EXHIBIT 10.21
FEDERAL HOME LOAN BANK
of SAN FRANCISCO ADVANCES AND SECURITY AGREEMENT
--------------------------------------------------------------------------------
This Advances and Security Agreement ("Agreement") is made as of January 29,
1996, between the Federal Home Loan Bank of San Francisco (Bank,) and Pan
American Bank, FSB ("Member"), which has its principal office at San Mateo,
California.
WHEREAS, the Member desires from time to time to apply for extensions of credit
from the Bank in accordance with the terms and conditions of this Agreement; and
WHEREAS, the Bank requires that all existing indebtedness of the Member to the
Bank and all extensions of credit by the Bank to the Member pursuant to this
Agreement be secured pursuant to this Agreement, and the Member is willing to
provide such security:
NOW THEREFORE, the Member and the Bank agree as follows:
I. DEFINITIONS
As used herein, the following terms shall have the following meanings:
A. "ACT" means the Federal Home Loan Bank Act, as amended.
B. "ADVANCE" or "ADVANCES" means any and all loans or other extensions of
credit by the Bank to the Member, including all loans or extensions of
credit by the Bank to the Member prior to the date hereof.
C. "BANK'S CREDIT PROGRAM" means the credit program established by the
Bank as it is described in the Bank's "Guide to the Credit Program"
and "Collateral Guidelines," as the same may be amended or
supplemented from time to tune.
D. "BOARD" means the Federal Housing Finance Board, or any successor
agency thereto.
E. "BORROWING CAPACITY" means the aggregate dollar amount that the Bank
shall from time to time, in its sole discretion, ascribe to the
various types of Collateral for determining the Member's compliance
with the Member's obligations pursuant to Section III.D.
F. "CAPITAL STOCK" means all of the capital stock of the Bank held by the
Member now or hereafter and all payments that have been or hereafter
are made on account of subscription to and all unpaid dividends on
such capital stock.
Page 1 of 32
G. "COLLATERAL" means all property, including the proceeds thereof,
heretofore assigned, transferred, and pledged to the Bank by the
Member as collateral for Advances, all deposit accounts maintained by
the Member at the Bank, all Capital Stock, and all Mortgage
Collateral, Multifamily Mortgage Collateral, Government and Agency
Securities Collateral, Other Securities Collateral, and Other
Collateral, including the proceeds thereof, that is now or hereafter
pledged to the Bank pursuant to Section III.A., Section III.B. or
otherwise.
H. "COLLATERAL CONFIRMATION" means a writing or machine-readable
electronic transmission in such form or forms as shall be prescribed
by the Bank from time to time, confirming the receipt by the Bank of a
Collateral Update Report.
I. "COLLATERAL MAINTENANCE LEVEL" means the aggregate dollar amount equal
to such percentage(s) as the Bank may specify from time to time of the
aggregate outstanding amount of (1) Advances, (2) Outstanding
Commitments, (3) with respect to each outstanding Swap Transaction,
the amount for which the Member is required to maintain Collateral,
and (4) any additional obligations and liabilities of the Member to
the Bank. The Bank may increase or decrease the Collateral Maintenance
Level at any time.
J. "COLLATERAL UPDATE REPORT" means a schedule, embodied on computer tape
or on such other media as may be prescribed by the Bank, and in such
form as may be prescribed by the Bank, specifying and describing the
Mortgage Collateral, Multifamily Mortgage Collateral and Other
Collateral -Commercial Mortgage Loans pledged by the Member to the
Bank as of the date thereof and specified in accordance with Section
III.E.(1).
K. "COMMITMENTS" means any and all agreements under which the Bank is
obligated to make Advances to the Member or payments On behalf of or
for the account of the Member, existing on the date hereof or
hereafter, including without limitation, letters of credit, firm
commitments, guarantees or other arrangements intended to facilitate
transactions between the Member and third parties (but excluding any
obligations that the Bank may now or hereafter have to honor item or
transfer orders under a depository or similar agreement between the
Member and the Bank), and irrespective of whether the Bank's
obligation under such agreement is contingent upon the occurrence or
nonoccurrence of a condition subsequent.
L. "CONFIRMATION OF ADVANCE" means a writing or machine-readable
electronic transmission, in such form or forms as shall be prescribed
by the Bank from time to time, confirming an Advance.
M. "ELIGIBLE COLLATERAL" means Collateral, other than Capital Stock, that
at the time it becomes Collateral and at all times thereafter (i)
qualifies as security to support the origination of advances under the
terms and conditions of the Act and the
Page 2 of 32
Regulations; (ii) satisfies the requirements that may be established
by the Bank pursuant to the Bank's Credit Program or otherwise; (iii)
is owned by the Member free and dear of any liens, encumbrances or
other interests other than the assignment to the Bank hereunder and
(iv) in the case of Other Collateral, Government and Agency Securities
Collateral and Other Securities Collateral, has been tendered by the
Member to the Bank and specifically accepted by the Bank as Eligible
Collateral.
N. "FEDERAL BANKING AGENCY" means the appropriate Federal banking agency
(the Office of Thrift Supervision, the Office of Comptroller of the
Currency, the Federal Deposit Insurance Corporation, or the Board of
Governors of the Federal Reserve System) as defined in the Federal
Deposit Insurance Act.
O. "GOVERNMENT AND AGENCY SECURITIES COLLATERAL" means mortgage backed
securities (including participation certificates) issued by the
Federal Home Loan Mortgage Corporation or the Federal National
Mortgage Association, obligations guaranteed by the Government
National Mortgage Association, and other obligations of or guaranteed
by the United States or an agency thereof.
P. "INDEBTEDNESS" means all indebtedness of the Member to the Bank
hereunder, whether now outstanding or hereafter incurred, including
all Advances and any other sums owed by the Member to the Bank
pursuant to any provision hereof, and all other obligations and
liabilities of the Member to the Bank.
Q. "MORTGAGE COLLATERAL" means Mortgage Documents (excluding
participation or other fractional interests therein) and all ancillary
security agreements, policies, and certificates of insurance or
guarantees, evidences of recordation, applications, underwriting
materials, appraisals, approvals, permits, notices, opinions of
counsel, and loan servicing data, and all other electronically stored
and written records or materials relating to the loans covered by the
Mortgage Documents.
R. "MORTGAGE DOCUMENTS" means mortgages -and deeds of trust (herein
"mortgages") representing a first lien on a one- to four-unit
residential dwelling and the single parcel of real estate on which it
is located, and all notes, bonds, or other instruments evidencing
loans secured thereby (herein "mortgage notes"), and any endorsements
and assignments thereof to the Member.
S. "MULTIFAMILY MORTGAGE COLLATERAL" means Multifamily Mortgage Documents
(excluding participation or other fractional interests therein) and
all ancillary security agreements, policies, and certificates of
insurance or guarantees, evidences of recordation, applications,
underwriting materials, appraisals, approvals, permits, notices,
opinions of counsel, and loan servicing data, and all other
electronically stored and written records or materials relating to the
loans covered by the Multifamily Mortgage Documents.
Page 3 of 32
T. "MULTIFAMILY MORTGAGE DOCUMENTS" means first mortgages and deeds of
trust (herein "mortgages") representing a lien on a multifamily
residential dwelling of five or more units and the single parcel of
real estate on which it is located, and all notes, bonds, or other
instruments evidencing loans secured thereby (herein "multifamily
mortgage notes") and any endorsements and assignments thereof to the
Member.
U. "OTHER COLLATERAL" means such items of property, other than Capital
Stock, Mortgage Collateral, Multifamily Mortgage Collateral,
Government and Agency Securities Collateral and Other Securities
Collateral, that are tendered by the Member to the Bank and are
specifically accepted by the Bank as collateral for Indebtedness or
Outstanding Commitments.
V. "OTHER COLLATERAL-COMMERCIAL MORTGAGE LOANS" means first mortgages and
deeds of trust (herein "mortgages) and all notes, bonds, or other
instruments evidencing loans secured thereby and made for commercial,
corporate, or business purposes (including Multifamily Mortgage
Collateral), and all ancillary security agreements, policies, and
certificates of insurance or guarantees, evidences of recordation,
applications, underwriting materials, appraisals, approvals, permits,
notices, opinions of counsel, and loan servicing data, and all other
electronically stored and written records or materials relating to
such loans.
W. "OTHER SECURITIES COLLATERAL" means securities (other than Government
and Agency Securities Collateral) representing unsubordinated
interests in, or collateralized by first priority security interests
in, both the interest and principal payments on fully-disbursed first
residential mortgage loans.
X. "OUTSTANDING COMMITMENTS" means, at any point in time, the maximum
aggregate principal amount of Advances or payments that the Bank may
be obligated to make under Commitments that are then in effect.
Y. "REGULATIONS" means the regulations of the Board, as amended from time
to time.
Z. "SWAP TRANSACTION" means an interest rate swap, interest rate cap,
floor or collar, currency exchange transaction or similar transaction
entered into between the Bank and the Member.
II. ADVANCES AGREEMENT
A. APPLICATION AND PROCEDURES FOR ADVANCES
From time to time, the Member may apply to the Bank for Advances or
Commitments in accordance with the procedures established in writing
by the Bank from time to time. Each Advance or
Page 4 of 32
Commitment shall be evidenced by a Confirmation of Advance or other
writing issued by the Bank. Each Advance or Commitment shall be
governed by the terms of this Agreement and the Confirmation of
Advance or other writing applicable thereto. Unless otherwise agreed
to in writing by the Bank, each Advance shall be made by crediting the
Member's demand deposit account(s) with the Bank. The Bank's
obligation to fund any Commitment shall be subject to compliance by
the Member with the terms and provisions of this Agreement, including
without limitation the Collateral maintenance requirements set forth
in Section III.D., as well as satisfaction by the Member of the
applicable credit considerations and other eligibility requirements
and policies prescribed in the Bank's Credit Program. In the event
that the member's access to Advances is subsequently restricted
pursuant to any provision of federal law, the Bank shall not be
required to fund outstanding Commitments for Advances not funded prior
to the effective date of such restriction. If the Bank shall so
request, the Member shall sign and deliver to the Bank a promissory
note or notes in such form as the Bank may reasonably require to
evidence any Advance.
B. REPAYMENT OF ADVANCES
The Member agrees to repay each Advance or any other amount due in
accordance with this Agreement and the applicable term and provisions
of the Bank's Credit Program and, where relevant, the terms and
conditions of the Confirmation of Advance issued in connection with
such Advance. A payment shall be deemed delinquent if such payment is
not received by the Bank on or before the applicable payment due date
as provided in the Confirmation of Advance or otherwise. The Member
shall maintain in the Member's demand deposit account(s) with the Bank
an amount at least equal to the amounts then currently due and payable
to the Bank on outstanding Advances or otherwise due hereunder, and
the Member here-by authorizes the Bank to debit the Member's demand
deposit account(s) in an amount equal to all such then due and payable
amounts. The Member agrees that, in the event any such debit results
in the Member's demand deposit account being overdrawn, the Member
shall pay overdraft charges thereon at the rate that the Bank normally
assesses for overdrafts on general deposit accounts; or, in the sole
discretion of the Bank, the Bank may fund an Advance to the Member in
the amount of the overdraft, which Advance shall bear interest from
the date the same shall be made until paid at the rate in effect and
being charged by the Bank from time to time under its Other Cash
Needs-Variable-Rate Credit option. Upon maturity of any Advance or
any portion thereof, either by its terms or by acceleration, or if any
interest on any Advance or any other sum owed hereunder shall be due
and payable, the Bank may without notice to the Member apply any
credits, deposits, monies, or other property of the Member then in
possession of the Bank (and not held by the Bank as bailee for a third
party) to the payment of such principal and interest or any amount
owed to the Bank.
Page 5 of 32
C. AMORTIZATION PAYMENTS
In the event that the Bank determines that the creditworthiness of the
Member, as determined from time to time by the Bank, does not meet the
requirements of the Bank, the Bank may require amortization by means
of monthly payments of principal on all or part of the Member's
Advances. Such amortization payments may also, but need not, be
required if such reduction in the level of the Member's
creditworthiness or such determination by the Bank with respect
thereto also constitutes, in the Bank's judgment, an Event of Default
hereunder. The Member agrees to begin making such monthly
amortization payments upon thirty (30) days' written notice from the
Bank in such amounts, not to exceed ten percent of the original
principal balance of the subject Advances, as shall be specified in
writing by the Bank. The Member shall make such payments while any
amount remains unpaid on the subject Advances or until notified
otherwise by the Bank. Amortization payments required pursuant to this
Section II.C. shall be in addition to all other payments of principal
and interest with respect to Advances. Notwithstanding any other
provision of this Agreement or any Confirmation of Advance, in the
event that the aggregate amount of outstanding Advances secured by
"other real estate related collateral" within the meaning of Section
10(a) of the Act (12 U.S.C. (S)1430(a)) (and not by other Eligible
Collateral) at any time shall exceed 30 percent of the Member's
capital, the Member shall immediately prepay, subject to the terms and
provisions of this Agreement and the Bank's Credit Program, the amount
of such outstanding Advances which shall be in excess of such amount
of the Member's, capital or shall immediately provide sufficient
additional Eligible Collateral to the Bank with respect to such
Advances so that the Collateral Maintenance Level requirements herein
provided for shall be satisfied.
D. ESTOPPEL
Failure of the Member, within two business days of the Member's
receipt of a Confirmation of Advance, to deliver, written notice to
the Bank specifying any disputed term or condition of such Advance
shall constitute the agreement and acknowledgment by the Member that
the terms and conditions of the Advance are valid and are those that
the Member requested and by which the Member agreed to be bound, and
the Member shall thereafter be estopped from asserting any claim or
defense with respect to the repayment of such Advance and all
interest, fees, and other charges thereon or in connection therewith.
E. RIGHT OF BANK TO MAKE ADVANCES WITH RESPECT TO OUTSTANDING COMMITMENTS
In the event that one or more Commitments are outstanding at the time
of an Event of Default, the Bank may at its option, and without notice
to or request from the Member, make an Advance by crediting a special
account of the Member with the Bank in an amount equal to the
Outstanding Commitments. The Bank shall have a first priority
perfected security interest in any such special account, and amounts
credited to such special account may not be withdrawn by the
Page 6 of 32
Member for so long as there shall be outstanding Commitments. The
funds in such special account shall be utilized by the Bank for the
purpose of satisfying the Bank's obligations under the Commitments.
When all such obligations have expired or have been satisfied, the
Bank shall disburse the balance, if any, in such account first to the
satisfaction of any amounts then due and owing by the Member to the
Bank and then to the Member or its successors in interest. Advances
made pursuant to this Section II.E. shall be payable on demand and
shall bear interest from the date the same shall be made until paid at
the rate in effect and being charged by the Bank from time to time
under its Other Cash Needs-Variable-Rate Credit option.
F. INTEREST
The Member agrees to pay interest on each Advance at a rate per annum
determined on the base described in the Confirmation of Advance
pertaining thereto and otherwise as specified herein. Interest with
respect to a given type of Advance as specified in the relevant
Confirmation of Advance shall be determined on the basis described in
the Bank's Credit Program for such type of Advance. Accrued interest
on each Advance shall be due and payable at the times specified in the
Bank's Credit Program, Confirmation of Advance, or otherwise as
specified by the Bank for the type of Advance in question.
G. COMMITMENT AND CANCELLATION FEES
The Member agrees to pay when due any fees applicable to any
Commitments issued by the Bank hereunder, or any fees applicable to
the cancellation of such Commitments, as prescribed by the Bank's
Credit Program.
H. PREPAYMENT FEES
Upon a permitted prepayment of any Advance, the Member agrees to pay
when due any applicable prepayment fees pertaining to such Advance, as
prescribed in the Bank's Credit Program for the type of Advance in
question. Prepayments shall be permitted only in accordance with the
terms and provisions of the Bank's Credit Program.
I. COMPLIANCE WITH THE BANK'S CREDIT PROGRAM
The Member hereby agrees to comply with the terms and provision of the
Bank's Credit Program, including, without limitation, any reporting
requirements, application procedures or eligibility requirements
imposed by the Bank's Credit Program with respect to particular types
of Advances. In the event that the Bank's Credit Program is amended,
the Member agrees to comply with the terms and provisions of the
Bank's Credit Program as so amended from time to time, provided that
any outstanding Advances or Commitments existing at the time of any
such amendment shall continue to be governed by the terms and
provisions of the Confirmation of Advance pertaining thereto.
Page 7 of 32
J. DESIGNATION FOR BLANKET LIEN STATUS
If the Member shall meet the criteria for blanket lien status
established by the Bank from time to time in the Bank's Credit
Program, the Member may apply to the Bank in writing to be designated
for blanket lien status for securing its Indebtedness and Outstanding
Commitments hereunder with (i) all, or such portion as is specifically
described in writing in the Member's blanket lien designation, of the
Mortgage Collateral now owned or hereafter acquired by the Member, all
proceeds thereof, and all other Collateral pledged by the Member
pursuant to Section III.A. or (ii) all, or such portion as is
specifically described in writing in the Member's blanket lien
designation, of the Mortgage Collateral and Multifamily Mortgage
Collateral now owned or hereafter acquired by the Member, all proceeds
thereof, and all other Collateral pledged by the Member pursuant to
Section III.A. The Bank, in its sole discretion, shall determine
whether Advances may by extended safely and soundly to the Member on
the basis of a blanket lien, and if so, shall designate the Member for
blanket lien status in a writing which adequately describes the
portion of Mortgage Collateral or the portion of Mortgage Collateral
and Multifamily Mortgage collateral pledged to the Bank by the Member
pursuant to the blanket lien. If the Member is designated for blanket
lien status by the Bank, the Member shall pledge Collateral in the
manner described in Section III.B. To maintain such designation for
blanket lien status, the Member shall satisfy the requirements for
blanket lien status as set forth in the Bank's Credit Program, as
amended from time to time. If any event has occurred that may cause
the Member to fail to meet the blanket lien criteria established by
the Bank or if the Member shall have been notified or deemed notified
by its Federal Banking Agency of a change in its capital category, the
Member Shall deliver written notice thereof to the Bank within two
business days following the earlier of the date of the event or the
date the Member is deemed to have received such notice from its
Federal Banking Agency. At any time that the Bank determines, in its
sole discretion, that the Member does not meet the requirements for
blanket lien status established by the Bank from time to time, the
Bank may, by written notice to the Member, require the Member to
pledge specifically identified Collateral to the Bank as set forth in
Section III.A. and to deliver a Collateral Update Report or other
report as set forth in Section III.E. Upon receipt of such notice by
the Member, the Member shall pledge such Collateral and deliver such
Collateral Update Report or other report in the manner and time
specified by the Bank.
K. ADDITIONAL COVENANTS BY THE MEMBER
The Member will, maintain a copy of this Agreement in its official
records at all times. The Member will use the proceeds from all
Advances constituting long-term Advances, as defined in the Bank's
Credit Program, only for the purpose of providing funds for
residential housing finance. The Member will give the Bank notice of
any material event that would cause the Member to be ineligible to
Page 8 of 32
become a member of the Bank or ineligible to obtain Advances, pursuant
to the provisions of the Act and the regulations promulgated
thereunder.
III SECURITY AGREEMENT
A. CREATION OF SECURITY INTEREST IF MEMBER IS NOT DESIGNATED FOR BLANKET
LIEN STATUS
As security for all Indebtedness and Outstanding Commitments, to the
extent the Member is not designated by the Bank in writing for blanket
lien status as set forth in Section II.J., the Member hereby assigns,
transfers, and pledges to the Bank, and grants to the Bank a security
interest in: (1) all of the Capital Stock; (2) all of the Mortgage
Collateral, Multifamily Mortgage Collateral, Government and Agency
Securities Collateral, Other Securities Collateral and Other
Collateral, and all proceeds thereof, which is specified pursuant to
Section III.E. or delivered pursuant to Section III.F.; and (3) all
deposit accounts now or hereafter maintained by the Member with the
Bank. Without limiting the foregoing all property heretofore
assigned, transferred or pledged by the Member to the Bank as
Collateral securing Indebtedness and other obligations of the Member
to the Bank prior to the date hereof is hereby assigned, transferred
and pledged to the Bank as Collateral hereunder.
B. CREATION OF SECURITY INTEREST IF MEMBER IS DESIGNATED FOR BLANKET LIEN
STATUS
To the extent the Member is designated by the Bank in writing for
blanket lien status for (i) all or a portion of its Mortgage
Collateral or (ii) all or a portion of its Mortgage Collateral and
Multifamily Mortgage Collateral, as set forth in Section II.J., the
Member shall pledge Collateral to the Bank as set forth in this
Section III.B.
(1) As security for all Indebtedness and Outstanding commitments, the
Member hereby assigns, transfers, and pledges to the Bank, and
grants to the Bank a security interest in: (1) all of the Capital
Stock, (2) all of the Government and Agency Securities
Collateral, Other Securities Collateral and Other Collateral, and
all proceeds thereof, which is specified pursuant to Section
III.E. or delivered pursuant to Section III.F.; and (3) all
deposit accounts now or hereafter maintained by the Member with
the Bank.
(2) To the extent the Member is designated by the Bank in writing for
blanket lien status, the Member, as security for all Indebtedness
and Outstanding Commitments, hereby assigns, transfers, and
pledges to the Bank, and grants to the Bank a security interest
in:
(i) the Mortgage Collateral or
(ii) the Mortgage Collateral and Multifamily Mortgage
Collateral now owned or hereafter acquired by the Member which is
described in the Member's designation for blanket lien status and
forms identified in the
Page 9 of 32
Bank's Credit Program reflecting the release or reinstatement of
blanket lien collateral, and all proceeds thereof. The Member, as
additional security for all Indebtedness and Outstanding
Commitments, hereby assigns, transfers, and pledges to the Bank,
and grants to the Bank a security interest in, the Mortgage
Collateral and Multifamily Mortgage Collateral, and all proceeds
thereof, which is specified pursuant to Section III.E. or
delivered pursuant to Section III.F.
(3) Without limiting the foregoing, all property heretofore assigned,
transferred or pledged by the Member to the Bank as Collateral
securing Indebtedness and other obligations of the Member to the
Bank prior to the date hereof is hereby assigned, transferred and
pledged to the Bank as Collateral hereunder.
C. MEMBER'S REPRESENTATIONS AND WARRANTIES CONCERNING COLLATERAL
The Member represents and warrants to the Bank, as of the date hereof
and as of each date on which there shall be an outstanding Advance or
Commitment, as follows:
(1) The Member owns and has marketable title to the Collateral and
has the right and authority to grant a security interest to the
Bank in the Collateral and to subject all of the Collateral to
this Agreement;
(2) The information given from time to time by the Member to the Bank
as to each item of Collateral is true, accurate, and complete in
all material respects;
(3) All the Collateral meets the standards and requirements with
respect thereto from time to time established by the Bank, the
Act, and the Regulations. The Member hereby agrees to permit the
Bank, or its designees, upon request, to inspect the real
property and any improvements thereon that are subject to the
lien of the Collateral and to pay to the Bank such reasonable
fees and charges as may be assessed by the Bank to cover the
costs of appraisals, inspections, or other actions relating to
the Bank's evaluation of the Collateral;
(4) The lien of the Collateral consisting of Mortgage Collateral or
Multifamily Mortgage Collateral on the real property securing the
same is a first, prior, and perfected lien under applicable state
law;
(5) The Member has not conveyed or otherwise created, and there does
not otherwise exist, any participation interest or other direct,
indirect legal, or beneficial interest in any Collateral
consisting of Multifamily Mortgage
Page 10 of 32
Collateral or Other Collateral-Commercial Mortgage Loans on the
part of anyone other than the Bank and the Member;
(6) All signatories to any and all writings that constitute any
Collateral are and will be bound as they appear to be by their
signatures and have the requisite authority and capacity
(corporate or other) to execute such writings;
(7) Except as may be approved in writing by the Bank, no account
debtor or other obligor owing any obligation to the Member with
respect to any item of Collateral consisting of Multifamily
Mortgage Collateral or Other Collateral-Commercial Mortgage Loans
has or will have any defenses, offsetting claims, or other
condition affecting the right of the Member or the Bank to
enforce the writings constituting any such Multifamily Mortgage
Collateral or Other Collateral-Commercial Mortgage Loans in
accordance with the express term of such writings, and no
defaults (or conditions that, with the passage of time or the
giving of notice or both, would constitute a default) exist or
will exist under any such writings; and
(8) Any and all real property or interest in real property that is
the subject of and included in the Collateral consisting of
Mortgage Collateral, Multifamily Mortgage Collateral or Other
Collateral-Commercial Mortgage Loans or that otherwise
constitutes Collateral contains no toxic or hazardous wastes or
other toxic or hazardous substance the presence of which could
subject the Bank to any liability under applicable state or
federal law or local ordinance ether at any time that such
property is pledged to the Bank or upon enforcement by the Bank
of its security interest therein. The Member hereby agrees to
indemnify and hold the Bank harmless against all costs, claims,
expenses, damages, and liabilities resulting in any way from the
presence on any real property or interest in real property that
is subject to or included in any Collateral consisting of
Mortgage Collateral, Multifamily Mortgage Collateral or Other
Collateral-Commercial Mortgage Loans or that otherwise
constitutes Collateral, of toxic or hazardous wastes or
substances.
D. COLLATERAL MAINTENANCE REQUIREMENT
(1) The Member shall at all times maintain hereunder as Collateral an
amount of Eligible Collateral that has a Borrowing Capacity that
is at least equal to the then current Collateral Maintenance
Level. In addition, the Member agrees to maintain in pledge with
the Bank such additional amounts of Collateral (which may, if the
Bank shall so determine, be collateral which is not Eligible
Collateral) as may be required by the Bank in order to protect
its Security position with respect to Indebtedness and
Outstanding Commitments. In the event that any Collateral
specified pursuant to
Page 11 of 32
Section III.E. or delivered pursuant to Section III.F. that was
Eligible Collateral ceases to be Eligible Collateral, the Member
will promptly notify the Bank in writing of the reason that such
Collateral has ceased to be Eligible Collateral and will request
delivery or reassignment of such Collateral pursuant to Section
III.G. The Member shall not assign, pledge, transfer, create any
Security interest in, sell, or otherwise dispose of any
Collateral, nor shall the Member foreclose any Collateral
specified pursuant to Section III.E. or delivered pursuant to
Section III.F. that consists of Mortgage Collateral Multifamily
Mortgage Collateral or Other Collateral constituting a lien on
real property, without the prior written consent of the Bank.
(2) Subject to Section III.E.(6) and Section III.F., all Collateral
shall be held by the Member in trust for the benefit of, and
subject to the direction and control of, the Bank, and will be
physically safeguarded by the Member with reasonable care. The
Member shall take all action necessary or desirable to protect
and preserve the Collateral and the Bank's interest therein,
including without limitation, assuring that the mortgage loan
comprising the Collateral consisting of Mortgage Collateral,
Multifamily Mortgage Collateral or Other Collateral-Commercial
Mortgage Loans are serviced in accordance with the standards of a
reasonable and prudent mortgage.
(3) The form and sufficiency of all documents pertaining to the
Collateral shall be satisfactory to the Bank. Any Collateral that
is not satisfactory to the Bank may be rejected by the Bank or
may have a value ascribed thereto that shall be less than the
value normally ascribed thereto under the Bank's Credit Program,
as the Bank may specify. The Bank may require, before any Advance
shall be made to the Member, that the Member make any or all
documents pertaining to the Collateral available to the Bank for
its inspection and approval.
E. SPECIFICATION AND SEGREGATION OF COLLATERAL
(1) To the extent the Member pledges Collateral to the Bank of a type
for which the Member is not designated for blanket lien status
pursuant to Section II.J., the Member shall prepare and deliver
to the Bank a Collateral Update Report as specified in this
Section III.E. From time to time hereafter as shall be necessary
to satisfy the requirements of Section III.D.(1), but at least
quarterly, the Member shall deliver to the Bank a Collateral
Update Report (or, if the Bank shall so agree, a written
schedule) specifying and describing such amount of Mortgage
Collateral, Multifamily Mortgage Collateral, or Other Collateral-
Commercial Mortgage Loans pledged to the Bank (other than under a
blanket lien pursuant to Section III.B.) that, together with
other Eligible Collateral pledged to the
Page 12 of 32
Bank, has a Borrowing Capacity as of the date of such Collateral
Update Report at least equal to the Collateral Maintenance Level.
The format of the Collateral Update Report shall be in accordance
with such requirements as may be prescribed by the Bank from time
to time. Notwithstanding any other provision hereof, the
Collateral Update Report (or any written schedule specifying and
describing any Collateral) shall not be effective until the same
shall be accepted by the Bank. Unless the Bank otherwise advises
the Member, acceptance of a Collateral Update Report (or other
schedule) shall be deemed to occur upon the issuance by the Bank
of a Collateral Confirmation with respect thereto pursuant to
Section III.E.(2). The Bank shall have no obligation to accept
any Collateral Update Report (or other schedule) if it would
result in the failure of the Member to maintain the Collateral
Maintenance Level or if the Bank shall determine, in its sole
discretion, that the same is irregular or deficient in any
respect. If so directed by the Bank, the Member shall endorse
each mortgage note evidencing Mortgage Collateral, Multifamily
Mortgage Collateral, or Other Collateral-Commercial Mortgage
Loans as follows: "Pay to the order of the Federal Home Loan Bank
of San Francisco." The Member shall be liable to the Bank for any
deficiency remaining after the exercise by the Bank of its
remedies in respect of the Collateral as provided in Section
IV.B. All other Mortgage Documents and Multifamily Mortgage
Documents and each document evidencing Securities Collateral or
Other Collateral that is part of the Collateral shall be endorsed
and assigned to the Bank in such manner as shall be specified by
the Bank. The specification and description of all Collateral
shall be effected pursuant to the delivery by the Member to the
Bank of such writings pertaining thereto as the Bank shall from
time to time prescribe.
(2) To the extent delivery of a Collateral Update Report is required
pursuant to Section III.E.(1), following the receipt thereof the
Bank shall generate a written record of the contents thereof and
the Bank shall deliver, at the Member's expense, a copy of such
record, together with a Collateral Confirmation, to the Member.
Failure of the Member to deliver written notice to the Bank
within seven days of the date of a Collateral Confirmation,
objecting to the information set forth in such Collateral
Confirmation or the accompanying written record prepared by the
Bank with respect to the Collateral Update Report and setting
forth in reasonable detail the basis for such objection, shall
constitute the agreement and acknowledgment by the Member of the
validity and accuracy of the information contained therein, and
the Member shall thereafter be estopped from asserting any claim
or defense based upon or with respect to the accuracy or validity
of any information contained in the Collateral Confirmation or
accompanying record. If the Member shall deliver a timely
objection to the Bank with respect to any Collateral Confirmation
Page 13 of 32
or the accompanying record, the parties shall promptly consult
with one another with a view to resolving the matter. However,
the Borrowing Capacity ascribed to the Collateral that is the
subject of such consultation shall be in the sole discretion of
the Bank pending the resolution of the matter. Nothing contained
herein or in any Collateral Confirmation or accompanying record
or other documents delivered with any Collateral Confirmation
shall be construed as an agreement or commitment on the part of
the Bank to make an Advance to the Member and the right and power
of the Bank either to grant or to deny a request by the Member
for an Advance is expressly reserved.
(3) To the extent the Member pledges Collateral subject to a blanket
lien created pursuant to Section III.B., the Member shall deliver
to the Bank from time to time as directed by the Bank a written
statement in such form as the Bank may require of duly authorized
signers for the Member certifying as to the aggregate amounts of
Collateral that is subject to the blanket lien of the Bank and
eligible to receive Borrowing Capacity (as determined by the
Bank), and further certifying that the Collateral subject to the
lien of the Bank has a Borrowing Capacity as of the date of such
certification at least equal to the Collateral Maintenance Level.
(4) Notwithstanding anything to the contrary, the Member shall be
solely responsible for the accuracy and adequacy of all
information and data in: (i) each Collateral Update Report (or
other writing specifying and describing any Collateral) submitted
to the Bank and the written record thereof generated by the Bank,
regardless of the form in which submitted; (ii) any report or
information provided by the Member to its Federal Borrowing
Agency from which the Bank obtains information related to
Collateral; and (iii) any other report or certification relating
to Collateral which is provided by the Member to the Bank. The
Bank shall have no duty to make any independent examination or
calculation with respect to the information submitted in a
Collateral Update Report (or in any other written report,
schedule, or certification that may be submitted by the Member)
and, without limiting the generality of the foregoing, the Bank
makes no representation or warranty, as to the validity,
accuracy, or completeness of any information contained in any
Collateral Confirmation or accompanying record or other document
delivered with any Collateral Confirmation.
(5) The Member hereby authorizes the Bank to maintain any and all
information contained in each Collateral Update Report in
microfiche or microfilm form or in any other physical or
electronic medium as may be prescribed by the Bank. However, the
Member agrees that the Bank shall not be required to retain any
such information, including information
Page 14 of 32
generated pursuant to subsection (2) of this Section III.E., in
written form. To the extent the Bank has obtained a Collateral
Update Report from the Member, the Bank will maintain on computer
tape or other machine-readable media the information set forth an
the Member's current Collateral Update Report. To enable the Bank
to regenerate any files or data previously furnished to the Bank
with respect to any Collateral or any information contained in
any Collateral Update Reports, the Member shall at all times
maintain complete and accurate records and materials supporting
and/or relating to any of the Collateral Update Reports and shall
make the same available, on request, to the Bank. The parties
hereto agree that the maintenance and retention of such
supporting records and materials shall be the sole responsibility
of the Member and that the Bank shall not be liable for any loss
of such data.
(6) If so requested by the, Bank, the Member shall physically
segregate the Mortgage Collateral or Multifamily Mortgage
Collateral described in each Collateral Update Report delivered
pursuant to subsection (1) of this Section III.E. and any
Collateral that has been pledged to the Bank other than by means
of a Collateral Update Report from all other property of the
Member in a manner satisfactory to the Bank. The Member shall
hold each package of Mortgage Documents or Multifamily Mortgage
Documents that is a part of such segregated Collateral in a
separate file folder with each file folder clearly labeled with
the loan Identification number and the name of the mortgagor.
(7) If so requested, the Member will provide, at its own cost and
expense, such certifications by an independent certified public
accountant, or by another party acceptable to the Bank, as the
Bank may request with respect to the Member's compliance with the
terms of this Section III.E.
F. DELIVERY OF COLLATERAL
(1) Within two business days of the Bank's written request, or
immediately at any time that the Member becomes subject to any
mandatory Collateral delivery requirements that may be
established in writing by the Bank, and in either case from time
to time thereafter, the Member shall deliver to the Bank, or to a
bailee designated by the Bank, such Eligible Collateral as may be
necessary so that the Borrowing Capacity of Eligible Collateral
held by the Bank, or such bailee, equals or exceeds the
Collateral Maintenance Level at all times. For the purpose of
verifying the accuracy of the Bank's records, the Member hereby
authorizes the Bank, upon receipt of Mortgage Documents or
Multifamily Mortgage Documents, to affix or otherwise attach to
each mortgage note, multifamily mortgage note, or other writings
included therein labels or stickers containing identification
codes. In all cases, Collateral delivered to the Bank shall be
Page 15 of 32
endorsed or assigned by the Member to the Bank in the manner
required pursuant to Section III.E.(1) and otherwise as the Bank
may require. Concurrently with the initial delivery of Collateral
and within 30 days of each subsequent valuation date established
by the Bank (and at such other times as the Bank may request),
the Member shall deliver to the Bank a Collateral Update Report
dated as of the then most recent valuation date, describing the
Mortgage Collateral or Multifamily Mortgage Collateral held by
the Bank and any of its bailees (or, in this case of Collateral
other than Mortgage Collateral or Multifamily Mortgage
Collateral, a writing in such form as may be prescribed from time
to time by the Bank). In addition, the Member shall, upon request
of the Bank, forthwith take such other actions as the Bank shall
deem necessary or appropriate to perfect its security interest in
the Collateral.
(2) With respect to any uncertificated securities pledged to the Bank
as Collateral hereunder, the delivery requirements herein
contained shall be satisfied by the transfer of a security
interest in such securities to the Bank, such transfer to be
effected in such manner and to be evidenced by such documents as
the Bank shall specify.
(3) The Member shall, upon request of the Bank, immediately take such
other actions as the Bank shall deem necessary or appropriate to
create and perfect the Bank's security interest in the Collateral
or otherwise to obtain, preserve protect enforce or collect the
Collateral.
(4) The Member agrees to pay upon demand to the Bank such reasonable
fees and charges as may be assessed by the Bank to cover overhead
and other costs relating to the receipt, holding, and redelivery
of Collateral and otherwise relating to the perfection of the
Bank's security interest therein and to reimburse the Bank upon
request for all recording fees and other reasonable expenses,
disbursements, and advances incurred or made by the Bank in
connection therewith (including the reasonable compensation and
the expenses and disbursements of any bailee that may be
appointed by the Bank hereunder, and the agents and legal counsel
of the Bank and of such bailee). Any sums owed to the Bank under
this Section III.F.(4) may be collected by the Bark, at its
option by debiting the Member's demand deposit account(s) with
the Bank.
G. REDELIVERY OF COLLATERAL
Upon receipt by the Bank from the Member of (i) a written request from
the Member requesting the redelivery or reassignment of Collateral
specified pursuant to Section III.E. or delivered pursuant to Section
III.F.(1), or as to which the Bank has otherwise perfected its
security interest, (ii) a Collateral Update Report (and any other
writings required by the Bank in respect of any Collateral) and a
listing
Page 16 of 32
of the Collateral to be redelivered, and (iii) a certificate of duly
authorized signers for the Member certifying that the Borrowing
Capacity of the Eligible Collateral in respect of which the Bank will
have a first, prior, and (if the Bank shall so require) perfected lien
immediately after such redelivery would not be less than the
Collateral Maintenance Level then applicable, the Bank shall promptly
reassign or redeliver to the Member, at the Member's expense, the
Collateral specified in said request. Notwithstanding anything to the
contrary herein contained, while an Event of Default hereunder shall
have occurred and be continuing, or at any time that the Bank's
records indicate that such redelivery would reduce the Borrowing
Capacity of the Member's Eligible Collateral below the Collateral
Maintenance Level, or at any time that the Bank reasonably and in good
xxxxx xxxxx itself insecure, the Member may not obtain any such
redelivery.
H. COLLATERAL AUDITS AND REPORTS
All Collateral and the satisfaction by the Member of the Collateral
Maintenance Level shall be subject to audit and verification by or on
behalf of the Bank. Such audits and verifications may occur without
notice during the Member's normal business hours or upon reasonable
notice at such other times as the Bank may reasonably request. The
Member shall provide access to, and shall make adequate working
facilities available to, the representatives or agents of the Bank for
purposes of such audits and verifications. The Member agrees to pay
to the Bank such reasonable fees and charges as may be assessed by the
Bank to cover overhead and other costs relating to such audit and
verification. In addition, if the Member becomes aware or has any
reason to believe that the Borrowing Capacity of the Eligible
Collateral has fallen below the Collateral Maintenance Level, or that
a contingency exists which, with the lapse of time, could result in
the Member failing to meet the Collateral Maintenance Level, the
Member shall immediately notify the Bank. If so requested by the
Bank, the Member shall promptly report to the Bank any event which
reduces the principal balance of any mortgage or security or other
item of Collateral by five percent or more, whether by prepayment,
foreclosure sale, insurance or guarantee payment or otherwise.
I. ADDITIONAL DOCUMENTATION
The Member shall make, execute, and deliver to the Bank such
assignments, listings, powers, financing statements, or other
instruments and documents with respect to the Collateral and the
Bank's security interest therein and in such form as the Bank may
require.
J. BANK'S RESPONSIBILITY AS TO COLLATERAL
In the event that the Bank shall take possession of any Collateral
hereunder, the Bank's duty as to such Collateral shall be solely to
use reasonable care in the custody and preservation of the Collateral
in its possession, which shall not include any steps necessary to
preserve rights against prior parties nor the duty to send notices,
perform services, or take any action in connection with the management
Page 17 of 32
of the Collateral. The Bank shall not have any responsibility or
liability for the form, sufficiency, correctness, genuineness, or
legal effect of any instrument or document constituting a part of the
Collateral, or any signature thereon or the description or
misdescription, or value of property represented, or purported to be
represented, by any such document or instrument, or for any error or
omission or delay in the liquidation of any Collateral, including the
sale, assignment, or delivery of the Collateral or any part thereof,
including the settlement, collection or payment of any Collateral, or
any damage resulting therefrom. The Member agrees that any and all
Collateral may be removed by the Bank from the state or location where
situated, and may thereafter be dealt with by the Bank as provided in
this Agreement.
K. BANK'S RIGHTS AS TO COLLATERAL; POWER OF ATTORNEY
At any time or times or times, at the expenses of the Member, the Bank
may in its discretion, before or after the occurrence of an Event of
Default, in its own name or in the name of its nominee or of the
Member, do any or all things and take any and all actions that are
pertinent to the protection of the Bank's interest hereunder and, if
such actions are subject to the laws of a state, are lawful under the
laws of the State of California, including without limitation the
following:
(1) Terminate any consent given hereunder;
(2) Notify obligors on any Collateral to make payments thereon
directly to the Bank;
(3) Endorse any Collateral that is in the Member's name or that has
been endorsed by others to the Member's name;
(4) Enter into any extension, compromise, settlement, or other
agreement relating to or affecting any Collateral;
(5) Take any action the Member is required to take or that is
otherwise necessary: (i) to sign and record a financing statement
or otherwise perfect a security interest in any or all of the
Collateral; or (ii) to obtain, preserve, protect, enforce, or
collect the Collateral;
(6) Take control of any funds or other proceeds generated by or
arising from the Collateral and use the same to reduce
Indebtedness as it becomes due; and
(7) Cause the Collateral to be transferred to its name or the name of
its nominee.
Page 18 of 32
The Member hereby appoints the Bank as its true and lawful attorney,
for and on behalf of the Member and in its name, place, and stead, to
prepare, execute, and record endorsements and assignments to the Bank
of all or any item of Collateral (including the identification and
listing, by exhibit prepared by the Bank or otherwise, of mortgage
loans constituting such Collateral), giving or granting to the Bank,
as such attorney, full power and authority to do or perform every
lawful act necessary or proper in connection therewith as fully as the
Member could or might do. The Member hereby ratifies and confirms all
that the Bank shall lawfully do or cause to be done by virtue of this
special power of attorney. This special power of attorney is granted
for a period commencing on the date hereof and continuing until the
discharge of all Indebtedness and all obligations of the Member
hereunder regardless of any default by the Member, is coupled with an
interest, and is irrevocable for the period granted. As the Member's
true and lawful attorney-in-fact, the Bank shall have no
responsibility to take any steps necessary to preserve rights against
prior parties nor the duty to send notices, perform services, or take
any action in connection with the management of the Collateral.
L. SUBORDINATION OF OTHER LOANS TO COLLATERAL
The Member hereby agrees that all mortgage notes, multifamily mortgage
notes, and other notes that are part of the Collateral consisting of
Mortgage Collateral, Multifamily Mortgage Collateral or Other
Collateral-Commercial Mortgage Loans or Other Collateral and any notes
secured by personal property ("personalty notes") that become part of
the Other Collateral shall have priority in right and remedy over any
claims, however evidenced, for other loans, whether made before or
after the date of such mortgage notes, multifamily mortgage notes,
personalty notes or other notes, that are secured by the mortgages or
security agreements securing such mortgage notes, multifamily mortgage
notes, personalty notes or other notes but are not part of the
Collateral, and shall be satisfied out of the property covered by such
mortgages or security agreements before recourse to such property may
be obtained for the repayment of such other loans. To this end, the
Member hereby subordinates the lien of such mortgages and security
agreements with respect to such other loans to the lien of such
mortgages and security agreements with respect to such mortgage notes,
multifamily mortgage notes, personalty notes and other notes. The
Member further agrees to retain possession of any promissory notes
evidencing such other loans and not to pledge, assign, or transfer the
same, or any interest therein, except that (if otherwise qualified)
the same may be pledged to the Bank as part of the Collateral.
M. APPLICATION OF PAYMENTS
The Bank may, in its sole discretion, apply any payments by or
recovery from the Member, which shall be received by the Bank without
any designation from the Member (at the time of such payment or
recovery) as to the intended application
Page 19 of 32
thereof, at such time and in such manner and order of priority as the
Bank shall deem fit.
N. INITIAL USE OF COLLATERAL UPDATE REPORTS
The Member acknowledges and agrees that if it has heretofore granted a
security interest to the Bank in Collateral under a predecessor
agreement to this Agreement by means other that through the use of a
Collateral Update Report, the initial utilization of a Collateral
Update Report hereunder that shall list thereon any such previously
pledged Collateral shall not under any circumstances be deemed to be a
new pledge of such Collateral but instead shall be deemed solely to be
a confirmation of the previous pledge thereof.
O. COVENANTS AS TO MULTIFAMILY MORTGAGE COLLATERAL AND OTHER COLLATERAL-
COMMERCIAL MORTGAGE LOANS
The Member covenants and agrees as to any Multifamily Mortgage
Collateral or Other Collateral-Commercial Mortgage Loans that may be
pledged hereunder and accepted by the Bank as Collateral hereunder:
(1) The Member shall cause its borrowers to pay when due (or shall
pay if such borrowers are unable or cannot be made to pay) all
taxes and assessments on the real property and improvements that
are subject to the lien of the Multifamily Mortgage Collateral or
Other Collateral-Commercial Mortgage Loans or the use thereof.
Unless otherwise agreed by the Member and the Bank, the Member
shall perform each of its obligations as a lender, secured party,
or otherwise, under all loan or other agreements pertaining to
the Multifamily Mortgage Collateral or Other Collateral-
Commercial Mortgage Loans.
(2) In the event that the Member discovers, through audit or
otherwise, exceptions to statements or representations previously
made to the Bank with respect to any of the Multifamily Mortgage
Collateral or Other Collateral-Commercial Mortgage Loans or any
real property or improvements covered by the lien thereof or any
other matter covered by this Agreement, the Member shall
immediately notify the Bank thereof in writing. The Member also
shall immediately notify the Bank in writing of any legal process
levied against any such Collateral or any other event that
affects the value of such Collateral or any of the rights,
interests, or remedies of the Bank in relation thereto.
(3) The Member agrees to take any action necessary to preserve the
rights against any prior or other parties (including without
limitation endorsers) on and any guarantors or sureties with
respect to any and all of the chattel paper, documents, or
instruments constituting all or any part of the Multifamily
Mortgage Collateral or Other Collateral-Commercial Mortgage
Page 20 of 32
Loans and to preserve redemption, conversion, warrant,
preemptive, or other rights concerning all or any part of such
Collateral. The Bank may, but need not, take any action that in
its reasonable judgment will assist in the preservation of such
rights. The Bank's failure to act hereunder shall not relieve the
Member of the Member's duties under this Section III.O.(3) or in
any way impair or discharge any Indebtedness or result in any
liability to the Member on the part of the Bank. The Bank shall
have no duty to take any steps necessary to preserve the rights
of the Member against prior or other parties or to initiate any
action to protect against the possibility of a decline in the
market value or other impairment of such Collateral. Furthermore,
the Bank shall not be obligated to take any action with respect
to such Collateral requested by the Member unless such request is
made in writing, and the Bank determines, in its reasonable
discretion, that the requested action would not jeopardize the
value of such Collateral as security for indebtedness or
otherwise adversely affect any right or interest of the Bank.
(4) To the extent a Collateral Update Report is required, the Member
shall update and provide to the Bank schedules showing, with
respect to any Multifamily Mortgage Loan or Other Collateral-
Commercial Mortgage Loans, in addition to the data required by
the Collateral Update Report, the results of any reappraisal, any
significant changes in leasing (affecting more than 20 percent of
the rentable area), and such other information as the Bank may
prescribe. In any event, the Member shall immediately identify to
the Bank any Multifamily Mortgage Collateral or Other Collateral-
Commercial Mortgage Loans classified as nonperforming,
nonaccrual, scheduled or criticized, special mention,
substandard, doubtful, loss, or the like and the value thereof.
Unless otherwise requested by the Bank, the Member may make the
foregoing classifications according to its own loan criteria.
(5) Except where failure to do so would not adversely affect the
Member's overall ability to value, monitor, and collect
Multifamily Mortgage Collateral or Other Collateral-Commercial
Mortgage Loan, the Member shall obtain and maintain current
financial statements, documents, appraisals, rent rolls, and
other information as may be requested by the Bank supporting or
relating to such Collateral and the real property and
improvements subject to the lien thereof, and the Member shall
use its best efforts to cause all persons obligated under such
Collateral to make the same available, upon request, to the Bank.
(6) The Member hereby agrees to save, hold harmless, indemnify, and
defend the Bank against any and all damages, liabilities, losses,
claims, causes of action, and expenses (including attorneys' fees
and expenses of the Bank's
Page 21 of 32
counsel) that the Bank may directly or indirectly suffer or incur
as a result or consequence of any claim by any person arising out
of or connected with the use or creation of any Multifamily
Mortgage Collateral or Other Collateral Commercial Mortgage Loans
or any real properties subject to the lien thereof. The aforesaid
claims include any arising with respect to any loan transaction
involving the Member, or any default or wrongdoing by the Member
with respect to any third party, including any nonperformance by
the Member of any of its obligations as a lender or otherwise in
connection with any such Collateral. Under no circumstances shall
the Bank be obligated to assume, perform or fulfill any
obligation of the Member as a lender or otherwise.
(7) If so requested by the Bank, the Member shall furnish to the Bank
opinions of counsel concerning the Multifamily Mortgage
Collateral or Other Collateral Commercial Mortgage Loans and the
transactions relating thereto or contemplated thereby in form and
substance (and by such counsel as are) acceptable to the Bank and
its counsel.
P. RIGHT TO CURE DEFAULTS ON MULTIFAMILY MORTGAGE COLLATERAL OR OTHER
COLLATERAL COMMERCIAL MORTGAGE LOANS
In the event that the Member fails (i) to procure or maintain
insurance, or to maintain or cause the maintenance of any real
property or improvements covered by the lien of any Collateral
consisting of Multifamily Mortgage Collateral or Other Collateral
Commercial Mortgage Loans, or to pay or procure the payment of any
fees, assessments, charges, or taxes arising with respect to any real
property or improvements covered by the lien of such Collateral, or to
perform any other obligation to the Bank, all as herein specified; or
(ii) to make any other advances or take any other actions necessary or
advisable to preserve or protect any of such Collateral, the value
thereof, or the Bank's security interest therein, the Bank shall have
the right to effect such insurance, or cause such real property or
improvements to be maintained, or to pay such fees, assessments,
charges, or taxes, or perform such obligations, or make such advances
or take such actions, as the case may be. In any such event, the
Member agrees to pay the cost thereof immediately upon demand by the
Bank. All liabilities owing by the Member to the Bank under this
Section III.P. shall bear interest from the date when first due at a
rate prescribed by the Bank or, if no such rate is prescribed, at the
highest rate of interest in effect on any Indebtedness of the Member
to the Bank from time to time, changing with each change in such rate.
Page 22 of 32
Q. PROCEDURES FOR OBTAINING RELEASE OF, THE BANK'S SECURITY INTEREST IN
COLLATERAL SUBJECT TO BLANKET LIEN
The Member my apply to the Bank for the release of any Mortgage
Collateral or Multifamily Mortgage Collateral which is subject to the
Bank's security interest pursuant to the blanket lien provisions of
Section III.B. as set forth in this Section III.Q. Upon receipt by the
Bank of (i) a written request from the Member for the release of
Collateral subject to the blanket lien of the Bank in which the Member
specifically identifies the Collateral to be released by submitting a
listing in the form prescribed by the Bank, and (ii) a certificate in
such form as the Bank may require of duly authorized signers for the
Member certifying that the Borrowing Capacity of the Eligible
Collateral which will remain subject to the security interest of the
Bank under Section III.B. after such release would not be less than
the Collateral Maintenance Level then applicable, the Bank shall
promptly execute and deliver a release of the Collateral specified in
said written request, whereupon the release of the specified
Collateral (but no other Collateral) shall be effective. If so
requested by the Bank, the Member shall physically segregate the
Mortgage Collateral or multifamily Mortgage Collateral pledged to the
Bank from any mortgage note or Multifamily mortgage note released by
the Bank pursuant to this Section III.Q. Notwithstanding anything to
the contrary herein, while an Event of Default hereunder shall have
occurred and be continuing, or at any time that the Bank determines
that such release would reduce the Borrowing Capacity of the Member's
Eligible Collateral below the Collateral Maintenance Level, or at any
time that the Bank reasonably and in good xxxxx xxxxx itself insecure,
the Bank shall not be required to execute and deliver such a release
of any such Collateral.
IV. DEFAULT, REMEDIES
A. EVENTS OF DEFAULT; ACCELERATION
Upon the occurrence of and during the continuation of any of the
following events or conditions of default ("Event of Default"), the
Bank may at its option and notwithstanding any other provision hereof,
by a notice to the Member, declare all Indebtedness (including, but
not limited to, any accrued interest) and any prepayment charges that
are provided for payment of an Advance before the date(s) scheduled
for repayment, to be immediately due and payable, without presentment,
demand, protest, or any further retire and/or terminate any obligation
on the part of the Bank in respect of any Commitment or to make or
continue any Advances under any revolving credit facility:
(1) Failure of the Member to pay when due the interest on or the
principal of any Advance; or
Page 23 of 32
(2) Failure of the Member to perform any promise or obligation or to
satisfy any condition or liability contained herein, in any
Confirmation of Advance, or in any other agreement to which the
Member and the Bank are parties; or
(3) Credible evidence coming to the attention of the Bank that any
representation, statement, or warranty made or furnished in any
manner to the Bank by or on behalf of the Member in connection
with any Advance, any Commitment, any specification of Eligible
Collateral, any matter related to designation for blanket lien
status, or any certification of Borrowing Capacity is false,
misleading or incomplete in any material respect; or
(4) Failure of the Member to maintain adequate Eligible Collateral
free of any encumbrances or claim as required herein; or
(5) The issuance of any tax, levy, seizure, attachment, garnishment,
levy of execution, or other process with respect to the
Collateral; or
(6) Any suspension of payment by the Member to any creditor of sums
due or the occurrence of any event that results (or which with
the giving of notice or passage of time, or both, will result) in
acceleration of the maturity of any indebtedness of the Member to
others under any security agreement, indenture, loan agreement,
or other undertaking; or
(7) Appointment of a trustee, conservator, receiver, liquidator,
custodian, or similar official for the Member or any subsidiary
(direct or indirect) of the Member or the Member's property,
notice of a judgment, decree, or administrative decision
adjudicating the Member or any subsidiary of the Member insolvent
or bankrupt or an assignment by the Member or any subsidiary of
the Member for the benefit of creditors or the appointment of a
trustee, conservator, receiver, liquidator, custodian, or similar
official for any parent (direct or indirect) of the Member or the
filing of a petition or application by any person for the
appointment of any such official for any such parent of the
Member or the transfer of any of the Member's assets or
liabilities (whether by purchase and assumption by any third
party or merger or otherwise) in connection with or as a result
of any event heretofore described in this Section IV.A.(7); or
(8) Sale by the Member of all or a material part of the Member's
assets or the taking of any other action by the Member to
liquidate or dissolve; or
(9) Termination of the Member's membership in the Bank or the
Member's ceasing to be a type of financial institution that is
eligible under the Act
Page 24 of 32
to become a member of the Bank or the Member's failure to satisfy
any requirement under the Act for obtaining or holding an
Advance; or
(10) Merger, consolidation, or other combination of the Member with an
entity that is not a member of the Bank if the nonmember entity
is the surviving entity in such transaction; or
(11) If an Advance is made pursuant to Section 11(g)(4) of the Act,
and if the creditor liabilities of the Member, excepting
liabilities to the Bank, exceed or are increased in any manner to
an amount exceeding five percent of the Member's net assets; or
(12) The Bank reasonably and in good faith determines that a material
adverse change has occurred in the financial condition of the
Member or in the Collateral from that disclosed previously to the
Bank; or
(13) The Bank reasonably and in good xxxxx xxxxx itself insecure even
though the Member is not otherwise in default; or
(14) The Member has borrowed, or committed to borrow, from any source
an amount that is greater than the amount the Member is permitted
to borrow under applicable law.
B. REMEDIES
Upon the occurrence of any Event of Default, the Bank shall have all
of the rights and remedies provided by applicable law, which shall
include, but not be limited to, all of the remedies of a secured party
under the Uniform Commercial Code as in effect in the State of
California. In addition, the Bank may take immediate possession of any
of the Collateral or any part thereof wherever the same may be found.
The Bank may sell, assign, and deliver the Collateral or any part
thereof at public or private sale for such price as the Bank deems
appropriate without any liability for any loss due to decrease in the
market value of the Collateral during the period held. The Bank shall
have the right to purchase all or part of the Collateral at such sale.
If the Collateral includes instruments or securities that will be
redeemed by the issuer upon surrender, or any accounts or deposits in
the possession of the Bank, the Bank may realize upon such Collateral
without notice to the Member. If any notification of intended
disposition of any of the Collateral is required by applicable law,
such notification shall be deemed reasonable and properly given if
mailed, postage prepaid, at least five days before any such
disposition to the address of the Member appearing on the records of
the Bank. Upon the occurrence of any Event of Default, the Bank may,
in its sole discretion, apply any payment by or recovery from the
Member or any sum realized from Collateral, at such time and in such
manner and order of priority, as the Bank shall deem fit, irrespective
of any manifestation of any contrary intention or desire on
Page 25 of 32
the part of the Member or the provisions of any other agreement
between the Bank and the Member. The Member agrees that the Bank may
exercise its rights of setoff upon the occurrence of an Event of
Default in the same manner as if the Advances and Commitments were
unsecured. Notwithstanding any other provision hereof, upon the
occurrence of any Event of Default at any time when all or part of the
obligations of the Member to the Bank hereunder shall be the subject
of any guarantee by a third party for the Bank's benefit and there
shall be other outstanding obligations of the Member to the Bank that
are not so guaranteed but that are secured by the Collateral, then any
sums realized by the Bank from the Collateral, or from any other
collateral pledged or furnished to the Bank by the Member under any
other agreement, shall be applied first to the satisfaction of such
other nonguaranteed obligations and then to the Member's guaranteed
obligations hereunder. The Member agrees to pay all the costs and
expenses of the Bank in the collection of the Indebtedness and
enforcement and preservation of the Bank's rights and remedies in case
of default, including, without limitation, reasonable attorneys' fees.
The Bank, at its discretion, may apply any surplus after payment of
the Indebtedness, provision for repayment to the Bank of any amounts
to be paid or advanced under Outstanding Commitments, and all costs of
collection and enforcement to third parties claiming a secondary
security interest in the Collateral, with any remaining surplus paid
to the Member. The Member shall be liable to the Bank for any
deficiency remaining.
C. PAYMENT OF PREPAYMENT CHARGES
Any prepayment few or charges for which provision is made, whether
under the Confirmation of Advance, the Bank's Credit Program or
otherwise, with respect to any Advance shall be payable at the time of
any voluntary or involuntary payment of the principal of such Advance
prior to the originally scheduled maturity thereof, including without
limitation, payments that are made in connection with the liquidation
of the Member or that become due as a result of an acceleration by the
Bank pursuant to Section IV.A., whether such payment is made by the
Member, by a trustee, conservator, receiver, liquidator, custodian, or
similar official, of or for the Member, or by any successor to or any
assignee of the Member.
D. DEFAULT RATE
Any payment of principal or interest or any other sum due hereunder if
not made when due (whether at stated maturity, by acceleration or
otherwise) shall bear interest, to the maximum extent permitted by
applicable law, at a rate per annum, for each day during the period
commencing on the due date thereof until such amount shall be paid in
full; equal to one percentage point above the interest rate that
otherwise will be applicable to any such payment of principal or if
such payment shall not constitute the principal sum, then at a rate
equal to one percentage point above the rate in effect and being
charged by the Bank from time to time under its Other Cash Needs-
Variable-Rate Credit option.
Page 26 of 32
E. CERTAIN PROVISIONS AS TO SALE OF COLLATERAL
In view of the possibility that federal and state securities laws and
other applicable federal and state laws may impose certain
restrictions on the method by which a sale of the Collateral may be
effected, the Bank and the Member agree that any sale of the
Collateral as a result of an Event of Default shall be deemed
"commercially reasonable" irrespective of whether the notice or manner
of such sale contains provisions, or imposes, or is subject to,
conditions or restrictions deemed appropriate to comply with the
Securities Act of 1933 or any other applicable federal or state
securities law or other applicable federal or state law. It is further
agreed that from time to time the Bank may attempt to sell the
Collateral by means of private placement. In so doing, the Bank may
restrict the bidders and prospective purchasers to those who will
represent and agree that they are purchasing for investment only and
not for distribution or otherwise impose restrictions deemed
appropriate by the Bank for the purpose of complying with the
requirements of applicable securities laws. The Bank may solicit
offers to buy such Collateral, for cash or otherwise, from a limited
number of investors deemed by the Bank to be responsible parties who
might be interested in purchasing such Collateral. If the Bank
solicits offers from not less than three such investors, then the
acceptance by the Bank of the highest offer obtained therefrom
(whether or not three offers are obtained) shall be deemed to be a
commercially reasonable method of disposing of the Collateral.
V. GENERAL, REPRESENTATIONS AND WARRANTIES BY THE MEMBER
The Member hereby represents and warrants that, as of the date hereof and
as of each date on which there shall be outstanding an Advance or
Commitment:
A. The Member is not now, and neither the execution of nor the
performance of any of the transactions or obligations of the Member
under this Agreement shall, with the passage of time, the giving of
notice, or otherwise, cause the Member to be: (i) in violation of its
charter or articles of incorporation by-laws, the Act, or the
Regulations, any other law or administrative regulation, any court
decree, or any order of a regulatory authority; or (ii) in default
under or in breach of any indenture, contract, or other instrument or
agreement to which the Member is a party or by which the Member or any
of its property may be bound.
B. The Member has full corporate power and authority and has received all
corporate and governmental authorizations and approvals (including the
approval of its board of directors, which approval is reflected in the
minutes of said board) as may be required to enter into and perform
its obligations under this Agreement, to borrow each Advance and to
obtain each Commitment.
C. The information given by the Member in any document provided, or in
any oral statement made, in connection with an application or request
for an Advance or
Page 27 of 32
a Commitment, a pledge, specification, or delivery of Collateral, is
true, accurate, and complete in all material respects.
D. Each Advance for which the Member applies hereunder will be authorized
by the terms and provisions of the Act and the Regulations. Any
application for an Advance hereunder shall be deemed to be a
representation by the Member that, as of the date of such application,
the Member will be in compliance with the Collateral maintenance
requirements specified pursuant to Section III.D.(1) after the funding
of such Advance.
VI. ASSIGNMENT OF INDEBTEDNESS AND SALE OF PARTICIPATIONS
The Member hereby gives the Bank the full right, power, and authority to
pledge or assign to any party all or part of the Indebtedness, together
with all or any part of the Collateral, as security for Consolidated
Federal Home Loan Bank Obligations issued pursuant to the provisions of the
Act or for any other purpose authorized by the Act, the Regulations, or the
Board. In the case of any such pledge assignment, the Bank shall have no
further responsibility with respect to Collateral transferred to the
pledgee or assignee, and all references herein to the "Bank" shall be read
to refer also to the pledgee or assignee. The Member may not (voluntarily
or involuntarily or by operation of law or otherwise) assign or transfer
any of its rights or obligations hereunder or with respect to any Advances
or Commitments without the express prior written consent of the Bank. The
Bank may at any time sell, assign, grant participations in, or otherwise
transfer to any other person, firm or corporation, including without
limitation another Federal Home Loan Bank (a "participant"), all or part of
the Indebtedness of the Member outstanding hereunder. The Member hereby
acknowledges and agrees that any such disposition will give rise to a
direct obligation of the Member to the participant. The Member hereby
authorizes the Bank and each participant, in case of default by the Member
hereunder, to proceed directly, by right of set off, banker's lien, or
otherwise, against any assets of the Member which may at the time of such
default be in the respective hands of the Bank or any such participant The
Member further agrees that the Bank may furnish any information pertaining
to the Member which is in the possession of the Bank to any prospective
participant to assist it in evaluating such participation provided that any
non-public information reasonably designated in writing to the Bank by the
Member as constituting non-public information shall be furnished to such
prospective participant on a confidential basis.
VII. DISCRETION OF BANK TO GRANT OR DENY ADVANCES
Nothing contained herein or in any documents describing or setting forth
the Bank's Credit Program or credit policies shall be construed as an
agreement or commitment on the part of the Bank to grant Advances or extend
Commitments hereunder, or to enter into any other transaction, the right
and power of the Bank in its discretion to either grant (with or without
conditions) or deny any Advance or to extend any Commitment or enter
Page 28 of 32
into any other transaction requested hereunder being expressly reserved.
Any determination by the Bank of the Borrowing Capacity of Collateral
pledged hereunder shall not constitute a determination by the Bank that
the Member may obtain Advances or Commitments in amounts up to such
Borrowing Capacity or otherwise.
VIII. AMENDMENT; WAIVERS
No modification, amendment, or waiver of any provision of this Agreement
or consent to any departure therefrom shall be effective unless executed
by the party against which such change is asserted and shall be effective
only in the specific instance and for the purpose for which given. No
notice to or demand on the Member in any case shall entitle the Member to
any other or further notice or demand in the same or similar or other
circumstances. Any forbearance, failure, or delay by the Bank in
exercising any right, power, or remedy hereunder shall not be deemed to
be a waiver thereof, and any single or partial exercise by the Bank of
any right, power, or remedy hereunder shall not preclude the further
exercise thereof. Every right, power, and remedy of the Bank shall
continue in full force and effect until specifically waived by the Bank
in writing.
IX. JURISDICTION; LEGAL FEES
In any action or proceeding brought by the Bank or the Member in order to
enforce any right or remedy under this Agreement, the parties hereby
consent to, and agree that they will submit to, the jurisdiction of the
United States District Court for the Northern District of California or,
if such action or proceeding may not be brought in federal court, the
jurisdiction of the Superior Court of the City and County of San
Francisco to the exclusion of all other courts. The Member agrees that,
if any action or proceeding is brought by the Member seeking to obtain
any legal or equitable relief against the Bank under or arising out of
this Agreement or any transaction contemplated hereby, and such relief is
not granted by the final decision, after any and all appeals, of a court
of competent jurisdiction, the Member will pay all attorneys' fees and
other costs incurred by the Bank in connection therewith. The Member
agrees to reimburse the Bank for all costs and expenses (including
reasonable fees and out-of-pocket expenses of counsel for the Bank)
incurred by the Bank in connection with the enforcement or preservation
of the Bank's rights under this Agreement including, but not limited to,
its rights in respect of any Collateral and the audit or possession
thereof.
X. APPLICABLE LAW; SEVERABILITY
This Agreement and all Advances granted under this Agreement shall be
governed by the statutory and common law of the United States and, to the
extent federal law incorporates or defers to state law, the laws of the
State of California (excluding however, the conflict of laws rules of
such state). Notwithstanding the foregoing, the Uniform Commercial Code
as in effect in the State of California shall be deemed applicable to
this Agreement and to any Advance hereunder. In the event that any
portion of this Agreement conflicts
Page 29 of 32
with applicable law, such conflict shall not
affect other provisions of this Agreement that can be given effect without
the conflicting provision, and to this end the provisions of this Agreement
are declared to be severable.
XI. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the Member and the Bank.
XII. NOTICES
Any notice, advice, request, consent, or direction given, made, or
withdrawn pursuant to this Agreement shall be in writing or by machine-
readable electronic transmission, and shall be deemed to have been duly
given to and received by a party hereto when it shall have been mailed to
such party at its address given by first-class mail, or if given by hand or
by machine-readable electronic transmission, when actually received by such
party at its principal office.
\\\\\\
\\\\\\
Page 30 of 32
XIII. ENTIRE AGREEMENT
This Agreement embodies the entire agreement and understanding between
the parties hereto relating to the subject matter hereof and supersedes
all prior agreements between such parties that relate to such subject
matter. Notwithstanding the above, Advances and Commitments made by the
Bank to the Member prior to the execution of this Agreement shall
continue to be governed by the terms of the Confirmation of Advance
pursuant to which such Advances and Commitments were made, and otherwise
by the terms and conditions of this Agreement.
IN WITNESS WHEREOF, the Member and the Bank have caused this Agreement to be
signed in their names by their duly authorized officers as of the date first
above-mentioned.
Pan American Bank, FSB San Mateo, California
________________________________________________________________________________
Full Corporate Name of Member Location of Member
/s/ XXXXXXXX X. GRILL Xxxxxxxx X. Grill, President
________________________________________________________________________________
Authorized Signature and Title Name of Signer (Print or Type)
/s/ XXXXXX XXXXXX Xxxxxx X. Xxxxxx, EVP
________________________________________________________________________________
Authorized Signature and Title Name of Signer (Print or Type)
FEDERAL HOME LOAN BANK OF SAN FRANCISCO
________________________________________________________________________________
By Title
/s/ [SIGNATURE ILLEGIBLE] VP
________________________________________________________________________________
By Title
/s/ [SIGNATURE ILLEGIBLE AVP
________________________________________________________________________________
Note: This form must be signed on behalf of the Member by one or two authorized
signers, in accordance with the Member's authorizations on file with the Bank,
and the accompanying acknowledgment form must be completed by a Notary Public.
Send to: Federal Home Loan Bank of San Francisco
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
or
X.X. Xxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Page 31 of 32
