shall not exceed
25% of the Commitment Amount.
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"Wire Clearing Account" shall mean PNC's general clearing
account to be used for:
[1] the receipt of:
[a] Purchase Proceeds for Underlying Loans;
[b] Purchase Proceeds for Mortgage-Backed
Securities;
[c] Purchase Proceeds for other Collateral; and
[d] any payments by Borrower; and
[2] the withdrawal by PNC of sums to repay the Loan in
accordance with the terms of the Note and to pay such
other sums to PNC as provided in this Loan Agreement
and the Note.
B. Index to Other Defined Terms. The following terms are defined in
context in the paragraph or section indicated.
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Term Paragraph (Paragraph) or Section (Section)
<S> <C>
Agency Securities Introduction, Paragraph A
Agreement Preamble
Borrower Preamble
Conforming Conventional Mortgage Loans Introduction, Paragraph B, Section [1][b]
ERISA Article 5, Paragraph A, Section [13]
Government-Backed Mortgage Loans Introduction, Paragraph B, Section [1][a]
Investors Introduction, Paragraph A
Jumbo Conventional Mortgage Loans Introduction, Paragraph B, Section [1][c]
Mortgage-Backed Securities Introduction, Paragraph A
Mortgage Loan Introduction, Paragraph A
Mortgage Pool Introduction, Paragraph A
Plan Article 5, Paragraph A, Section [13]
PNC Preamble
Purchase Commitments Introduction, Paragraph A
Qualified Investors Introduction, Paragraph A
Single-Family Mortgage Loans Introduction, Paragraph A
Trust Company Article 3, Paragraph C
</TABLE>
C. Other Definitional Provisions.
[1] Unless otherwise specified therein, all terms defined in
this Agreement shall have the above-defined meanings when used in the Note or
any other Loan Document, report or other document made or delivered pursuant
hereto.
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[2] Defined terms used herein in the singular shall import
the plural and vice versa.
ARTICLE 2.
TERMS OF THE CREDIT
A. Commitment. PNC agrees to make Advances to Borrower on a revolving
credit basis from time to time on any Business Day from the date of this
Agreement through the Termination Date in an amount not to exceed at any one
time outstanding the Maximum Loan Amount, subject to the terms and conditions of
this Agreement. In no event shall PNC be obligated to disburse sums in excess of
any Sublimit or any other limitation herein. If at any time the Loan Value shall
be less than the Loan, Borrower shall repay so much of the Loan as may be
necessary to cause the Loan Value to be greater than or equal to the Loan. PNC
shall not be obligated to make an Advance if an Event of Default shall have
occurred and is then existing hereunder or under any other Loan Document beyond
any applicable grace or curative period contained therein. PNC shall have the
right to refuse to make an Advance at any time without prior notice to Borrower.
Within the foregoing limits, Borrower may borrow, repay and reborrow.
B. Purpose of the Credit Facility. Proceeds of the Credit Facility and
Advances made to Borrower by PNC under the Note shall be used by Borrower to
fund the origination and acquisition of Underlying Loans.
C. Note. To evidence the Loan and the Credit Facility, Borrower shall
execute and deliver to PNC the Note dated as of the date hereof. The Note shall
be payable and bear interest as set forth therein.
D. Procedure for Advance against Underlying Loans. Borrower shall
deliver to PNC not later than 2:00 p.m. (Louisville, Kentucky time) on the
Business Day preceding the Business Day on which Borrower desires to borrow
against Underlying Loans, a Funding Application containing Borrower's written
request for an Advance and specifying the amount of the Advance that it desires
to borrow and Collateral and documents specified by Section 3B relative to the
type of Advance requested by Borrower. At its discretion, PNC shall deposit the
Advance in the Funding Account on the date such Advance was requested provided
that: [i] no Event of Default has occurred or is existing; [ii] all terms and
conditions of this Agreement and the other Loan Documents relative to an Advance
have been satisfied; and [iii] the making of the Advance shall not cause the
Loan to exceed the Maximum Loan Amount or any Sublimit or other limitation
herein, or otherwise cause or result in the violation of any of the terms of
this Agreement or any other Loan Document. Funding Applications received
subsequent to 2:00 p.m. (Louisville, Kentucky time) shall be processed for an
Advance on the second following Business Day.
E. Procedure for Advance Against Mortgage-Backed Securities. Borrower
shall deliver to PNC not later than 2:00 p.m. (Louisville, Kentucky time) on the
Business Day preceding the Business Day on which Borrower desires to borrow
against Mortgage-Backed Securities, a written request for an Advance against
Mortgage-Backed Securities and specifying the amount of the
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Advance that it desires to borrow and identifying the Mortgage-Backed Securities
constituting the Collateral and shall furnish the documents specified by Section
3C. At its discretion, PNC shall deposit the Advance in the Funding Account on
the date such Advance was requested provided that: [i] no Event of Default has
occurred or is existing; [ii] all terms and conditions of this Agreement and the
other Loan Documents relative to an Advance have been satisfied; and [iii] the
making of the Advance shall not cause the Loan to exceed the Maximum Loan Amount
or any Sublimit or other limitation herein, or otherwise cause or result in the
violation of any of the terms of this Agreement or any other Loan Document.
Requests received subsequent to 2:00 p.m. (Louisville, Kentucky time) shall be
processed for an Advance on the second following Business Day.
F. Payment Procedure. All payments of principal and interest, fees,
expenses and other obligations under the Note and this Agreement shall be made
by Borrower to the Wire Clearing Account before 3:00 p.m. (Louisville, Kentucky
time) on the respective dates when due in federal or other immediately available
funds at PNC's address. Funds received after 3:00 p.m. (Louisville, Kentucky
time) may be treated for all purposes as having been received by PNC on the
Business Day next following the date of receipt of such funds. All payments
received by PNC shall be applied, in such order as PNC shall determine in its
sole discretion, to payment of costs, expenses, fees and reasonable attorneys'
fees arising out of or in connection with this Agreement and the other Loan
Documents; to the payment of interest then due and payable under the Note; and
to the principal of the Note. Borrower hereby authorizes PNC to charge the Wire
Clearing Account for such payments and obligations without further notice to or
consent from Borrower.
G. Non-Use Fee. Beginning on the first day of the calendar month
following the date of this Agreement and continuing on the first day of each
month thereafter until the Termination Date, Borrower shall pay a non-use fee to
PNC, in arrears, at the rate of 0.125% per annum on the average daily balance of
the Credit Facility that was undisbursed during the preceding month (pro rata
for the first month). The non-use fee shall be computed on the basis of a year
of 360 days and paid on the actual number of days elapsed and shall be paid
quarterly in arrears, upon receipt of statement from PNC.
ARTICLE 3.
COLLATERAL
A. Collateral. To secure payment of the Note and all obligations of
Borrower to PNC under this Agreement and the other Loan Documents, Borrower
shall [i] grant to PNC a first and prior lien on and security interest in the
Collateral as more particularly described in Section 1 of the Security
Agreement, [ii] deliver to PNC the Collateral and related documents specified in
Section 3B as to Underlying Loans and in Section 3C as to Mortgage-Backed
Securities, and [iii] execute all documents and instruments, including the
Security Agreement, and perform all other acts reasonably deemed necessary by
PNC to perfect the security interest and lien of PNC in and to the Collateral.
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B. Deliveries to PNC Relative to Underlying Loans. Whenever Borrower
desires to receive an Advance to fund an Underlying Loan, Borrower shall deliver
to PNC the Collateral and related documents hereinafter specified.
[1] Single-Family Document Funding. Whenever Borrower desires
Document Funding of a Single-Family Mortgage Loan, Borrower shall deliver to
PNC: [i] the original Underlying Note, endorsed in blank by Borrower; [ii]
original assignment(s) in blank of the Mortgage relating to the Underlying Loan,
executed and acknowledged by Borrower, and in such form as to be recordable by
PNC in the appropriate governmental office(s) at any time PNC in its sole
discretion shall deem necessary during the period in which the Advance shall be
outstanding; [iii] certified copies of any interim assignments; [iv] a copy of
the Purchase Commitment relative to each such Underlying Loan; and [v] a Funding
Application in the form of Exhibit C-1 hereto, completed and executed by
Borrower.
[2] Single-Family Wet Settlement Funding. Whenever Borrower
desires Wet Settlement Funding of a Single-Family Mortgage Loan, Borrower shall
deliver a copy by facsimile transmission or the original by expedited delivery
to arrive on the date for which such funding is requested, of the Funding
Application in the form of Exhibit C-2 relative to such Underlying Loan. Upon
receipt of the Funding Application, PNC shall, subject to the Wet Settlement
Sublimit, fund the Advance and wire transfer the proceeds of the Advance in
accordance with the instructions set forth in the Funding Application.
In addition, Borrower shall, within seven (7) Business Days of
PNC's funding the Advance, deliver to PNC the Collateral specified in Section
3B[1][i], [ii] and [iii], [iv]. In the event Borrower shall fail to deliver such
Collateral within such period, then PNC shall withdraw funds in the amount of
the Advance from the Funding Account to repay such Advance. Borrower hereby
authorizes PNC to make such withdrawals without further notice to, consent of,
or authorization from Borrower. In the event the Funding Account shall not
contain sums sufficient to repay the Advance, then Borrower shall immediately
upon PNC's demand repay PNC such sum.
C. Deliveries to PNC Relative to Mortgage-Backed Securities.
Mortgage-Backed Securities in certificated form shall be deemed delivered when
the original certificates are deposited with PNC or the Custodian, together with
transfer powers duly executed in blank or other instruments of assignment, in
each case satisfactory to PNC, permitting the negotiation, transfer and
collection thereof. In the case of Agency Securities that are issued in book
entry form, such Agency Securities shall be delivered when PNC or the Custodian
receives a confirmation from another bank or trust company that is a member of a
federal reserve bank and a direct participant in the Participants Trust Company
as depository, in the case of GNMA Mortgage-Backed Securities, that is approved
by PNC and that has a custody or trust agreement with PNC confirming to PNC that
[x] in its capacity as an independent custodian or such approved member bank and
participant with an approved custody or trust agreement (the "Trust Company"),
it has received on FedWire (or from Participants Trust Company) confirmation
that the requisite number of such securities have been credited to the
safekeeping account of Participants Trust Company and [y] Participants Trust
Company has received valid irrevocable instructions to transfer such securities
only as instructed by PNC. If anything appears on any security or on any
confirmation, or in any document or paper
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associated with the security, indicating that title to such securities is
subject to any lien, encumbrance or adverse claim (including that of
Participants Trust Company), or that Borrower or Participants Trust Company
would be able to transfer such security without PNC's instructions, then such
security shall not be included in the calculation of Loan Value.
D. Review of Documentation. Upon PNC's receipt of the documents set
forth in Section 3B or Section 3C, it shall review the same for conformity to
PNC's collateral review standards and notify Borrower of any nonconformity. If
any document submitted relative to an Underlying Loan or Mortgage-Backed
Security shall require correction or otherwise to be conformed to PNC's
collateral review standards, then such document shall be returned to Borrower
for correction and the Underlying Loan or Mortgage-Backed Security to which the
document relates shall be ineligible for inclusion in the calculation of Loan
Value.
Upon the furnishing of items in Section 3B or Section 3C, as
the case may be, in form and substance satisfactory to PNC and subject to
compliance with all other procedures and conditions relative to an Advance set
forth in Section 3B or Section 3C and elsewhere in this Agreement, Borrower
shall receive an Advance in the amount indicated on the Funding Application;
provided, however, in the event the amount requested for an Advance as indicated
on the Funding Application does not comply with requirements for inclusion in
the calculation of Loan Value based upon PNC's review of the materials
submitted, then the amount requested for Advance shall be adjusted by PNC prior
to making the Advance.
E. Evidence of Purchase Commitments. Borrower shall deliver to PNC such
evidence as PNC may require, in form and substance satisfactory to PNC, of
Purchase Commitments held by Borrower for the sale to Qualified Investors of all
Underlying Loans and Mortgage-Backed Securities to be financed under this
Agreement. Subsequent to the initial Advance, such evidence will be furnished by
Borrower to PNC without request no less frequently than monthly and at all such
other times as PNC may reasonably request as more particularly set forth in
Section 5A[3][d] of this Agreement. Borrower covenants and agrees to use its
best efforts to maintain Purchase Commitments for the purchase of Underlying
Loans and Mortgage-Backed Securities to be financed under this Agreement in
amounts satisfactory to PNC. At the option of PNC, Borrower shall execute
further documentation required by PNC, including without implied limitation
assignments of all such Purchase Commitments. In the event it becomes apparent
that Underlying Loans or Mortgage-Backed Securities are not covered by Purchase
Commitments from Qualified Investors, PNC, in its sole and absolute discretion,
may determine that Underlying Loans or Mortgaged-Backed Securities without
Purchase Commitments are to be excluded from the calculation of Loan Value and
may require Borrower to repay the Loan to the extent necessary so that the
amount of the Loan does not exceed the Loan Value.
F. Release of Documentation for Correction. In the event Borrower or
PNC shall determine that a document relative to an Underlying Loan or
Mortgage-Backed Security fails to meet PNC's collateral review standards or is
otherwise deficient subsequent to the initial review by PNC, then upon
Borrower's delivery to PNC of a trust receipt substantially in the form of
Exhibit E hereto, PNC shall deliver such document to Borrower for correction.
Any such nonconforming document delivered to Borrower for correction shall be
corrected or otherwise conformed to PNC's collateral
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review standards and delivered to PNC within ten (10) days of PNC's delivery of
such document to Borrower. In the event Borrower shall fail to make corrections
or conform the documents to PNC's collateral review standards within this
period, then PNC shall withdraw funds from the Funding Account in the amount of
the Advance relative to the Underlying Loan or Mortgage-Backed Security to which
the deficient documents relate without further notice to, consent of or
authorization from Borrower. In the event the Funding Account shall not contain
sums sufficient to repay the Advance, Borrower shall immediately upon PNC's
demand repay PNC such sum.
G. Delivery to Qualified Investors. Upon receipt of Borrower's Shipping
Schedule substantially in the form of Exhibit F hereto or such other form as may
be acceptable to PNC, PNC shall deliver to Qualified Investors or their document
custodians for purchase by the Qualified Investors pursuant to current Purchase
Commitments the Underlying Notes and other documents held by PNC relative to the
Underlying Loan or Mortgage-Backed Securities covered by such Purchase
Commitments, subject to the following terms and conditions:
[1] Each delivery must be accompanied by instructions to the
Qualified Investors [i] in the case of sales of Underlying Loans, to remit the
Purchase Proceeds directly to the Wire Clearing Account or, in the case of any
Underlying Loan that is not purchased on the settlement date in accordance with
the Purchase Commitment, to return the delivered Underlying Note and other
documents relative to the Underlying Loan to PNC immediately, and [ii] in the
case of the sale of a Mortgage-Backed Security, to issue such security on a
book-entry or certificate basis to the Wire Clearing Account. The sale of
Mortgage-Backed Securities shall be "delivery versus payment" and the Purchase
Proceeds shall be deposited directly by Qualified Investors into the Wire
Clearing Account. In no case shall delivery be unrestricted or for delivery to
Borrower directly.
[2] In addition, prior to any delivery or transfer of custody
of Underlying Loans to GNMA, FHLMC, or FNMA, PNC will assemble documents
relative to the Underlying Loans in pre-pool status for delivery to GNMA, FHLMC
and FNMA at Borrower's request and Borrower shall deliver to PNC the original
and any required copies of all necessary or appropriate forms to effect delivery
and payment. Such forms will be included by PNC with the delivery or transfer of
custody to GNMA, FHLMC, or FNMA.
[3] PNC agrees to provide and execute such forms and documents
as are necessary to accomplish deliveries of Underlying Loans and
Mortgage-Backed Securities.
[4] Borrower shall provide PNC with information relative to
institutions serving as document custodians for Qualified Investors as set forth
in Section 4.A[10].
[5] When delivering Underlying Notes and related documents to
a Qualified Investor for which PNC is not acting as the document custodian, such
delivery shall be by overnight courier in general use in the industry and shall
be accompanied by a bailee letter from PNC to the Investor substantially in the
form of Exhibit G-2 hereto. Borrower acknowledges and agrees to PNC's typing the
name of Borrower's authorized officer on the bailee letter to indicate
Borrower's agreement with the instructions contained therein. PNC shall have no
liability for loss or delay in
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connection with such deliveries, except for any loss arising from the gross
negligence or willful misconduct of any employee, agent or officer of PNC.
[6] When delivering Underlying Notes and related documents to
a third party who is acting as document custodian for Mortgage-Backed
Securities, such delivery shall be by overnight courier in general use in the
industry and shall be accompanied by a bailee letter from PNC to such document
custodian substantially in the form of Exhibit G-1 hereto. Borrower acknowledges
and agrees to PNC's typing the name of Borrower's authorized officer on the
bailee letter to indicate Borrower's agreement with the instructions contained
therein. PNC shall have no liability for loss or delay in connection with such
deliveries, except for any loss arising from the gross negligence or willful
misconduct of any employee, agent or officer of PNC.
[7] PNC shall not be required to forward any Underlying Notes
and related documents unless the request to ship is received by PNC prior to
3:00 p.m., Louisville, Kentucky time one (1) Business Day prior to the requested
delivery.
[8] Borrower shall provide PNC with express mail and expedited
delivery service packaging, including airbills addressed to Qualified Investors
or their designees with PNC's return address shown thereon. Borrower shall pay
directly for such packaging.
[9] In the event Borrower shall receive Purchase Proceeds for
an Underlying Loan or Mortgage-Backed Security from an Investor notwithstanding
PNC's instructions to the contrary, Borrower shall immediately deposit the
Purchase Proceeds so received in the Wire Clearing Account and advise PNC of the
Underlying Loan or Mortgage-Backed Security to which such payment relates.
H. Notification of Repayment. PNC will notify Borrower daily by
telephone of the amount deposited by Investors in the Wire Clearing Account.
ARTICLE 4.
CONDITIONS PRECEDENT
A. Conditions Precedent to Initial Funding. PNC shall not be obligated
to make the initial Advance hereunder, unless PNC has received the following in
form and substance acceptable to PNC and its counsel:
[1] Resolutions. Copies of resolutions of the Board of
Directors of Borrower and such other corporate records, certified by the
Secretary of Borrower, as PNC may request evidencing authorization and approval
of the execution and delivery of this Agreement and the other Loan Documents,
and such other agreements, certificates and instruments as are in fact executed
and delivered by Borrower in connection with this Agreement.
[2] Organizational Documents. Certified copies of the
instrument of incorporation and by-laws of Borrower, with all amendments
thereto.
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[3] Legal Opinion as to Borrower. An opinion addressed to PNC
from counsel to Borrower.
[4] Report of Financing Statements. A report of UCC financing
statements, amendments and related filings made in the office of the Secretary
of State of Borrower's chief executive office set forth in the Preamble, and as
applicable, reports of any such local filings, that name Borrower as debtor.
[5] Compliance Certificate. An Officer's Certificate of
Compliance dated as of the date of the initial Advance. Each request by Borrower
for an additional Advance shall constitute reaffirmation by Borrower that such
representations and warranties are true and correct in all material respects as
of the date such Advance is to be made.
[6] List of Other Credit Facilities. A list certified by a
duly authorized officer of Borrower of any and all existing credit facilities
and a summary description of same including the name of the lender, the amount
and maturity date of the credit facility, a description of the collateral
therefor and the purpose of the credit facility.
[7] Funding Application. A Funding Application and all
documents, instruments and other writings referred to therein.
[8] List of Investors. A list of all Investors and, if
applicable, their document custodians, together with mailing addresses,
telephone numbers and contact persons for the Investors and document custodians.
[9] Closing Agents. To the extent possible, a list of all
Closing Agents that Borrower will use to close Underlying Loans by Wet
Settlement, together with Insured Closing Letters for such Closing Agents.
[10] Field Examination. An on-site field examination performed
by PNC's employees at PNC's expense.
[11] Evidence of Insurance. Certified copies of Borrower's
hazard insurance, fidelity insurance or bond ($300,000 minimum limit), errors
and omissions insurance ($300,000 minimum limit) and blanket bond coverage, and
an endorsement to such blanket bond naming PNC as an additional insured
thereunder.
[12] Licenses. Copies of all licenses and permits required by
applicable law so as to permit Borrower to conduct a mortgage banking business
and related activities.
[13] Loan Documents and Other Conditions. All Loan Documents,
duly executed, and such other documents as PNC and its counsel may reasonably
require and evidence satisfactory to PNC and its counsel of the fulfillment of
any further conditions precedent to the closing of this Agreement.
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B. Conditions Precedent to Subsequent Advances. PNC shall not be
obligated to make any subsequent Advance hereunder: [i] if, at any time such
Advance is requested, an Event of Default shall have occurred; or [ii] unless
PNC has received those materials required for funding an Advance specified in
Section 3B and/or Section 3C of this Agreement.
ARTICLE 5.
COVENANTS
A. Affirmative Covenants. Until payment in full of the entire principal
balance of and all accrued interest on the Loan, and all other obligations
relative thereto, Borrower agrees to observe and comply with all of the
following affirmative covenants and agreements:
[1] Payments of Indebtedness.Borrower shall make full and
timely payment of the principal of and accrued interest on the Loan and on all
other indebtedness of Borrower to PNC in accordance with their respective terms.
[2] Examination by PNC. Borrower shall, at all reasonable
times, permit PNC to examine any or all of Borrower's operations, books and
financial records, to make excerpts therefrom and transcripts thereof, to
discuss the operations, affairs, finances and accounts of Borrower with its
principal officers and to conduct any audit or similar examination (including,
without limitation, a collateral audit) deemed necessary or appropriate by PNC.
[3] Financial Statements and Reports of Borrower. Borrower
shall furnish or shall cause the following to be furnished to PNC:
[a] Annual Audited Financial Statements, Auditors'
Report Thereon, and Auditors' Certificate. Within ninety (90) days
after the end of each fiscal year of Borrower, financial statements of
Borrower for and as of the end of such fiscal year prepared in
accordance with GAAP, all in reasonable detail and accompanied by [i]
the unqualified opinion of independent certified public accountants
acceptable to PNC and [ii] a certificate from such accountants to the
effect they know of no condition or event that then constitutes an
Event of Default hereunder or, if any such condition or event then
exists, specifying the nature and period of existence thereof.
[b] Quarterly Financial Statements. Within thirty
(30) days after the end of each fiscal quarter of Borrower, financial
statements of Borrower (including income statement and balance sheet)
for and as of the end of the period from the beginning of Borrower's
applicable fiscal year to the end of such fiscal quarter prepared in
accordance with GAAP and certified by the chief executive officer or
chief financial officer of Borrower as being true and accurate.
[c] Quarterly Compliance Certificate. Within thirty
(30) days after the end of each fiscal quarter of Borrower or more
frequently if requested by PNC, an Officer's
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Certificate of Compliance, showing among other things, that, as of that
date, Borrower was in compliance with the covenants in Section 5B[2] of
this Agreement.
[d] Other Reports. Promptly after any request
therefor, such other reports, whether the same, similar or dissimilar
to the foregoing, as PNC may reasonably specify.
[4] Books and Records. Borrower shall at all times maintain
its books and records at its chief executive office at the address set forth in
the Preamble.
[5] Insurance. Borrower shall obtain and maintain in full
force and effect hazard and fidelity insurance, errors and omissions and blanket
bond coverages in conformity with the Uniform Single Audit Program as specified
by the Mortgage Bankers' Association in such amounts and with such companies as
are reasonably satisfactory to PNC, to protect against loss, theft or
destruction of the security for the Credit Facility or defalcation(s) by
Borrower or any of its officers and directors. Borrower shall maintain coverage
for PNC as additional loss payee under Borrower's blanket bond.
[6] Compliance with Laws. Borrower shall comply with all
applicable governmental statutes, regulations and rules governing the conduct of
Borrower's business and ownership of property.
[7] Taxes and Assessments. Borrower shall pay all taxes,
assessments and governmental charges and levies imposed upon Borrower,
Borrower's income or any property before the same become delinquent; provided,
however, that no such tax, assessment, charge or levy need be paid so long as
the validity thereof shall be contested in good faith by appropriate proceedings
for which a bond or other security satisfactory to PNC shall have been posted;
and provided further that Borrower shall have set aside on Borrower's books
adequate reserves therefor.
[8] Corporate Existence. Borrower shall preserve and maintain
Borrower's corporate existence and qualification to do business in good standing
in every jurisdiction in which the nature of the business conducted by Borrower
or the properties owned by Borrower require such qualification.
[9] Events of Default and Notice. Borrower shall, promptly
upon obtaining knowledge of the occurrence or existence of any Event of Default,
or of the occurrence or existence of a condition or event which, with notice or
the lapse of time, or both, would constitute an Event of Default, deliver to PNC
a notice specifying the nature thereof, the period of existence thereof, and
what action Borrower has taken or proposes to take with respect thereto.
[10] Other Loan Agreements. Borrower shall give written notice
to PNC at least five (5) Business Days prior to the date Borrower enters into
any other loan agreement.
[11] Payment of Indebtedness; Compliance with Agreements.
Borrower shall pay and discharge all of Borrower's debts and obligations timely
in accordance with their respective terms, and shall at all times comply with
each and every term and provision of the documents
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evidencing and securing such debts and obligations, and with each and every
lease, contract, agreement or obligation Borrower may have or be a party to with
any Person or as to which any of its properties may be subject.
[12] Management. Borrower shall notify PNC of any changes in
the voting control, stock ownership or management of Borrower.
[13] ERISA. With respect to any Plan ("Plan" shall mean an
employee pension benefit plan or pension covered by ERISA, hereafter defined,
which is guaranteed by the Pension Benefit Guaranty Corporation or any successor
thereto) maintained or adopted by Borrower, Borrower shall [i] at all times make
prompt payments of contributions required to be made to meet the minimum funding
standards of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"); [ii] promptly after the filing thereof furnish to PNC copies of all
reports of prohibited transactions and accumulated funding deficiencies required
to be made pursuant to the provisions of ERISA; and [iii] notify PNC promptly of
the occurrence of any Reportable Event within the meaning of ERISA.
[14] Other Acts. Borrower agrees, upon the request of PNC, to
duly execute and deliver, or cause to be duly executed and delivered, such
further instruments, and do or cause to be done such further acts, as may be
necessary or proper in the reasonable opinion of PNC to carry out more
effectively the provisions of this Agreement and the other Loan Documents.
[15] Notification. Borrower shall notify PNC of any default by
Borrower on any other credit facility available to Borrower.
B. Financial Covenants. Until payment in full of the entire balance of
and all accrued interest on the Loan and all other obligations relative thereto,
Borrower agrees that Borrower will observe and comply with all of the following
financial covenants and agreements.
[1] Minimum GAAP Net Worth. Borrower agrees to maintain a
minimum GAAP Net Worth of $2,500,000 exclusive of amounts due to or due from
Affiliates.
[2] Maximum Leverage Ratio. Borrower agrees to maintain the
ratio of its total liabilities to GAAP Net Worth, in each case exclusive of
amounts due to or due from Affiliates, at not more than 14.0 to 1.0.
C. Negative Covenants. Until payment in full of the entire principal
balance of and all accrued interest on the Loan, and all other obligations
relative thereto, Borrower agrees to observe and comply with all of the
following negative covenants and agreements:
[1] No Other Loan Facilities. Borrower shall not
maintain or establish any loan facilities other than pursuant to this Agreement.
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[2] No Unapproved Investor. Borrower shall not request an
Advance hereunder with respect to any Underlying Loan to be sold to an Investor
that PNC has not approved as a Qualified Investor.
[3] No Merger. Borrower shall not merge or consolidate with or
into any other Person, nor shall Borrower acquire by purchase or otherwise
acquire all or substantially all of the assets (except to the extent that such
assets consist solely of Underlying Notes, Mortgage-Backed Securities and rights
to service mortgage loans) or capital stock or other equity securities of any
other Person nor shall Borrower sell or otherwise dispose of all or
substantially all of its assets other than in the ordinary course of its
busineSection
[4] Guaranties. Except as may be required of Borrower in the
ordinary course of its business, Borrower shall not guarantee, endorse, assume,
indemnify, become surety for, or otherwise become responsible for the
obligations of any other Person in an aggregate amount exceeding $100,000
without first notifying PNC relative to any such obligations and obtaining PNC's
prior consent thereto.
[5] Financial Accommodations Regarding Affiliates. Borrower
agrees not to advance, directly or indirectly, to any Affiliate of Borrower any
sums in the form of loans, purchase of capital stock or prepayments for future
services rendered by such Affiliate, or otherwise in excess of an aggregate of
$50,000.
[6] Dividends. Borrower shall not declare or pay any dividends
on any class of equity securities.
[7] Fiscal Year, Method of Accounting. Borrower shall not
change its fiscal year or method of accounting without thirty (30) days prior
written notice to PNC.
[8] Busines. Borrower shall not, directly or indirectly,
engage in any business other than that currently engaged in by Borrower or any
other business customarily engaged in by other corporations in the mortgage
banking busineSection
[9] Use of Proceeds. Borrower shall not permit the proceeds of
Advances to be used for any purpose other than those permitted by Section 2B
hereof.
[10] Actions with Respect to Underlying Loan Documentation.
Borrower shall not:
[a] Compromise, extend, release, or adjust payments
on any Underlying Loan or Mortgage-Backed Security or related
documentation, accept a conveyance of mortgaged property in full or
partial satisfaction of any Underlying Loan, or release any Underlying
Mortgage;
[b] Agree to the amendment or termination of any
Purchase Commitment in which PNC has a security interest hereunder or
to substitution of a Purchase Commitment
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for a Purchase Commitment in which PNC has a security interest
hereunder, if such amendment, termination or substitution may
reasonably be expected (as determined by PNC in its sole discretion) to
have a Material Adverse Effect;
[c] Transfer, sell, assign or deliver any Underlying
Loan or Mortgage- Backed Security pledged to PNC to any Person other
than PNC, except pursuant to a Purchase Commitment and the terms of
this Agreement and the Security Agreement; or
[d] Grant, create, incur, permit or suffer to exist
any lien upon any Underlying Loan or Mortgage-Backed Security except:
[i] liens granted to PNC to secure the Loan and [ii] such
non-consensual liens as may be deemed to arise as a matter of law
pursuant to any Purchase Commitment.
[11] Transactions with Affiliates. Subject to any other
restriction herein, Borrower shall not enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate unless such transactions are in the
ordinary course of Borrower's business and are upon fair and reasonable terms no
less favorable to Borrower than Borrower could obtain in a comparable arm's
length transaction with a Person other than an Affiliate.
[12] Liens. Borrower shall not hereinafter grant, create,
incur, assume, permit or suffer to exist any lien, other than liens that secure
payment of the Credit Facility, upon any of its property without first notifying
PNC relative to any such lien and obtaining PNC's prior consent thereto. PNC
agrees that such consent shall not be unreasonably withheld.
[13] Change of Principal Office. Borrower shall not move its
chief executive office from the address set forth in the preamble of this
Agreement without thirty (30) days prior written notice to PNC.
ARTICLE 6.
REPRESENTATION AND WARRANTIES
A. Existence. Borrower is [i] a corporation duly organized and validly
existing under the laws of state of Borrower's incorporation set forth in the
Preamble; [ii] qualified to do business as a foreign corporation in all states
in which such qualification is required; and [iii] duly qualified to conduct
mortgage banking activities in accordance with the banking laws of the state of
Borrower's incorporation set forth in the Preamble and all other states in which
such qualification is required.
B. Subsidiaries. Borrower has no subsidiaries.
C. No Restrictions on Performance. The execution or delivery of this
Agreement or any other Loan Document, the consummation of the transactions
contemplated hereby, or the fulfillment
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of or compliance with the terms and conditions of this Agreement and the other
Loan Documents does not:
[1] require the consent or approval of, or registration with,
any federal, state, municipal or other governmental commission, board, agency,
bureau, authority, official or regulatory body;
[2] violate any provision of law, any order of any court or
any order, rule or regulation of any agency of government;
[3] conflict with or results in a breach of any of the terms,
conditions or provisions of any corporate restriction or of any agreement or
instrument to which Borrower,, or any Affiliate is a party or by which Borrower
or any of Borrower's properties may be bound or affected; or
[4] result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the property or assets of
Borrower, except liens and security interests in favor of PNC.
D. Proper Execution. The officers executing and delivering this
Agreement and the other Loan Documents on behalf of Borrower have been duly
authorized to do so, and this Agreement and the other Loan documents are legally
binding upon Borrower in every respect in accordance with their respective
terms.
E. Legal Proceedings; Taxes. There are no actions, proceedings or
investigations pending or, to the knowledge of Borrower, threatened by or before
any federal, state, municipal or other governmental department, commission,
board, agency, bureau, authority or official involving the likelihood of any
material judgment or liability against Borrower, or questioning or threatening
Borrower's right to carry on the business that Borrower presently conducts or
proposes to conduct, or that, if adversely determined, would cause a Material
Adverse Effect. All tax returns and reports of Borrower required by law to be
filed have been duly filed and all taxes, assessments, fees and other
governmental charges upon Borrower or upon any of Borrower's assets, income or
franchises that are due and payable, have been paid. Borrower does not know of
any unpaid assessment for additional federal taxes for any fiscal period.
F. ERISA. No fact or circumstance, including but not limited to any
Reportable Event within the meaning of ERISA, exists in connection with any Plan
of the Company that might constitute grounds for the termination of any such
Plan by the Pension Benefit Guaranty Corporation or for the appointment of a
trustee to administer any such Plan. For purposes of this representation and
warranty, Borrower shall be deemed to have knowledge of all facts attributable
to any administrator of any such Plan.
G. No Misrepresentations. This Agreement, the other Loan Documents,
the financial covenants referred to herein and the financial information
relative to Borrower heretofore submitted
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to PNC prior to the date hereof do not contain any untrue statement of a
material fact nor omit to state a material fact necessary in order to make any
statement made not misleading.
H. Inducement to PNC. The foregoing representations and warranties are
an inducement to PNC to enter into this Agreement, and each request for an
Advance by Borrower shall constitute a reaffirmation of each and every
representation and warranty of Borrower contained in this Article 6.
ARTICLE 7.
DEFAULTS AND REMEDIES
A. Events of Default. Each of the following shall constitute an Event
of Default hereunder:
[1] Payments. If Borrower fails to make any payment of
principal or interest on the Note or any payment of any fee, expense or other
amount due hereunder, under the Note, or under any other Loan Document and such
payment shall remain unpaid for a period of ten (10) days after any such payment
is due.
[2] Covenants and Agreements. If Borrower shall fail or omit
to perform or observe any covenant, agreement, condition or other provision
contained or referred to in this Agreement or in any other Loan Document (other
than a provision requiring a payment described in Section 7[A][1] preceding),
and such failure or omission shall not have been fully corrected to the
satisfaction of PNC within ten (10) days after the mailing by PNC to Borrower of
written notice of the occurrence thereof.
[3] Accuracy of Statements. If any representation or warranty
of other statement of fact contained in this Agreement, in any other Loan
Document or in any writing, certification, report or statement at any time
furnished to PNC pursuant to or in connection with this Agreement or in
connection with obtaining the Credit Facility or otherwise shall have been false
or misleading in any material respect or shall have omitted to state a material
fact as of the date such representation, warranty or statement of fact was made.
[4] Judgments. If a final judgment for the payment of money in
excess of $10,000.00 in the aggregate shall be entered against Borrower, and
such judgment shall remain unsatisfied and in effect for a period of thirty (30)
consecutive days after the entry thereof, and shall not have been discharged or
the execution thereof stayed pending appeal, or if so stayed, within ten (10)
days after the expiration of any such stay if such judgment shall not have been
discharged.
[5] Borrower's Solvency. If Borrower shall [i] make a general
assignment for the benefit of creditors; [ii] apply for or consent to the
appointment of a receiver, trustee or liquidator of all or a substantial part of
the assets of Borrower is appointed; [iii] be adjudicated a bankrupt or
insolvent; [iv] file a voluntary petition in bankruptcy or file a petition or
any answer seeking reorganization or an arrangement with creditors or seeking to
take advantage of any other law
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relating to relief of debtors, or admit (by answer, default or otherwise) the
material allegations of a petition filed against Borrower in any bankruptcy,
reorganization, insolvency or other proceedings relating to relief for debtors;
[v] suffer or permit to continue unstayed and in effect for thirty (30)
consecutive days any judgment, decree or order entered by a court or
governmental agency of competent jurisdiction that assumes control of Borrower,
approves a petition seeking reorganization of Borrower or any other judicial
modification of the rights of Borrower's creditors, or appoints a receiver,
trustee, custodian or liquidator for Borrower or all or a substantial part of
Borrower's assets; or [vi] fail to pay Borrower's debts as and when the same
mature.
[6] Termination of Suspension of Business. If Borrower shall
terminate or suspend the transaction of business.
[7] Other Indebtedness. If any other indebtedness of Borrower
to PNC shall remain unpaid beyond any applicable grace or curative period
contained in the documents evidencing and securing such indebtedness or if
Borrower or any Affiliate shall fail or omit to perform or observe any covenant,
agreement, condition or other provision contained or referred to in any
agreement evidencing or securing such indebtedness of Borrower or any Affiliate
to PNC and such failure to omission shall not have been fully corrected to the
satisfaction of PNC within any applicable curative period contained in the
documents evidencing and securing such indebtedness.
[8] Material Adverse Change. If any Material Adverse Change
shall occur in the condition of Borrower, financial or otherwise.
[9] Loan Documents. If any provision of this Agreement, the
Note or any other Loan Document shall for any reason cease to be in full force
and effect or be declared null and void or unenforceable in whole or in part or
the validity or enforceability of any such document shall be challenged or
denied.
[10] Default on Other Indebtedness. If Borrower or any
Affiliate shall default beyond any applicable grace or curative period on any
other indebtedness of Borrower that exceeds $10,000.
[11] Insecurity. If PNC shall, in the exercise of good faith
judgment, deem itself to be insecure with respect to Borrower's ability or
intention [i] to make full and timely payment of each and every installment of
principal or interest on the Note, or [ii] to perform any or all of the
agreements, obligations, covenants, conditions, warranties or representations
made or to be performed by Borrower pursuant to the terms of this Agreement or
any other Loan Document.
B. Remedies Upon Default. Upon the occurrence of an Event of Default,
PNC may exercise any one or more of the following remedies:
[1] Acceleration. PNC may demand payment in full of all
principal of and accrued interest on the Note or any and all of Borrower's other
indebtedness to PNC, whereupon all indebtedness of Borrower to PNC shall become
immediately due and payable in full without any presentment, demand or notice of
any kind, all of which are hereby expressly waived by Borrower.
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<PAGE> 29
[2] Advances; Termination of Agreement. PNC may refuse to make
any further Advances, and at PNC's sole discretion, terminate this Agreement.
[3] Judgment. PNC may reduce any claim to judgment.
[4] Offsets. If any state of facts that constitutes, or with
the lapse of time or the giving of notice or both would constitute an Event of
Default, shall occur or begin to exist, PNC shall have the right then, or at any
time thereafter, unless remedied to the reasonable satisfaction of PNC, to set
off against, and to appropriate and apply toward the payment of, first the Note
and then any other indebtedness then owed by Borrower to PNC, whether or not
such indebtedness shall have been matured or be due and payable and whether or
not PNC has declared the note evidencing such indebtedness in default, any and
all deposit balances and other sums and indebtedness then held or owed by PNC to
or for the credit or account of Borrower (other than balances in trust accounts,
escrow accounts, and other accounts not beneficially owned by Borrower), all
without notice to or demand upon Borrower or any other Person, all such notices
and demands being hereby expressly waived.
[5] Rights Under Collateral Agreements. PNC may exercise all
rights and remedies granted PNC under any and all of the instruments now or
hereafter evidencing and securing the Credit Facility, including but not limited
to the Security Agreement.
[6] Foreclosure. PNC may exercise all those rights and
remedies allowed to secured parties by all applicable laws, including without
limitation the Kentucky Uniform Commercial Code and the Uniform Commercial Code
as enacted in any other jurisdiction in which the Collateral or any portion
thereof may be located.
[7] Possession. PNC may enter upon the premises of Borrower
and take immediate possession of the Collateral, with or without legal process,
either personally or by means of a receiver appointed by a court of competent
jurisdiction.
[8] Collection of Accounts. PNC may collect and receive all
accounts, rents, income, revenue, earnings, issues and profits from the
Collateral.
[9] Performance by PNC. Should Borrower fail to observe or
perform any covenant, duty or promise by it to be observed or performed under
the terms of this Agreement or the other Loan Documents, PNC may, but shall not
be obligated to, perform or attempt to perform, such covenant, duty or promise
on behalf of Borrower, and, in the event PNC shall do so, Borrower shall
immediately upon demand reimburse PNC for all expenses, disbursements, fees and
costs incurred by PNC in connection therewith, with interest thereon at the rate
specified in the Note. PNC does not assume and shall never have, except by its
express written consent, any liability or responsibility for the performance of
any covenant, duty or promise of Borrower under this Agreement.
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[10] Suspension of Payment. PNC may require Borrower to
suspend payment by Borrower to its equity owners of the principal of and
interest on any loans by such equity owners to Borrower.
C. Rights Cumulative. The rights and remedies of PNC hereunder, in the
Note, and in the other Loan Documents are cumulative, may be exercised in such
sequence or combination as PNC may elect, and are not exclusive of any rights or
remedies otherwise provided by law.
ARTICLE 8.
MISCELLANEOUS
A. Interpretation. No course of dealing in respect of, nor any omission
or delay in the exercise of, any right, power, or privilege by PNC shall operate
as a waiver thereof. Each right, power or privilege may be exercised by PNC as
often and in such order as PNC may deem expedient. No waiver or consent granted
by PNC in respect to this Agreement or any related writing shall be binding upon
PNC unless specifically granted in writing, which right shall be strictly
construed. Time shall be of the essence in the performance of all Borrower's
obligations under this Agreement and the other Loan Documents. Borrower may not
assign any of Borrower's rights under this Agreement, and any attempted
assignment shall be wholly null and void.
B. Notices. All notices and other communications hereunder or under the
other Loan Documents shall be in writing and shall be mailed by first class mail
or express mail, postage prepaid, or sent by telecopier or other similar form of
rapid transmission confirmed by mailing (by first class or overnight delivery
service, postage or other delivery charges prepaid) written confirmation at
substantially the same time as such rapid transmission, or personally delivered
to an officer of the receiving party. All such communications shall be mailed,
sent or delivered to the parties hereto at their respective addresses as
follows:
If to Borrower: CENTRAL PACIFIC MORTGAGE
5750 Sunrise Boulevard, Suite 250
Citrus Heights, California 95610
Attention: Mr. John A. Courson
Telephone: [(916) 966-8600]
Facsimile: [(916) 966-7327]
If to PNC: PNC BANK, NATIONAL ASSOCIATION
500 West Jefferson Street
Louisville, Kentucky 40202
Attention: Warehouse Lending
Telephone: (502) 581-4894
Facsimile: (502) 581-3844
Any communication so addressed and mailed shall be deemed to
be given when so mailed, except that notices and requests related to Advances
shall not be effective until actually
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<PAGE> 31
received by PNC or Borrower, as the case may be; and any notice so sent by rapid
transmission shall be deemed to be given when receipt of such transmission is
acknowledged, and any communication so delivered in person shall be deemed to be
given when receipted for by, or actually received by, an authorized officer of
Borrower or PNC, as the case may be.
C. Governing Law. The laws of the Commonwealth of Kentucky shall govern
the construction of this Agreement and the rights, remedies and duties of the
parties hereto.
D. Section Titles. The section titles of this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
E. Severability. The invalidity or unenforceability of any one (1) or
more phrases, sentences, clauses or paragraphs of this Agreement shall not
affect the validity or enforceability of the remaining portions of this
Agreement or of any part hereof.
F. Integration. The Loan Documents contain the entire agreement between
the parties relating to the Credit Facility. The Loan Documents supersede any
and all prior agreements and any and all contemporaneous oral agreements between
PNC and Borrower relative to the Credit Facility.
G. Successors and Assigns. This Agreement shall bind Borrower and its
successors and assigns, and shall inure to the benefit of PNC, its successors
and assigns, and any participants in the Credit Facility.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers on the dates set forth below. This
Agreement shall be effective as of the date first above written.
BORROWER:
CENTRAL PACIFIC MORTGAGE
By /s/ John E. Cassell
---------------------------------------
John A. Courson, President
John E. Cassell, Sr. Vice President
Date: April 15, 1998
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PNC:
PNC BANK, NATIONAL ASSOCIATION
By \S\ CHARLES J. EZELL
-----------------------------------------
Charles J. Ezell, Vice President
Date: April 15, 1998
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<PAGE> 33
Central Pacific Mortgage
EXHIBIT A
MORTGAGE LOAN WAREHOUSING NOTE
$25,000,000 Louisville, Kentucky
as of April 15, 1998
FOR VALUE RECEIVED, the undersigned CENTRAL PACIFIC MORTGAGE
("Borrower"), a California corporation, hereby promises to pay to the order of
PNC BANK, NATIONAL ASSOCIATION, a national banking association ("PNC"), at its
office at 500 West Jefferson Street, Louisville, Kentucky 40202 (Attention:
Warehouse Lending) or at such other address as the holder hereof may from time
to time specify by notice to Borrower, the principal sum of TWENTY FIVE MILLION
DOLLARS ($25,000,000) or so much thereof as shall be outstanding at the date of
payment, whichever shall be less, together with interest on the principal
balance hereof from time to time, in the manner and at the rate or rates
hereinafter set forth. The proceeds of this Mortgage Loan Warehousing Note (this
"Note") shall be used by Borrower to finance its investments in Underlying Loans
pending their sale into the secondary market. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Mortgage Warehousing Loan Agreement (the "Loan Agreement") between PNC and
Borrower dated as of even date herewith.
The principal balance hereof and all accrued interest hereon
shall be due payable on or before April 15, 1999 or such later date as may be
designated by PNC by written notice from PNC to Borrower (as applicable, the
"Maturity Date," it being understood that in no event shall PNC be under any
obligation to extend the Maturity Date beyond date specified above or any
extension thereof by PNC).
Each Advance used by Borrower to originate or acquire:
1. an Underlying Loan that is a Government-Backed Mortgage Loan, a
Conforming Conventional Mortgage Loan, or a Jumbo Conventional Mortgage Loan, in
which case the Advance shall be repaid by Borrower upon the first to occur, as
applicable, of [i] the date on which an Investor shall purchase such Underlying
Loan, [ii] forty five (45) days after the date on which the Underlying Note
evidencing such Underlying Loan is delivered by PNC to an Investor or to a
custodian for pooling, [iii] the date on which a Mortgage-Backed Security into
which such Underlying Loan has been pooled is sold by Borrower to an Investor,
[iv] one hundred twenty (120) days subsequent to the Advance to make or purchase
such Underlying Loan, or [v] the Maturity Date; and
2. a Mortgage-Backed Security shall be repaid by Borrower upon the
first to occur, as applicable, of [i] the date on which an Investor shall
purchase such Mortgage-Backed Security, or
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[ii] one hundred twenty (120) days after the date of issuance of such
Mortgage-Backed Security, [iii] one hundred twenty (120) days subsequent to the
Advance to originate or acquire the Mortgage Backed Security, or [iv] the
Maturity Date.
This Note is made and delivered by Borrower to PNC pursuant
to, and is subject to certain terms and conditions set forth in, the Loan
Agreement. This Note is secured by a Mortgage Loan Warehousing Security
Agreement dated as of even date herewith and related financing statements.
It is understood that Borrower may request Advances under this
Note from time to time for the purpose set forth above. Subject to applicable
terms and provisions of the Loan Agreement, PNC will honor any such request,
with such adjustments as PNC may from time to time deem appropriate, provided
that: no default exists hereunder, under the Loan Agreement or otherwise with
regard to the Loan; no default exists in the payment or performance of any other
obligation of Borrower to PNC; and the amount of the requested Advance will not
cause the principal balance hereof to exceed the lesser of the Maximum Loan
Amount or the Loan Value or will NOT cause the amount advanced that is subject
to any Sublimit to exceed such Sublimit. Borrower's indebtedness to PNC under
this Note at any time shall be the total of all Advances plus accrued interest,
less repayments received by PNC. PNC may make Advances upon the facsimile
instructions of Borrower to PNC and may rely thereon in doing and performing all
actions that Borrower shall request PNC to perform. All facsimile instructions
shall be confirmed immediately in writing, should PNC so require; but the
failure of PNC so to require or of Borrower so to confirm in writing shall not
affect Borrower's liability to PNC hereon or otherwise nor PNC's right to rely
on any such facsimile instructions. Requests for Advances shall be in the form
of Funding Applications or other loan requests as prescribed by the Loan
Agreement. In making Advances under this Note, PNC may rely on Funding
Applications or other loan requests signed by anyone purporting to be an
authorized representative of Borrower.
Until the Maturity Date or any earlier date to which the
maturity of this Note shall have been accelerated under the terms hereof,
interest only shall be payable by Borrower on the principal sums actually
disbursed and outstanding hereon from time to time, calculated as follows:
1. at any time and to the extent that Borrower maintains Net Collected
Balances, the principal sums then actually disbursed and outstanding hereon not
in excess of the then Net Collected Balances shall bear interest at the rate of
one and one half percent (1.50%) per annum; and
2. the principal sums then actually disbursed and outstanding hereon in
excess of the then Net Collected Balances shall bear interest at the Adjusted
LIBO Rate, adjustable the date of any change in the Adjusted LIBO Rate, plus one
and one half percent (1.50%) per annum.
"Adjusted LIBO Rate" shall mean at any time the interest rate per annum
determined by PNC by dividing (the resulting quotient rounded upwards, if
necessary, to the nearest 1/16th of 1% per annum) [i] the rate of interest most
recently determined by PNC in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the average of
the
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London interbank offered rates for one-month deposits set forth on the "LIBOR"
page of the Reuter's Monitor Money Rate Service (or an appropriate successor or,
if Reuter's or its successor ceases to provide such quotes, a comparable
replacement determined by PNC at approximately 11:00 a.m. on the date of
determination by [ii] the number equal to 1.00 minus the Euro Rate Reserve
Percentage. "Euro Rate Reserve Percentage" shall mean the maximum effective
percentage in effect on such day as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, margin and emergency
reserve requirements) with respect to eurocurrency funding (currently referred
to as "eurocurrency liabilities").
PNC shall maintain on a daily basis a record of [i] Borrower's
Net Collected Balances with PNC, [ii] the amounts disbursed and outstanding
hereon, [iii] Advances subject to the Wet Settlement Sublimit, and [iv] the
Adjusted LIBO Rate. PNC shall use such information to determine the monthly
interest payable by Borrower pursuant to clauses 1 through 4 preceding. All
interest hereon shall be calculated on the basis of the actual number of days
elapsed in an assumed year of 360 days.
Interest accrued on this Note shall be due and payable to PNC
monthly one (1) Business Day following Borrower's receipt of a billing presented
by PNC to Borrower. Payments of interest shall be made by Borrower to PNC before
3:00 p.m. (Louisville, Kentucky time) on the date such monthly payment of
interest is due in federal or other immediately available funds or, at PNC's
option, shall be charged by PNC to the Funding Account. Failure by PNC to bill
Borrower for interest due and owing on this Note shall not relieve Borrower of
its obligation to pay interest accrued on this Note. Borrower shall pay the
holder hereof a late charge of five per cent (5%) of any monthly installment of
interest not paid within fifteen (15) days of the date same is due and payable.
Borrower shall repay principal of this Note at the times set
forth hereinabove and at additional times set forth in the Loan Agreement when
the principal amount outstanding hereunder exceeds the Loan Value. Each such
payment shall be applied to payment of principal hereof, interest hereon, and
costs, expenses, fees and reasonable attorneys' fees arising out of or in
connection with the Loan, all in such order and in such portions as PNC may
determine in its sole discretion.
Borrower may borrow, repay in whole or in part without premium
or penalty, and reborrow hereunder, subject to the terms hereof and of the Loan
Agreement.
The security granted PNC to secure this Note shall also secure
all renewals, extensions, increases or modifications hereof. Each request for an
Advance shall be a reaffirmation of all security interests previously granted to
PNC and a reaffirmation of all representations and warranties heretofore made to
PNC in the Loan Agreement and all other documents evidencing and securing the
indebtedness evidenced hereby.
The following shall constitute a default on this Note and the
indebtedness evidenced hereby: failure to pay the principal hereof or any
installment of interest hereon within ten (10) days of the date same is or first
becomes due; or the occurrence of any other Event of Default under the Loan
Agreement. If default is made in the payment of this Note, Borrower agrees to
pay to the
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<PAGE> 36
holder hereof interest at a variable default rate equal to the Prime Rate plus
five per cent (5%) until paid, together with all reasonable attorneys' fees and
other costs of collection occasioned by any of the foregoing. "Prime Rate" shall
mean at any time the interest rate per annum most recently designated and
announced by PNC as its prime rate in effect at its office in Louisville,
Kentucky.
Borrower, and any endorsers or guarantors hereof, and each of
them, expressly waive demand and presentment for payment, notice of nonpayment,
protest, notice of protest, bringing of suit, and diligence in taking any action
to collect the indebtedness evidenced hereby and in the handling of security at
any time existing in connection therewith and are and shall be jointly and
severally, directly and primarily liable for the payment of the indebtedness
evidenced hereby, regardless of and without any notice, diligence, act or
omission with respect to the collection of any amount called for hereunder or in
connection with any right, lien, interest or property at any time existing as
security for the indebtedness evidenced hereby or by any other instrument
executed in connection with the indebtedness evidenced hereby.
All agreements between Borrower and the holder of this Note
are expressly limited such that in no event and under no contingency (whether by
reason of advancement of the proceeds hereof, acceleration of maturity of the
unpaid principal balance hereof, or otherwise) shall the amount paid or agreed
to be paid to the holder of this Note for the use, forbearance or detention of
the money to be advanced hereunder exceed the highest lawful rate permissible
under applicable law as determined by a court of competent jurisdiction. If from
any circumstance whatsoever, performance of any provision of this Note or of any
other instrument securing or otherwise relating to the loan evidenced hereby
shall result in the collection of interest in excess of that allowed by
applicable law determined as aforesaid, then in such event any such excess
interest so collected by the holder of this Note shall be applied to the
reduction of the principal balance remaining unpaid hereunder and not to the
payment of interest. This provision shall control every other provision of all
agreements relative to the indebtedness evidenced by this Note between PNC and
Borrower.
In the event of any inconsistency between the terms and
provisions of this Note or any other Loan Document as to the rights and remedies
of the holder hereof, or in the event of any such inconsistency between or among
any two (2) or more Loan Documents, then in any such event the holder hereof
shall have the right at its sole option to elect which of such provisions shall
govern.
This Note and the respective rights and liabilities of
Borrower and the holder of this Note shall be governed by and shall be construed
in accordance with the laws of the Commonwealth of Kentucky.
BORROWER:
CENTRAL PACIFIC MORTGAGE
By /s/ John E. Cassell
------------------------------------------
John E. Cassell, Sr. Vice President
Date: April 15, 1998
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<PAGE> 37
Central Pacific Mortgage
EXHIBIT B
MORTGAGE LOAN WAREHOUSING SECURITY AGREEMENT
THIS MORTGAGE LOAN WAREHOUSING SECURITY AGREEMENT (this
"Agreement") is made and entered into as of April 15, 1998 by and between
CENTRAL PACIFIC MORTGAGE ("Borrower"), a California corporation, with its chief
executive office at 5750 Sunrise Boulevard, Suite 250, Citrus Heights,
California 95610 and PNC BANK, NATIONAL ASSOCIATION ("PNC"), a Kentucky
corporation, with an office and place of business at 500 West Jefferson Street,
Louisville, Kentucky 40202 (Attention: Warehouse Lending). All capitalized
terms not otherwise defined herein shall have the meanings ascribed to such
terms in the Mortgage Warehousing Loan Agreement between PNC and Borrower dated
as of even date herewith (the "Loan Agreement").
BORROWER AND PNC AGREE AS FOLLOWS:
1. Assignment and Pledge of Collateral. For value received, the receipt
and sufficiency of which are hereby acknowledged by Borrower, Borrower hereby
pledges, sells, assigns, transfers and grants to PNC a lien on and security
interest in all of Borrower's right, title and interest in and to the following
described property and rights and documentation relative thereto to secure all
indebtedness from Borrower to PNC under the Credit Facility established pursuant
to the Loan Agreement (collectively, the "Warehousing Collateral"):
A. all Underlying Loans, Underlying Notes, Underlying
Mortgages, and Mortgage-Backed Securities;
B. all documents and instruments related to Underlying Loans,
Underlying Notes, Underlying Mortgages, and Mortgage-Backed Securities, and all
contract rights, personal property, accounts and general intangibles related
thereto, including, without limitation, title insurance policies and binders,
hazard and liability insurance policies, legal opinions, Purchase Commitments,
FHA insurance, VA guaranties, and other guaranties relating thereto;
C. all contracts for the sale or purchase of Underlying Loans
or Mortgage-Backed Securities, including all Purchase Commitments, and all
interest rate hedge contracts, including futures and cash forward contracts (or
options for such contracts);
D. all documents and records relating to such Underlying
Loans, Underlying Notes, Underlying Mortgages, and Mortgage-Backed Securities;
and
E. the products and proceeds of each of the foregoing,
including, without limitation, all receivables arising from the sale thereof,
insurance and condemnation proceeds,
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<PAGE> 38
payments and prepayments of principal and interest, prepayment premiums, late
charges, and Purchase Proceeds.
The Warehousing Collateral shall hereinafter be referred to as
the "Collateral." The portion of the Collateral relative to Underlying Loans and
Underlying Notes not delivered to the Custodian shall be held in trust by
Borrower for the benefit of PNC subject to the terms of the Loan Documents.
Notwithstanding that the assignment contained in this
Agreement is a present assignment of the Collateral, it is understood and agreed
that Borrower may collect installments of principal and interest due and payable
under the Underlying Notes and Mortgage-Backed Securities the same as if this
Agreement had not been given, unless and until there shall occur an event of
default specified in Section 8; but the permission granted pursuant to this
provision shall terminate automatically upon the occurrence of any such event of
default, or upon breach of any condition, covenant, agreement, representation or
warranty made by Borrower in this Agreement.
2. Indebtedness Secured. This Agreement secures [i] the Mortgage Loan
Warehousing Note dated as of even date herewith made by Borrower to the order of
PNC in a principal sum not to exceed TWENTY FIVE MILLION DOLLARS ($25,000,000)
outstanding at any time, and all extensions, modifications, replacements and
renewals thereof (the "Note"); [ii] payment by Borrower to PNC of all sums
expended or advanced by PNC pursuant to any provisions contained in this
Agreement or any other Loan Document; and [iii] all other obligations,
liabilities, and indebtedness of every kind of Borrower to PNC, howsoever
arising or acquired, whether now existing or hereafter incurred or acquired, and
howsoever evidenced.
3. Term. This Agreement shall remain in full force and effect until PNC
shall provide Borrower with written confirmation that the Note and all
obligations of Borrower to PNC under the Credit Facility have been fully paid
and satisfied.
4. Representations and Warranties. Borrower represents and warrants to
PNC, (and to the extent any of the following maybe construed as covenants,
covenants to PNC), as of the date hereof and as of the date of each Advance, as
follows:
A. Borrower has the right and power to enter into this
Agreement. This Agreement has been duly authorized by all necessary corporate
action and constitutes a valid and binding agreement enforceable against
Borrower in accordance with its terms. Execution of this Agreement and
compliance herewith by Borrower will not violate its instruments of
incorporation, by-laws or any contract or commitment to which it is a party or
by which it or any of its property is bound.
B. At such time as the Collateral becomes subject to this
Agreement, Borrower shall be the sole legal and beneficial owner of the
Collateral, free of all liens and security interests or encumbrances of others
except the liens and security interests granted hereby and those subordinate
liens and security interests that may arise in the ordinary course of Borrower's
business, and shall have good right, title and authority to pledge, sell,
transfer and assign the Collateral.
B-2
<PAGE> 39
C. The only location at which any of the Collateral is
situated and shall be situated during the term of the Credit Facility is the
chief executive office of Borrower set forth in the preamble to this Agreement,
or in transit to, or in the possession of a Qualified Investor who will
subsequently purchase Underlying Loans, or in transit to or in the possession of
Custodian, or in the possession of the custodian for Mortgage-Backed Securities
for the sole purpose of securitization.
D. There are no defenses, offsets or counterclaims to or
against the Collateral.
E. No effective financing statement or other instrument of
similar effect covering all or any part of the Collateral is on file except
pursuant to this Agreement in favor of PNC. This Agreement creates a valid
security interest in the Collateral. No filings or other actions are necessary
to effect and perfect such security interests except the UCC Financing
Statements filed pursuant to this Agreement. No authorization, approval or other
action by, and no notice to or other filing with, any governmental authority or
regulatory body is required either for the creation of the security interest
intended hereby or for the execution, delivery and performance of this Agreement
by Borrower or for the perfection or exercise by PNC of its rights with respect
to the Collateral provided for under this Agreement.
F. The Underlying Notes, the Underlying Mortgages, and all
other documents related to Underlying Loans have been duly executed and
delivered at a closing held not more than the maximum number of days prior to
the delivery of such documents to PNC in pledge under this Agreement permitted
by the Loan Agreement. The Underlying Loans were closed in compliance with all
requirements of the Real Estate Settlement Procedures and Federal
Truth-In-Lending Acts. The Underlying Notes, Underlying Mortgages, and other
documents related to Underlying Loans are valid and enforceable in accordance
with their terms, without defense or offset, and have not been modified or
amended or any requirements thereof waived, except as may be reflected in
documenta tion delivered to PNC. The full amount of the Underlying Notes has
been advanced in the form of cash or other good funds collected by the
mortgagors or other recipients and there have not been any prepayments or
discount points other than as set forth or reflected on the Funding Applications
related thereto.
G. Each Underlying Loan, at the time of its delivery as part
of the Collateral, is not delinquent in respect of payment and is free of any
other material breach or default; Borrower has no notice of any event that has
occurred that may, with the passage of time or the giving of notice, or both,
become such a breach or default; and, with respect to any breach or default that
has occurred after such delivery, no Underlying Loan that is part of the
Collateral has been delinquent in payment or other performance for more than
thirty (30) days. An Underlying Loan is delinquent if any payment is not made
within thirty (30) days of its due date or if there is any other material breach
or default in the terms thereof.
H. Each Jumbo Conventional Mortgage Loan pledged as Collateral
complies and will comply, in all respects, with all applicable requirements for
purchase under a FNMA standard form of conventional selling contract then in
effect except that the principal amount thereof exceeds the FNMA maximum
principal amount.
B-3
<PAGE> 40
I. In the case of each Government-Backed Mortgage Loan, all
laws, rules and regulations respecting the FHA insurance or VA guaranty of the
Government-Backed Mortgage Loan have been complied with and such insurance or
guarantee is in full force and effect. All Government-Backed Mortgage Loans
pledged as collateral comply with and will comply, in all respects, with all
applicable requirements for purchase under the FNMA standard form of selling
contract for Government-Backed Mortgage Loans and any supplement thereto then in
effect and with all requirements for inclusion in a GNMA mortgage pool.
J. In the case of a Conforming Conventional Mortgage Loan, the
original principal amount of the Conforming Conventional Mortgage Loan was not
in excess of eighty percent (80%) of the appraised value of the mortgaged
premises, with a maturity of not more than thirty (30) years; or if the
Conforming Conventional Mortgage Loan was made in the original principal amount
of up to ninety-five percent (95%) of appraised value, the full principal amount
thereof, if any, in excess of eighty percent (80%) of such appraised value is
insured with a private mortgage insurance company meeting applicable Purchase
Commitment requirements. Notwithstanding the foregoing, Borrower hereby
specifically represents that each Conforming Conventional Mortgage Loan complies
and will comply, in all respects, with all applicable requirements for purchase
under the FNMA standard form of conventional selling contract and any supplement
thereto then in effect.
K. Each Underlying Loan pledged hereunder is a first priority
real estate lien on a single family (1 to 4 family) residence premises described
therein. Borrower has obtained a title insurance policy or binder in ALTA form
(or comparable forms used in other states where the mortgaged property is
located) from a reputable, financially responsible and duly licensed title
insurance company insuring the priority of such lien and meeting all
requirements of FHA/VA and FNMA/FHLMC. Such premises are shown by a survey of
recent date or a copy of the filed condominium declaration and exhibits in
Borrower's possession.
L. Borrower has in its possession fire and casualty policies
or binders naming Borrower and assigns as the insured under a standard mortgagee
clauses not less favorable to the mortgagee than the FNMA Standard Mortgagee
Endorsement, insuring the premises covered by the Underlying Mortgage against
fire and other casualty, together with flood hazard insurance if required by
applicable FHA, VA, FNMA or FHLMC requirements.
M. No Underlying Loan has been initially certified for
inclusion in a GNMA, FNMA, FHLMC or private mortgage pool and rejected, unless
the reason for the rejection has since been corrected.
N. With respect to each Mortgage-Backed Security delivered and
remaining a part of the Collateral, such Mortgage-Backed Security has been duly
authorized and issued and is valid and enforceable and in full force and effect.
O. As of the date hereof and as of the date of each Funding
Application, Borrower has valid and enforceable Purchase Commitments from
Qualified Investors that are in full force and effect, for the sale by Borrower
of all Underlying Loans (and related Mortgage-Backed
B-4
<PAGE> 41
Securities) pledged as Collateral, at the sales prices used in computing the
Loan Value of such Underlying Loans; and no such Purchase Commitment held by
Borrower contains any terms, covenants or conditions that may only be complied
with, performed or satisfied by Borrower, that are conditioned upon the
financial condition or continued existence of Borrower, or that do not relate
exclusively to the Underlying Loan (or related Mortgage-Backed Security) being
purchased, its validity, amount, terms, origination, yield, collateral security,
underwriting or other like matters concerning the Underlying Loans or
Mortgaged-Backed Securities themselves.
5 Affirmative Covenants. Borrower covenants and agrees with
PNC that Borrower:
A. Will pay the Note and all other indebtedness and
obligations of Borrower to PNC in accordance with their terms.
B. Will comply in all respects with the Loan Agreement and
this Agreement.
C. Will take all steps, at its sole cost and expense, to
obtain, preserve, perfect, defend and enforce the security interest and lien of
PNC in the Collateral, and shall preserve, enforce, defend and collect the
Collateral in accordance with its terms.
D. Will maintain accurate books and records relative to the
Collateral and will permit PNC to inspect the Collateral and such books and
records at all reasonable times and from time to time.
E. Will promptly notify PNC in writing, at least thirty (30)
days prior thereto, of any change in Borrower's chief executive office or any
change in Borrower's name or adoption of a trade name, assumed name or
fictitious name.
F. Will at all times hold in trust for PNC and subject to the
security interest of PNC therein all Purchase Commitments relating to the
Underlying Loans and Mortgage-Backed Securities pledged to PNC and all documents
relating to each such Underlying Loan including, without limitation, the
following specific items for each Underlying Loan:
[1] the title insurance report, commitment or other
evidence of the obligations of the title insurance company to issue a
title insurance policy and, when issued, the original title insurance
policy in conformity with the representations contained in Section 4K
hereof;
[2] the hazard insurance policy or binder covering
all improvements on the mortgaged property in conformity with the
representations set forth in Section 4L hereof, together with a flood
insurance policy (or evidence that the property does not lie in a flood
plain);
[3] whenever applicable to such Underlying Loan, the
FHA or VA commitment to insure or guarantee or other evidence of
commitment for the issuance of a private mortgage insurance policy and,
when issued, the FHA insurance certificate, the VA
B-5
<PAGE> 42
guaranty certificate and private mortgage insurance policy in
conformity with the representations in Sections 4I and 4J hereof;
[4] the closing statement regarding closing of the
Underlying Loan, including evidence of compliance with the Federal
Truth in Lending Act and the Real Estate Settlement Procedures Act; and
[5] the original Underlying Mortgage (when returned
from recording).
G. Will promptly notify PNC of any change in any fact or
circumstance warranted or represented by Borrower in this Agreement or in any
other Loan Document, and will promptly notify PNC of any claim, action or
proceeding affecting title to the Collateral, or any part thereof, or the
security interests herein granted, and at PNC's request, will appear in and
defend, at Borrower's expense, any such action or proceeding.
H. Will immediately deliver to and deposit with PNC any and
all additional and/or replacement Underlying Note received or procured by
Borrower in conjunction with the purchase or making by Borrower of an Underlying
Loan.
I. Should the Collateral be converted into another type of
property or should Purchase Proceeds ever be paid or delivered to Borrower as a
result of Borrower's interest in the Collateral, will pay and deliver to PNC or
Custodian all of same that is susceptible of delivery to PNC, properly endorsed
or assigned, should PNC so require.
J. Will deliver to PNC such other information concerning the
Collateral as PNC may from time to time reasonably request.
K. Will [i] furnish and maintain sufficient Collateral or make
repayments of the Loan so that the outstanding principal balance of the Loan
does not at any time exceed the Loan Value or any Sublimit or other requirement
under the Loan Agreement; [ii] furnish, upon request, any documentation relating
to any Underlying Loan or Mortgage-Backed Security and a specific assignment or
endorsement thereof to PNC or the Custodian; [iii] as an independent contractor
and at no cost to PNC, service all Underlying Loans pledged as Collateral in
accordance with the standard requirements of the issuers of the Purchase
Commitments and all applicable FHA and VA requirements; and [iv] hold all escrow
funds collected in trust, without commingling with non- escrow funds, and apply
such funds for the purposes for which they were collected. At PNC's request,
after an event of default specified in Section 8 has occurred and is continuing,
and, in the event Borrower is relieved of the obligation to service any such
Underlying Loans, Borrower shall turn over all such escrow funds (in trust
nevertheless for such purposes) to or as directed by PNC with respect to
Underlying Loans included in the Collateral.
L. Will maintain Purchase Commitment coverage of not less than
100% of the amount of [i] closed Underlying Loans and Mortgage-Backed Securities
held by Borrower, plus [ii] Underlying Loans and Mortgage-Backed Securities that
Borrower is obligated to purchase on a date within sixty (60) days of any date
of determination.
B-6
<PAGE> 43
M. Will pay when due all taxes, assessments or other
governmental assessments or charges relative to the Collateral.
N. [i] Will execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices as may
be, in the opinion of PNC, necessary in order to perfect and preserve the
security interests granted or purported to be granted hereby; and [ii]
authorizes PNC, upon the giving of notice to Borrower, to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral and described in clause [i] above, without the
signature of Borrower as provided in the equivalent, if any, of Section
9-402(2)(c) of the Uniform Commercial Code as enacted in the state of its chief
executive office set forth in the preamble to this Agreement or, if permitted,
under the laws of any other applicable jurisdiction; and [iii] will keep its
chief executive office and the office where it keeps its records concerning the
Collateral at the location designated as Borrower's chief executive office
address in this Agreement.
O. Will pay PNC a file handling fee as follows:
[a] Twelve dollars ($12) with respect to each
Underlying Loan for which Borrower completes a computer-formatted information
form supplied by PNC and transmits the completed information form to PNC
electronically.
[b] Twenty-five dollars ($25) with respect to each
Underlying Loan for which PNC completes the
computer-formatted information form.
6. Negative Covenants. Borrower covenants and agrees with PNC
that Borrower:
A. Will not [i] permit any lien, security interest or
encumbrance (other than PNC's lien and security interest granted herein to
attach to any of the Collateral, [ii] permit any of the Collateral to be levied
upon under any legal process, or [iii] dispose of the Collateral, except for
sales of Underlying Notes and Mortgage-Backed Securities and related documents
to Qualified Investors in the ordinary course of Borrower's business.
B. Will not permit any part of the Collateral or any of the
records concerning same to be removed from the location referred to above in
Section 4.C hereof without the prior written consent of PNC or Custodian.
C. Will not modify, amend or waive any material term or
condition of any Underlying Loan, Mortgage-Backed Security or other Collateral
without the consent in writing of PNC. In the absence of an event of default
specified in Section 8, Borrower shall be entitled to collect and retain the
monthly mortgage amortization and interest amounts payable under Underlying
Loans and Mortgage-Backed Securities, together with payments of taxes, insurance
premiums, and other impound amounts (to be applied for the purposes collected).
All other payments or proceeds received on or with respect to the Collateral, if
received by Borrower, shall be received in trust by Borrower and delivered to
PNC and, if received by PNC, shall be held by PNC and, in the absence of an
event of default, transferred to Borrower.
B-7
<PAGE> 44
7. Power of Attorney. Borrower hereby irrevocably appoints PNC its
attorney in fact, with full power of substitution, for and on behalf and in the
name of Borrower, to [i] endorse and deliver to any person, corporation,
partnership, association or trust any check, instrument or other paper coming in
to PNC's or Custodian's possession and representing payment made relative to any
Underlying Note or Mortgage-Backed Security delivered to PNC or Custodian as
Collateral or relative to any Purchase Commitment; [ii] prepare, complete,
execute, deliver and record any assignment to PNC (or to any person,
corporation, partnership, association or trust that PNC may designate, including
Custodian) of any Underlying Mortgage; [iii] endorse and deliver any Underlying
Note or Mortgage-Backed Security delivered to PNC or Custodian as Collateral and
do every other thing necessary or desirable to effect transfer of all or any
part of the Collateral to PNC (or to any person, corporation, partnership,
association or trust PNC may designate, including Custodian); [iv] take all
necessary and appropriate action deemed necessary by PNC with respect to the
Credit Facility and the Collateral now or hereafter delivered to PNC or
Custodian or held by Borrower in trust for PNC; [v] commence, prosecute, settle,
discontinue, defend, or otherwise dispose of any claim relative to any Purchase
Commitment or any part of the Collateral; and [vi] sign Borrower's name wherever
appropriate to effect the performance of this Agreement and the other Loan
Documents. This provision shall be liberally, not restrictively, construed so as
to give the greatest latitude to PNC's power, as Borrower's attorney-in-fact, to
collect, sell, and deliver any of the Collateral and all other documents
relative thereto. The powers and authorities herein conferred on PNC may be
exercised by PNC through any person who, at the time of the execution of a
particular instrument, is an authorized officer, employee or agent of PNC,
including without limitation Custodian.
The power of attorney hereby conferred shall become effective
upon the occurrence and during the continuance of an event of default specified
in Section 8 beyond any applicable grace or curative period and is granted for a
valuable consideration and is coupled with an interest and irrevocable so long
as the Credit Facility available to Borrower is outstanding and in effect. All
persons dealing with PNC, its officers, agents and employees, or any substitute
attorney, acting pursuant hereto shall be fully protected in treating the powers
and authorities conferred by this Section 7 as existing and continuing in full
force and effect until advised by PNC that the Loan and the Note have been fully
and finally paid and satisfied and the Credit Facility has been terminated.
8. Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default hereunder:
A. The occurrence of any Event of Default under the Loan
Agreement, or
B. Any default in or breach of any covenant, agreement,
representation or warranty by Borrower under the provisions of this Agreement.
C. Any default in the payment of principal of, or any
installment of interest on any other indebtedness of Borrower or any Affiliate
of Borrower to PNC.
B-8
<PAGE> 45
9. Remedies. Upon the occurrence of any one or more events of
default, PNC may at its option:
A. Declare the Loan and the Note immediately due and payable.
B. Invoke the rights and remedies of a secured party under the
Uniform Commercial Code, in addition to the rights and remedies provided herein
or under any other Loan Document.
C. Reduce PNC's claim to judgment or foreclose or otherwise
enforce the security interests and liens herein granted, in whole or in part, by
any judicial procedure.
D. Transfer the Collateral or any part thereof and all books
and records relative to the Collateral into its own name, or the name of its
nominee, take possession of the Collateral and after any required notice dispose
of all or any portion of the Collateral, at public or private sale, as a unit or
in parcels, upon any terms and prices and in any order, at one or more sales,
free from any claim or rights of any kind, and at any such sale PNC may, if it
may lawfully do so, participate as a buyer and bid on and purchase the
Collateral.
E. Retain the Collateral in satisfaction of Borrower's
obligations relative to the Loan and the Note.
F. Notify and cause (and Borrower agrees to notify and use
Borrower's best efforts to cause) all persons directly or contingently liable on
the Underlying Notes or other Collateral thereafter to make all payments to PNC
or its nominee.
G. Receive all payments made on Underlying Notes and
Underlying Loans).
H. Notify and cause (and Borrower agrees to instruct and use
Borrower's best efforts to cause) all persons directly or contingently liable on
the Underlying Notes and Underlying Loans to make all payments to PNC or its
nominee.
I. Compromise or settle with any obligor(s) on any claims
arising from the Collateral as PNC may deem desirable in PNC's sole discretion,
and extend the time for payment or otherwise modify or amend the terms and
conditions of any of the Underlying Notes, Mortgage-Backed Securities or other
Collateral.
The parties acknowledge that [i] a private sale of Collateral
under the Purchase Commitments used in computing the Loan Value for such
Collateral or [ii] a public sale of Underlying Loans or Mortgage-Backed
Securities on at least ten (10) days' notice to Borrower, with newspaper
publication of a notice of "Sale of Mortgage Loans," which may state only the
number of Underlying Loans, whether the Underlying Loans are FHA insured, VA
guaranteed or conventional loans, and the aggregate outstanding principal amount
and coupon rates (net of servicing), together with the time and place of sale,
at least once and not less than five (5) nor more than fifteen (15) days prior
to such sale, shall be deemed to be a sale of such collateral in a commercially
reasonable manner. Underlying Loans and Mortgage-Backed Securities for which
there is an active secondary market may be sold five (5) days after notice to
Borrower by
B-9
<PAGE> 46
obtaining bids for immediate (ten (10) days or less) delivery from
at least two (2) recognized dealers active in such market and such Collateral
may be sold and may be purchased by PNC at the highest of such bids at which
delivery can be made and such sale shall be deemed a sale of such Collateral in
a commercially reasonable manner. The parties further acknowledge that the
Collateral is of a type that may speedily decline in value and if, in the
reasonable opinion of PNC, there is a threat of a decline in value of any
Collateral, then such Collateral may be sold without notice to Borrower and such
sale shall be deemed to be a sale in a commercially reasonable manner. The
parties further acknowledge that, notwithstanding the above, a sale of the
Collateral may be made in any other commercially reasonable manner. Any sale may
be made together with the right to service the Underlying Loans on a "servicing
release" basis or the Underlying Loans and servicing rights may be sold
separately. PNC may be the purchaser at any public sale of all or any portion of
the Collateral or at a private sale at the bid price obtained from dealers with
respect to Collateral with an active secondary market and in each case Borrower
shall remain liable for any deficiency.
The entire net proceeds of any collection or sale of the
Collateral, as and when received in cash, and after deducting all costs incurred
in connection with such collection or sale, including, but not limited to, the
cost, including discount, of acquiring Purchase Commitments, plus reasonable
attorneys' fees and disbursements incurred in connection with the collection or
sale of Collateral, shall be applied to the payment of the principal amount of
the Loan outstanding, to the payment of accrued and unpaid interest on the Loan,
and to the payment of any other amount secured by the Collateral including,
without limitation, any commitment fees or other sums due to PNC in such order
as PNC shall elect. Borrower shall remain liable for any deficiency after such
application of the proceeds of the Collateral.
After the occurrence of an event of default specified in
Section 8, the costs and expenses incurred by PNC relative to the maintenance
and collection of the Collateral and the collection of the Loan hereunder or
under any other Loan Document shall be added to and become part of the Loan and
payment of such costs and expenses shall be secured by the Collateral.
10. Set-off. If any event of default, or event, condition or thing that
constitutes, or that, with the giving of notice or the lapse of time, or both,
would constitute an event of default specified in Section 8, shall occur or
begin to exist, PNC shall have the right then, or at any time thereafter during
the continuance of any such event, unless remedied to the complete satisfaction
of PNC, to set off against, and to appropriate and apply toward the payment of,
the Note, whether or not the Loan shall have then matured or be due and payable
and whether or not PNC has declared the Note in default, any and all deposit
balances and other sums and indebtedness then held or owed by PNC to or for the
credit or account of Borrower (other than balances in trust accounts, escrow
accounts, and other accounts not beneficially owned by Borrower), all without
notice to or demand upon Borrower or any other person, all such notices and
demands being hereby expressly waived.
11. Standard of Care. PNC and Custodian shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral in the actual possession
B-10
<PAGE> 47
of such parties if they exercise the same diligence in the care thereof which
they exercise in the care of their own property.
12. Reaffirmation of Security Interest and Collateral. From time to
time Borrower agrees to reaffirm PNC's security interest in and lien on
Collateral acquired by Borrower subsequent to the date of this Agreement. Upon
acquisition by Borrower all such Collateral will be subject to the terms and
provisions of this Agreement. Borrower agrees to execute and deliver to PNC
supplemental UCC financing statements as may be required by PNC relative to such
Collateral.
13. Assignment of Rights. This is a pledge, security agreement and
assignment of rights and is not a delegation of duties. PNC does not assume any
of, and shall not at any time prior to foreclosure of its lien and security
interest hereunder be liable for, any of the obligations, duties, covenants,
warranties, representations or other liabilities of Borrower in or under the
Collateral or any transaction, agreement or contract out of which the
Collateral, or any of it, arises.
14. Interpretation. No course of dealing with respect to, or any
omission or delay in the exercise of, any right, power or privilege by PNC shall
operate as a waiver thereof, nor shall any right, power or privilege of PNC be
exclusive of any other right, power or privilege referred to herein or in any
other Loan Document now or hereafter available at law, in equity, in bankruptcy,
by statute or otherwise. Each right, power or privilege may be exercised by PNC
as often and in such order as PNC may deem expedient. No waiver or consent
granted by PNC under any Loan Document shall be binding upon PNC unless
specifically granted in writing, which writing shall be strictly construed. Time
shall be of the essence in the performance of all Borrower's obligations under
this Agreement and the other Loan Documents.
15. Notices. All notices shall be in writing and shall be mailed by
first class mail or express mail, postage prepaid, or sent by telex, telegram,
facsimile or other similar form of rapid transmission confirmed by mailing (by
first class or express mail, postage prepaid) written confirmation at
substantially the same time as such rapid transmission, or personally delivered
to an officer of the receiving party. All such communications shall be mailed,
sent or delivered to the parties hereto at their respective addresses as
follows:
If to Borrower: CENTRAL PACIFIC MORTGAGE
5750 Sunrise Boulevard, Suite 250
Citrus Heights, California 95610
Attention: Mr. John A. Courson
If to PNC: PNC BANK, NATIONAL ASSOCIATION
500 West Jefferson Street
Louisville, Kentucky 40202
Attention: Mortgage Warehousing
Any communication so addressed and mailed shall be deemed to be given when so
mailed; and any notice so sent by rapid transmission shall be deemed to be given
when receipt of such
B-11
<PAGE> 48
transmission is acknowledged, and any communication so delivered in person shall
be deemed to be given when receipted for by, or actually received by, an
authorized officer of Borrower or PNC, as the case may be.
16. Future Advances. This Agreement secures all future Advances that
may be made at any time by PNC to Borrower under the Note and pursuant to the
Loan Agreement.
17. Governing Law. The laws of the Commonwealth of Kentucky shall
govern the construction of this Agreement and the rights, remedies and duties of
the parties hereto, except to the extent the laws of the state where the
Collateral or part thereof is situated dictate that the laws of such other state
shall govern.
18. Survival of Representations and Warranties. All representations and
warranties of Borrower herein or made by Borrower in connection with the Credit
Facility and all covenants and agreements of Borrower herein or otherwise not
fully performed on or before the date of this Agreement shall survive such date
and shall continue in effect for the term of this Agreement and until all
obligations of Borrower owing PNC hereunder and under the other Loan Documents
have been fully paid, performed and otherwise satisfied.
19. Section Titles. The section titles of this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
20. Severability. The invalidity or unenforceability of any one (1) or
more phrases, sentences, clauses or paragraphs of this Agreement shall not
affect the validity or enforceability of the remaining portions of this
Agreement or of any part hereof.
21. Integration. The Loan Documents contain the entire agreement
between the parties relating to the Credit Facility. The Loan Documents
supersede any and all prior agreements and any and all contemporaneous oral
agreements between PNC and Borrower relative to the Credit Facility.
22. Successors and Assigns. This Agreement shall bind Borrower and its
successors and assigns, and shall inure to the benefit of PNC, its successors
and assigns, and any participants in the Credit Facility.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the dates set forth below. This Agreement shall be dated and shall
be effective as of the day, month and year first above written.
BORROWER:
CENTRAL PACIFIC MORTGAGE
By /s/ John A. Courson, President
---------------------------------
John A. Courson
Date: April 15, 1998
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<PAGE> 49
PNC:
PNC BANK, NATIONAL ASSOCIATION
By /S/ CHARLES J. EZELL
-----------------------------------------
Charles J. Ezell
Date: April 15, 1998
B-13
<PAGE> 50
Central Pacific Mortgage
EXHIBIT C-1
FUNDING APPLICATION - WAREHOUSE ADVANCE
Capitalized terms herein shall have the same meanings ascribed to such
terms in the Mortgage Warehousing Loan Agreement between PNC BANK, NATIONAL
ASSOCIATION and the undersigned.
I.Underlying Loan Description
II. MIN Number: ______________________
III. Loan Number:______________________
IV. Borrower & Property Address: Type Loan: []FHA []VA []CONV
V. Amount of Loan:
$____________________
__________________________________ Amount of Discount: $_____
Net Loan Value:
$____________________
__________________________________ Acquisition Cost: $__________-
Take Out Price:
$____________________
__________________________________ Advance Rate (%):* ____________-
Warehouse Amount:
$____________________
___________________Zip____________ Note Date:
_____________________
Interest Rate:
_____________________
Payment Type:[]Fixed []1yr ARM
[]3yr ARM []5yr ARM
SSN#______________________________ []7yr ARM []Other
SSN#______________________________ Term: _______________Months
Closing Agent:____________________
Address:__________________________
Telephone:________________________
* Advance Rate is 100% for Loans subject to Purchase Commitments from PNC
Mortgage; 98% for Loans subject to Purchase Commitments from other Qualified
Investors.
I.Wire Instructions
II.
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<PAGE> 51
III. PNC is hereby instructed to wire transfer the Advance to the Closing
Agent in accordance with the following information:
IV.
Financial Institution: ____________________________________________
ABA#________________
Account#:_______________ for the Account of:
__________________________________
Attention:_____
Telephone:_____
CENTRAL PACIFIC MORTGAGE
Date:_____________, 199__
By_______________________________________
Name:____________________________________
Title:___________________________________
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<PAGE> 52
Central Pacific Mortgage
EXHIBIT C-2
FUNDING APPLICATION - WET FUNDING ADVANCE
Capitalized terms herein shall the same meanings ascribed to such terms in
the Mortgage Warehousing Loan Agreement between PNC BANK, NATIONAL ASSOCIATION
and the undersigned.
I. Underlying Loan Description
MIN Number:___
Loan Number:___
Borrower & Property Address: Type Loan: [ ] FHA [ ] VA [ ] CONV
Amount of Loan:
$__________________________
Amount of Discount: $
__________________________ Net Loan Value: $__________________
Acquisition Cost: $__________________
Take Out Price:
$_____________________ Advance Rate (%):* ___________________
______________________
Wet Funding Amount:
$_____________________
___________________Zip_____ Note Date:
___________________
Interest Rate:
___________________
Payment Type: [ ] Fixed [ ] 1yr ARM
[ ] 3yr ARM [ ] 5yr ARM
SSN#_______________ [ ] 7yr ARM [ ] Other
SSN#_______________ Term: ___________________Months
Closing Agent:____________________
Address:__________________________
__________________________________
Telephone:________________________
* Advance Rate is 100% for Loans subject to Purchase Commitments from PNC
Mortgage; 98% for Loans subject to Purchase Commitments from other Qualified
Investors.
II. Wire Instructions
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<PAGE> 53
PNC is hereby instructed to wire transfer the Advance to the Closing
Agent in accordance with the following information:
Financial Institution: ____________________________________________
ABA#________________
Account#_____________ for the Account of:
________________________________________
Attention: ______
Telephone: ______
CENTRAL PACIFIC MORTGAGE
Date:_____________, 199__
By_______________________________________
Name:____________________________________
Title:___________________________________
2
<PAGE> 54
[BORROWER NAME]
EXHIBIT D
OFFICER'S CERTIFICATE OF COMPLIANCE
For the Period From___, 199_ to___, 199__.
TO: PNC BANK, NATIONAL ASSOCIATION
Ladies and Gentlemen:
This Certificate is delivered pursuant to the Mortgage
Warehousing Loan Agreement (the "Loan Agreement") between PNC BANK, NATIONAL
ASSOCIATION as lender ("PNC") and Central Pacific Mortgage as borrower
("Borrower"). All capitalized terms not otherwise defined herein shall have the
meaning ascribed to such terms in the Loan Agreement, as amended from time to
time.
I hereby certify to you as follows:
I. I am presently, and at times mentioned herein have been, the duly
elected, qualified and acting ________________ of Borrower.
II. I have personally reviewed the provisions of the Loan Agreement,
and supervised a review of the activities of Borrower during the period from
______, 199__ , to__ , 199__ (the "Subject Period") with a view toward
determining whether, during the Subject Period, Borrower has kept, observed,
performed and fulfilled all its obligations under the Loan Documents.
III. Based upon the foregoing review, the representations and
warranties made in Article 6 of the Loan Agreement are true and correct in all
material respects as of the date hereof as though made as of the date hereof,
and no Event or Default has occurred nor does any circumstance exist that, with
the passage of time or giving of notice or both, would constitute an Event of
Default under the Loan Documents.
IV. No event of default has occurred relative to any other credit
facility available to Borrower or under any document evidencing or securing any
such credit facility nor does any circumstance exist that, with the passage of
time or giving of notice or both, would constitute an event of default under any
such credit facility or the documentation relative thereto.
V. There are no actions, suits, legal, equitable, arbitration or
administrative proceedings pending or threatened against Borrower, the adverse
determination of which could have a Material Adverse Effect on the
enforceability of the Loan Documents, the business
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<PAGE> 55
operations or financial condition of Borrower, or the ability of Borrower to
fulfill its obligations under the Loan Documents.
VI. The GAAP Net Worth of Borrower, exclusive of amounts due to or due
from Affiliates, as of the last day of the Subject Period, was: $________.
Requirement of Loan Agreement: Minimum of $2,500,000.
Accordingly, the requirement was:
___ Satisfied
___ Not Satisfied
VII. The ratio of Borrower's total liabilities to GAAP Net Worth, in
each case exclusive of amounts due to or due from Affiliates, as of the last day
of the Subject Period, was .
Requirement of Loan Agreement: Maximum of 14:1.
Accordingly, the requirement was:
___ Satisfied
___ Not satisfied
Executed and delivered this ____ day of _____________, 199_.
CENTRAL PACIFIC MORTGAGE
By___________________________________________
Name:________________________________________
Title:_______________________________________
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<PAGE> 56
Central Pacific Mortgage
EXHIBIT E
TRUST RECEIPT
THE UNDERSIGNED ("Borrower") has granted a security interest in various
collateral to PNC BANK, NATIONAL ASSOCIATION, a national banking association,
with offices at 500 West Jefferson Street, Louisville, Kentucky 40202 ("PNC").
All capitalized terms not otherwise defined shall herein have the meaning
ascribed to such terms in the Mortgage Warehousing Loan Agreement between PNC
and Borrower (the "Loan Agreement").
Pursuant to the Security Agreement, Borrower granted a security
interest in and lien on certain property more particularly described therein.
Borrower acknowledges receipt from Custodian (which term includes PNC
when acting as Custodian) of certain collateral more particularly described on
Schedule A hereto (the "Collateral"). Borrower has requested that possession of
the Collateral be temporarily relinquished to Borrower for the purpose of
correction.
Borrower agrees that:
1. The Collateral described on Schedule A and all proceeds thereof is
and will continue to be subject to PNC's security interest and to the terms and
conditions of the Loan Agreement, the Security Agreement, and other Loan
Documents.
2.
3. All Advances made under the Loan Agreement relative to the
Collateral will be repaid within ten (10) days of the date hereof in the event
the Collateral described on Schedule A shall not have been returned to PNC
within such ten (10) day period.
4.
5. The Collateral will not be used for any purpose other than correction.
6.
7. At all times while the Collateral is in Borrower's possession,
Borrower will hold the Collateral in trust so as to continue the perfection of
PNC's security interest.
8.
9. Borrower will include this trust receipt in its business records.
10.
11. CENTRAL PACIFIC MORTGAGE
12.
13.
By _____________________________________
_______________________________ (printed name)
______________________________________ (title)
Date signed: _________ __, 199__
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<PAGE> 57
[BORROWER NAME]
EXHIBIT F
SHIPPING SCHEDULE
Shipping Date: _____________, 199__
________ __________________ _________________________ _______________
Loan Number Borrower(s) Last Name(s) Loan Amount or
UPC
________ __________________ _________________________ _______________
1
________ __________________ _________________________ _______________
2
________ __________________ _________________________ _______________
3
________ __________________ _________________________ _______________
4
________ __________________ _________________________ _______________
5
________ __________________ _________________________ _______________
6
________ __________________ _________________________ _______________
7
________ __________________ _________________________ _______________
8
________ __________________ _________________________ _______________
9
________ __________________ _________________________ _______________
10
________ __________________ _________________________ _______________
11
________ __________________ _________________________ _______________
12
________ __________________ _________________________ _______________
13
________ __________________ _________________________ _______________
14
________ __________________ _________________________ _______________
15
________ __________________ _________________________ _______________
TOTALS: Number of Loans ________ Loan Amounts $________________
We hereby request PNC BANK, NATIONAL ASSOCIATION to deliver the above referenced
Underlying Loans to: ____________________________________ for receipt on
__________ 199___.
The loans may/may not (circle one) be delivered prior to this date.
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<PAGE> 58
_____ Please endorse the notes exactly as follows:
___________________________________________
___________________________________________
_____ Please leave endorsement blank.
CENTRAL PACIFIC MORTGAGE
By _________________________________
_________________________________ (printed name)
________________________________________ (title)
Date signed: _________ __, 199__
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<PAGE> 59
Central Pacific Mortgage
EXHIBIT G-1
DOCUMENT CUSTODIAN BAILEE LETTER
______________________________ Air Bill #
______________________________
______________________________ Date:
______________________________
Ladies and Gentlemen:
Enclosed are _____ original promissory notes in the original
principal amount of $_______________ (the "Notes") evidencing the mortgage loans
described on the attached Schedule A, along with other related documents, for
pooling and securitization of such mortgage loans into a mortgage backed
security (the "Mortgage Backed Security") by you as document custodian (the
"Custodian") prior to the settlement of such Mortgage Backed Security pursuant
to the commitment of a mortgage backed security broker (the "Broker") to
purchase the Mortgage Backed Security from Central Pacific Mortgage (the
"Seller"). Hereinafter the mortgage loans described on the attached Schedule A,
related documents and the Mortgage Backed Security when issued shall be referred
to as the "Collateral". A security interest in the Collateral and proceeds
thereof has been granted to PNC BANK, NATIONAL ASSOCIATION ("PNC"), in
accordance with Seller's loan agreement with PNC.
All Collateral now or hereafter delivered to Custodian is to
be held by Custodian in its capacity as custodian, bailee and agent for the
benefit of PNC. Custodian shall oversee settlement of the Mortgage Backed
Security. Immediately upon settlement and receipt of payment from the mortgage
backed security broker, Custodian shall remit proceeds of the Mortgage Backed
Security by wire transfer, in immediately available funds to: PNC BANK, NATIONAL
ASSOCIATION, ABA #083000108, FOR THE BENEFIT OF CENTRAL PACIFIC MORTGAGE ACCOUNT
#________________________. THE CUSTODIAN SHALL BE RESPONSIBLE FOR MAKING CERTAIN
THAT ALL PROCEEDS FROM THE SALE OF THE MORTGAGE BACKED SECURITY ARE RECEIVED IN
ACCORDANCE WITH THE WIRE TRANSFER INSTRUCTIONS SET FORTH ABOVE.
PNC shall have no obligation to release its security interest
in the Collateral unless and until PNC shall have received the entire proceeds
of sale of the Mortgage Backed Security, which proceeds shall not be less than
the "Minimum Amount of Proceeds" as set forth on the attached Schedule A. Upon
PNC's receipt of such proceeds, its security interest in the Collateral shall
terminate without further action. The Collateral has not been assigned or
transferred by PNC to any other party.
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<PAGE> 60
PNC reserves the right at any time, until the Mortgage Backed
Security has been purchased, to demand the return of the Collateral to PNC, and
Custodian agrees to return to PNC the Collateral in its hands immediately upon
such demand by PNC.
The person(s) listed on the attached Schedule A are the
authorized representatives ("Authorized Representatives") of PNC. Custodian
shall not honor any communication from Seller relative to any Collateral that is
not confirmed by the written or telephonic consent of an Authorized
Representative of PNC, or until PNC has received the Minimum Amount of Proceeds
of the sale of the Mortgage Backed Security, as set forth on the attached
Schedule A. Custodian shall not deliver any Collateral to any third party,
unless delivery is versus payment or unless instructed to do so by PNC. In no
event shall the enclosed Notes enclosed herein, the Mortgage Backed Security or
any other part of the Collateral be returned to Seller. In the event the
Custodian is not able for any reason to comply with the terms of this Bailee
Letter, the Custodian shall immediately return all Collateral to PNC at the
address below.
In the event the Mortgage Backed Security shall not be issued
for any reason, please deliver the Collateral to PNC at the address below.
By accepting the Collateral, Custodian shall be bound by the
terms of this Bailee Letter.
Sincerely,
___________________________
Loan Administrator
PNC BANK,
NATIONAL ASSOCIATION
500 W. Jefferson
Suite 1200
Louisville, Kentucky 40202
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<PAGE> 61
SCHEDULE A
Mortgagor Name Minimum Amount of Proceeds
______________________________ TOTAL $
PNC: PNC BANK, NATIONAL ASSOCIATION
500 West Jefferson
Citizens Plaza, Suite 1200
Louisville, Kentucky 40202
(502) 581-7434 FAX (502) 581-3844
Authorized Representatives:
Tina Jones
Deena Mattingly
Mark Williams
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<PAGE> 62
Central Pacific Mortgage
EXHIBIT G-2
DIRECT INVESTOR BAILEE LETTER
______________________________ Air Bill #
______________________________
______________________________
______________________________ Date:
Ladies and Gentlemen:
Enclosed are ________ original promissory notes in the original
principal amount of $__________ (the "Notes") evidencing the mortgage loans
described on the attached Schedule A, along with other related documents
(collectively, "Collateral"), for inspection by you ("Investor") prior to
purchase pursuant to a commitment to purchase such mortgage loans from Central
Pacific Mortgage ("Seller"). A security interest in the Collateral and proceeds
thereof has been granted to PNC BANK, NATIONAL ASSOCIATION ("PNC"), in
accordance with Seller's loan agreement with PNC.
All Collateral now or hereafter delivered to Investor is to be
held by Investor as a custodian, bailee and agent for the benefit of PNC and
subject to PNC's exclusive direction and control until released as provided
herein. Proceeds of all Collateral accepted for purchase must be remitted
immediately, by wire transfer, upon settlement by Investor, in immediately
available funds, to: PNC BANK, NATIONAL ASSOCIATION, ABA #083000108, FOR THE
BENEFIT OF CENTRAL PACIFIC MORTGAGE ACCOUNT #_______________. INVESTOR SHALL BE
RESPONSIBLE FOR MAKING CERTAIN THAT ALL OF THE PROCEEDS FROM THE SALE OF THE
COLLATERAL ARE RECEIVED IN ACCORDANCE WITH THE WIRE TRANSFER INSTRUCTIONS SET
FORTH ABOVE.
PNC shall have no obligation to release its security interest in
the Collateral unless and until PNC shall have received the entire proceeds of
sale of each Note, which proceeds shall not be less than the "Minimum Amount of
Proceeds" as set forth on the attached Schedule A. Upon PNC's receipt of such
proceeds, its security interest in the Collateral shall terminate without
further action. The Collateral has not been assigned or transferred by PNC to
any other party.
Collateral that has not been purchased must be returned to PNC at
the address listed below within twenty-one (21) days after the date of this
Bailee Letter. PNC reserves the right at any time, until the Collateral has been
purchased, to demand the return of the Collateral to PNC, and Investor agrees to
return to PNC any Collateral not purchased by Investor immediately upon such
demand by PNC.
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<PAGE> 63
The person(s) listed on the attached Schedule A are the authorized
representatives ("Authorized Representatives") of PNC. Investor shall not honor
any communication from Seller relating to any Collateral that is not confirmed
by written or telephonic consent of an Authorized Representative of PNC, or
until PNC has received the Minimum Amount of Proceeds of the sale of such Notes,
as set forth on the attached Schedule A. Investor shall not deliver any
Collateral to any third party without the prior written consent of PNC. In no
event shall the Notes enclosed herein be returned to Seller. In the event the
Investor is not able for any reason to comply with the terms of this Bailee
Letter, the Investor shall immediately return all Collateral to PNC at the
address below.
No deviation in performance of the terms of any previous Bailee
Letter will alter any of your duties or responsibilities as provided herein. If
PNC files suit to recover the Collateral, or the proceeds from the sale of the
Collateral, the prevailing party shall recover all attorney's fees, expenses and
costs as a result of such action.
By accepting the Collateral, Investor shall be bound by the terms
of this Bailee Letter.
Sincerely,
- -------------------------------
PNC BANK,
NATIONAL ASSOCIATION
500 W. Jefferson, Suite 1200
Louisville, Kentucky 40202
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<PAGE> 64
SCHEDULE A
Mortgagor Name Minimum Amount of Proceeds
______________________________ TOTAL $
PNC: PNC BANK, NATIONAL ASSOCIATION
500 West Jefferson
Citizens Plaza, Suite 1200
Louisville, Kentucky 40202
(502) 581-7434 FAX (502) 581-3844
Authorized Representatives:
Tina Jones
Deena Mattingly
Mark Williams
3
<PAGE> 65
EXHIBIT H
TO UCC-1 FINANCING STATEMENT
FROM CENTRAL PACIFIC MORTGAGE AS DEBTOR
TO PNC BANK, NATIONAL ASSOCIATION AS SECURED PARTY
This Financing Statement covers all of Debtor's right, title and
interest in and to the following described property and rights and documentation
relative thereto to secure all indebtedness from Debtor to Secured Party under
the Credit Facility established pursuant to the Loan Agreement between Secured
Party and Debtor (the "Loan Agreement"):
a. Underlying Loans, Underlying Notes, Underlying Mortgages, and
Mortgage-Backed Securities;
b.
c. all documents and instruments related to Underlying Loans,
Underlying Notes, Underlying Mortgages, and Mortgage-Backed Securities, and all
contract rights, personal property, accounts and general intangibles related
thereto, including, without limitation, title insurance policies and binders,
hazard and liability insurance policies, legal opinions, Purchase Commitments,
FHA insurance, VA guaranties, and other guaranties relating thereto;
d.
e. all contracts for the sale or purchase of Underlying Loans or
Mortgage-Backed Securities, including all Purchase Commitments, and all
interest rate hedge contracts, including futures and cash forward contracts
(or options for such contracts);
f.
g. all documents and records relating to such Underlying Loans,
Underlying Notes, Underlying Mortgages, and Mortgage-Backed Securities; and
h.
i. the products and proceeds of each of the foregoing, including, without
limitation, all receivables arising from the sale thereof, insurance and
condemnation proceeds, payments and prepayments of principal and interest,
prepayment premiums, late charges, and proceeds of sale of Mortgage-Backed
Securities.
j.
k. Definitions: Terms defined in the Loan Agreement shall have the same
meanings when used herein unless otherwise defined herein. In addition, the
following terms shall have the indicated meanings:
l.
m. "Credit Facility" shall mean the aggregate principal amount available
to Debtor under the Loan Agreement.
n.
o. "Underlying Loans" shall mean Government-Backed Mortgage Loans,
Conforming Conventional Mortgage Loans, Jumbo Conventional Mortgage Loans and
Repurchased Mortgage Loans for which advances under the Loan Agreement have been
made by Secured Party. For this purpose:
p.
(1) Government-Backed Mortgage Loans means Single-Family Mortgage Loans
insured by FHA under the National Housing Act, as amended, or Title V of the
Housing Act of 1949, as
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<PAGE> 66
amended, or guaranteed by VA under the Servicemen's Readjustment Act of 1944, as
amended, or Chapter 37 of Title 38 of the United States Code, or with respect to
which there are current, binding and enforceable commitments for such insurance
issued by FHA or for such guaranties issued by VA, together with all rights and
interests related to such Mortgage Loans;
(2)
(3) Conforming Conventional Mortgage Loans means Single-Family Mortgage
Loans made on a conventional basis not insured or guaranteed by FHA or VA that
comply with all applicable requirements for purchase under either the FNMA or
the FHLMC standard form of conventional mortgage purchase contract and any
supplement thereto then in effect; and
(4)
(5) Jumbo Conventional Mortgage Loans means Single-Family Mortgage
Loans that would be Conforming Conventional Mortgage Loans in all other respects
but that exceed the maximum individual loan limits of FNMA and FHLMC.
(6)
(7) "Underlying Mortgages" shall mean Mortgages securing Underlying Loans.
(8)
(9) "Underlying Notes" shall mean promissory notes evidencing Underlying
Loans.
(10)
(11) "Mortgage-Backed Securities" shall mean securities derived from or
secured by Underlying Loans that are intended to be sold to responsible
long-term investors.
(12)
(13) "Purchase Commitments" shall mean commitments from long-term
investors or representatives of long-term investors to purchase Underlying Loans
or Mortgage-Backed Securities.
(14)
(15)
(16)
(17)
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<PAGE> 67
EXHIBIT I
Draft of April __, 199__
Closing Agenda
PNC BANK, NATIONAL ASSOCIATION
and
CENTRAL PACIFIC MORTGAGE
Mortgage Warehousing Loan Agreement
(Warehousing Lines)
April , 1998
Section References to Mortgage Warehousing Loan Agreement
Principal Loan Documents
1. Mortgage Warehousing Loan Agreement, with following Exhibits
2.
3. A -- Mortgage Loan Warehousing Note
4. B-1 -- Mortgage Loan Warehousing Security Agreement
5. C-1 -- Funding Application - Warehouse Advance
6. C-2 -- Funding Application - Wet Funding Advance
7. D -- Officer's Certificate of Compliance
8. E -- Trust Receipt
9. F -- Shipping Schedule
10. G-1 -- Bailee Letter -- Document Custodian
11. G-2 -- Bailee Letter -- Direct Investor
12.
EXECUTION: BY BOTH PARTIES (TWO COUNTERPART ORIGINALS)
1. Mortgage Loan Warehousing Note (Exhibit A)
2.
EXECUTION: BORROWER
1. Mortgage Loan Warehousing Security Agreement (Exhibit B-1)
2.
EXECUTION: BORROWER
1. UCC Financing Statements
EXECUTION: BORROWER
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<PAGE> 68
FILING: PNC FILES IN OFFICE OF CALIFORNIA SECRETARY OF STATE
Additional Closing Documents
1. Resolutions for Extensions of Credit and Incumbency
certificate -- see Section 4A[2] (form supplied)
1. Officer's Certificate (form supplied) with reference to:
2.
A. Organizational Documents -- see Section 4A[3]
A. List of Other Credit Facilities -- see Section 4A[8]
B.
C. List of Investors -- see Section 4A[10]
D.
E. Closing Agents -- see Section 4A[11]
F.
G. Evidence of Insurance -- see Section 4A[13]
H.
I. Licenses -- see Section 4A[14]
J.
2. Legal Opionion as to Borrower -- see Section 4A[4]
(form supplied)
3.
4. Report of Financing Statements -- see Section 4A[6]
5.
A. Secretary of State of California
B.
6. Compliance Certificate-- see Section 4A[7] (Exhibit D)
7.
8. Field Examination -- see Section 4A[12]
9.
10. Other -- see Section 4A[15]
11.
12.
13.
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<PAGE> 69
EXHIBIT J
Central Pacific Mortgage
RESOLUTIONS FOR EXTENSIONS OF CREDIT
AND INCUMBENCY CERTIFICATE
The undersigned certifies as follows to PNC BANK, NATIONAL
ASSOCIATION ("PNC"):
1. Name of Corporation: Central Pacific Mortgage (the "Corporation")
2. Chief Executive Office Address: 5750 Sunrise Boulevard
Citrus Hills, CA 95610
3. Taxpayer Identification Number:
4. Adoption of Resolutions: The Corporation is a corporation formed
under the laws of California; the undersigned is the duly elected and qualified
Secretary or Assistant Secretary of the Corporation and the following is a true
copy of resolutions adopted by the Board of Directors of the Corporation
pursuant to a notice and its articles or certificate of incorporation and its
regulations or by-laws, and at which a quorum was present, or adopted without a
meeting by the written approval of all of the directors of the Corporation,
which adoption occurred on February 6, 1997.
5. Resolutions:
A. Loans and Extensions of Credit. Resolved that any of the
following:
<TABLE>
<CAPTION>
NAME TITLE ACTUAL SIGNATURE
<S> <C> <C>
John A. Courson President/CEO x /s/ John A. Courson
- ----------------------------- ------------------------ ---------------------------
John E. Cassell Senior Vice President x /s/ John E. Cassell
- ----------------------------- ------------------------ ---------------------------
Michael C. Allemang Director x /s/ Michael C. Allemang
- ----------------------------- ------------------------ ---------------------------
Edwin E. Fuchs Vice President x /s/ Edwin E. Fuchs
- ----------------------------- ------------------------ ---------------------------
</TABLE>
are hereby authorized: (i) to effect loans, advances and renewals at any time
for the Corporation from PNC; (ii) to sign and deliver any loan agreements,
notes and other agreements, instruments, documents or evidences of indebtedness
of the Corporation (any of which may contain a warrant of
J-1
<PAGE> 70
attorney authorizing PNC to confess judgment against the Corporation for all
sums due or to become due by the Corporation to PNC); (iii) to request PNC to
issue letters of credit and to sign and deliver to PNC any agreements on behalf
of the Corporation to reimburse PNC for all payments made and expenses incurred
by it under such letters of credit and drafts drawn pursuant thereto; (iv) to
sign and deliver any instruments or documents on behalf of the Corporation
guaranteeing, endorsing or securing the payment of any debts or obligations of
any person, firm or corporation to PNC; (v) to pledge, assign, transfer,
mortgage, grant a security interest in or otherwise hypothecate to PNC any
stock, securities, commercial paper, warehouse receipts and other documents of
title, bills, accounts receivable, contract rights, inventory, equipment, real
property, and any other investments or property of the Corporation real or
personal, tangible or intangible, as security for the payment of any and all
loans, advances, indebtedness and other liabilities of the Corporation to PNC of
every kind and description, direct or indirect, absolute and contingent, joint
or several, whether as drawer, maker, endorser, guarantor, surety or otherwise,
and to execute on behalf of the Corporation mortgages, pledges, security
agreements, financing statements and other instruments or documents in
connection therewith; (vi) to sign and deliver any amendments, modifications,
renewals or supplements to any of the foregoing documents, and (vii) to sell or
discount with PNC any commercial paper, bills and other instruments and evidence
of indebtedness, warehouse receipts and other documents of title, accounts,
accounts receivable, contract rights, and other assets, tangible and intangible,
at any time held by the Corporation and for such purpose to endorse, assign,
transfer and deliver the same to PNC.
B. Revolving Credits. Resolved, that in connection with any
extensions of credit obtained by any of the persons authorized in Section 5.1
above, that permit the Corporation to effect multiple advances or draws under
such credit, any of the persons listed in Section 5.1 (or any other person
designated in writing by any of the persons listed in Section 5.1) shall be
authorized to make such advances or draws.
C. Telephonic and Facsimile Requests. Resolved, that PNC is
authorized to take any action authorized hereunder based upon: (i) the
telephonic request of any person purporting to be a person authorized to act
hereunder, (ii) the signature of any person authorized to act hereunder that is
delivered to PNC by facsimile transmission, or (iii) the telex originated by any
of such persons, tested in accordance with such testing procedures as may be
established between the Corporation and PNC from time to time.
D. General. Resolved, that a certified copy of these
resolutions be delivered to PNC and that they and the authority vested in the
persons specified herein will remain in full force and effect until a certified
copy of a resolution of the Corporation revoking or modifying these resolutions
and such authority has been filed with PNC.
6. Incumbency: Each of the above-named persons holds the office, title
or status with the Corporation specified above and that following each person's
name, his or her actual signature appears.
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<PAGE> 71
7. Resolution in Effect: The foregoing Resolutions now stand of record
on the books of the Corporation, are in full force and effect and have not been
modified or revoked in any manner whatsoever.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
the undersigned have hereunto set their hands and seals this 14 day of April,
1998.
/s/ Darlene Marchetti (SEAL)
- ---------------------------------------
(Assistant) Secretary
Print Name: Darlene Marchetti
-------------------------------------
Countersignature*
By /s/ John J. Cleary (SEAL)
--------------------------------------
Print Name: John J. Cleary
-------------------------------------
Title: Senior Vice President
------------------------------------
*NOTE: Countersignature by another officer of the Corporation is required when
person signing above is designated in Section 5.1 as one of the authorized
signatures.
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<PAGE> 72
EXHIBIT K
Central Pacific Mortgage
OFFICER'S CERTIFICATE
PNC BANK, NATIONAL ASSOCIATION
500 West Jefferson Street
Louisville, KY 40202
Attention: Warehouse Lending
Re: Mortgage Warehousing Loan Agreement with Central Pacific
Mortgage ("Borrower")
Ladies and Gentlemen:
Pursuant to Article 4 of the referenced Agreement (defined
terms in which shall have the same meanings when used herein), the undersigned
hereby certifies, individually and on behalf of Borrower, that attached hereto
are true, correct and complete copies of:
1. Exhibit A -- the instruments of incorporation and bylaws of
Borrower, with all amendments thereto, pursuant to Section 4A[3];
2. Exhibit B -- a list of all (if any) credit facilities and a summary
description of the same, including the name of the lender, the amount and
maturity date of the credit facility, a description of the collateral therefor
and the purpose of the credit facility, pursuant to Section 4A[8];
3. Exhibit C -- a list of all Investors and, if applicable, their
document custodians, together with mailing addresses, telephone numbers and
contact persons for the Investors and document custodians, pursuant to
Section 4A[10];
4. Exhibit D -- a list of a Closing Agents that Borrower will use to
close Underlying Loans by Wet Settlement, together with Insured Closing Letters
for such Closing Agents, pursuant to Section 4A[11];
5. Exhibit E -- evidence of Borrower's hazard insurance, fidelity
insurance or bond ($300,000 minimum limit), errors and omissions insurance
($300,000 minimum limit) and blanket bond coverage, and an endorsement to such
blanket bond naming PNC as additional insured thereunder, pursuant to Section
4A[13]; and
6. Exhibit F -- copies of all licenses and permits required by
applicable law so as to permit Borrower to conduct a mortgage banking business
and related activities, pursuant to Section 4A[14];
each of which documents remains in full force and effect as of the date hereof.
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Date: April 15, 1998
/s/ JOHN E. CASSELL (SEAL)
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Print Name: John E. Cassell
-----------------------------
Title: Senior Vice President
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K-2
<PAGE> 74
EXHIBIT L
[Letterhead of Counsel]
FORM OF OPINION OF COUNSEL TO BORROWER
April __, 199_
PNC BANK, NATIONAL ASSOCIATION
500 West Jefferson Street
Louisville, Kentucky 40202
Attention: Warehouse Lending
Re: Mortgage Warehousing Loan Agreement dated as of April __,
199_, between PNC BANK, NATIONAL ASSOCIATION and CENTRAL
PACIFIC MORTGAGE (the "Loan Agreement")
Ladies and Gentlemen:
We have acted as counsel to Central Pacific Mortgage (the
"Borrower") in connection with the Loan Agreement and the transactions
contemplated thereby. This opinion is delivered pursuant to Section 4A[4] of the
Loan Agreement. Certain capitalized terms used herein without definition that
are defined in the Loan Agreement shall have the meanings specified in the Loan
Agreement.
For the purposes of this opinion, we have examined and are
familiar with, among other things, the Loan Agreement, the Note, the Security
Agreement, and the financing statement prepared with reference to the Security
Agreement (the "Financing Statement") (collectively, the "Loan Documents"), as
well as the other documents delivered by the Borrower, all as described in the
Loan Agreement and as executed in connection therewith.
We understand that you are relying on this opinion in entering
into the transactions contemplated by the Loan Agreement.
As counsel for the Borrower, we have examined such records of
the Borrower, public records, and other documents and instruments, have made
such inquiries of public officials, and have considered such questions of law as
we have considered necessary or appropriate for the purposes of this opinion. As
to certain matters of fact material to this opinion, we have relied, to the
extent we believe appropriate, upon records furnished to us by the Borrower,
upon certificates of the corporate officers of the Borrower, and upon
certificates and telephone or telephonic updates thereof from public officials.
In rendering this opinion, we have assumed the due authorization, execution and
delivery of all documents by the persons party thereto other than the Borrower.
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<PAGE> 75
Based upon and subject to the foregoing and the qualifications
that follow, and having due regard for the legal considerations under California
law that we deem relevant, we are of the opinion that:
1. The Borrower is a corporation organized, validly existing and in
good standing under the laws of the State of California, is duly qualified as a
corporation to do business in all states in which such qualification is required
by law, and has full power and authority to own and operate its properties, to
carry on its business as now conducted and proposed to be conducted, to enter
into the Loan Documents and to consummate the transactions contemplated thereby.
2. The execution, delivery and performance by the Borrower of the Loan
Documents have been duly authorized by all necessary action on the part of the
Borrower and will not result in any violation of or conflict with or constitute
a default under any term of the constitutive documents of the Borrower.
3. To the best of our knowledge after reasonable investigation, the
execution, delivery and performance by the Borrower of the Loan Documents will
not result in any violation of or conflict with or constitute a default under
any of any judgment, decree, or order issued with respect to the Borrower, any
statute, rule or governmental regulation applicable to the Borrower, or any
mortgage, indenture, or deed of trust encumbering property or assets of the
Borrower or any other material obligation of the Borrower or result in the
creation of any mortgage, lien, charge, or encumbrance upon any of the
properties or assets of the Borrower (except pursuant to the Security
Agreement). To the best of our knowledge after reasonable investigation, the
Borrower is not in violation of any judgment, decree or order issued with
respect to it.
4. To the best of our knowledge after reasonable investigation, there
is no action, proceeding or investigation pending or threatened against the
Borrower, at law or in equity, by or before any federal, state, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality.
5. The Borrower is not required to obtain any order, consent, approval
or authorization of, or required to make any declaration, registration, or
filing with, any governmental authority (other than filing the Financing
Statement) in connection with the execution, delivery, or performance of the
Loan Documents, including the issuance and delivery of the Note pursuant
thereto, or in connection with the granting of security interests in the
Collateral pursuant thereto.
6. The Loan Documents have been duly executed and delivered by the
Borrower and constitute the legal, valid and binding obligations of the Borrower
enforceable (subject to applicable bankruptcy, insolvency, and other laws
affecting the enforceability of creditors' rights generally) against the
Borrower in accordance with their respective terms.
7. The Financing Statement is in appropriate form for filing as a
financing statement in the State of California, which is the only state in which
a financing statement is required to be filed in order to perfect a security
interest in the Collateral described therein pursuant to the
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Uniform Commercial Code. Upon the due filing of the Financing Statement in
the Office of the Secretary of State of California and the payment of filing
and/or recording taxes in the approximate amount of $__________, you will have a
valid and perfected security interest in the Collateral described therein. No
further filing and no refiling is necessary to maintain the perfected status of
such security interest, including any with regard to future advances of the
Loan, except for a continuation statement, which must be filed within the period
of six months preceding the fifth anniversary of the date the Financing
Statement is filed, to maintain such perfected status.
8. The Loan is not usurious or otherwise illegal under the laws of the
State of California.
9. The lending of money by you under the Loan Documents and the
enforcement of your rights thereunder in the State of California will not cause
you to be deemed to be doing business in such state, and you shall not be
subject to taxation by such state or any city or county, except for the filing
and/or recording fees specified in paragraph 7.
We have not examined title to any of the property intended to
be encumbered pursuant to any of the Loan Documents and express no opinion
concerning the status of title thereto.
We are authorized to practice law in the State of California
and express no opinion as to the laws of any jurisdiction other than the State
of California and the federal laws of the United States.
This opinion is rendered solely for your benefit and the
benefit of your counsel, Brown, Todd & Heyburn PLLC, and may not be relied upon
in any manner by any other person without our prior written consent.
Sincerely,
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