Security and Collateral Agency Agreement - CWM Mortgage Holdings Inc., Independent National Mortgage Corp., Independent Lending Corp. and First Union Bank of North Carolina
SECURITY AND COLLATERAL AGENCY AGREEMENT
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THIS SECURITY AND COLLATERAL AGENCY AGREEMENT (the "Security Agreement") is
made and dated as of the 30th day of May, 1995 by and among CWM MORTGAGE
HOLDINGS, INC., a Delaware corporation ("CWM"), INDEPENDENT NATIONAL MORTGAGE
CORPORATION, a Delaware corporation ("INMC"), INDEPENDENT LENDING CORPORATION, a
Delaware corporation ("ILC" and, together with CWM and INMC, the "Companies"),
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association
("FUNB"), acting in its capacity as administrative agent for the lenders from
time to time participating in the Facility II Agreement (as defined below) (in
such capacity, the "Facility II Administrative Agent"), and in its capacity as
administrative agent for the lenders from time to time participating in the
Facility I Agreement (as defined below) (in such capacity, the "Facility I
Administrative Agent" and for convenience, FUNB, acting in either capacity, is
sometimes referred to herein as the "Administrative Agent") (the Facility II
Administrative Agent and the Facility I Administrative Agent being collectively
referred to herein as the "Administrative Agent"), and BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., a national banking association ("BT"), acting in its capacity
as collateral agent for the Administrative Agent (in such capacity, the
"Collateral Agent").
RECITALS
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A. Pursuant to that certain Facility II Credit Agreement of even date
herewith among the Companies, the lenders party thereto (the "Facility II
Lenders"), the Facility II Administrative Agent (as same may be amended,
extended or replaced from time to time, the "Facility II Agreement"), the
Facility II Lenders have agreed to extend credit to the Companies on the terms
and subject to the conditions set forth therein.
B. Pursuant to that certain Facility I Credit Agreement of even date
herewith among the Companies, the lenders party thereto (the "Facility I
Lenders"), and the Facility I Administrative Agent (as same may be amended,
extended or replaced from time to time, the "Facility I Agreement"), the
Facility I Lenders have agreed to extend credit to the Companies on the terms
and subject to the conditions set forth therein.
C. The Collateral Agent and the Administrative Agent have entered into
that certain Custodial and Intercreditor Agreement dated as of May 23, 1995
among the Companies, Merrill Lynch Mortgage Capital Inc., Merrill Lynch Credit
Corporation, Lehman
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Commercial Paper Inc., Nomura Asset Capital Corporation, the Collateral Agent,
the Administrative Agent and other lenders (as the same may be amended, extended
or replaced from time to time, the "Custodial Agreement") pursuant to which the
A/B Collateral (as defined herein) and Proceeds under this Security Agreement
shall be held, administered and allocated.
D. As a condition precedent to the effectiveness of the Facility II
Agreement and the Facility I Agreement, the Companies are required to execute
and deliver to the Collateral Agent and the Administrative Agent this Security
Agreement.
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
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1. Defined Terms. All capitalized terms used and not otherwise defined
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herein shall have the same meanings given to such term in the Facility II
Agreement, except that (i) for purposes hereof, the phrase "Required Documents"
refers to the documents listed on Exhibit 2 attached hereto and (ii) any
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capitalized term used and not defined herein which appears in both the Facility
II Agreement and the Facility I Agreement shall refer to in this Security
Agreement, collectively, both the meaning given to such term in the Facility II
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Agreement and the meaning given to such term in the Facility I Agreement (for
example, the term "Credit Documents" as used herein shall mean, collectively,
the "Credit Documents" as defined in the Facility II Agreement and the "Credit
Documents" as defined in the Facility I Agreement). In case of an irresolvable
conflict between the provisions of the Facility II Agreement and the Facility I
Agreement, the Facility II Agreement shall govern for the purposes hereof.
2. Appointment of Administrative Agent; Appointment of Collateral Agent.
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(a) By executing and delivering the Facility II Agreement or otherwise
becoming a "Lender" thereunder, each Facility II Lender has appointed the
Administrative Agent to act as secured party, agent, bailee and custodian for
the exclusive benefit of the Facility II Lenders, with respect to the Collateral
(as defined below). By executing and delivering the Facility I Agreement or
otherwise becoming a "Lender" thereunder, each Facility I Lender has appointed
the Administrative Agent to act as secured party, agent, bailee and custodian
for the exclusive benefit of the
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Facility I Lenders, with respect to the A/B Collateral (as defined below). The
Administrative Agent hereby accepts such appointment and agrees to maintain and
hold all Collateral at any time delivered to it as secured party, agent, bailee
and custodian for the exclusive benefit of Lenders. The Administrative Agent is
acting and will act with respect to the Collateral for the exclusive benefit of
Lenders and is not, and shall not at any time in the future be, subject with
respect to the Collateral, in any manner or to any extent, to the direction or
control of the Companies except as expressly permitted hereunder and under the
other Credit Documents. The Administrative Agent agrees to act in accordance
with this Security Agreement and the other Credit Documents and in accordance
with any written instructions properly delivered pursuant hereto. Under no
circumstances shall the Administrative Agent deliver possession of Collateral to
the Companies except in accordance with the express terms of this Security
Agreement or the Custodial Agreement.
(b) The Administrative Agent hereby appoints the Collateral Agent to act as
agent, bailee and custodian for the exclusive benefit of the Administrative
Agent, with respect to that portion of the A/B Collateral and the DEF Collateral
(as defined below) described in Paragraphs 5(a)(i), 5(a)(viii), 5(b)(i),
5(b)(ii), 5(b)(iii), and 5(b)(vii) below, and the products and Proceeds thereof,
to the extent such Collateral is received by or maintained by the Collateral
Agent (the "BT Collateral"). The Collateral Agent hereby accepts such
appointment and agrees to maintain and hold all such BT Collateral at any time
delivered to it as agent, bailee and custodian for the exclusive benefit of the
Administrative Agent. The Collateral Agent is acting and will act with respect
to the BT Collateral for the exclusive benefit of the Administrative Agent and
is not, and shall not at any time in the future be, subject with respect to the
BT Collateral, in any manner or to any extent, to the direction or control of
the Companies except as expressly permitted hereunder or under the Custodial
Agreement or as directed by the Administrative Agent. The Collateral Agent
agrees to act in accordance with this Security Agreement and the Custodial
Agreement and in accordance with any written instructions of the Administrative
Agent properly delivered pursuant hereto (provided, however, that in the event
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of any conflict between the terms of this Security Agreement and the terms of
the Custodial Agreement, the terms of this Security Agreement shall control).
Under no circumstances shall the Collateral Agent deliver possession of BT
Collateral to the Companies except in accordance with the express terms of this
Security Agreement or the Custodial Agreement.
4. Delivery of Collateral; Periodic Reports.
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(a) The Companies shall deliver BT Collateral (which is of a type which is
capable to be delivered), or cause BT Collateral (which is of a type which is
capable to be delivered) to be delivered, to the Collateral Agent hereunder
(and, in the case of BT Collateral which is A/B Collateral, under the terms of
the Custodial Agreement), and shall deliver all other Collateral (collectively,
the "Non-BT Collateral"), or cause Non-BT Collateral (which is of a type which
is capable to be delivered) to be delivered, to the Administrative Agent
hereunder. Delivery of Collateral (as hereinafter defined) delivered to the
Collateral Agent or the Administrative Agent in connection with the making of
any Loan shall be effected by delivery of the Required Documents listed on
Exhibit 2 hereto evidencing or relating to such Collateral for such type of Loan
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(provided, however, that such Required Documents shall not be required to be
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delivered with respect to any "Wet Mortgage Loan," as defined in Section 3.3 of
the Custodial Agreement, which is submitted for inclusion in the Tranche A
Borrowing Base, until the expiration of the time period set forth therein),
together with a Mortgage Loan Schedule with respect to each Mortgage Loan
(including, without limitation, "Wet Mortgage Loans") submitted for inclusion in
the Tranche A Borrowing Base or the Tranche B Borrowing Base, as more fully set
forth in Paragraph 6 below, by 6:00 a.m. (California time) on the Business Day
on which such Loan is being requested. The responsibility of the Collateral
Agent to review the BT Collateral relating to A/B Collateral shall be in
accordance with the provisions set forth in the Custodial Agreement for review
of A/B Collateral, and the responsibility of the Collateral Agent to review the
BT Collateral relating to DEF Collateral is limited to the review steps
described on Exhibit 1A hereto, said review of all BT Collateral delivered by
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6:00 a.m. on any Business Day to be completed by 11:00 a.m. (California time) on
such Business Day. The responsibility of the Administrative Agent to review
Other Collateral is limited to the review steps described on Exhibit 1B hereto,
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said review of Collateral delivered on any Business Day to be completed before
the opening of business of the Administrative Agent on the next succeeding
Business Day. All Required Documents at any time delivered to the Collateral
Agent hereunder shall be held and maintained in accordance with the methods set
forth in the Custodial Agreement for maintenance of A/B Collateral regardless of
whether such Required Documents relate to A/B Collateral or to DEF Collateral.
All Required Documents at any time delivered to the Administrative Agent
hereunder shall be held by the Administrative Agent in a fire resistant vault,
drawer or other suitable depositary maintained and controlled solely by the
Administrative Agent, conspicuously marked to show the respective interests of
the Facility II Lenders therein and not commingled
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with any other assets or property of, or held by, the Administrative Agent.
(b) The Companies shall also deliver on computer readable media to the
Collateral Agent, no later than the third Business Day of each month, (i) a
Mortgage Loan Schedule (in the form of Exhibit 3A attached hereto) with respect
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to each Mortgage Loan held by the Collateral Agent for inclusion in the Tranche
A Borrowing Base or the Tranche B Borrowing Base as of the last day of the
preceding month, such Mortgage Loan Schedule to set forth, with respect to each
Mortgage Loan so held, the loan number, the unpaid principal balance thereof as
of the last day of the preceding month, the "paid-to date" of the Mortgage Loan,
and whether a Mortgage Loan is a Construction-to-Permanent Loan; (ii) a DEF
Schedule (in the form of Exhibit 3B attached hereto) with respect to each
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Construction Loan, Servicing Loan or Foreclosure/Repurchase Loan held by the
Collateral Agent for inclusion in the Tranche D Borrowing Base, the Tranche E
Borrowing Base or the Tranche F Borrowing Base, as applicable, as of the last
day of the preceding month, such schedule to set forth with respect to each such
loan the obligor's name, the unpaid principal balance thereof as of the last day
of the preceding month, and the "paid-to date" thereof; (iii) such other
information which is necessary to calculate the Collateral Value of any
Borrowing Base. The Collateral Agent will promptly provide a written copy of
each such item.
(c) The Administrative Agent shall deliver to the Collateral Agent,
simultaneously with the delivery by the Companies to the Collateral Agent of
Required Documents with respect to any Eligible A/B Mortgage Loan, Construction
Loan, Servicing Loan or Foreclosure/Repurchase Loan which does not conform to
the requirements therefor contained in the Facility II Agreement but which is
intended to be included in the Tranche A Borrowing Base, the Tranche B Borrowing
Base, the Tranche D Borrowing Base, the Tranche E Borrowing Base or the Tranche
F Borrowing Base, as applicable, a waiver in the form of Exhibit 4 attached
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hereto indicating that the Administrative Agent has waived such nonconformity
and consents to the inclusion of such Collateral in the applicable Borrowing
Base.
5. Grant of Security Interest. The Companies hereby pledge, assign and
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grant to the Administrative Agent (i) for the pro rata, pari passu benefit of
the Lenders, a security interest in the property described in Paragraph 5(a)
below (collectively and severally, the "A/B Collateral"), to secure payment and
performance of the Obligations, (ii) for the pro rata, pari passu benefit of the
Facility II Lenders, a security interest in the property described in Paragraph
5(b) below (collectively and severally, the "DEF Collateral"), to secure payment
and performance of the
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Obligations, and (iii) for the pro rata, pari passu benefit of the Facility II
Lenders, a security interest in the property described in Paragraph 5(c) below
(collectively and severally, the "Other Collateral"), to secure payment and
performance of the Obligations. The A/B Collateral, the DEF Collateral and the
Other Collateral may be hereinafter referred to collectively from time to time
as the "Collateral."
6. Collateral.
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(a) The A/B Collateral shall consist of all now existing and hereafter
arising right, title and interest of the Companies in, under and to each of the
following:
(i) All Mortgage Loans (including, without limitation, all Eligible
A/B Mortgage Loans but not including Construction Loans or any Mortgage Loans
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securing Foreclosure/Repurchase Loans) now owned or hereafter acquired or
originated by the Companies or any of them and delivered to the Collateral Agent
or otherwise identified as A/B Collateral, in each case until the release
thereof as provided in Paragraph 5 of the Custodial Agreement or in Paragraphs 8
and 25 hereof, including, without limitation, the promissory notes or other
instruments or agreements evidencing the indebtedness of Obligors thereon, all
mortgages, deeds to secure debt, trust deeds and security agreements related
thereto, all rights to payment thereunder, all rights in the Properties securing
payment of the indebtedness of the Obligors thereon, all rights under documents
related thereto, such as guaranties and insurance policies (issued by
governmental agencies or otherwise), including, without limitation, mortgage and
title insurance policies, fire and extended coverage insurance policies
(including the right to any return premiums) and FHA insurance and VA
guaranties, and all rights in cash deposits consisting of impounds, insurance
premiums or other funds held on account thereof;
(ii) All Mortgage-Backed Securities secured or otherwise supported by
those Mortgage Loans described in subparagraph (a)(i) above (collectively,
"Warehouse-Related MBS's") now owned or hereafter acquired by the Companies or
any of them, all right to the payment of monies and non-cash distributions on
account thereof and all new, substituted and additional securities at any time
issued with respect thereto;
(iii) All rights of the Companies or any of them (but not the
obligations relating thereto) under all Take-Out Commitments or Hedging
Arrangements, now existing or hereafter arising, covering any part of the
foregoing A/B Collateral, all rights to deliver those Mortgage Loans described
in subparagraph (a)(i) above
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and those Warehouse-Related MBS's described in subparagraph (a)(ii) above to
permanent investors and other purchasers pursuant thereto and all proceeds
resulting from the disposition of such A/B Collateral pursuant thereto;
(iv) All now existing and hereafter arising rights to service,
administer and collect Mortgage Loans and Warehouse-Related MBS's included in
the computation of the Collateral Value of the Tranche A Borrowing Base or the
Collateral Value of the Tranche B Borrowing Base on the date of determination
(it being acknowledged and agreed that prior to the occurrence of an Event of
Default and acceleration of the Obligations, the security interest in such
servicing rights granted hereunder shall be automatically terminated without
need for further action upon the sale, transfer or other disposition of the
related Mortgage Loan or Warehouse-Related MBS, or removal of such Mortgage Loan
or Warehouse-Related MBS from the Tranche A Borrowing Base and the Tranche B
Borrowing Base, each in accordance with the provisions of the Credit Documents),
and all rights to the payment of money on account of such servicing,
administration and collection activities;
(v) All now existing and hereafter arising accounts, contract rights
and general intangibles constituting or relating to any of the foregoing A/B
Collateral;
(vi) All now existing and hereafter acquired files, documents,
instruments, surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, cards, accounting records and other books, records,
information and data of the Companies or any of them relating to the foregoing
A/B Collateral (including all information, records, data, programs, tapes,
discs, and cards necessary or helpful in the administration or servicing of the
foregoing A/B Collateral);
(vii) The Funding Account, and any and all funds at any time held
in such account;
(viii) The Financial Institution Settlement Account (as defined in the
Custodial Agreement) established for the benefit of the Administrative Agent,
and the Administrative Agent's pro rata share of the Joint Settlement Account
(as defined in the Custodial Agreement), and any and all funds at any time held
in any such accounts; and
(ix) All products and Proceeds of the foregoing A/B Collateral arising
prior to the release of such Collateral pursuant to Paragraph 5 of the Custodial
A greement or in Paragraphs 8 and 25 hereof.
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(b) The DEF Collateral shall consist of all now existing and hereafter
arising right, title and interest of the Companies in, under and to each of the
following:
(i) All Construction Loans and all Mortgage Loans securing
Foreclosure/Repurchase Loans now owned or hereafter acquired or originated by
the Companies or any of them and delivered to the Collateral Agent or otherwise
identified as DEF Collateral, in each case until the release thereof as provided
in Paragraphs 8 and 25 hereof, including, without limitation, the promissory
notes or other instruments or agreements evidencing the indebtedness of obligors
thereon, all mortgages, deeds to secure debt, trust deeds and security
agreements related thereto, all rights to payment thereunder, all rights in the
real property securing payment of the indebtedness of the Obligors thereon, all
rights under documents related thereto, such as guaranties and insurance
policies (issued by governmental agencies or otherwise), including, without
limitation, mortgage and title insurance policies, fire and extended coverage
insurance policies (including the right to any return premiums) and FHA
insurance and VA guaranties, and all rights in cash deposits consisting of
impounds, insurance premiums or other funds held on account thereof;
(ii) All Servicing Loans originated (now or hereafter) by the
Companies or any of them and delivered to the Collateral Agent or otherwise
identified as DEF Collateral, in each case until the release thereof as provided
in Paragraphs 8 and 25 hereof, including, without limitation, the promissory
notes or other instruments or agreements evidencing the indebtedness of the
applicable sub-borrowers thereon, all security agreements related thereto, all
rights of the Companies to payment thereunder, all rights in the servicing
contracts securing payment of the indebtedness of the applicable sub-borrowers
thereon (including without limitation all rights to service, administer or
collect Mortgage Loans, including pools of Mortgage Loans underlying Mortgage-
Backed Securities, thereunder, all rights to the payment of monies thereunder on
account of servicing, administration or collection activities thereunder, on
account of the termination thereof, and as reimbursement for costs and expenses
incurred and advances made by the applicable sub-borrowers on account of
obligations of the Obligors under the Mortgage Loans serviced thereunder), and
all rights under guaranties, indemnifications or other documents, instruments or
agreements providing collateral security or credit support for the obligations
of the investors under such servicing contracts to make payments with respect
thereto;
(iii) All Foreclosure/Repurchase Loans originated (now or
hereafter) by the Companies or any of them and delivered to the
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Collateral Agent or otherwise identified as DEF Collateral, in each case until
the release thereof as provided in Paragraphs 8 and 25 hereof, including,
without limitation, the promissory notes or other instruments or agreements
evidencing the indebtedness of the applicable sub-borrowers thereon, all
security agreements related thereto, all rights to payment thereunder, all
rights in the instruments, documents, agreements or underlying property securing
payment of the indebtedness of the applicable sub-borrowers thereon, all rights
under documents related thereto, such as guaranties and insurance policies, and
all rights in cash deposits or other funds held on account thereof;
(iv) All now existing and hereafter arising accounts, contract rights
and general intangibles constituting or relating to any of the foregoing DEF
Collateral;
(v) All now existing and hereafter acquired files, documents,
instruments, surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, cards, accounting records and other books, records,
information and data of the Companies or any of them relating to the foregoing
DEF Collateral (including all information, records, data, programs, tapes,
discs, and cards necessary or helpful in the administration or servicing of the
foregoing DEF Collateral;
(vi) The Funding Account and any and all funds at any time held in
such account;
(vii) All products and Proceeds of the foregoing DEF Collateral
arising prior to the release of such Collateral pursuant to Paragraphs 8 and 25
hereof.
(c) The Other Collateral shall consist of all now existing and hereafter
arising right, title and interest of the Companies in, under and to each of the
following:
(i) All Servicing Contracts and Master Servicing Contracts listed on
Schedule 1 hereto (as such Schedule 1 may be amended, modified, or replaced from
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time to time), including, without limitation, all now existing and hereafter
arising rights to service, administer or collect Mortgage Loans, including pools
of Mortgage Loans underlying Mortgage-Based Securities, thereunder, in each case
until the release thereof as provided in Paragraphs 8 and 25 hereof;
(ii) All now existing and hereafter arising right to the payment of
monies under the Servicing Contracts and Master Servicing Contracts listed on
Schedule 1 hereto (as such Schedule 1 may be amended, modified, or replaced from
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time to time), on
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account of servicing, administration or collection activities thereunder, on
account of the termination of any such Servicing Contract or Master Servicing
Contract and as reimbursement for costs and expenses incurred and advances made
by the Companies or any of them on account of obligations of the Obligors under
said Mortgage Loans;
(iii) All now existing and hereafter arising rights under
guaranties, indemnifications and other documents, instruments and agreements
providing collateral security or credit support for the obligations of the
investors or MBS Fiduciaries to make the payments referred to in subparagraph
(ii) above;
(iv) All now existing and hereafter arising accounts, contract rights
and general intangibles constituting or relating to any of the foregoing Other
Collateral;
(v) All now existing and hereafter acquired files, documents,
instruments, surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, cards, accounting records and other books, records,
information and data of the Companies or any of them relating to the foregoing
Other Collateral (including all information, records, data, programs, tapes,
discs, and cards necessary or helpful in the administration or servicing of the
foregoing Other Collateral or in providing servicing as required under the
Servicing Contracts, the Master Servicing Contracts or any other servicing
contract described above);
(vi) The Funding Account and any and all funds at any time held in
such account; and
(vii) All products and Proceeds of the foregoing Other Collateral
arising prior to the release of such Collateral pursuant to Paragraphs 8 and 25
hereof.
In connection with any of the items listed in Paragraphs 5(a), 5(b) or
5(c) above which are delivered to or held by the Collateral Agent or the
Administrative Agent, each of the Collateral Agent and the Administrative Agent
agrees that it will hold and use, and will cause any agents and attorneys-in-
fact appointed by it pursuant to the terms hereof to hold and use, such items in
accordance with all applicable laws relating to the financial privacy of the
obligors thereon.
6. Review of Collateral.
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(a) Each delivery of Required Documents relating to A/B Collateral to the
Collateral Agent shall be accompanied by a schedule prepared on computer-
readable media containing the
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information set forth on Exhibit 3A (the "Mortgage Loan Schedule"). Each
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delivery of Required Documents relating to DEF Collateral to the Collateral
Agent shall be accompanied by a schedule prepared on computer-readable media
containing the information set forth on Exhibit 3B (the "DEF Schedule").
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(b) Upon any receipt of Required Documents related to BT Collateral which
is A/B Collateral with respect to any Loan requested by the Companies, the
Collateral Agent shall conduct such review of the same as may be required under
and pursuant to the terms of the Custodial Agreement. The obligations of the
Collateral Agent with respect to any non-conforming Required Documents delivered
in connection with any BT Collateral which is A/B Collateral shall be as set
forth in the Custodial Agreement. In the event that the Companies had been
requested to deliver to the Administrative Agent the Additional Required
Documents related to A/B Collateral with respect to any Loan requested by the
Companies, the Administrative Agent shall conduct such review of the same as it
may deem appropriate. The Collateral Agent shall not be required to make any
independent examination of any BT Collateral which is A/B Collateral beyond the
review specifically required herein. Specifically, the Collateral Agent shall
make no representations as to: (i) The validity, genuineness, legality or
enforceability of any of the BT Collateral which is A/B Collateral delivered to
it, or (ii) the collectability, insurability, effectiveness or suitability of
any such BT Collateral which is A/B Collateral.
(c) Upon any receipt of Required Documents and related DEF Schedule related
to BT Collateral which is DEF Collateral with respect to any Loan requested by
the Companies, the Collateral Agent shall review the same and verify that:
(i) All Required Documents relating to such items of BT Collateral
which is DEF Collateral as set forth in the related DEF Schedule appear regular
on their face and are in the possession of the Collateral Agent; and
(ii) The statements set forth on Exhibit 1A hereto are accurate and
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complete in all respects.
In the event that the Companies had been requested to deliver to the
Administrative Agent the Additional Required Documents related to DEF Collateral
with respect to any Loan requested by the Companies, the Administrative Agent
shall conduct such review of the same as it may deem appropriate. The
Collateral Agent shall not be required to make any independent examination of
any DEF Collateral beyond the review specifically required herein.
Specifically, the Collateral Agent shall make no representations as
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to: (i) The validity, genuineness, legality or enforceability of any of the DEF
Collateral delivered to it, or (ii) the collectability, insurability,
effectiveness or suitability of any such DEF Collateral.
Such verification of the Required Documents delivered in connection with BT
Collateral which is DEF Collateral delivered during any period covered by a
Borrowing Base Schedule shall be set forth in such schedule. If the Collateral
Agent notes any exception in the review described in this subparagraph (c), the
Collateral Agent shall prepare a report noting same (a "DEF Exception Report")
and deliver it to the Administrative Agent and the Companies as soon as possible
but in no event later than simultaneously with the delivery of its next
Borrowing Base Schedule. The Construction Loans, Servicing Loans or
Foreclosure/Repurchase Loans on the DEF Exception Report shall not be included
in the Tranche D Borrowing Base, the Tranche E Borrowing Base or the Tranche F
Borrowing Base, as applicable, or on the Borrowing Base Schedule.
(d) Upon any receipt of Required Documents related to Other Collateral with
respect to any Loan requested by the Companies, the Administrative Agent shall
review the same and verify that:
(viii) All Required Documents relating to such item of Other
Collateral appear regular on their face and are in the possession of the
Administrative Agent; and
(ix) The statements set forth on Exhibit 1B hereto are accurate and
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complete in all respects.
Such verification for Other Collateral delivered during any period covered by a
collateral report referred to in Paragraph 7 below shall be set forth in such
report. If the Administrative Agent notes any exception in the review described
in subparagraph (i) or (ii) above or questions, in its reasonable discretion,
the genuineness, regularity, propriety, or accuracy of any item of Other
Collateral, the Administrative Agent shall so note in its next collateral report
delivered to Facility II Lenders. In the event that the Companies had been
requested to deliver the Additional Required Documents related to Other
Collateral with respect to any Loan requested by the Companies, the
Administrative Agent shall review and verify such Additional Required Documents
consistent with the obligations set forth above.
7. Collateral Value Determination; Determination Assumptions.
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(d) No later than 11:00 a.m. (California time) on each Business Day,
the Collateral Agent shall compute, in accordance
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with Exhibit F of the Agreement, (i) the Collateral Value of the Tranche A
Borrowing Base (including, without limitation, "Wet Mortgage Loans" as defined
in the Custodial Agreement) and the Collateral Value of the Tranche B Borrowing
Base (an "A/B Collateral Value Determination"), and (ii) the Collateral Value of
the Tranche D Borrowing Base, the Collateral Value of the Tranche E Borrowing
Base and the Collateral Value of the Tranche F Borrowing Base (a "DEF Collateral
Value Determination") by completing the Borrowing Base Schedule as of 6:00 a.m.
(California time) on the same Business Day and notify the Administrative Agent
and the Companies thereof via facsimile. Such computations shall be made without
reduction for uncleared drafts relating to Mortgage Loans. The Companies shall
certify as to the accuracy of such determinations and shall return such
determinations after completing the information regarding uncleared drafts, with
such certification attached, to the Collateral Agent and the Administrative
Agent via facsimile no later than 11:00 a.m. (California time) on each such
Business Day.
(e) No later than 11:00 a.m. (California time) on each Business Day,
the Collateral Agent shall prepare and deliver to the Companies and the
Administrative Agent via facsimile a schedule showing (i) the composition of the
Tranche A Borrowing Base, on a per-Eligible A/B Mortgage Loan basis (including,
without limitation, Wet Mortgage Loans), (ii) the composition of the Tranche B
Borrowing Base, on a per-Eligible A/B Mortgage Loan basis, (iii) the composition
of the Tranche D Borrowing Base, (iv) the composition of the Tranche E Borrowing
Base, and (v) the composition of the Tranche F Borrowing Base, all as of 6:00
a.m. (California time) on the same Business Day. Such computations shall be
made without reduction for uncleared drafts relating to Mortgage Loans.
(c) No later than 8:00 a.m. (Charlotte, North Carolina time) on the
third Business Day of each month, the Administrative Agent shall compute, in
accordance with Exhibit F of the Agreement, the Collateral Value of the Tranche
C Borrowing Base (an "Other Collateral Value Determination") as of 5:00 p.m.
(California time) on the last Business Day of the preceding month and notify the
Companies thereof.
(d) No later than 8:00 a.m. (Charlotte, North Carolina time) on the
third Business Day of each month, the Administrative Agent shall prepare and
deliver to the Companies via facsimile a schedule showing the composition of the
Tranche C Borrowing Base, as of 5:00 p.m. (California time) on the last Business
Day of the preceding month. The Companies shall certify as to the accuracy of
such schedule and shall return such schedule, with such certification attached,
to the Administrative Agent via facsimile no later
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than 11:00 a.m. (Charlotte, North Carolina time) on the same Business Day such
schedule is delivered to the Companies.
(e) In making any collateral value determination or other calculation
involving determination of the Collateral Value of any Borrowing Base, the
Collateral Agent shall be permitted to rely, on information supplied by the
Companies to the Collateral Agent on the Mortgage Loan Schedule or DEF Schedule,
or the information described in Paragraph 3(b) hereof, most recently received by
the Collateral Agent with respect to such loan, without independent
investigation of the correctness thereof.
8. Handling of Collateral; Release of Security Interest.
----------------------------------------------------
(f) Prior to the occurrence of an Event of Default, from time to time
until otherwise notified by the Administrative Agent in writing (which may be
via facsimile with telephonic confirmation), the Collateral Agent is hereby
authorized to release documentation relating to Eligible A/B Mortgage Loans to
the Companies pursuant to the terms and provisions set forth in Section 5.1 of
the Custodial Agreement. The Companies hereby agree that any request by the
Companies for release of A/B Collateral under this subparagraph (a) shall be in
the form of Exhibit D-1 to the Custodial Agreement and shall be in compliance
with all terms and conditions of such release set forth herein and in Section
5.1 of the Custodial Agreement.
(g) Prior to the occurrence of an Event of Default, and subject to the
provisions of Paragraphs 8(c) and 8(d) below, upon written request of the
Companies to the Administrative Agent, the Administrative Agent is hereby
authorized, and does hereby agree to release free and clear of the security
interest granted to the Administrative Agent hereunder, and Administrative Agent
will direct the Collateral Agent and the Collateral Agent will release the
documentation relating to A/B Collateral and DEF Collateral, and the
Administrative Agent will release free and clear of the security interest
granted to the Administrative Agent, the Other Collateral to the Companies or as
directed by the Companies so long as after such release (i) the Collateral Value
of the Tranche A Borrowing Base relating to Mortgage Loans in which the
Administrative Agent retains a security interest hereunder equals or exceeds the
aggregate outstanding principal balance of the Tranche A Loans, (ii) the
Collateral Value of the Tranche B Borrowing Base relating to Mortgage Loans in
which the Administrative Agent retains a security interest hereunder equals or
exceeds the aggregate outstanding principal balance of the Tranche B Loans,
(iii) the Collateral Value of the Tranche C Borrowing Base relating to Assigned
Servicing Rights in which the Administrative Agent retains a security interest
hereunder equals or exceeds the
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aggregate outstanding principal balance of the Tranche C Loans, (iv) the
Collateral Value of the Tranche D Borrowing Base relating to Construction Loans
in which the Administrative Agent retains a security interest hereunder equals
or exceeds the aggregate outstanding principal balance of the Tranche D Loans,
(v) the Collateral Value of the Tranche E Borrowing Base relating to Servicing
Loans in which the Administrative Agent retains a security interest hereunder
equals or exceeds the aggregate outstanding principal balance of the Tranche E
Loans, and (vi) the Collateral Value of the Tranche F Borrowing Base relating to
Foreclosure/Repurchase Loans in which the Administrative Agent retains a
security interest hereunder equals or exceeds the aggregate outstanding
principal balance of the Tranche F Loans. Any such request for release made to
the Collateral Agent with respect to A/B Collateral shall be made pursuant to
Exhibit D-1 or D-2, as applicable, of the Custodial Agreement. Upon receipt of a
request for such a release made to the Collateral Agent for A/B Collateral, the
Collateral Agent will forward a copy to the Administrative Agent and the
Administrative Agent will, no later than the next Business Day, verify and
approve in writing the aggregate outstanding principal balance of the Loans for
purposes of making the foregoing computation and shall authorize the release of
such A/B Collateral. Any request for release of DEF Collateral will be sent
directly to the Administrative Agent and the Administrative Agent, after
verification of the applicable Loan balances, will authorize, in writing, the
Collateral Agent to release the DEF Collateral if the requirements of this
Paragraph 8(b) are met; provided, that the Collateral Agent shall not release
--------
such A/B Collateral or DEF Collateral without the express authorization of the
Administrative Agent. The Collateral Agent agrees to transmit all Collateral
released pursuant to this Paragraph 8(b) as directed by the Companies at the
Companies' expense, and, upon request by the Companies, to endorse any related
notes (without recourse) and to execute assignments of any related mortgages or
deeds of trust (including, without limitation, mortgages or deeds of trust
relating to Construction Loans) and other instruments of transfer or release as
the Companies shall reasonably request.
(h) (i) Subject to the provisions of Paragraph 8(d) below, the
Administrative Agent shall, no later than ten (10) Business Days following
receipt of the written request therefor by the Companies, release from the
security interest created hereby specifically identified portions of Other
Collateral consisting of rights under Servicing Contracts or Master Servicing
Contracts in connection with the sale of such rights, said release of lien to be
evidenced by the execution and delivery by the Administrative Agent to the
Companies, at no cost or expense to the Collateral Agent, the Administrative
Agent or any Facility II Lender, of an appropriate form of UCC financing
statement release and such other
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<PAGE>
documents as the Companies may reasonably request (the "Tranche C Release
Documents"); provided, however, that (A) at the date of receipt from the
Companies of a release request hereunder and at the date of delivery by the
Administrative Agent to the Companies of the Tranche C Release Documents
relating thereto (and both before and after giving effect to the requested
release) there shall not exist an Event of Default or Potential Default, and (B)
the aggregate outstanding principal balance of Tranche C Loans will not exceed
the Collateral Value of the Tranche C Borrowing Base.
(ii) Subject to the provisions of Paragraph 8(d) below, the
Administrative Agent shall, no later than ten (10) Business Days following
receipt of the written request therefor by the Companies, release from the
security interest created hereby specifically identified portions of DEF
Collateral consisting of rights under those servicing contracts securing
Servicing Loans, in connection with the sale of such rights, said release of
lien to be evidenced by the execution and delivery by the Administrative Agent
to the Companies, at no cost or expense to the Administrative Agent or any
Facility II Lender, of an appropriate form of UCC financing statement release
and such other documents as the Companies may reasonably request (such forms to
be prepared by the Companies or the Administrative Agent) (the "Tranche E
Release Documents"); provided, however, that (A) at the date of receipt from the
Companies of a release request hereunder and at the date of delivery by the
Administrative Agent to the Companies of the Tranche E Release Documents
relating thereto (and both before and after giving effect to the requested
release) there shall not exist an Event of Default or Potential Default, and (B)
the aggregate outstanding principal balance of Tranche E Loans will not exceed
the Collateral Value of the Tranche E Borrowing Base.
(i) Except as expressly set forth herein or in the Custodial
Agreement, the Collateral Agent shall not release any item of Collateral from
the security interest created hereby without the prior written consent of the
Administrative Agent. Except as expressly set forth herein, the Administrative
Agent shall not release any item of Collateral from the security interest
created hereby without the prior written consent of one hundred percent (100%)
of the Lenders.
(j) Prior to the occurrence of an Event of Default, the Collateral
Agent and the Administrative Agent shall take such steps as either of them may
be reasonably directed from time to time by the Companies in writing (and, in
the case of directions to the Collateral Agent, which are approved by the
Administrative Agent in writing) which are not inconsistent with the provisions
of this Security Agreement, the Custodial Agreement and the other Credit
Documents and which the Companies deem necessary to enable the
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Companies to perform and comply with Take-Out Commitments or Hedging
Arrangements and with other agreements for the sale or other disposition in
whole or in part of Mortgage Loans.
(k) Prior to the occurrence of an Event of Default and acceleration of
the Obligations and if, but only if, such action is not inconsistent with the
express provisions of this Security Agreement, the Custodial Agreement and the
other Credit Documents and would not create an Event of Default or Potential
Default, the Companies may, in connection with their respective residential
mortgage banking businesses: originate, acquire and service Mortgage Loans;
receive payments on Mortgage Loans from the Obligors thereon and impounds and
fees in connection therewith; retain, use and apply fees and payments made on
account of the Mortgage Loans by the Obligors thereunder; disburse from impound
accounts; in the ordinary course of the Companies' business, create, use,
destroy and transfer records, files and other items described in Paragraphs
5(a)(vi), 5(b)(v) or 5(c)(v) above; sell or otherwise dispose of Mortgage Loans
not included in the computation of the Collateral Value of the Tranche A
Borrowing Base or the Collateral Value of the Tranche B Borrowing Base, with or
without servicing rights; pledge Mortgage Loans to the extent permitted under
the Credit Documents; sell servicing rights; and enter into, exercise rights
under, perform, modify, waive and cancel any Take-Out Commitments or Hedging
Arrangements.
(l) Following the occurrence of an Event of Default, the Collateral
Agent and the Administrative Agent shall not, and shall incur no liability to
the Companies or any other Person for refusing to, deliver any item of
Collateral to the Companies or any other Person (other than under existing Take-
Out Commitments) without the express prior written consent and at the direction
of, in the case of delivery by the Collateral Agent, the Administrative Agent
and, in the case of delivery by the Administrative Agent, one hundred percent
(100%) of the Lenders.
(h) All amounts payable on account of the sale or release pursuant to
Paragraph 8(b) requiring payment by the Companies, of Mortgage Loans included in
the Tranche A Borrowing Base or the Tranche B Borrowing Base, will be instructed
to be paid directly by the purchaser or the Companies, as the case may be, to
the Joint Settlement Account or to the Financial Institution Settlement Account
maintained in the name of the Administrative Agent, each of which Joint
Settlement Account and such Financial Institution Settlement Account shall be
maintained by the Collateral Agent and shall be "no access" accounts to the
Companies, the Administrative Agent and Collateral Agent except to the extent
expressly permitted hereunder or under the Custodial Agreement. Pursuant to
Paragraph 4 above, the Companies have granted a
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security interest in and lien upon the Financial Institution Settlement Account
maintained in the name of the Administrative Agent, and on the Administrative
Agent's pro rata share of the Joint Settlement Account, and in any and all
amounts at any time held therein or pertaining thereto, to the Administrative
Agent as collateral security for the Obligations. This Paragraph 8(h) shall
constitute notice to the Collateral Agent of such security interest pursuant to
the Uniform Commercial Code of all relevant jurisdictions and any other law or
regulation requiring such notice. The Collateral Agent shall hold the Financial
Institution Settlement Account maintained in the name of the Administrative
Agent, and the Administrative Agent's pro rata share of the Joint Settlement
Account, and all funds at any time held therein or pertaining thereto, for the
benefit of the Administrative Agent with all rights of a secured party under the
Uniform Commercial Code of all relevant jurisdictions. This Paragraph 8(h) shall
further constitute irrevocable notice to the Collateral Agent that the accounts
referred to above are "no access" accounts to the Companies, the Administrative
Agent and the Collateral Agent except to the extent expressly permitted
hereunder and under the Custodial Agreement. Upon written direction of the
Administrative Agent, funds held in the Financial Institution Settlement Account
maintained in the name of the Administrative Agent, and the Administrative
Agent's pro rata share of funds held in the Joint Settlement Account, shall be
disbursed by the Collateral Agent pursuant to the instructions of the
Administrative Agent in accordance with the provisions of the Agreement and of
the Custodial Agreement.
9. Reports. The Collateral Agent shall deliver to the Administrative
-------
Agent, from time to time, such other reports and information as the
Administrative Agent may from time to time reasonably request. In preparing any
such reports the Collateral Agent shall be entitled to rely, without independent
investigation (other than the review steps described in the Custodial Agreement
and on Exhibit 1A hereto), on information supplied to the Collateral Agent by
----------
the Companies. Any expense incurred by the Collateral Agent in preparing such
reports shall be paid by the Companies.
10. No Reliance. The Collateral Agent shall not be responsible to the
-----------
Administrative Agent, the Companies or any Lender, and the Administrative Agent
shall not be responsible to the Collateral Agent, the Companies or any Lender,
for any recitals, statements, representations or warranties contained herein, in
the Custodial Agreement or in any other Credit Document; or for the execution,
effectiveness, genuineness, validity, enforceability, collectability, accuracy,
completeness or sufficiency of this Security Agreement, the Custodial Agreement
or any other Credit Document or instruments executed and delivered, or
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<PAGE>
which could have been executed or delivered, in connection with this Security
Agreement, the Custodial Agreement or the other Credit Documents, including,
without limitation, the attachment, creation, effectiveness or perfection of the
security interests granted or purported to be granted hereunder in and to the
Collateral. The Collateral Agent shall be entitled to refrain from exercising
any discretionary powers or actions under this Security Agreement or any other
Credit Document until the Collateral Agent shall have received the prior written
consent of the Administrative Agent to such action and shall have been
indemnified by the Administrative Agent for the performance of such actions. The
Administrative Agent shall be entitled to refrain from exercising any
discretionary powers or actions under this Security Agreement, the Custodial
Agreement or any other Credit Document until such Person shall have received the
prior written consent of one hundred percent (100%) of the Lenders to such
action.
11. Fees of the Collateral Agent. The Custodian shall charge such fees
----------------------------
for its services under this Agreement as are set forth in a separate agreement
between the Custodian and the Companies, the payment of which fees, together
with the Custodian's expenses in connection herewith, shall be solely the
obligation of the Companies.
12. Availability of Documents. The Administrative Agent and Lenders and
-------------------------
its and their agents, accountants, attorneys and auditors will be permitted
during normal business hours at any time and from time to time upon reasonable
advance written notice to the Companies and to the Collateral Agent (but in no
event less than two (2) Business Days) to examine (to the extent permitted by
applicable law) the files, documents, records and other papers in the possession
or under the control of the Collateral Agent or the Administrative Agent
relating to any or all Collateral and to make copies thereof. Prior to the
occurrence of an Event of Default, any such activity will be at the cost and
expense of the Administrative Agent or Lender conducting such activity;
following the occurrence of an Event of Default, all reasonable costs and
expenses associated with the exercise by Administrative Agent or Lenders of
their rights under this Paragraph 12 which have been reasonably incurred shall
be promptly paid by the Companies upon demand of Administrative Agent or any
Lender made through the Administrative Agent; provided, that if the Companies
--------
shall not pay any expenses of the Collateral Agent relating to the exercise of
the rights of Administrative Agent or Lenders under this Paragraph 12, the
Administrative Agent or the Lenders, as applicable, shall pay such costs and
expenses.
13. Representations and Warranties. The Companies hereby jointly and
------------------------------
severally represent and warrant that: (a) the
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Companies are the sole owners of the Collateral (or, in the case of after-
acquired Collateral, at the time the Companies acquire rights in the Collateral,
will be the sole owners thereof); (b) except for security interests in favor of
the Administrative Agent for the benefit of the Lenders hereunder, no Person
(other than the investors party to the Servicing Contracts or to the servicing
contracts constituting security for the Servicing Loans, and the MBS Fiduciaries
party to the Master Servicing Contracts) has (or, in the case of after-acquired
Collateral, at the time the Companies acquire rights therein, will have) any
right, title, claim or interest (by way of lien or otherwise) in, against or to
the Collateral and, in any event, the Administrative Agent has a perfected,
first priority security interest therein for the benefit of the Lenders; (c) all
information heretofore, herein or hereafter supplied to the Collateral Agent, to
the Administrative Agent or to any Lender by or on behalf of the Companies with
respect to the Collateral is or will be accurate and complete in all material
respects; (d) each Mortgage Loan is, at all dates when it is submitted by the
Companies for inclusion in the computation of the Collateral Value of the
Tranche A Borrowing Base or the Collateral Value of the Tranche B Borrowing
Base, an Eligible A/B Mortgage Loan; and (e) each Construction Loan, Servicing
Loan, and Foreclosure/Repurchase Loan meets, at all dates when it is included by
the Companies in the Tranche D Borrowing Base, the Tranche E Borrowing Base or
the Tranche F Borrowing Base, as applicable, the respective requirements
contained in the definitions of such terms as set forth in the Facility II
Agreement.
14. Covenants of the Companies. The Companies hereby agree: (a) to
--------------------------
procure, execute and deliver from time to time any endorsements, assignments,
financing statements and other writings deemed necessary by the Administrative
Agent to perfect, maintain and protect the security interest of the
Administrative Agent hereunder in the Collateral for the benefit of the Lenders
and the priority thereof and to deliver promptly to the Collateral Agent or the
Administrative Agent, as applicable, all originals of Collateral or Proceeds
consisting of chattel paper or instruments; (b) not to surrender or lose
possession of (other than to the Collateral Agent or the Administrative Agent,
as applicable), sell, encumber, or otherwise dispose of or transfer, any
Collateral or right or interest therein other than shipment of Mortgage Loans
and Mortgage-Backed Securities under Take-Out Commitments and as otherwise
permitted under Paragraph 8 above, in the Facility II Agreement or in the
Facility I Agreement; (c) at the times and in the manner expressly provided for
herein and in the Custodial Agreement, to account fully for and promptly to
deliver to the Collateral Agent or the Administrative Agent, as applicable, in
the form received, all Required Documents and other Collateral capable of being
delivered or Proceeds received, endorsed to the Collateral Agent or
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<PAGE>
the Administrative Agent, as applicable, as appropriate and accompanied by such
assignments and powers, duly executed, as the Administrative Agent shall
reasonably request, and until so delivered all Collateral and Proceeds shall be
held in trust for the Administrative Agent separate from all other property of
the Companies and identified as subject to a security interest in favor of the
Administrative Agent in its capacity as agent and bailee of the Lenders; (d) at
any reasonable time, following reasonable advance written notice to the
Companies by the Collateral Agent or the Administrative Agent, to exhibit to and
allow inspection by such Person (or Persons designated by such Person) of the
Collateral and the records concerning the Collateral; (e) to keep the records
concerning the Collateral at the location(s) set forth in Paragraph 22 below and
not to remove the records from such location(s) without the prior written
consent of the Collateral Agent and the Administrative Agent which consent shall
not be unreasonably withheld; (f) at the request of the Administrative Agent, to
place on each of its records pertaining to the Collateral a legend, in form and
content satisfactory to the Administrative Agent, indicating that a security
interest in such Collateral has been granted to the Administrative Agent; (g)
not to modify (other than as permitted under the Custodial Agreement or the
Agreement), compromise, extend, rescind or cancel any deed of trust, mortgage,
note or other document, instrument or agreement connected with any Mortgage
Loan, Construction Loan, Servicing Loan or Foreclosure/Repurchase Loan pledged
under this Security Agreement, or any Servicing Contract or Master Servicing
Contract pledged under this Security Agreement, or any document relating thereto
or connected therewith or consent to a postponement of strict compliance on the
part of any party thereto with any term or provision thereof, without the
consent of the Administrative Agent; (h) to keep the Collateral insured against
loss, damage, theft, and other risks customarily covered by insurance, and such
other risks as the Collateral Agent or the Administrative Agent may request; (i)
to do all acts that a prudent investor would deem necessary or desirable to
maintain, preserve and protect the Collateral; (j) not knowingly to use or
permit any Collateral to be used unlawfully or in violation of any provision of
this Security Agreement or the Custodial Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral; (k)
to pay (or require to be paid) prior to their becoming delinquent all taxes,
assessments, insurance premiums, charges, encumbrances, and liens now or
hereafter imposed upon or affecting any Collateral, except where covered by an
adequate bond or insurance reasonably satisfactory to the Administrative Agent
or where being contested in good faith by appropriate proceedings and for which
provision is made to the reasonable satisfaction of the Administrative Agent for
the payment thereof in the event the Companies are found by the final
determination of a court of competent jurisdic-
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tion to be obligated to pay such taxes, assessments, insurance premiums,
charges, encumbrances or liens; (l) to notify the Collateral Agent and the
Administrative Agent before any such change shall occur of any change in the
name, identity or structure (through merger, consolidation or otherwise) of any
of the Companies; (m) to appear in and defend, at the Companies' cost and
expense, any action or proceeding which may affect its title to, or the
Administrative Agent's interest for the benefit of the Lenders in, the
Collateral; (n) to keep accurate and complete records of the Collateral and to
provide the Collateral Agent and the Administrative Agent with such records and
such reports and information relating to the Collateral as the Collateral Agent
or the Administrative Agent, as applicable, may request from time to time; and
(o) to comply with all terms and conditions of all Servicing Contracts and
Master Servicing Contracts to which any of the Companies is a party and to
comply with all laws, regulations and ordinances relating to the possession,
operation, maintenance and control of the Collateral which if not complied with
would have a material adverse effect on the business or financial condition of
the Companies.
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15. Collection of Collateral Payments.
----------------------------------
(m) The Companies shall, at their sole cost and expense, endeavor to
obtain payment, when due and payable, of (i) all sums due or to become due with
respect to any A/B Collateral (each such payment being referred to as an "A/B
Collateral Payment"), (ii) all sums due or to become due with respect to any DEF
Collateral (each such payment being referred to as a "DEF Collateral Payment"),
and (iii) all sums due or to become due with respect to any Other Collateral
(each such payment being referred to as an "Other Collateral Payment")
including, without limitation, in each case, the taking of such action with
respect thereto as the Administrative Agent may reasonably request and, prior to
such request, as the Companies may reasonably deem advisable; provided, however,
that the Companies shall not, without the prior written consent of the
Administrative Agent, grant or agree to any rebate, refund, compromise or
extension with respect to any A/B Collateral Payment, DEF Collateral Payment, or
Other Collateral Payment, as applicable, except as may be required by applicable
laws or regulations or at the order of a Governmental Authority, or accept any
prepayment on account thereof, except in accordance with the terms of the
Required Documents. Upon the request of the Administrative Agent following the
occurrence, and during the continuance, of an Event of Default (and subject to
the requirements of applicable law), the Companies will notify and direct any
party who is or might become obligated to make any A/B Collateral Payment, DEF
Collateral Payment or Other Collateral Payment, to make payment thereof to the
Administrative Agent (or to the Companies in care of the Administrative Agent)
at such address as the Administrative Agent may designate. The Companies will
reimburse the Administrative Agent and the Collateral Agent promptly upon demand
for all reasonable out-of-pocket costs and expenses, including reasonable
attorneys' fees and litigation expenses, incurred by either such Person in
seeking to collect any A/B Collateral Payment, DEF Collateral Payment or other
Collateral Payment.
(n) If there shall occur and be continuing an Event of Default, upon
the request of the Administrative Agent (which request shall be made only upon
direction of the Majority Lenders) the Companies will transmit and deliver to
the Administrative Agent, forthwith upon receipt and in the form received, all
cash, checks, drafts and other instruments for the payment of money (properly
endorsed where required so that such items may be collected by the
Administrative Agent) which may be received by the Companies any time as payment
on account of any A/B Collateral Payment, DEF Collateral Payment or Other
Collateral Payment and if such request shall be made, until delivery to the
Administrative Agent, such items will be held in trust for the Administrative
23
<PAGE>
Agent and will not be commingled by the Companies with any of their other funds
or property. Thereafter, the Administrative Agent is hereby authorized and
empowered to endorse the name of the Companies on any check, draft or other
instrument for the payment of money received by the Administrative Agent on
account of any A/B Collateral Payment, DEF Collateral Payment or other
Collateral Payment if the Administrative Agent believes such endorsement is
necessary or desirable for purposes of collection.
(o) The Companies hereby agree, jointly and severally, to indemnify,
defend and save harmless each of the Collateral Agent and the Administrative
Agent and their respective agents, officers, employees and representatives from
and against any and all claims, obligations, penalties, actions, suits,
judgments, reasonable costs and disbursements, losses, liabilities and damages
(including, without limitation, reasonably attorneys' fees) of any kind
whatsoever which may at any time be imposed on, assessed against or incurred by
such Person in any way resulting from any action taken or omitted to be taken by
the Companies relating to or arising out of the collection of A/B Collateral
Payments, DEF Collateral Payments or Other Collateral Payments, and such
obligation of the Companies shall continue in effect after and notwithstanding
the discharge of the Obligations and the release of the security interest
granted in Paragraph 4 above. Each of the Collateral Agent and the
Administrative Agent agrees that it will promptly notify the Companies of any
claim, action or suit asserted or commenced against it and that the Companies
may assume the defense thereof with counsel reasonably satisfactory to the
Collateral Agent and the Administrative Agent at the Companies' sole expense,
that it will cooperate with the Companies on such defense, and that such Person
will not settle any such claim, action or suit without the consent of the
Companies; provided, however, that in the event the Collateral Agent or the
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Administrative Agent, as applicable, is not reasonably satisfied with such
defense, such Persons may assume such defense with counsel satisfactory to such
Persons at the Companies' sole expense.
16. Delivery of Collateral by Collateral Agent. The Collateral Agent
------------------------------------------
hereby agrees that following the occurrence and during the continuance of an
Event of Default, upon written notice by the Administrative Agent to the
Collateral Agent (which notice shall be given only upon direction of the
Majority Lenders), the Collateral Agent shall immediately deliver to the
Administrative Agent all Collateral held by the Collateral Agent for the benefit
of the Administrative Agent under and pursuant to the terms of this Security
Agreement which is capable of being delivered, together with any endorsements,
assignments or releases reasonably requested by the Administrative Agent with
respect to such Collateral and copies of any electronic files which may have
been maintained by
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<PAGE>
the Collateral Agent with respect to such Collateral. As part of such delivery,
all items, if any, (including promissory notes) endorsed to the order of the
Collateral Agent will be endorsed by the Collateral Agent to the order of the
Administrative Agent and, if any assignments of mortgages, deeds of trust, etc.,
name the Collateral Agent as assignee, then the Collateral Agent will execute,
acknowledge and deliver in recordable form appropriate assignments naming the
Administrative Agent as assignee of such mortgages, deeds of trust, etc.
17. Authorized Action by Administrative Agent. The Companies hereby
-----------------------------------------
irrevocably appoint the Administrative Agent as their attorney-in-fact to do
(but the Administrative Agent shall not be obligated to and shall incur no
liability to the Companies or any third party for failure so to do) at any time
and from time to time following the occurrence and during the continuance of an
Event of Default at the request and direction, given after the occurrence of an
Event of Default, of the Majority Lenders (which request and direction must be
in writing if so requested by the Administrative Agent), any act which the
Companies are obligated by this Security Agreement to do, and to exercise such
rights and powers as the Companies might exercise with respect to the
Collateral, including, without limitation, the right to (i) collect by legal
proceedings or otherwise and endorse, receive and receipt for all dividends,
interest, payments, proceeds and other sums and property now or hereafter
payable on or on account of the Collateral; (ii) enter into any extension,
reorganization, deposit, merger, consolidation or other agreement pertaining to,
or deposit, surrender, accept, hold or apply other property in exchange for the
Collateral; (iii) insure, process and preserve the Collateral; (iv) transfer the
Collateral to the Administrative Agent's own or its nominee's name; and (v) make
any compromise or settlement, and take any other action it deems advisable with
respect to the Collateral. Notwithstanding anything contained herein, in no
event shall the Administrative Agent be required to make any presentment, demand
or protest, or give any notice and the Administrative Agent need not take any
action to preserve any rights against any prior party or any other person in
connection with the Obligations or with respect to the Collateral.
18. The Collateral Agent.
--------------------
(p) Appointment. The Administrative Agent hereby appoints the Collateral
-----------
Agent as the agent for the Administrative Agent under the Credit Documents and
authorizes the Collateral Agent as agent of the Administrative Agent to take
such action on its behalf under the provisions of this Security Agreement and to
exercise such powers and perform such duties as are expressly delegated thereto
by the terms of this Security Agreement, together with such
25
<PAGE>
other powers as are reasonably incidental thereto, and which the Collateral
Agent is expressly directed to undertake by the Administrative Agent. The
Collateral Agent shall have no duties or responsibilities except those expressly
set forth herein, nor any fiduciary relationship with any Lender, and no implied
covenants, responsibilities, obligations or liabilities shall be read into the
Credit Documents or otherwise exist against the Collateral Agent.
(q) Delegation of Duties. The Collateral Agent may execute any of its
--------------------
duties under this Security Agreement by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning such duties. The
Collateral Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
(r) Exculpatory Provisions. Neither the Collateral Agent nor any of its
----------------------
officers, directors, employees, agents, counsel, attorneys-in-fact or Affiliates
shall be liable to any Lender or the Administrative Agent for any action taken
or omitted to be taken by it or such Person under or in connection with the
Credit Documents (except for its or such Person's own negligence or willful
misconduct). In no event shall the Collateral Agent or any of its officers,
directors, employees, agents, counsel, attorneys in-fact or Affiliates be held
liable for any special, indirect, punitive or consequential damages resulting
from any action taken or omitted to be taken by such Person hereunder or in
connection herewith. The Collateral Agent shall be under no obligation to the
Administrative Agent to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, the Credit
Documents (other than agreements required to be complied with by the Collateral
Agent thereunder and subject to the standards of care set forth therein with
respect thereto) or to inspect the properties, books or records of the
Companies. The Collateral Agent shall be entitled to refrain from exercising
any discretionary powers or actions under this Agreement or any other Credit
Document until it shall have received the prior written consent of the
Administrative Agent to such action.
(s) Reliance by Collateral Agent. The Collateral Agent shall be entitled
----------------------------
to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certification, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Companies), independent accountants and other experts selected by the Collateral
Agent. The Collateral Agent may deem and treat the payee of any Note as the
owner thereof for all
26
<PAGE>
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Collateral Agent. The Collateral Agent shall be
fully justified in failing or refusing to take any action under the Credit
Documents unless it shall first receive such advice or concurrence of the
Administrative Agent or it shall first be indemnified to its satisfaction by the
Administrative Agent or the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any action
(other than liability and expense arising out of the Collateral Agent's gross
negligence or willful misconduct). The Collateral Agent shall in all cases be
fully protected in acting, or in refraining from acting, under the Credit
Documents in accordance with a request of the Administrative Agent absent gross
negligence and willful misconduct on the part of the Collateral Agent in the
method in which it acts or refrains from acting in accordance therewith, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon the Administrative Agent.
(t) Notice of Default; Agreement to Advance. The Collateral Agent shall be
---------------------------------------
deemed to have no knowledge or notice of the occurrence of any Event of Default
or Potential Default under the Credit Documents unless the Collateral Agent has
received notice from the Administrative Agent or the Companies referring to the
Credit Documents, describing such Event of Default or Potential Default and
stating that such notice is a "notice of default". In the event that the
Collateral Agent receives such a notice, the Collateral Agent shall give notice
thereof to the Companies and the Administrative Agent. The Collateral Agent
shall take such action with respect to such Event of Default or Potential
Default as is set forth in Paragraph 16 and as shall be reasonably directed by
the Administrative Agent; provided, however that unless and until the Collateral
Agent shall have received such directions, the Collateral Agent may (but shall
not be obligated to) take such action or refrain from taking such action (in
each case consistent with the provisions of the Credit Documents), with respect
to such Event of Default or Potential Default, as it shall deem advisable in the
best interest of the Administrative Agent.
(u) Indemnification. The Companies hereby agree, jointly and severally, to
---------------
indemnify, defend and save harmless each of the Collateral Agent and the
Administrative Agent and their respective agents, officers, employees and
representatives from and against any and all claims, obligations, penalties,
actions, suits, judgments, reasonable costs and disbursements, losses,
liabilities and damages (including, without limitation, reasonable attorneys'
fees) of any kind whatsoever which may at any time be imposed on, assessed
against or incurred by such Person in any way resulting from any action taken or
omitted to be taken by the Companies
27
<PAGE>
relating to or arising out of this Security Agreement or any documents
contemplated hereby or referred to herein or the transactions contemplated
hereby, and such obligation of the Companies shall continue in effect after and
notwithstanding the discharge of the Obligations and the release of the security
interest granted in Paragraph 5 above. Each of the Collateral Agent and the
Administrative Agent agrees that it will promptly notify the Companies of any
claim, action or suit asserted or commenced against it and that the Companies
may assume the defense thereof with counsel reasonably satisfactory to the
Collateral Agent and the Administrative Agent at the Companies' sole expense,
that it will cooperate with the Companies on such defense, and that such Person
will not settle any such claim, action or suit without the consent of the
Companies which consent will not be unreasonably withheld; provided, however,
-------- -------
that in the event the Collateral Agent or the Administrative Agent, as
applicable, is not reasonably satisfied with such defense, such Persons may
assume such defense with counsel satisfactory to such Persons at the
Companies' sole expense. The Lenders agree to indemnify and hold harmless the
Collateral Agent in its capacity as such ratably in accordance with their
Percentage Shares to the extent required by the Companies hereunder if the
Collateral Agent is not reimbursed by the Companies pursuant to the terms hereof
and without limiting the obligation of the Companies to do so. The
indemnification obligations of the Companies and Lenders under this Paragraph
18(f) shall survive termination of the Credit Documents and payment in full of
the Obligations.
(v) Collateral Agent in Its Individual Capacity. The Collateral Agent and
-------------------------------------------
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Companies as though the Collateral Agent were not
the Collateral Agent hereunder. With respect to such loans made or renewed by
it and any note issued to it under the Credit Documents, the Collateral Agent
shall have the same rights and powers under the Credit Documents as any Lender
under the Credit Documents and may exercise the same as though it were not the
Collateral Agent, and the terms "Lender" and "Lenders" shall include the
Collateral Agent in its individual capacity.
28
<PAGE>
(w) Successor Agents.
----------------
(i) The Collateral Agent may resign as such under the Credit Documents
upon sixty (60) days' prior written notice to the other parties hereto. If the
Collateral Agent shall resign, then, on or before the effective date of such
resignation, the Administrative Agent shall appoint a successor agent reasonably
acceptable to the Companies, whereupon such successor agent shall succeed to the
rights, powers and duties of the Collateral Agent, and the term "Collateral
Agent" shall mean such successor agent effective upon its appointment, and the
former Collateral Agent's rights, powers and duties shall be terminated without
any other or further act or deed on the part of such former Collateral Agent or
any of the parties to this Agreement or any of the other Credit Documents or
successors thereto. Upon such appointment, the resigned Collateral Agent will
deliver all Collateral to the successor Collateral Agent and take all other
steps deemed necessary by the Administrative Agent to vest the successor
Collateral Agent with all rights, titles, and powers given to the Collateral
Agent hereunder. After the Collateral Agent's resignation hereunder, the
provisions of this Paragraph 18(h)(i) shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Collateral Agent under
the Credit Documents.
(ii) The appointment of BT as Collateral Agent hereunder shall
terminate upon the removal of BT as Custodian under the Custodial Agreement
pursuant to the terms thereof. In the event that BT is removed as Custodian
under the Custodial Agreement, the party appointed as BT's successor Custodian
under the Custodial Agreement shall also become the Collateral Agent hereunder
and shall succeed to the rights, powers and duties of the Collateral Agent, and
the term "Collateral Agent" shall mean the party appointed as BT's successor
Custodian under the Custodial Agreement, and BT's rights, powers and duties as
Collateral Agent hereunder shall be terminated without any other or further act
or deed on the part of BT or any of the parties to this Agreement or any of the
other Credit Documents or successors thereto. Provided, however, that
-------- -------
notwithstanding anything contained in this Paragraph 18(h)(ii) to the contrary,
if BT is removed as Custodian under the Custodial Agreement, and the
Administrative Agent does not approve the appointment of the party appointed as
BT's successor Custodian under the Custodial Agreement as Collateral Agent
hereunder, then FUNB shall become the Collateral Agent hereunder and shall
succeed to the rights, powers and duties of the Collateral Agent, and the term
"Collateral Agent" shall mean FUNB, and BT's rights, powers and duties as
Collateral Agent hereunder shall be terminated without any other or further act
or deed on the part of BT or any of the parties to this Agreement or any of the
other Credit Documents or successors thereto. In the event that FUNB does
become
29
<PAGE>
the Collateral Agent hereunder as set forth in the immediately preceding
sentence, then the parties hereto agree to enter into such amendments,
modifications and restatements to or of this Security Agreement, and any
documents, instruments or agreements executed in connection herewith, as may be
deemed necessary by the Administrative Agent regarding the handling of the A/B
Collateral and the DEF Collateral and the continuation and perfection of the
Administrative Agent's security interest therein for the benefit of the Lenders.
19. Default and Remedies. Upon the occurrence of an Event of Default and
--------------------
following the acceleration of the Obligations, the Administrative Agent shall at
the request and direction of the Majority Lenders (which request and direction
must be in writing if so requested by the Administrative Agent), without notice
to or demand upon the Companies: (i) foreclose or otherwise enforce the
Administrative Agent's security interest for the benefit of the Lenders in the
Collateral in any manner permitted by law or provided for hereunder (to the
extent permitted by law); (ii) sell or otherwise dispose of the Collateral or
any part thereof at one or more public or private sales, whether or not such
Collateral is present at the place of sale, for cash or credit or future
delivery and without assumption of any credit risk, on such terms and in such
manner as the Administrative Agent may determine; (iii) require the Companies to
assemble the Collateral or books and records relating thereto and make such
available to the Administrative Agent at a place to be designated by the
Administrative Agent reasonably convenient to the Companies and the
Administrative Agent; (iv) enter onto property where any Collateral or books and
records relating thereto are located and take possession thereof with or without
judicial process and without a breach of the peace; (v) prior to the disposition
of the Collateral, prepare it for disposition in any commercially reasonable
manner and to the extent the Administrative Agent deems appropriate; and (vi)
deliver the Resignation Letters to the appropriate MBS Fiduciaries or investors
named therein (it being understood that such Resignation Letters shall be held
in escrow by the Administrative Agent prior to the occurrence of an Event of
Default and acceleration of the Obligations, and that delivery of such
Resignation Letters shall occur only upon the occurrence of an Event of Default
----
and following acceleration of the Obligations). Upon any sale or other
disposition pursuant to this Security Agreement, the Administrative Agent shall
have the right to deliver, assign and transfer to the purchaser thereof the
Collateral or portion thereof so sold or disposed of and all proceeds thereof
shall be allocated in the manner set forth in Paragraph 7(s)(2) of the Facility
II Agreement or Paragraph 3(s)(2) of the Facility I Agreement. Each purchaser
at any such sale or other disposition shall hold the Collateral free from any
claim or right of whatever kind, including any equity
30
<PAGE>
or right of redemption of the Companies, and the Companies specifically waive
(to the extent permitted by law) all rights of redemption, stay or appraisal
which they have or may have under any rule of law or statute now existing or
hereafter adopted.
20. Binding Upon Successors. All rights of the Collateral Agent, the
-----------------------
Administrative Agent, the Lenders and the Companies under this Security
Agreement shall inure to the benefit of the Collateral Agent, the Administrative
Agent, the Lenders and the Companies and their respective successors and
assigns, and all obligations of the Companies shall bind their successors and
assigns.
21. Entire Agreement; Severability. This Security Agreement, together
------------------------------
with the Custodial Agreement, contains the entire security agreement and
collateral agency agreement with respect to the Collateral among the Lenders,
the Companies, the Collateral Agent and the Administrative Agent. All waivers
by the Companies provided for in this Security Agreement or in the Custodial
Agreement have been specifically negotiated by the parties with full cognizance
and understanding of their rights. If any of the provisions of this Security
Agreement shall be held invalid or unenforceable, this Security Agreement shall
be construed as if not containing such provisions, and the rights and
obligations of the parties hereto shall be construed and enforced accordingly.
22. Choice of Law. This Security Agreement shall be construed in
-------------
accordance with and governed by the laws of the State of North Carolina and,
where applicable and except as otherwise defined herein, terms used herein shall
have the meanings given them in the Uniform Commercial Code as in effect from
time to time in the State of North Carolina.
23. Place of Business; Records. The Companies represent and warrant that
--------------------------
their chief place of business is at 35 North Lake Avenue, Pasadena, California
91101 and that all books and records concerning the Collateral are kept at such
chief place of business.
24. Notice. Any written notice, consent or other communication provided
------
for in this Security Agreement shall be delivered or sent to the applicable
parties at the following addresses:
31
<PAGE>
COMPANIES:
CWM Mortgage Holdings, Inc.
Independent National Mortgage Corporation
Independent Lending Corporation
35 North Lake Avenue
Pasadena, California 91101
Attn: Mr. Steven E. West
Facsimile No.: (818) 304-5899
ADMINISTRATIVE AGENT:
First Union National Bank of North Carolina
One First Union Center, CORP-6, TW-19
301 South College Street
Charlotte, North Carolina 28288
Attn: Ms. Carolyn Eskridge
Facsimile No.: (704) 374-7102
COLLATERAL AGENT:
Bankers Trust Company of California, N.A.
3 Park Plaza, 16th Floor
Irving, California 92714
Attn: Ms. Michelle Lambott
Facsimile No.: (714) 440-6568
25. Defeasance. If the obligations of the Lenders to advance Loans to the
----------
Companies shall have expired or been terminated as provided in the Facility II
Agreement or the Facility I Agreement and all Obligations of the Companies
secured hereby shall have been fully paid, performed, released or otherwise
satisfied or discharged, the security interests created hereunder shall
terminate and the Collateral Agent (upon the direction of the Administrative
Agent) or the Administrative Agent, as applicable, shall promptly deliver any
Collateral then held by such Person to the Companies. Each of the Collateral
Agent and the Administrative Agent agrees to transmit all Collateral delivered
pursuant to this Paragraph 25 as directed by the Companies at the Companies'
expense, and, upon request by the Companies, to endorse the related notes
(without recourse) and to execute assignments of the related mortgages or deeds
of trust, UCC financing statement assignments, and other instruments of transfer
or release as the Companies shall reasonably request and the Administrative
Agent shall approve.
26. Transmission of Collateral. Written instructions as to the method of
--------------------------
shipment and shipper(s) the Collateral Agent and the Administrative Agent are
directed to utilize in connection with the
32
<PAGE>
transmission of Collateral by such
Persons in the performance of their duties hereunder shall be delivered by the
Administrative Agent or the Companies (the "Requesting Party") to the Collateral
Agent or the Administrative Agent prior to any shipment of Collateral hereunder
by the Collateral Agent or the Administrative Agent. The Requesting Party will
arrange for the provision of such services at the expense of the Companies (or,
at the option of the Collateral Agent or the Administrative Agent, the Companies
shall reimburse such Person for all such costs and expense incurred by such
Person) and such insurance against loss or damage to the Collateral as the
Administrative Agent or the Companies deem appropriate. In the event the
Collateral Agent or the Administrative Agent does not receive written directions
as to the method of shipment and shipper(s) from the Requesting Party, each of
the Collateral Agent and the Administrative Agent is hereby authorized to
utilize a nationally recognized courier service. The Collateral Agent and the
Administrative Agent shall be entitled to reimbursement from the Companies for
all reasonable costs and expenses incurred by such Persons for utilizing such
courier service.
33
<PAGE>
EXECUTED as of the day and year first above written.
CWM MORTGAGE HOLDINGS, INC., a Delaware
corporation
By:_____________________________
Name:___________________________
Title:__________________________
INDEPENDENT NATIONAL MORTGAGE CORPORATION, a
Delaware corporation
By:_____________________________
Name:___________________________
Title:__________________________
INDEPENDENT LENDING CORPORA-TION, a Delaware
corporation
By:_____________________________
Name:___________________________
Title:__________________________
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
a national banking association, as Facility
II Administrative Agent and Facility I
Administrative Agent
By:_____________________________
Name:___________________________
Title:__________________________
34
<PAGE>
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a
national banking association, as Facility II
Collateral Agent and Facility I Collateral
Agent
By:_____________________________
Name:___________________________
Title:__________________________
35
<PAGE>
SCHEDULE OF EXHIBITS AND SCHEDULES
TO
SECURITY AGREEMENT
EXHIBIT DOCUMENT
------- --------
1A Required Review Steps (DEF Collateral)
1B Required Review Steps (Other Collateral)
2 Required Documents
3A Form of Mortgage Loan Schedule (A/B Collateral)
3B Form of Delivery Certificate (DEF Collateral)
4 Form of Waiver
SCHEDULE DOCUMENT
-------- --------
1 List of Servicing Contracts and Master
Servicing Contracts
36
<PAGE>
EXHIBIT 1A
----------
TO SECURITY
-----------
AGREEMENT
---------
Required Review Steps (DEF Collateral)
--------------------------------------
BY THE COLLATERAL AGENT, WITH RESPECT TO ALL REQUIRED DOCUMENTS DELIVERED
TOGETHER WITH A DEF SCHEDULE:
A. Construction Loans and Mortgage Loans acquired with the proceeds
of Foreclosure/Repurchase Loans:
a. The note (including intervening endorsements, if any), the
mortgage/deed of trust, the assignment(s) of the
mortgage/deed of trust (including intervening assignments,
if any) and the DEF Schedule are consistent as to borrower
name, loan face amount and the loan number.
b. The note and mortgage/deed of trust each bears an original
signature or signatures which appear to be those of the
person or persons named as the maker and mortgagor/trustor,
or, in the case of a copy of the mortgage/deed of trust,
certified by an Authorized Officer of the Companies or a
person purporting to be an officer of a sub-borrower of the
Foreclosure/Repurchase Loan, such copy bears what appears to
be a reproduction of such signature or signatures.
c. Except for (a) the endorsement(s) to the Companies or, if
applicable, the sub-borrower, of the note in the event such
loan was purchased or acquired by the Companies or, if
applicable, a sub-borrower and (b) the endorsement in blank
of the note by the Companies or, if applicable a sub-
borrower, the note, the mortgage/deed of trust, and the
assignment(s) of the mortgage/deed of trust appear on their
face to be regular.
d. The note is endorsed in blank and such endorsement bears an
original signature of an Authorized Officer of the
Companies, based on the current list of such officers
supplied by the Companies or, if by a sub-borrower, such
endorsement bears an original signature of a person
purporting to be an officer of such sub-borrower.
37
<PAGE>
e. In the event that the loan was purchased or acquired by the
Companies or a sub-borrower, each intervening endorsement
from the original holder thereof through and into the
Companies or a sub-borrower bears an original signature or
signatures which appear to be those of the person or persons
endorsing such note, and all intervening endorsements
necessary to establish chain of endorsements in Companies or
a sub-borrower exist.
f. The original assignment of the mortgage/deed of trust bears
an original signature of an Authorized Officer of the
Companies, based on the current list of such officers
supplied by the Companies or, if applicable, an original
signature of a person purporting to be an officer of the
sub-borrower, with the name of the assignee left blank in
form and substance acceptable for recording.
g. In the event that the loan was purchased or acquired by the
Companies or a sub-borrower, each intervening assignment
from the original holder thereof through and into the
Companies or a sub-borrower bears an original signature or
signatures which appear to be those of the person or persons
assigning such mortgage or deed of trust, or, in the case of
a copy of such assignment certified by an Authorized Officer
of the Companies or a person purporting to be an officer of
an applicable sub-borrower, such copy bears what appears to
be a reproduction of such signature or signatures and all
intervening assignments necessary to establish a complete
chain into the Companies or sub-borrower.
h. For Construction Loans, evidence of each advance made by the
Companies which shall consist of a disbursement report
certified as true and correct by an Authorized Officer of
the Companies.
B. Tranche E and F Loans:
a. The original note, the copy of the credit and security
agreement and (for Tranche E Loans only) a copy of UCC-1
financing statements from the sub-borrower to the applicable
Company (each such copy to be certified by an Authorized
Officer of the applicable Company as true and complete) and
the DEF Schedule are consistent as to sub-borrower's name,
loan face amount and the Companies' loan number.
38
<PAGE>
b. The original note bears an original signature or signatures
which appear to be those of officers of the sub-borrower
named as the maker and the copy of the credit and security
agreement bears what appears to be a reproduction of such
signature or signatures.
c. Except for the endorsement in blank by the Companies of the
note, the original note, the copy of the credit and security
agreement appear, on their face, to be regular.
d. The description of collateral contained in the copy of the
credit and security agreement and the copy of the UCC-1
financing statement are identical in all material respects.
(Tranche E only)
e. The UCC-3 assignment correctly lists the applicable Company
as assignor and the Administrative Agent as assignee, bears
an original signature of an Authorized Officer of the
Company as assignee and correctly refers to the UCC-1
financing statement being assigned. Upon completion of this
review, the UCC-3 will be sent to the Administrative Agent.
(Tranche E only)
39
<PAGE>
EXHIBIT 1B
----------
TO SECURITY
-----------
AGREEMENT
---------
Required Review Steps (Other Collateral)
-----------------------------------------
BY THE ADMINISTRATIVE AGENT, WITH RESPECT TO ALL TRANCHE C LOANS AND REQUIRED
DOCUMENTS DELIVERED:
f. The copies of each Servicing Contract and Master Servicing
Contract have been certified as being true and complete by an
Authorized Officer of the applicable Company, and bears what appears
to be a reproduction of signatures of Authorized Officers of the
applicable Company and signatures of persons purporting to be officers
of all other parties thereto.
g. The original consent or acknowledgement bears the original
signature of persons purporting to be officers of each party to the
Servicing Contact or Master Servicing Contract which, according to the
terms of the Servicing Contract or Master Servicing Contract are
required to consent or acknowledge the assignment.
h. The original UCC-1 financing statement (or the original UCC-3
financing statement amendment) bears an original signature of an
Authorized Officer of the applicable Company as Debtor, is properly
completed and the description of collateral accurately describes the
servicing rights being pledged.
40
<PAGE>
EXHIBIT 2
---------
TO SECURITY
-----------
AGREEMENT
---------
Schedule of Required Documents
------------------------------
A. FOR A TRANCHE A LOAN OR A TRANCHE B LOAN (A/B COLLATERAL), THE FOLLOWING
DOCUMENTS FOR EACH MORTGAGE LOAN BEING FUNDED THEREWITH:
Those documents constituting (i) the "Required Loan Documents" as defined
and more fully described in Section 3.2(a) of the Custodial Agreement, and (ii)
the "Intervening Assignments" as defined and more fully described in Section
3.2(b) of the Custodial Agreement (such delivery to be subject to the exceptions
and time limits set forth therein).
Provided, however, that with respect to any Mortgage Loan which is being funded
-------- -------
with a Tranche B Loan and which has been included in the Collateral Value of the
Tranche B Borrowing Base in excess of 120 days, the Required Documents for such
Mortgage Loan shall also include (i) the "Intervening Assignments" as defined
and more fully described in Section 3.2(b) of the Custodial Agreement, and (ii),
if request therefor has been made by the Collateral Agent, the "Supplemental
Loan Documents" as defined and more fully described in Sections 3.2(c) and
3.2(d) of the Custodial Agreement, in each case subject to the exceptions
contained in such Sections.
B. FOR A TRANCHE C LOAN (OTHER COLLATERAL), THE FOLLOWING DOCUMENTS IN
CONNECTION THEREWITH:
6. A copy of each Servicing Contract and Master Servicing Contract
pursuant to which the Companies have acquired and continue to exercise the
Assigned Servicing Rights being financed in connection therewith; and
7. The original consent executed by the investor under each such
Servicing Contract or the MBS Fiduciary under each such Master Servicing
Contract acknowledging and consenting to the assignment by the Companies of the
Assigned Servicing Rights under each such Servicing Contract or Master Servicing
Contract to the Administrative Agent for the benefit of the Lenders (or, if such
acknowledgement and consent forms are not available with respect to any
Servicing Contracts, other evidence reasonably satisfactory to the
41
<PAGE>
Administrative Agent that the Companies' interest in such Servicing Contract can
be pledged to the Administrative Agent for the benefit of the Lenders) (for
purposes of the foregoing, a consent may consist of one or more separate
documents which, taken as a whole, evidence the consent of the applicable
investor or MBS Fiduciary to the assignment of the Companies' interest, an
agreement to appoint an entity acceptable to the Administrative Agent as a
successor servicer or master servicer, and a suitable Resignation Letter); and
3. Such UCC-3 Financing Statement amendments, listing the Companies as
debtors and the Administrative Agent on behalf of the Lenders as secured party,
and assigning the right, title and interest of the Companies in such Servicing
Contracts, Master Servicing Contracts and rights therein and thereunder, as the
Administrative Agent may deem necessary.
C. FOR A TRANCHE D LOAN (DEF COLLATERAL), THE FOLLOWING DOCUMENTS FOR EACH
CONSTRUCTION LOAN BEING FUNDED THEREWITH:
9. The original executed promissory note relating to the Construction
Loan, which promissory note shall be duly endorsed in blank and assigned in
blank without recourse by the Companies;
10. A copy of the original executed mortgage or deed of trust relating to
the Construction Loan, certified by the Companies, or the title company or
closing attorney which closed the Construction Loan, to be a true copy of such
original mortgage or deed of trust;
11. An original executed and recordable but unrecorded assignment of the
mortgage or deed of trust relating to the Construction Loan (unless the
Administrative Agent determines that under applicable State law the assignment
should be recorded in order to adequately protect its interest, in which case
the assignment shall be recorded by the Companies in the name of the
Administrative Agent and a certified true copy thereof shall be provided to the
Collateral Agent);
12. A certificate of the Companies with regard to such Construction Loan
certifying that no single-family tract home to be constructed with the proceeds
thereof has a sales price or construction cost in excess of $850,000 (unless
such requirement is specifically waived with respect to any single-family tract
home by the Administrative Agent).
42
<PAGE>
13. A Daily Trial Balance Report showing the current principal balance
outstanding under the note.
D. FOR A TRANCHE E LOAN (DEF COLLATERAL), THE FOLLOWING DOCUMENTS FOR EACH
SERVICING LOAN BEING FUNDED THEREWITH:
14. The original executed promissory note relating to the Servicing
Loan, made by the applicable sub-borrower as obligor and payable to the order of
the Companies, which promissory note shall be duly endorsed in blank and
assigned in blank without recourse by the Companies;
15. A copy of the credit and security agreement between the Companies
and the applicable sub-borrower relating to such Servicing Loan;
16. UCC-3 financing statements listing the Companies as debtors and the
Administrative Agent on behalf of the Lenders as secured party, and assigning
the right, title and interest of the Companies in the servicing contracts and
rights therein and thereunder which have been pledged by the applicable sub-
borrower to the Companies as security for such Servicing Loan; and
4. A copy, certified by an Authorized Officers of the Companies, of all
UCC-1 financing statements listing the applicable sub-borrower as debtor and the
Companies as secured party, signed by the sub-borrower and covering the
servicing contracts and rights therein described in the credit and security
agreement.
E. FOR A TRANCHE F LOAN (DEF COLLATERAL), THE FOLLOWING DOCUMENTS FOR EACH
FORECLOSURE/REPURCHASE LOAN BEING FINANCED THEREWITH:
17. The original executed promissory note relating to the
Foreclosure/Repurchase Loan, made by the applicable sub-borrower as obligor and
payable to the order of the Companies, which promissory note shall be duly
endorsed in blank and assigned in blank without recourse by the Companies;
18. A copy of the credit and security agreement between the Companies
and the applicable sub-borrower relating to such Foreclosure/Repurchase Loan;
and
19. With respect to each Mortgage Loan being purchased with the proceeds
of such Foreclosure/Repurchase Loan:
A. An original fully completed Delivery Certificate (as defined in
the Security Agreement);
43
<PAGE>
B. The original executed promissory note relating to the Mortgage
Loan (properly endorsed or assigned through all intervening holders thereof
to the Companies), which promissory note shall be duly endorsed in blank
and assigned in blank without recourse by the Companies or by the
applicable sub-borrower; and
C. An original and recordable but unrecorded assignment of the
mortgage or deed of trust relating to the Mortgage Loan (unless the
Administrative Agent determines that under applicable State law the
assignment should be recorded in order to adequately protect its interest,
in which case the assignment shall be recorded by the Companies in the name
of the Administrative Agent and a certified true copy thereof shall be
provided to the Collateral Agent), together with the original or a duly
certified copy of a proper assignment or assignments of the mortgage or
deed of trust from the original holder through any subsequent transferees
to the Companies, duly recorded if local requirements in the jurisdiction
in which the Property is located required the recordation of such
assignment or assignments.
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EXHIBIT 3A
----------
TO SECURITY
-----------
AGREEMENT
---------
Form of Mortgage Loan Schedule (A/B Collateral)
-----------------------------------------------
The delivery schedule for each Mortgage Loan and the monthly report to be
provided under the Security Agreement will contain the following information:
DELIVERY INFORMATION
--------------------
1. Loan Number
2. Identify that this Loan is being pledged to First Union National Bank
of North Carolina, as Agent
3. The scheduled principal balance
4. Name of Mortgagor
5. Paid to Date
6. Current Coupon
7. Remaining Term
8. Date on Promissory Note
9. Whether Loan is a Construction-to-Permanent Loan
MONTHLY INFORMATION
-------------------
1. Loan Number
2. Scheduled principal balance
3. Remaining Term
4. Paid to Date
5. Current Coupon
Each Mortgage Loan Schedule will be accompanied by the following transmittal
certification from the Companies.:
Pursuant to the terms of the Facility I or Facility II Credit Agreement dated as
of May 30, 1995, as amended or modified from time to time ("Agreement"), the
following documents (the "Required Documents") are being sent to you with
respect to each Mortgage Loan covered hereby:
( ) Executed Original Note, endorsed in blank (and including all intervening
endorsements necessary to establish chain of title in the applicable
Company)
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( ) Executed assignment of mortgage or deed of trust in blank (and any
intervening assignments - if original intervening assignments are
unavailable, then provide copies certified by the Companies)
( ) If the Mortgage Loan is a Construction-to-Permanent Loan, a Daily Trial
Balance Report certified as true and correct by an Authorized Officer
( ) An original or copy of the Consolidation and Modification Agreement, if
applicable
ACKNOWLEDGMENT:
All Representations and Warranties set forth in the Agreement are true and
correct. No default or event of default exists on the date hereof.
CERTIFICATE:
The Companies have in their possession appropriate copies or originals, as the
case may be, of all other documents relating to this Mortgage Loan and hold same
in trust for the benefit of the Administrative Agent and the Lenders as set
forth in the Agreement or in the Security Agreement referred to therein.
[NAME OF COMPANY]
By:_____________________
Name:___________________
Title:__________________
Date:___________________
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<PAGE>
EXHIBIT 3B
----------
TO SECURITY
-----------
AGREEMENT
---------
Form of DEF Schedule (DEF Collateral)
-------------------------------------
The delivery certificate for each Construction Loan, Servicing Loan or
Foreclosure/Repurchase Loan and the monthly report to be provided under the
Custodial Agreement will contain the following information:
DELIVERY INFORMATION
--------------------
1. Loan Number
2. The scheduled principal balance
3. Name of Obligor
4. Paid to Date
5. Note Amount
MONTHLY INFORMATION
-------------------
1. Loan Number
2. Scheduled principal balance
3. Paid to Date
Each DEF Schedule will be accompanied by the following transmittal certification
from the Companies.:
Pursuant to the terms of the Facility II Credit Agreement dated as of May 30,
1995, as amended or modified from time to time ("Agreement"), the following
documents (the "Required Documents") are being sent to you with respect to each
Construction Loan, Servicing Loan or Foreclosure/Repurchase Loan covered hereby:
Tranche D
---------
( ) Executed original note, endorsed in blank (and including all intervening
endorsements necessary to establish chain into the applicable Company)
( ) Copy of executed original mortgage or deed of trust
( ) Executed assignment of mortgage or deed of trust (and any intervening
assignments - if original intervening assignments are unavailable, then
provide copies certified by the Companies)
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<PAGE>
( ) Companies' certification that no home being constructed with proceeds of
such Construction Loan has a sales price or construction cost in excess of
$850,000 unless waived in writing by Administrative Agent (and, if
applicable, a copy of such waiver)
( ) A Daily Trial Balance Report certified as true and correct by an Authorized
Officer
Tranche E
---------
( ) Executed original note, endorsed in blank (and including all intervening
endorsements necessary to establish chain into the applicable Company)
( ) Copy of credit and security agreement between the applicable Company and
the applicable sub-borrower
( ) Copy of UCC-1 financing statements from sub-borrower to the applicable
Company
( ) UCC-3 Assignment duly executed by the applicable Company assigning to
Administrative Agent the applicable Company's security interest in the
servicing contracts and rights pledged by the sub-borrower to such Company
Tranche F
---------
( ) Executed original note, endorsed in blank (and including all intervening
endorsements necessary to establish chain into the applicable Company
( ) Copy of credit and security agreement between the applicable Company and
the applicable sub-borrower
( ) For each Mortgage Loan being acquired with the proceeds of a
Foreclosure/Repurchase Loan, a Mortgage Loan Schedule containing the
information and each document described on Exhibit 3A, except that the last
endorsement and assignment of mortgage (before the ones in blank) may be to
the sub-borrower rather than to the Companies.
ACKNOWLEDGMENT:
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<PAGE>
All Representations and Warranties set forth in the Agreement are true and
correct. No default or event of default exists on the date hereof.
CERTIFICATE:
The Companies have in their possession appropriate copies or originals, as the
case may be, of all other documents relating to this Construction Loan,
Servicing Loan or Foreclosure/Repurchase Loan and hold same in trust for the
benefit of the Administrative Agent and the Lenders as set forth in the
Agreement or in the Security Agreement referred to therein.
[NAME OF COMPANY]
By:____________________
Name:__________________
Title:_________________
Date:__________________
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<PAGE>
EXHIBIT 4
---------
TO SECURITY
-----------
AGREEMENT
---------
Form of Waiver
--------------
TO: Bankers Trust Company of California, N.A.,as Collateral
Agent
FROM First Union National Bank of North Carolina, as Administrative Agent
DATE: _____________________________
Pursuant to Paragraph 3(c) of the Security and Collateral Agency Agreement
dated as of May 30, 1995, as amended or modified from time to time (the
"Security Agreement"), the undersigned, acting in its capacity as Administrative
Agent under and pursuant to (i) that certain Facility II Credit Agreement dated
as of May 30, 1995, as amended or modified from time to time (the "Facility II
Agreement," all capitalized terms used and not defined herein having the
meanings given to such terms therein), and (ii) that certain Facility I Credit
Agreement dated as of May 30, 1995, as amended or modified from time to time
(the "Facility I Agreement" and, together with the Facility II Agreement, the
"Credit Agreements"), hereby informs you that:
(Check as applicable)
______ The undersigned Administrative Agent has waived the nonconformity of
the following Mortgage Loan(s) with respect to the eligibility
requirements for "Eligible A/B Mortgage Loans" contained in the Credit
Agreements:
Mortgage Loan No.: _____________________
Mortgagor's Name: ______________________
(Attach schedule containing additional Mortgage Loan(s), if any)
Upon the delivery to you of the Required Documents with respect to
such Mortgage Loan(s), and assuming that such Mortgage Loan(s)
complies with the requirements described in Paragraph 6(b) of the
Security Agreement,
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<PAGE>
you are hereby authorized to include such Mortgage
Loan(s) in the computation of the Collateral Value of the Tranche A
Borrowing Base or the Tranche B Borrowing Base, as applicable.
______ The undersigned Administrative Agent has waived the nonconformity of
the following Construction Loan(s) with respect to the eligibility
requirements for "Construction Loans" contained in the Facility II
Agreement:
Obligor's Name: ______________________
(Attach schedule containing additional Construction Loan(s), if any)
Upon the delivery to you of the Required Documents with respect to
such Construction Loan(s), and assuming that such Construction Loan(s)
complies with the requirements described in Paragraph 6(c) of the
Security Agreement, you are hereby authorized to include such
Construction Loan(s) in the computation of the Collateral Value of the
Tranche D Borrowing Base.
______ The undersigned Administrative Agent has waived the nonconformity of
the following Servicing Loan(s) with respect to the eligibility
requirements for "Servicing Loans" contained in the Facility II
Agreement:
Obligor's Name: ______________________
(Attach schedule containing additional Servicing Loan(s), if any)
Upon the delivery to you of the Required Documents with respect to
such Servicing Loan(s), and assuming that such Servicing Loan(s)
complies with the requirements described in Paragraph 6(c) of the
Security Agreement, you are hereby authorized to include such
Servicing Loan(s) in the computation of the Collateral Value of the
Tranche E Borrowing Base.
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<PAGE>
______ The undersigned Administrative Agent has waived the nonconformity of
the following Foreclosure/Repurchase Loan(s) with respect to the
eligibility requirements for "Foreclosure/Repurchase Loans" contained
in the Facility II Agreement:
Obligor's Name: ______________________
(Attach schedule containing additional Foreclosure/Repurchase
Loan(s), if any)
Upon the delivery to you of the Required Documents with respect to
such Foreclosure/Repurchase Loan(s), and assuming that such
Foreclosure/Repurchase Loan(s) complies with the requirements
described in Paragraph 6(c) of the Security Agreement, you are hereby
authorized to include such Foreclosure/Repurchase Loan(s) in the
computation of the Collateral Value of the Tranche F Borrowing Base.
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,as Administrative Agent
By:__________________
Name:________________
Title:_______________
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<PAGE>
SCHEDULE 1
----------
TO SECURITY
-----------
AGREEMENT
---------
List of Servicing Contracts and Master Servicing Contracts
----------------------------------------------------------
53