SECURITY AGREEMENT
THIS AGREEMENT, made this 3rd day of September, 1999, by and between
Factual Data Corp., hereinafter referred to as "Debtor" and Residential Mortgage
Credit Reporting, Inc., hereinafter referred to as "Secured Party";
WHEREAS, on or about September 3, 1999, Debtor and Secured Party entered
into an Asset Purchase Agreement (the "Purchase Agreement"), pursuant to which
Debtor purchased the assets which appear on Exhibit 2.1 to the Purchase
Agreement, a copy of which is attached hereto; and
WHEREAS, upon closing under the Purchase Agreement, Debtor will be the
holder of all such assets which appear in Exhibit 2.1 to the Purchase Agreement
(the "Collateral"); and
WHEREAS, Debtor desires to borrow from Secured Party, and Secured Party
desires to lend to Debtor in conjunction with the sale of the Secured Party's
Collateral to Debtor, the sum of One Hundred Sixty-Two Thousand, Five Hundred
Dollars ($162,500) (the "Loan"), which Loan is evidenced by that certain secured
Non-negotiable Promissory Note of even date herewith from Debtor (as Maker) to
Secured Party (as Holder) (the "Note"); and
WHEREAS, as a condition to the Loan and to induce Secured Party to make
the Loan and to accept the Note, Debtor agrees to grant to Secured Party a
security interest in and to said Collateral;
NOW, THEREFORE, in consideration of the foregoing recitals, the Loan and
other financial accommodation heretofore, now or hereafter made to Debtor by
Secured Party and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows, it is hereby agreed as follows:
1. Debtor does hereby assign and grant to Secured Party a security
interest in said Collateral to secure the payment of the indebtedness referred
to above, including principal and interest as provided in said Note, and all
other indebtedness of Debtor to Secured Party, however or whenever arising,
whether due or to become due and to secure performance of all provisions to be
observed, performed and kept under the Note and this Agreement.
2. Secured Party shall have the right to record its lien and, at any time,
to notify any and all third parties of the security interest of Secured Party in
said Collateral and, in the event of a default, to cause said Collateral to be
transferred to the name of the Secured Party or to the name of any other person
or corporation; and Secured Party or such transferee may exercise all the rights
and privileges in connection with said Collateral to which transferor would have
been entitled by virtue of being record holder thereof.
3. Debtor does hereby constitute and appoint Secured Party as its
attorney-in-fact to, upon default, endorse Debtor's name on said Collateral, on
any check or any other instrument of payment to be received therefrom, or on any
other document or instrument which would facilitate the collection or payment of
said Collateral; to give receipts therefor in the name of Debtor for any amounts
which may be received thereon; and to apply the amount so collected to any
indebtedness of Debtor to Secured Party.
4. Debtor does hereby warrant, represent and covenant to Secured Party
that at the time of execution of this Security Agreement:
(i) Except for security interests which may be granted to a senior
lender in accordance with paragraph 9 hereof, Debtor is the owner of all
of the Collateral free from any claim, lien, charge, security interest or
encumbrance, and Debtor will defend the Collateral against all claims and
demands of all persons at any time claiming the same or any interest
therein;
(ii) Debtor shall keep the Collateral at Phoenix, Arizona, and will
promptly notify Secured Party of any change in the location of the
Collateral within said State, and will not remove the Collateral from
Phoenix, Arizona, without the prior written consent of Secured Party,
which will not be unreasonably withheld;
(iii) Except for financing statements filed or to be filed in favor
of any senior lender and Secured Party, no financing statement covering
any of the Collateral or any proceeds thereof is on file in any public
office. Debtor shall notify Secured Party in writing of any change in
name, address, identity or corporate structure from
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that shown in this Agreement and shall, concurrently with the execution of
this Agreement and thereafter furnish to the Secured Party such further
information and shall execute and deliver to Secured Party such financing
statements, continuation statements and other documents in form
satisfactory to Secured Party and shall do all such acts and things as
Secured Party may at any time or from time to time reasonably request or
as may be necessary or appropriate to establish and maintain a perfected
security interest in the Collateral subject to the prior lien of any
senior lender (as hereinafter described), and further subject to no
adverse liens or encumbrances; and Debtor will pay the cost of filing the
same or filing or recording this Agreement in all public offices wherever
filing or recording is deemed by Secured Party as necessary or desirable.
A carbon, photographic or other reproduction of this Agreement is
sufficient as a financing statement;
(iv) Debtor will not sell or offer to sell, assign, pledge, lease or
otherwise transfer or encumber the Collateral or any interest therein,
without the prior written consent of Secured Party, except for the rental
or sale of inventory in the ordinary course of business or as described in
paragraph 9 below;
(v) Except for the security interests in favor of any senior lender
and Secured Party, Debtor will keep the Collateral free from any adverse
lien, security interest or encumbrance and in good order and repair, shall
not waste or destroy the Collateral or any part thereof, and shall not use
the Collateral in violation of any statute, law or ordinance known to
Debtor or policy of insurance thereon. Secured Party may inspect the
Collateral at any reasonable time or times, during business hours and upon
reasonable notice, wherever located;
(vi) Debtor, at its sole expense, shall maintain insurance on the
Collateral expressly naming Secured Party as an additional insured, in
such form, with such companies, and in amounts as may be in such amounts
as is typically maintained by other similarly situated companies, but in
no event less than the remaining balance of the Obligations (hereinafter
defined), from time to time; and
(vii) Debtor shall pay promptly when due all taxes, levies,
assessments and governmental charges on the Collateral or for its use or
operation or upon this Agreement or upon any note or notes evidencing the
Obligations.
(viii) Debtor hereby grants to Secured Party the right to discharge
any claim, lien, charge, security interest or encumbrance placed on, or
relating to, the Collateral should Debtor fail to do so upon receiving
notice of any such claim, lien, charge, security interest or encumbrance.
5. It is agreed that upon occurrence of any of the following events of
default hereunder (an "Event of Default"): (i) nonpayment when due of any amount
payable under the Note, (ii) occurrence of any event of default hereunder, (iii)
insolvency (as defined in the Uniform Commercial Code as in effect at that time)
of the Debtor, (iv) filing of a petition in bankruptcy by or against the Debtor,
or (v) entry of any final judgment against the Debtor not appealed or satisfied
within 90 days of the date of entry, then, at any time thereafter, (1) the total
unpaid principal balance of the Note together with all accrued but unpaid
interest thereunder may, at the option of the Secured Party, and without demand
or notice of any kind, be accelerated and declared, and thereupon immediately
shall become, in default and due and payable, (2) the Debtor will pay all
expenses of the Secured Party in the collection of the Note, and in the
enforcement of its rights in any of the Collateral, including reasonable
attorney's fees and legal expenses, and (3) the Secured Party may exercise from
time to time any rights and remedies available to the Secured Party under the
Uniform Commercial Code as in effect at that time in Arizona or other applicable
jurisdiction or otherwise available to Secured Party, including those available
under any written instrument (in addition to this Security Agreement) relating
to the Collateral, or (4) do any of the foregoing.
6. Upon an Event of Default, and at any time thereafter, and subject to
the rights of the senior lender, Secured Party may (a) declare all of the
obligations secured hereby immediately due and payable; (b) exercise any one or
more of the rights and remedies of a secured party under the Uniform Commercial
Code of the relevant state or states, and any other applicable law upon default
by the Debtor; (c) to the extent allowed under Arizona law and after having
first provided any notice required by Arizona law, take immediate and exclusive
possession of the Collateral, or any part thereof, and for that purpose may,
with or without judicial process enter (if this can be done without breach of
the peace), upon any premises on which the Collateral or any part thereof may be
situated and seize and remove the Collateral and/or remaining upon the premises
and use the same for the purpose of collecting, preserving and preparing the
Collateral for sale, until disposed of; (d) without notice to Debtor, demand,
xxx for, collect or receive, in the name of Debtor or Secured Party, any money
or property payable or receivable on any item of Collateral; (e) without notice
to Debtor, settle, release, compromise, adjust, xxx upon or otherwise enforce
any item of Collateral as Secured Party may determine; and (f) sell or otherwise
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dispose of the whole or any part of said Collateral, at public or private sale,
at its discretion after fifteen (15) days' prior written notice thereof to
Debtor, without advertisement or notice of public sale, for cash or on credit,
for such price and upon such terms as Secured Party shall determine, delivering
said Collateral to the purchaser thereof, Secured Party retaining the right to
become the purchaser at such sale. Debtor acknowledges and agrees that such
15-day notice is, and shall be deemed, commercially reasonable notice to Debtor.
Debtor, immediately upon demand by Secured Party, shall assemble the Collateral
and make it available to Secured Party for possession at a place to be
designated by Secured Party which is reasonably convenient to both parties. The
proceeds received shall first be applied to expenses, costs and charges,
including (without limitation) attorneys' fees, incurred in the collection,
sale, or delivery of said Collateral, then to the payment of all indebtedness of
Debtor to Secured Party, paying any surplus to Debtor.
The remedies of the Secured Party hereunder are cumulative and the
exercise of any one or more of the remedies provided for herein or under the
applicable Uniform Commercial Code or other law applicable under default by a
debtor shall not be construed as a waiver of any of the other remedies of the
Secured Party so long as any part of the Obligations remains unsatisfied.
Debtor waives any right to require Secured Party to proceed against any
person, exhaust any Collateral, or pursue any other remedy which Secured Party
may now or hereafter have. Debtor authorizes Secured Party, without notice or
demand, to renew, extend the time of payment of, or accelerate the terms of any
indebtedness due or to become due from Debtor to Secured Party, or to take and
hold additional security for the payment of said indebtedness, or exchange,
enforce, release or substitute any of said Collateral.
7. At such time as all indebtedness of Debtor to Secured Party has been
fully paid and satisfied, Secured Party shall release its security interest in
said Collateral and deliver said Collateral to Debtor.
8. The rights and liabilities of the parties hereto shall be governed and
construed by the Uniform Commercial Code, as enacted in the State of Arizona.
9. Notwithstanding any other language to the contrary set forth herein,
the Debtor has advised the Secured Party of its intention to secure, from and
after the date hereof, a senior institutional bank or credit arrangement. The
Secured Party agrees to execute a subordination agreement and intercreditor
agreement in form reasonably satisfactory to the senior debt lender at such time
as a senior credit facility is obtained by Debtor and, by virtue of such
subordination agreement and intercreditor agreement, Secured Party shall
subordinate its security interest described herein to any senior institutional
bank or credit arrangements secured by Debtor from and after the date hereof.
Accordingly, the Secured Party acknowledges that, while it has a first security
interest in all of the assets set forth in Exhibit 2.1 to the Purchase
Agreement, Secured Party may at any time from and after the date hereof be
required to subordinate and retain a second security interest in all of such
assets which constitute the Collateral. Secured Party shall not subordinate
beyond a second security interest.
Any notice desired or required hereunder will be deemed to have been duly
given if in writing and personally delivered, mailed by registered or certified
mail, telexed, sent by facsimile transmission or by a recognized overnight
courier addressed to the Debtor at Factual Data Corp., 0000 Xxxxx Xxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx 00000, Attention: X.X. Xxxxxx, President, or if to the
Secured Party at 0000 X. Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, Attention:
Xxxxx X. Xxxxxx, or at such other place as may have been designated to the other
party by notice in writing in accordance herewith.
This Agreement shall be binding upon Debtor and its successors and assigns
and inure to the benefit of the Secured Party and its successors and permitted
assigns. This Agreement may be assigned by the Secured Party with the prior
express written consent of the Debtor, which will not be unreasonably withheld.
Should any one or more of the provisions of this Agreement be determined
to be illegal or unenforceable, all other provisions of this Agreement shall be
given effect separately from the provision or provisions determined to be
illegal or unenforceable and shall not be affected thereby.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Colorado without regard to conflict of law
principles of such state.
IN WITNESS WHEREOF, this Agreement has been executed the day and year
first above written.
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DEBTOR:
FACTUAL DATA CORP.
By: /s/ X. X. Xxxxxx
X. X. Xxxxxx, President
SECURED PARTY:
RESIDENTIAL MORTGAGE CREDIT
REPORTING, INC.
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, Chairman
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