EXHIBIT 10.47
THIRD AMENDMENT TO
PLEDGE AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO PLEDGE AND SECURITY AGREEMENT (the "Amendment")
dated as of February 17, 2000 by and among NEW CENTURY MORTGAGE CORPORATION, a
California corporation (the "Company"), the lenders party to the Credit
Agreement referred to below (collectively, the "Lenders" and individually, a
"Lender") and U.S. BANK NATIONAL ASSOCIATION, a national banking association, in
its capacity as agent for the Lenders (in such capacity, together with any
successor agents appointed thereunder, the "Agent").
WITNESSETH THAT:
WHEREAS, the Company, the Lenders and the Agent are parties to a Fourth
Amended and Restated Credit Agreement dated as of May 26, 1999, a First
Amendment to Fourth Amended and Restated Credit Agreement and a Second Amendment
to Fourth Amended and Restated Credit Agreement and Pledge and Security
Agreement dated as of October 14, 1999 (as amended, the "Credit Agreement"),
pursuant to which the Lenders provide the Company with a revolving mortgage
warehousing credit facility; and
WHEREAS, the Company and the Agent are parties to a Pledge and Security
Agreement dated as of May 29, 1998 and a First Amendment to Fourth Amended and
Restated Credit Agreement and Pledge and Security Agreement (as amended, the
APledge and Security Agreement"); and
WHEREAS, the Company and the Lenders have agreed to amend the Pledge
and Security Agreement upon the terms and conditions herein set forth;
NOW, THEREFORE, for value received, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Lenders agree as follows:
1. CERTAIN DEFINED TERMS. Each capitalized term used herein without
being defined herein that is defined in the Credit Agreement shall have the
meaning given to it therein.
2. AMENDMENTS TO PLEDGE AND SECURITY AGREEMENT. The Pledge and Security
Agreement is hereby amended as follows:
(a) Section 1 of the Pledge and Security Agreement is hereby
amended to add the following definitions thereto in the appropriate
alphabetical order:
"SUBORDINATED NOTE": The promissory note dated as of
October 14, 1999 made by the Company in the original principal
amount of $20,000,000 as amended and restated pursuant to the
promissory note dated as of February , 2000 made by the
Company in the original principal amount of $30,000,000.
"SUBORDINATED NOTE OBLIGATIONS": The obligations of
the Company to pay principal and interest on the Subordinated
Note and all fees, costs, expenses and indemnities for which
the Company is liable in connection therewith.
(b) The first paragraph of Section 2 is hereby amended in its
entirety to read as follows:
As collateral security for the due and punctual
payment and performance of all of the Obligations, Lease
Obligations and Subordinated Note Obligations, the Company
does hereby pledge, hypothecate, assign, transfer and convey
to the Agent, for the benefit of the Lenders, the Lessor and
the holders of the Subordinated Note, and grants to the Agent,
for the benefit of the Lenders, the Lessor and the holders of
the Subordinated Note, a security interest in and to, the
following described property (the "Collateral")
(c) Clause Fifth of Section 17 of the Pledge and Security
Agreement is hereby amended in its entirety as follows:
Fifth: to the payment of the Subordinated Note
Obligations until all of the Subordinated Note Obligations
have been paid in full;
3. CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT. This Amendment shall
become effective when the Agent shall have received at least thirteen (13)
counterparts of this Amendment, duly executed by the Company and the Required
Lenders, provided the following conditions are satisfied:
(a) Before and after giving effect to this Amendment, the
representations and warranties of the Company in Section 3 of the
Credit Agreement, Section 5 of the Pledge and Security Agreement and
Section 4 of the Servicing Security Agreement, of NCFC in Section 15 of
the Guaranty, and of NCCC in Section 15 of the NCCC Guaranty shall be
true and correct as though made on the date hereof, except for changes
that are permitted by the terms of the Credit Agreement.
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(b) The Agent shall have received the consent of the Required
Lenders to the increase of the Subordinated Note.
(c) The Agent shall have received such other documents,
instruments, opinions and approvals as the Agent may reasonably
request.
4. ACKNOWLEDGMENTS. The Company and each Lender acknowledge that, as
amended hereby, the Pledge and Security Agreement remains in full force and
effect with respect to the Company and the Lenders, and that each reference to
the Pledge and Security Agreement in the Loan Documents shall refer to the
Pledge and Security Agreement as amended hereby. The Company confirms and
acknowledges that it will continue to comply with the covenants set out in the
Credit Agreement and the other Loan Documents, as amended hereby, and that its
representations and warranties set out in the Credit Agreement and the other
Loan Documents, as amended hereby, are true and correct as of the date of this
Amendment. The Company represents and warrants that (i) the execution, delivery
and performance of this Amendment is within its corporate powers and has been
duly authorized by all necessary corporate action; (ii) this Amendment has been
duly executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms (subject to limitations as to enforceability which might result
from bankruptcy, insolvency, or other similar laws affecting creditors' rights
generally and general principles of equity) and (iii) no Events of Default or
Unmatured Events of Default exist.
5. GENERAL.
(a) The Company agrees to reimburse the Agent upon demand for
all reasonable expenses (including reasonable attorneys fees and legal
expenses) incurred by the Agent in the preparation, negotiation and
execution of this Amendment and any other document required to be
furnished herewith, and to pay and save the Lenders harmless from all
liability for any stamp or other taxes which may be payable with
respect to the execution or delivery of this Amendment, which
obligations of the Company shall survive any termination of the Credit
Agreement.
(b) This Amendment may be executed in as many counterparts as
may be deemed necessary or convenient, and by the different parties
hereto on separate counterparts, each of which, when so executed, shall
be deemed an original but all such counterparts shall constitute but
one and the same instrument.
(c) Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining
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portions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
(d) This Amendment shall be governed by, and construed in
accordance with, the internal law, and not the law of conflicts, of the
State of Minnesota, but giving effect to federal laws applicable to
national banks.
(e) This Amendment shall be binding upon the Company, the
Lenders, the Agent and their respective successors and assigns, and
shall inure to the benefit of the Company, the Lenders, the Agent and
the successors and assigns of the Lenders and the Agent.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the day and year first above written.
NEW CENTURY MORTGAGE
CORPORATION
By /s/ [ILLEGIBLE]
-------------------------------------------
Its Vice President
--------------------------------------
U.S. BANK NATIONAL ASSOCIATION,
By /s/ [ILLEGIBLE]
--------------------------------------------
Its Senior Vice President
--------------------------------------
GUARANTY FEDERAL BANK, FSB
By /s/ W. Xxxxx Xxxxxxxx
--------------------------------------------
Its Vice President
--------------------------------------
[Signature Page for Third Amendment to
Pledge and Security Agreement]
BANK UNITED
By /s/ [ILLEGIBLE]
---------------------------------------------
Its Vice President
---------------------------------------
RESIDENTIAL FUNDING CORPORATION
By /s/ [ILLEGIBLE]
---------------------------------------------
Its Director
---------------------------------------
BANK ONE, TEXAS, N.A.
By /s/ [ILLEGIBLE]
--------------------------------------------
Its Senior Vice President
---------------------------------------
UNION BANK OF CALIFORNIA
By /s/ [ILLEGIBLE]
--------------------------------------------
Its Vice President
---------------------------------------
[Signature Page for Third Amendment to
Pledge and Security Agreement]
AMENDED AND RESTATED SUBORDINATED
PROMISSORY NOTE
$30,000,000.00 February 17, 2000
FOR VALUE RECEIVED, the undersigned, NEW CENTURY MORTGAGE CORPORATION
(the "Maker"), hereby promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION (the "Payee", which term includes any subsequent holder hereof) at
Minneapolis, Minnesota or at such other place as the Payee may from time to time
hereafter designate to the Maker in writing the principal sum of all loans made
by the Payee to the Maker under the terms of this Note (each an "Advance" and
collectively, the "Advances"). The aggregate principal amount of all Advances
outstanding hereunder shall not exceed THIRTY MILLION DOLLARS AND NO CENTS
($30,000,000.00). The amount and date and each Advance shall be entered by the
Lender into its records, which records shall be conclusive evidence of the
subject matter thereof absent manifest error.
The unpaid principal balance hereof from time to time outstanding shall
bear interest at the rate of twelve percent (12%) per annum. Interest shall be
computed on the basis of actual days elapsed and a year of 360 days. Upon the
happening of any Event of Default, this Note, at the option of the Payee, shall
bear interest until paid in full at a rate per annum equal to the rate of
interest applicable immediately prior to such Event of Default plus 2.0%.
The principal hereof is payable on June 1, 2000 in the amount of the
entire principal balance.
Interest shall be payable monthly in arrears five (5) business days
after the end of the preceding calendar month, and at final maturity.
Except with the prior written consent of the Payee, this Note may not
be prepaid.
This Note is secured by liens granted pursuant to (i) the Pledge and
Security Agreement dated as of May 29, 1998, made and given by the Maker (as the
same may hereafter be amended, modified or supplemented, or any agreement
entered into in substitution or replacement therefor, the "Pledge and Security
Agreement") and (ii) the Security Agreement dated as of February , 2000, made
and give by NC Capital Corporation (as the same may hereafter be amended,
modified or supplemented, or any agreement entered into in substitution or
replacement therefor, the "NCCC Security Agreement").
The occurrence of any one or more of the following events shall
constitute an Event of Default, and upon the occurrence of any Event of Default
the Payee may declare this
Note to be, and the same shall forthwith become, immediately due and payable and
the Payee may exercise all rights and remedies under the Pledge and Security
Agreement and the NCCC Security Agreement and as may otherwise be allowed by
applicable law:
(1) The Maker shall fail to make any payment of principal or
interest hereon when due.
(2) The Maker shall become insolvent or shall generally not pay
its debts as they mature or shall apply for, shall consent to,
or shall acquiesce in the appointment of a custodian, trustee
or receiver for the Maker or for a substantial part of the
property thereof or, in the absence of such application,
consent or acquiescence, a custodian, trustee or receiver
shall be appointed for the Maker or for a substantial part of
the property thereof; or any bankruptcy, reorganization, debt
arrangement or other proceedings under any bankruptcy or
insolvency law shall be instituted by or against the Maker.
(3) The maturity of any material indebtedness of the Maker (other
than the indebtedness on this Note) shall be accelerated or
the Maker shall fail to pay any such material indebtedness
when due or, in the case of indebtedness payable on demand,
when demanded. For these purposes, indebtedness of the Maker
shall be deemed material if it exceeds $250,000 as to any item
of indebtedness or in the aggregate for all items of
indebtedness with respect to which any of the events described
in this paragraph has occurred.
(4) Any default shall occur under the terms of the Pledge and
Security Agreement and shall continue for more than the period
of grace, if any, applicable thereto.
(5) Any default shall occur under the terms of the NCCC Security
Agreement and shall continue for more than the period of
grace, if any, applicable thereto.
(6) A judgment or judgments for the payment of money in excess of
the sum of $250,000 in the aggregate shall be rendered against
the Maker and the Maker shall not discharge the same or
provide for its discharge, or procure a stay of execution
thereof, prior to any execution on such judgment, within 60
days from the date of entry thereof, and within said period of
60 days, or such longer period during which execution shall be
stayed, appeal therefrom and cause the execution to be stayed
during such appeal.
(7) Any execution or attachment shall be issued whereby any
substantial part of the property of the Maker shall be taken
or attempted to be taken and the
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same shall not have been vacated or stayed within 30 days
after the issuance thereof.
(8) An "Event of Default" as defined in that certain Subordination
Agreement dated as of October 14, 1999 given by U.S. Bank
National Association (the "Subordination Agreement") shall
occur and continue thereunder.
This Note is subject to the terms set forth in the Subordination
Agreement and is the Subordinated Note as defined in the Subordination
Agreement.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF.
AT THE OPTION OF THE PAYEE THIS NOTE MAY BE ENFORCED IN ANY FEDERAL
COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY OR XXXXXX COUNTY,
MINNESOTA; AND THE MAKER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT THE VENUE IN SUCH FORUMS IS NOT CONVENIENT.
IF THE MAKER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY
TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP
CREATED BY THIS NOTE, THE PAYEE AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR, IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.
The Maker hereby waives presentment for payment, notice of dishonor,
protest and notice of protest.
If this Note is not paid when due, the Maker shall pay all of the
Payee's costs of collection including reasonable attorneys' fees.
This Note amends and restates the remaining unpaid principal
indebtedness of the undersigned to the Bank evidenced by a Subordinated
Promissory Note dated October 14, 1999, in the original principal amount of
$20,000,000 issued by the undersigned to the order of the Payee (the "Prior
Subordinated Note"). It is expressly intended, understood and agreed that this
note shall replace the Prior Subordinated Note as evidence of the remaining
unpaid principal indebtedness of the undersigned to Payee under the Prior
Subordinated Note and accrued and unpaid interest thereon, and such indebtedness
of the undersigned to the Payee heretofore represented by the Prior Subordinated
Note, as of the
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date hereof, shall be considered outstanding hereunder from and after the date
hereof and shall not be considered paid (nor shall the undersigned's obligation
to pay the same be considered discharged or satisfied) as a result of the
issuance of this note.
MAKER:
New Century Mortgage Corporation
By /s/ XXXX X. XXXXXXX
--------------------------------
Its CHIEF EXECUTIVE OFFICER
----------------------------
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SECURITY AGREEMENT
SECURITY AGREEMENT dated as of February 17, 2000 by and between NC
CAPITAL CORPORATION, a California corporation ("NCCC" or a "Grantor"), NC
RESIDUAL II CORPORATION , a Delaware corporation ("NCRC" or a "Grantor" and
together with NCCC, the "Grantors"), and U.S. BANK NATIONAL ASSOCIATION, a
national banking association ("USBNA"), as collateral agent (in such capacity,
together with any successor agent under the Credit Agreement referred to below,
which shall also be a successor collateral agent hereunder, the "Agent") for (A)
the Lenders (as defined below), (B) U.S. Bancorp Leasing & Financial, successor
in interest to FBS Business Finance Corp. (the "Lessor"), as lessor under any
present or future leases of equipment by the Lessor, as the lessor, to New
Century Mortgage Corporation (the "Company") or New Century Financial
Corporation ("NCFC"), as lessee, or as lender under any present or future loan
by the Lessor, as lender, to the Company or NCFC, as Company, secured by
equipment, and (C) the holder(s) of the Subordinated Note (as defined below).
RECITALS
A. The Company, the lenders party thereto (the "Lenders") and the Agent
are party to the Fourth Amended and Restated Credit Agreement dated as of May
26, 1999 (as the same has heretofore been amended and as may hereafter be
amended, modified, extended or restated and in effect from time to time, the
"Credit Agreement").
B. The Lessor has, and may from time to time hereafter, lease equipment
to the Company or NCFC, or make loans to the Company or NCFC secured by
equipment.
C. The Company has requested that USBNA make additional loans to the
Company under the promissory note dated as of October 14, 1999 made by the
Company in the original principal amount of $20,000,000 as amended and restated
pursuant to the promissory note dated as of February 17, 2000 made by the
Company in the original principal amount of $30,000,000 (the "Subordinated
Note").
D. It is a condition precedent to the agreement of the holder(s) of the
Subordinated Note to loan or advance additional monies under the Subordinated
Note that each Grantor executes and delivers this Security Agreement granting
the Agent a security interest in the property of the Grantors hereinafter
described.
E. NCCC is a wholly owned subsidiary of the Company and NCRC is a
wholly owned subsidiary of NCCC. Each Grantor participates with the Company in
Company Securitization Transactions, and has concluded that it is in its best
interests that the Company borrow the additional loans from USBNA.
Accordingly, each Grantor and the Agent hereby agree as follows:
Section 1. DEFINED TERMS.
Section 1.01. TERMS DEFINED IN CREDIT AGREEMENT. All terms used herein
that are not otherwise defined herein but that are defined in the Credit
Agreement, including Exhibit E thereto, shall have the respective meanings
assigned to them therein unless otherwise expressly defined herein.
Section 1.02. DEFINITION OF CERTAIN TERMS. As used herein, the
following terms shall have the following respective meanings (such terms to be
equally applicable to both the singular and plural forms of the terms defined):
"BANKRUPTCY CODE" shall mean 11 U.S.C. Section 101 ET. SEQ., as
amended from time to time.
"COLLATERAL" shall mean all property and rights in property now owned
or hereafter at any time acquired by either Grantor in or upon which a Lien is
granted to the Agent by such Grantor under this Security Agreement or under any
other document or instrument executed by such Grantor pursuant to this Security
Agreement, including, without limitation, the property described in Section 2.
"COMPANY" shall have the meaning assigned to it in the first recital
hereto.
"FINANCING STATEMENT" shall have the meaning given to such term in
Section 4(c).
"GCFPI" shall mean Greenwich Capital Financial Products, Inc., a
Delaware corporation.
"GRANTOR ADDRESS" shall mean 00000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxxxx 00000.
"LEASE AGREEMENT" shall mean each and any agreement for the lease of
equipment or for the making of a loan secured by equipment now existing or at
anytime entered into between the Lessor, as lessor or lender, and the Company or
NCFC, as lessee or Company.
"LEASE OBLIGATIONS" shall mean all of the obligations now or hereafter
arising owed by the Company or NCFC to the Lessor in connection with any lease
of equipment or loan secured by equipment.
"PROCEEDS" shall mean any consideration received from the sale,
exchange, lease or other disposition of any asset or property which constitutes
Collateral, any value received as a consequence of the possession of any
Collateral and any payment received from any
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insurer or other person or entity as a result of the destruction, loss, theft,
damage or other involuntary conversion of whatever nature of any asset or
property which constitutes Collateral, and shall include all cash and negotiable
instruments received or held on behalf of the Agent pursuant to this Security
Agreement.
"RESIDUAL FINANCING" shall have the meaning assigned to it in Section
4(c).
"SBI": Salomon Brothers International, Limited, an English corporation.
"SECURED PARTIES" shall mean the Agent, the Lenders, the Lessor, and
the holder(s) of the Subordinated Note.
"SECURITIZATION DOCUMENTS" shall mean all agreements, instruments,
certificates, and other documents executed and delivered in connection with any
Company Securitization Transaction, as the same may be amended, modified,
extended or restated and in effect from time to time.
"SUBORDINATED NOTE" shall have the meaning assigned to it in the
Recital C hereto.
"SUBORDINATED NOTE OBLIGATIONS" shall mean the obligations of the
Company to pay principal and interest on the Subordinated Note and all fees,
costs, expenses and indemnities for which the Company is liable in connection
therewith.
Section 1.03. TERMS DEFINED IN UNIFORM COMMERCIAL CODE. All other terms
used in this Agreement that are not specifically defined herein or the
definitions of which are not incorporated herein by reference shall have the
meaning assigned to such terms in the Uniform Commercial Code in effect in the
State of Minnesota as of the date first above written (the "Uniform Commercial
Code") to the extent such other terms are defined therein.
Section 1.04. RULES OF INTERPRETATION. Unless the context of this
Security and Agreement otherwise clearly requires, references to "or" has the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereunder," and similar terms in this Security Agreement refer to
this Security Agreement as a whole and not to any particular provision of this
Security Agreement. References to Sections, Attachments and Schedules are
references to Sections in, and Attachments and Schedules to, this Security
Agreement unless otherwise provided.
Section 2. GRANT OF SECURITY INTEREST. As security for the payment and
performance of all of the Obligations (as defined in the Credit Agreement),
Lease Obligations, and Subordinated Note Obligations, each Grantor hereby
assigns and pledges to the Agent for
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the benefit of the Lenders, the Lessor, the holder(s) of the Subordinated Note
and their respective successors and assigns, and hereby grants to the Agent for
the benefit of the Lenders, the Lessor, the holder(s) of the Subordinated Note
and their respective successors and assigns, a security interest in and to, all
of such Grantor's right, title, and interest in and to the following:
(a) all Junior Securitization Interests described on Schedule
1 and 2 hereto, and all Junior Securitization Interests hereafter
arising (the "Pledged Junior Securitization Interests");
(b) all rights, remedies and other interests of such Grantor
to and under any agreement pursuant to which any Pledged Junior
Securitization Interest was, is or may be acquired, sold or financed,
either before or after the date hereof;
(c) all rights, remedies and other interests of such Grantor
in any Securitization Documents related to the Pledged Junior
Securitization Interests;
(d) all sums paid or payable to such Grantor under or by
virtue of any Pledged Junior Securitization Interests;
(e) all books, correspondence, credit files, records,
invoices, bills of lading, and other documents, including, without
limitation, all tapes, cards, computer runs, and other papers and
documents in the possession or control of such Grantor or any computer
bureau from time to time acting for such Grantor relating to the
foregoing;
(f) any and all Hedging Arrangements related to the Pledged
Junior Securitization Interests or the Mortgage Loans backing the
related Company Securitization Transactions, and any and all rights,
remedies and other interests of such Grantor therein or thereunder;
(g) any and all balances, credits, deposits, accounts or
moneys of, or in the name of, such Grantor representing or evidencing
the foregoing or any proceeds thereof; and
(h) all Proceeds of any of the foregoing;
provided, however, that with respect to the Junior Securitization Interests
listed on Schedule 1 hereto, and any related Collateral described in clauses
(b), (c), (d), (e), (f), (g) and (h) above, such security interest shall not
take effect until consented to by GCFPI.
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Section 3. THE GRANTORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Security Agreement had not been executed, (b) the exercise by the Agent of any
of the rights hereunder shall not release either Grantor from any of its duties
or obligations under the contracts and agreements included in the Collateral,
and (c) none of the Agent or the Lenders shall have any obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Security Agreement, nor shall the Agent or the Lenders be obligated to perform
any of the obligations or duties of either Grantor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
Section 4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants as follows:
(a) The chief place of business and the office where each
Grantor keeps its books and records concerning the Collateral is
located at the Grantor Address. The chief executive office of each
Grantor is located at the Grantor Address.
(b) Each Junior Securitization Interest described in Schedule
1 or 2, or which is at any time hereafter created or acquired by either
Grantor is, or upon the creation or acquisition thereof by such Grantor
will be, in full force and effect without modification or amendment of
any kind.
(c) Each Grantor is the legal and beneficial owner of the
Collateral free and clear of any Lien except for the security interests
created by this Security Agreement and (i) in the case of Junior
Securitization Interests listed on Schedule 1, a Lien in favor of
GCFPI, (ii) in the case of Junior Securitization Interests listed on
Schedule 2, a Lien in favor of SBI, and (iii) in the case of future
Junior Securitization Interests, a Lien in favor of the Person(s)
providing financing described in Section 4.08(d) of the Credit
Agreement ("Residual Financing") secured by such Junior Securitization
Interests. No effective financing statement or other similar document
used to perfect and preserve a security interest under the laws of any
jurisdiction (a "Financing Statement") covering all or any part of the
Collateral is on file in any recording office, except such as may have
been filed in favor of the Agent relating to this Security Agreement or
to perfect permitted Liens as described above.
(d) Each Grantor has good right, power and lawful authority to
pledge, assign and deliver the Collateral in the manner hereby done or
contemplated.
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(e) No consent or approval of any governmental body,
regulatory authority, person, trust, or entity is or will be (i)
necessary to the validity of the rights created hereunder or (ii)
required prior to the assignment, transfer and delivery of any of the
Collateral to the Agent, except for the consent of SBI and GCFPI to the
Agent's security interest in the Junior Securitization Interests listed
on Schedule 2, which has been obtained.
(f) To each Grantor's knowledge, no material dispute, right of
setoff, counterclaim or defense exists with respect to all or any part
of the Collateral.
(g) This Security Agreement constitutes the legal, valid and
binding obligation of each Grantor enforceable against such Grantor and
the Collateral in accordance with its terms (subject to limitations as
to enforceability which might result from bankruptcy, reorganization,
arrangement, insolvency or other similar laws affecting creditors'
rights generally and general principles of equity).
(h) Immediately upon the acquisition by either Grantor of
rights in the Collateral and the filing of an appropriate financing
statement in the appropriate filing office or offices, the Agent shall
have a valid, perfected security interest and lien in the Collateral,
subject to no other security interest or lien except as provided in
this Security Agreement.
(i) Neither Grantor has used any trade names and styles in its
business during the last five years. No such trade names or styles and
no trademarks or other similar marks owned by either Grantor are or
have been registered with any governmental unit during the last five
years.
Section 5. COVENANTS OF THE GRANTORS.
(a) NAME CHANGE. Without the prior written consent of the
Agent, neither Grantor will change its name from that set forth in the
first paragraph of this Security Agreement nor use any other name.
(b) CHANGE OF LOCATION. Each Grantor shall give at least 30
days' prior written notification to the Agent of the opening of a new
place of business where any of the Collateral or records relating
thereto are to be located, any other change in the location of the
office where it keeps its books and records concerning the Collateral,
and of any change in the location of its chief executive office.
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(c) USE OF TRADE NAMES OR STYLES. Neither Grantor will, except
after giving at least 30 days' prior written notice to the Agent, use
any trade names or styles in its business in any state.
(d) INSPECTION AND VERIFICATION OF BOOKS RECORDS AND
COLLATERAL. The Agent, or any persons designated by the Agent, shall
have the right, at reasonable times, without hindrance or delay, to
inspect the books and records of each Grantor relating to the
Collateral. The Agent, or any persons designated by the Agent, shall
have the right to make such verifications concerning each Grantor's
business and the Collateral as may be reasonable.
(e) MARKING COLLATERAL AND RECORDS. Promptly upon the request
of the Agent, each Grantor will xxxx, or will permit the Agent to xxxx
in a reasonable manner, such Grantor's books, records and accounts
showing or dealing with the Collateral with a notation clearly setting
forth that a security interest in the Collateral has been granted to
the Agent for the benefit of the Lenders and of the Subordinated
Lender, which notations shall be in form and substance reasonably
satisfactory to the Agent.
(f) REPORTS AND SCHEDULES. Each Grantor will from time to time
as the Agent may reasonably request, deliver to the Agent such
schedules and such certificates and reports respecting all or any of
the Collateral, and the items or amounts received by such Grantor in
full or partial payment, or otherwise as proceeds of any of the
Collateral, all to such extent as the Agent may reasonably request. Any
such schedule, certificate or report shall be executed by a duly
authorized officer of such Grantor and shall be in such form and detail
as the Agent may reasonably specify. Each Grantor will also furnish the
Agent such additional information concerning the Collateral as it may
from time to time reasonably request.
(g) MAINTENANCE OF SECURITY INTEREST. Each Grantor will do all
acts and things, and will execute and file or record all instruments
(including, but not limited to, mortgages, pledges, assignments,
security agreements, financing statements, amendments to financing
statements, continuation statements, etc.) required, or reasonably
requested by the Agent, to establish, perfect, maintain and continue
the perfection and priority of the interests of the Agent in the
Collateral. Each Grantor will also pay the costs and expenses of: all
filings and recordings, including taxes thereon; all searches
necessary, or reasonably deemed necessary by the Agent, to establish
and determine the validity and the priority of such interests; and also
to satisfy all other liens which in the reasonable opinion of the Agent
might prejudice, imperil or otherwise affect the Collateral or the
existence or priority of such
7
interests. A carbon, photographic or other reproduction of this
Security Agreement or of a financing statement shall be sufficient as a
financing statement and may be filed in lieu of the original in any or
all jurisdictions which accept such reproductions. On or before April
30, 2000, the Grantors shall cause SBI to enter into intercreditor and
agency agreements, on terms reasonably acceptable to the Agent,
concerning the Agent's security interest in the Junior Securitization
Interests described in Schedules 2.
(h) COLLECTIONS. Until notified in writing by the Agent to the
contrary, each Grantor shall, at its own expense, endeavor to collect
as and when due, all amounts due with respect to amounts payable under
or with respect to the Collateral, including the taking of such action
with respect to collection as such Grantor may deem advisable. Whenever
an Event of Default shall have occurred and be continuing, all
collections of the Collateral received by either Grantor shall be held
in trust for the Agent and shall be promptly remitted to the Agent in
the form received, properly endorsed, or as the Agent may otherwise
direct in writing.
(i) INDEMNITY. Each Grantor will indemnify and save and hold
the Secured Parties harmless from and against any and all claims,
damages, losses, liability or judgments which may be incurred or
sustained by, or asserted against, any one or more of the Secured
Parties, directly or indirectly, in connection with the existence of or
the exercise of any of its or their rights under this Security
Agreement; PROVIDED, that such Grantor shall not be liable to any
Secured Party for any portion of such claims, damages, losses,
liabilities or judgments resulting from (i) the gross negligence or
willful misconduct of the Secured Party seeking indemnification, (ii)
any breach by the Secured Party seeking indemnification of the terms of
the Loan Documents to which such Secured Party is a party, or (iii) any
violation of law by the Secured Party seeking indemnification.
(j) THIRD-PARTY CLAIMS. Each Grantor will defend the
Collateral and the security interests therein against all claims and
demands of all Persons, at any time claiming any adverse interest with
respect thereto, except for claims of (i) GCFPI with respect to the
Junior Securitization Interests listed on Schedule 1 and (ii) SBI with
respect to the Junior Securitization Interests listed on Schedule 2,
and (iii) in the case of future Junior Securitization Interests, the
Person(s) providing Residual Financing secured by such Junior
Securitization Interests.
(k) TAXES. Each Grantor will promptly pay any and all taxes,
assessments and governmental charges upon the Collateral prior to the
date that penalties are attached thereto or the same become a lien on
any of the Collateral, except to the
8
extent that such taxes, assessments and charges shall be contested by
such Grantor in good faith and through appropriate proceedings.
(l) ADDITIONAL JUNIOR SECURITIZATION INTERESTS. With respect
to any Junior Securitization Interests created or acquired after the
date hereof, the Grantors will promptly deliver the following documents
to the Agent: (i) copies of all Securitization Documents relating
thereto, (ii) such amendments to this Security Agreement and the
related financing statements as the Agent may deem necessary to
describe more fully such Junior Securitization Interests and any
related Hedging Arrangements or other Collateral, and (iii) a consent
of the Person providing Residual Financing to either Grantor with
respect to such Junior Securitization Interests.
(m) DISPOSITION OF COLLATERAL. Neither Grantor will sell or
offer to sell or otherwise assign, transfer or dispose of any of the
Collateral or any interest therein except as and to the extent
permitted under the Credit Agreement and the Repurchase Agreements.
Section 6. REMEDIES.
(a) COLLECTIONS.
(i) Each Grantor shall have the right to collect all
amounts payable under the Collateral in the ordinary course of
its business; PROVIDED, HOWEVER, that during the occurrence
and continuation of an Event of Default, each Grantor agrees,
upon the request of the Agent, promptly to deposit all
payments received by such Grantor on account of the
Collateral, whether in the form of cash, checks, notes,
drafts, bills of exchange, money orders or otherwise, in one
or more accounts designated by the Agent in precisely the form
received (but with any endorsements of such Grantor necessary
for deposit or collection), subject to withdrawal by the Agent
only, as hereinafter provided, and until they are deposited,
such payments shall be deemed to be held in trust by such
Grantor for and as the property of the Lenders and shall not
be commingled with any of such Grantor's other funds.
Notwithstanding the occurrence and continuation of an Event of
Default, each Grantor agrees to perform under all
Securitization Documents in accordance with its normal
collection practices, whether the remittances received in
connection with the Junior Subordination Interests are
transferred to an account for the benefit of the Agent or
otherwise.
9
(ii) Upon receipt by the Agent of notice that an
Event of Default has occurred and is continuing, the Agent
shall have the right, as the true and lawful agent of each
Grantor, with power of substitution for each Grantor and in
either Grantor's name, the Agent's name or otherwise, for the
use and benefit of the Secured Parties, (A) to receive,
endorse, assign and/or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (B) to demand,
collect, receive payment of, give receipt for and give
discharges and releases of all or any of the Collateral; (C)
to sign the name of either Grantor on any invoice or xxxx of
lading relating to any of the Collateral; (D) to commence and
prosecute any and all suits, actions or proceedings at law or
in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to
enforce any rights in respect of any Collateral; (E) to
settle, compromise, compound, adjust or defend any actions,
suits or proceedings relating to all or any of the Collateral;
(F) to notify, or to require either Grantor to notify, the
Person obligated on any of or all the Collateral to make
payment thereof directly to the Agent; and (G) to use, sell,
assign, transfer, pledge, make any agreement with respect to
or otherwise deal with all or any of the Collateral, and to do
all other acts and things necessary to carry out the purposes
of this Security Agreement, as fully and completely as though
the Agent were the absolute owner of the Collateral for all
purposes; PROVIDED, HOWEVER, that nothing herein contained
shall be construed as requiring or obligating the Agent or the
Secured Parties to make any commitment or to make any inquiry
as to the nature or sufficiency of any payment received by the
Agent or the Secured Parties, or to present or file any claim
or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become
due in respect thereof or any property covered thereby, and no
action taken or omitted to be taken by the Agent or the
Secured Parties with respect to the Collateral or any part
thereof shall give rise to any defense, counterclaim or offset
in favor of either Grantor or to any claim or action against
the Agent or the Secured Parties. It is understood and agreed
that the appointment of the Agent as the agent of each Grantor
for the purposes set forth above is coupled with an interest
and is irrevocable. The provisions of this Section 6(a) shall
in no event relieve either Grantor of any of its obligations
hereunder or under any of the other Loan Documents with
respect to the Collateral or any part thereof or impose any
obligation on the Agent or the Secured Parties to proceed in
any particular manner with respect to the Collateral or any
part thereof, or in any way limit the exercise by the Agent or
any Secured Party of any other or further right which it may
have on the date of this Security
10
Agreement or hereafter, whether hereunder, under any Loan Documents or
by law or otherwise.
(iii) the rights of the Agent set forth in clauses
(i) and (ii) above, in Section 5(h) above and in Section 6(c)
below are subject to (A) with respect to the Junior
Securitization Interests described on Schedule 1, the rights
of GCFPI, and (B) with respect to the Junior Securitization
Interests described on Schedule 2, the rights of SBI, and (C)
with respect to future Junior Securitization Interests, the
rights of the Person providing Residual Financing therefor.
(b) RIGHT TO USE CERTAIN ASSETS OF THE GRANTORS. Upon receipt
by the Agent of notice that an Event of Default has occurred and is
continuing, the Agent and any representatives of the Agent shall have,
in addition to all its other rights under this Security Agreement, the
right to obtain access to each Grantor's data processing equipment,
computer hardware and software relating to the Collateral and to use
all of the foregoing and the information contained therein in any
manner the Agent deems necessary for the purpose of effectuating its
rights under this Security Agreement and any other Loan Documents. Each
Grantor agrees that the Agent has no obligation to preserve rights to
the Collateral against any other parties. The Agent is hereby granted a
license or other right to use, without charge, each Grantor's labels,
patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in
advertising for sale and selling any Collateral and each Grantor's
rights under all licenses and all franchise agreements shall inure to
the Agent's benefit until the Obligations are paid in full.
(c) OTHER REMEDIES. Upon receipt by the Agent of notice that
an Event of Default has occurred and is continuing, the Agent may, in
addition to any other right or remedy available to the Agent or the
Secured Parties under any Loan Documents, exercise any and all rights
and remedies available to it and/or the Secured Parties under the
Uniform Commercial Code as in effect in the State of Minnesota and any
other applicable law to the fullest extent permitted thereby. Without
limiting the foregoing, upon receipt of notice by the Agent that an
Event of Default has occurred and is continuing, the Agent may exercise
any of the following rights and remedies: (a) in the name of either
Grantor, any Secured Party or otherwise, to demand, collect, receive
and receipt for, compound, compromise, settle and give acquittance for,
and prosecute and discontinue any suits or proceedings in respect of
any or all of the Collateral; (b) upon written notice to either Grantor
and any other Person entitled to receive such notice under any Junior
Securitization Interest or the related Securitization Documents,
specifying the effective date of any assumption thereof,
11
to assume, become bound by, and agree to perform and observe the
covenants, agreements, obligations and conditions to be performed and
observed under any Servicing Contract specified in such notice and to
exercise all of the rights, powers and privileges of such Grantor
thereunder; (c) to sell and assign to any other Person or Persons the
right, title and interest of either Grantor in any Servicing Contract
or Servicing Rights; (d) to require each Grantor to, and each Grantor
hereby agrees that it will at its expense and upon request of the Agent
forthwith, assemble all or part of the Collateral as directed by the
Agent and make it available to the Agent at a place to be designated by
the Agent that is reasonably convenient to both the Agent and the
Grantors; (e) without notice except as specified below, to sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Agent's offices or elsewhere, for cash, on
credit, or for future delivery, and upon such other terms as the Agent
may reasonably believe are commercially reasonable; (f) to occupy any
premises owned or leased by either Grantor where the Collateral or any
part thereof or any books and records relating thereto is assembled for
a reasonable period in order to effectuate the Agent's rights and
remedies hereunder or under law, without obligation to compensate such
Grantor for such occupation; (g) to take any action which the Agent may
reasonably deem necessary or desirable in order to realize on the
Collateral, including, the power to endorse in the name of either
Grantor any checks, drafts, notes or other instruments or documents
received in payment of or on account of the Collateral; and (h) to
exercise any and all rights and remedies of either Grantor under or in
connection with the Collateral. Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days' prior
written notice to such Grantor (which such Grantor agrees is reasonable
notification within the meaning of Section 9-504(3) of the Uniform
Commercial Code) of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent
may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(d) WAIVER OF CERTAIN CLAIMS. Each Grantor acknowledges that
because of present or future circumstances, a question may arise under
the Securities Act of 1933, as from time to time amended (the
"Securities Act"), with respect to any disposition of the Collateral
permitted hereunder. Each Grantor understands that compliance with the
Securities Act may very strictly limit the course of conduct of the
Agent if the Agent were to attempt to dispose of all or any portion of
the Collateral and may also limit the extent to which or the manner in
which any subsequent transferee of the Collateral or any portion
thereof may dispose of the same. There may be other legal restrictions
or limitations affecting the Agent in any
12
attempt to dispose of all or any portion of the Collateral under the
applicable Blue Sky or other securities laws or similar laws analogous
in purpose or effect. The Agent may be compelled to resort to one or
more private sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such Collateral for
their own account for investment only and not to engage in a
distribution or resale thereof. Each Grantor agrees that the Agent
shall not incur any liability, and any liability of either Grantor for
any deficiency shall not be impaired, as a result of the sale of the
Collateral or any portion thereof at any such private sale in a manner
that in all other respects is commercially reasonable (within the
meaning of Section 9-504(3) of the Uniform Commercial Code). Each
Grantor hereby waives any claims against the Agent arising by reason of
the fact that the price at which the Collateral may have been sold at
such sale was less than the price that might have been obtained at a
public sale or was less than the aggregate amount of the Obligations,
even if the Agent shall accept the first offer received and does not
offer any portion of the Collateral to more than one possible
purchaser. Each Grantor further agrees that the Agent has no obligation
to delay sale of any Collateral for the period of time necessary to
permit the issuer of such Collateral to qualify or register such
Collateral for public sale under the Securities Act, applicable Blue
Sky laws and other applicable state and federal securities laws, even
if said issuer would agree to do so. Without limiting the generality of
the foregoing, the provisions of this Section would apply if, for
example, the Agent were to place all or any portion of the Collateral
for private placement by an investment banking firm, or if such
investment banking firm purchased all or any portion of the Collateral
for its own account, or if the Agent placed all or any portion of the
Collateral privately with a purchaser or purchasers.
Section 7. APPLICATION OF PROCEEDS. The Agent shall apply the proceeds
of any collection, sale or other disposition of the Collateral as
follows:
FIRST, ratably to the payment of the costs and expenses of the
Agent and the Lenders in connection with the enforcement of this
Agreement (including, without limitation, the sale or other disposition
of the Collateral) and the reasonable fees and out of pocket expenses
of counsel employed in connection therewith, to the payment of all
costs and expenses incurred by the Agent in connection with the
administration of this Agreement and to the payment of all advances
made by the Agent and the Lenders for the account of the Company
hereunder, to the extent that such costs, expenses and advances have
not been reimbursed to the Agent and the Lenders, as the case may be;
SECOND, to the payment in full of the principal of and any
Balances Deficiency Fees, Usage Fees, facility fees and interest on the
Notes;
13
THIRD, to the payment of all other Obligations, as provided in
the Credit Agreement or otherwise, as the Agent or the Lenders may
determine;
FOURTH, to the payment in full of the Lease Obligations, as
provided in the Lease Agreements, or otherwise, as the Lessor may
determine
FIFTH, to the payment in full of the Subordinated Note
Obligations until all of the Subordinated Note Obligations have been
paid in full;
SIXTH, the balance (if any) of such proceeds shall be paid to
the Grantors, their successors or assigns, or as a court of competent
jurisdiction may direct; PROVIDED, that if such proceeds are not
sufficient to satisfy the Obligations, the Lease Obligations and the
Subordinated Note Obligations in full, the Company shall remain liable
to the Agent, the Lenders, the Lessor and the holder(s) of the
Subordinated Note, as applicable, for any deficiency.
The Agent shall apply any such proceeds, moneys or balances in accordance with
this Security Agreement as promptly as is reasonably practicable. Upon any sale
of the Collateral by the Agent (including, pursuant to a power of sale granted
by statute or under a judicial proceeding), the receipt of the Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Agent or such officer or be answerable in any way for the
misapplication thereof.
Section 8. MISCELLANEOUS.
(a) BENEFIT OF AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of each Grantor and the Agent and their
respective successors and assigns, and shall inure to the benefit of
the Lenders, the Lessor, USBNA and their respective successors and
assigns, except that neither Grantor may assign or transfer any of its
rights or obligations under this Agreement without the prior written
consent of the Lenders.
(b) NO COMMITMENT BY LESSOR OR USBNA. Nothing in this
agreement shall be construed as a commitment on the part of the Lessor
to lease any equipment or make any loan, or on the part of USBNA to
extend any loan pursuant to the Subordinated Note, under any existing
agreement or otherwise, to or for the account of the Company or NCFC.
14
(c) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties and covenants made by either Grantor to the
Agent, the Lenders, the Lessor or USBNA in connection with this
Agreement shall survive the execution and delivery of this Agreement.
All statements contained in any certificate or other instrument
delivered to the Agent, the Lenders, the Lessor or USBNA pursuant to
this Agreement shall be deemed representations, warranties and
covenants hereunder of such Grantor.
(d) HEADINGS. Section headings in this Agreement are for
convenience of reference only, and shall not govern the interpretation
of any of the provisions of this Agreement.
(e) EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, all of which taken together shall
constitute one and the same instrument and either of the parties hereto
may execute this Agreement by signing any such counterpart.
15
IN WITNESS WHEREOF, the parties hereto have duly executed this
Security Agreement as of the day and year first above written.
NC CAPITAL CORPORATION
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------------------------
Title: CHIEF EXECUTIVE OFFICER
-----------------------------------------------
NC RESIDUAL II CORPORATION
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxxx
------------------------------------------------
Title: CHIEF EXECUTIVE OFFICER
-----------------------------------------------
U.S. BANK NATIONAL ASSOCIATION, as Agent
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------------
Title: Senior Vice President
-----------------------------------------------
[Signature Page to Security Agreement]
SCHEDULES
1. GCFPI Junior Securitization Interests
2. SBI Junior Securitization Interests
SCHEDULE 1
GCFPI Junior Securitization Interests
SCHEDULE 1
GCFPI has a Lien on the following Junior Securitization Interest:
OWNER SECURITY CERTIFICATE NAME
----- -------- ----------------
NCCC 1999-NCA New Century Home Equity Loan Trust, Series 0000-XXX Xxxxx Backed Pass-
Through Certificates Series 1999-NCA, Class A-810
NCRC 1999-NCD New Century Home Equity Loan Trust, Series 1999-NCD Asset Backed Pass-
Through Certificates Series 1999-D, Class R
[Schedule 1 to the Security Agreement]
SCHEDULE 2
SBI Junior Securitization Interests
SCHEDULE 2
SBI has a Lien on the following Junior Securitization Interest:
OWNER SECURITY CERTIFICATE NAME
----- -------- ----------------
NCCC XXXX 0000-X XX Finance Trust 1998-1 NC Finance XX Xxxxx, Series 0000-X
XXXX XXXX 0000-XX XX Finance Trust 1998-2 NC Finance XX Xxxxx, Series 0000-XX
XXXX XXXX 0000-X XX Finance Trust 1999-1 Class D Bonds, Series 1999-I
NCRC 1999-NC1 Salomon Brothers Mortgage Securities VII, Inc. Mortgage Pass-Through
Certificates Series 1999-NC1, Class CE, Class P
NCRC 1999-NC2 Salomon Brothers Mortgage Securities VII, Inc. Floating Rate Mortgage Pass-
Through Certificates Series 1999-NC2, Class CE, Class P
NCRC 1999-NC3 Salomon Brothers Mortgage Securities VII, Inc. Floating Rate Mortgage Pass-
Through Certificates Series 1999-NC3, Class CE, Class P
NCRC 1999-NC4 Salomon Brothers Mortgage Securities VII, Inc. Floating Rate Mortgage Pass-
Through Certificates Series 1999-NC4, Class CE, Class P
NCRC 1999-NC5 Salomon Brothers Mortgage Securities VII, Inc. Floating Rate Mortgage Pass-
Through Certificates Series 1999-NC5, Class CE, Class P
[Schedule 2 to the Security Agreement]
