Document:

Exhibit 10.4

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”) is entered into as of April 1, 2011, by and between EXCEL MORTGAGE SERVICING, INC., a California corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

 

RECITALS

 

Borrower has requested that Bank extend or continue credit to Borrower as described below, and Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as follows:

 

ARTICLE I

CREDIT TERMS

 

SECTION 1.1.                                  LINE OF CREDIT.

 

(a)                     Line of Credit.  Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time up to and including April 1, 2012, not to exceed at any time the aggregate principal amount of Two Million Dollars ($2,000,000.00) (“Line of Credit”), the proceeds of which shall be used to finance Borrower’s working capital requirements.  Borrower’s obligation to repay advances under the Line of Credit shall be evidenced by a promissory note dated as of April 1, 2011 (“Line of Credit Note”), all terms of which are incorporated herein by this reference.

 

(b)                    Borrowing and Repayment.  Borrower may from time to time during the term of the Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note; provided however, that the total outstanding borrowings under the Line of Credit shall not at any time exceed the maximum principal amount available thereunder, as set forth above.

 

SECTION 1.2.                                  STANDBY LETTER OF CREDIT.

 

(a)                     Standby Letter of Credit.  Bank has issued or caused an affiliate to issue a standby letter of credit for the account of Borrower and for the benefit of LIBERTY MUTAL INSURANCE COMPANY (the “Standby Letter of Credit”) in the principal amount of One Million One Hundred Fifty Thousand Dollars ($1,150,000.00).  The Standby Letter of Credit has an expiration date of November 15, 2011, and is subject to the additional terms of the Letter of Credit agreement, application and any related documents required by Bank in connection with the issuance thereof (the “Letter of Credit Agreement”).  Subject to the terms and conditions of this Agreement, Bank hereby confirms that the Standby Letter of Credit remains in full force and effect.

 

(b)                    Repayment of Drafts.  Each drawing paid under the Standby Letter of Credit shall be repaid by Borrower in accordance with the provisions of the Letter of Credit Agreement.

 

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SECTION 1.3.                                  INTEREST/FEES.

 

(a)                     Interest.  The outstanding principal balance of each credit subject hereto shall bear interest, and the amount of each drawing paid under the Standby Letter of Credit shall bear interest from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest set forth in each promissory note or other instrument or document executed in connection therewith.

 

(b)                    Computation and Payment.  Interest shall be computed on the basis of a 360-day year, actual days elapsed.  Interest shall be payable at the times and place set forth in each promissory note or other instrument or document required hereby.

 

(c)                     Commitment Fee.  Borrower shall pay to Bank a non-refundable commitment fee for the Line of Credit equal to Ten Thousand Dollars ($10,000.00), which fee shall be due and payable in full on the date this Agreement is executed by Borrower and delivered to Bank.

 

(d)                    Letter of Credit Fees.  Borrower shall pay to Bank fees upon the issuance of each Letter of Credit, upon the payment or negotiation of each drawing under any Letter of Credit and upon the occurrence of any other activity with respect to any Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Letter of Credit) determined in accordance with Bank’s standard fees and charges then in effect for such activity.

 

SECTION 1.4.                                  COLLECTION OF PAYMENTS.  Borrower authorizes Bank to collect all principal, interest and fees due under each credit subject hereto by charging Borrower’s deposit account number 4121758262 with Bank, or any other deposit account maintained by Borrower with Bank, for the full amount thereof.  Should there be insufficient funds in any such deposit account to pay all such sums when due, the full amount of such deficiency shall be immediately due and payable by Borrower.

 

SECTION 1.5.                                  GUARANTIES.  The payment and performance of all indebtedness and other obligations of Borrower to Bank shall be guaranteed, jointly and severally, by Integrated Real Estate Service Corp. (“Integrated”), in the principal amount of Two Million Dollars ($2,000,000.00), and Impac Mortgage Holdings, Inc. (“Impac”), in the principal amount of One Million One Hundred Fifty Thousand Dollars ($1,150,000.00), as evidenced by and subject to the terms of guaranties in form and substance satisfactory to Bank.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

Borrower makes the following representations and warranties to Bank, which representations and warranties shall survive the execution of this Agreement and shall continue in full force and effect until the full and final payment, and satisfaction and discharge, of all obligations of Borrower to Bank subject to this Agreement.

 

SECTION 2.1.                                  LEGAL STATUS.  Borrower is a corporation, duly organized and existing and in good standing under the laws of California, and is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Borrower.

 

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SECTION 2.2.                                  AUTHORIZATION AND VALIDITY.  This Agreement and each promissory note, contract, instrument and other document required hereby or at any time hereafter delivered to Bank in connection herewith (collectively, the “Loan Documents”) have been duly authorized, and upon their execution and delivery in accordance with the provisions hereof will constitute legal, valid and binding agreements and obligations of Borrower or the party which executes the same, enforceable in accordance with their respective terms.

 

SECTION 2.3.                                  NO VIOLATION.  The execution, delivery and performance by Borrower of each of the Loan Documents do not violate any provision of any law or regulation, or contravene any provision of the Articles of Incorporation or By-Laws of Borrower, or result in any breach of or default under any contract, obligation, indenture or other instrument to which Borrower is a party or by which Borrower may be bound.

 

SECTION 2.4.                                  LITIGATION.  There are no pending, or to the best of Borrower’s knowledge threatened, actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court or administrative agency which could have a material adverse effect on the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in writing prior to the date hereof.

 

SECTION 2.5.                                  CORRECTNESS OF FINANCIAL STATEMENT.  The annual financial statement of Borrower dated March 31, 2010, and all interim financial statements delivered to Bank since said date, true copies of which have been delivered by Borrower to Bank prior to the date hereof, (a) are complete and correct and present fairly the financial condition of Borrower, (b) disclose all liabilities of Borrower that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with generally accepted accounting principles consistently applied.  Since the dates of such financial statements there has been no material adverse change in the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing.

 

SECTION 2.6.                                  INCOME TAX RETURNS.  Borrower has no knowledge of any pending assessments or adjustments of its income tax payable with respect to any year.

 

SECTION 2.7.                                  NO SUBORDINATION.  There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the subordination in right of payment of any of Borrower’s obligations subject to this Agreement to any other obligation of Borrower.

 

SECTION 2.8.                                  PERMITS, FRANCHISES.  Borrower possesses, and will hereafter possess, all permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade names, patents, and fictitious names, if any, necessary to enable it to conduct the business in which it is now engaged in compliance with applicable law.

 

SECTION 2.9.                                  ERISA.  Borrower is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time (“ERISA”); Borrower has not violated any provision of any defined employee pension benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a “Plan”); no Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under generally accepted accounting principles.

 

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SECTION 2.10.                            OTHER OBLIGATIONS.  Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation.

 

SECTION 2.11.                            ENVIRONMENTAL MATTERS.  Except as disclosed by Borrower to Bank in writing prior to the date hereof, Borrower is in compliance in all material respects with all applicable federal or state environmental, hazardous waste, health and safety statutes, and any rules or regulations adopted pursuant thereto, which govern or affect any of Borrower’s operations and/or properties, including without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any of the same may be amended, modified or supplemented from time to time.  None of the operations of Borrower is the subject of any federal or state investigation evaluating whether any remedial action involving a material expenditure is needed to respond to a release of any toxic or hazardous waste or substance into the environment.  Borrower has no material contingent liability in connection with any release of any toxic or hazardous waste or substance into the environment.

 

SECTION 2.12.                            COMPLIANCE WITH FINANCE LAWS.  Borrower is in compliance, in all material respects, with all laws, regulations and directives with respect to credit and finance, including the California Unruh Act, California Civil code Sections 1799.90 et seq., the Federal Truth in Lending Act and the Federal Equal Credit Act, all as may be amended from time to time.

 

ARTICLE III

CONDITIONS

 

SECTION 3.1.                                  CONDITIONS OF INITIAL EXTENSION OF CREDIT.  The obligation of Bank to extend any credit contemplated by this Agreement is subject to the fulfillment to Bank’s satisfaction of all of the following conditions:

 

(a)                     Approval of Bank Counsel.  All legal matters incidental to the extension of credit by Bank shall be satisfactory to Bank’s counsel.

 

(b)                    Documentation.  Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed:

 

	
(i)
    	
 
    	
This   Agreement and each promissory note or other instrument or document required   hereby.
    
	
(ii)
    	
 
    	
Certificates   of Incumbency (3).
    
	
(iii)
    	
 
    	
Corporate   Resolution: Continuing Guaranty.
    
	
(iv)
    	
 
    	
Corporate   Resolution: Guaranty.
    
	
(v)
    	
 
    	
Corporate   Resolution: Borrowing.
    
	
(vi)
    	
 
    	
Continuing   Guaranty from Impac listed in Section 1.5. hereof.
    
	
(vii)
    	
 
    	
Guaranty   from Integrated listed in Section 1.5. hereof.
    
	
(viii)
    	
 
    	
Disbursement   Order.
    
	
(ix)
    	
 
    	
Name   Affidavit.
    
	
(x)
    	
 
    	
Such   other documents as Bank may require under any other Section of this   Agreement.
    

 

 

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(c)                     Financial Condition.  There shall have been no material adverse change, as determined by Bank, in the financial condition or business of Borrower or any guarantor hereunder, nor any material decline, as determined by Bank, in the market value of any collateral required hereunder or a substantial or material portion of the assets of Borrower or any such guarantor.

 

(d)                    Insurance.  Borrower shall have delivered to Bank evidence of insurance coverage on all Borrower’s property, in form, substance, amounts, covering risks and issued by companies satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank.

 

(e)                     Compliance Certificate.  Borrower’s chief financial officer shall have delivered to Bank such compliance certificate as Bank may require.

 

SECTION 3.2.                                  CONDITIONS OF EACH EXTENSION OF CREDIT.  The obligation of Bank to make each extension of credit requested by Borrower hereunder shall be subject to the fulfillment to Bank’s satisfaction of each of the following conditions:

 

(a)                     Compliance.  The representations and warranties contained herein and in each of the other Loan Documents shall be true on and as of the date of the signing of this Agreement and on the date of each extension of credit by Bank pursuant hereto, with the same effect as though such representations and warranties had been made on and as of each such date, and on each such date, no Event of Default as defined herein, and no condition, event or act which with the giving of notice or the passage of time or both would constitute such an Event of Default, shall have occurred and be continuing or shall exist.

 

(b)                    Documentation.  Bank shall have received all additional documents which may be required in connection with such extension of credit.

 

(c)                     Additional Letter of Credit Documentation.  Prior to the issuance of each Letter of Credit, Bank shall have received a Letter of Credit Agreement, properly completed and duly executed by Borrower.

 

ARTICLE IV

AFFIRMATIVE COVENANTS

 

Borrower covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in writing:

 

SECTION 4.1.                                  PUNCTUAL PAYMENTS.  Punctually pay all principal, interest, fees or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein.

 

SECTION 4.2.                                  ACCOUNTING RECORDS.  Maintain adequate books and records in accordance with generally accepted accounting principles consistently applied, and permit any representative of Bank, at any reasonable time, to inspect, audit and examine such books and records, to make copies of the same, and to inspect the properties of Borrower.

 

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SECTION 4.3.                                  FINANCIAL STATEMENTS.  Provide to Bank all of the following, in form and detail satisfactory to Bank:

 

(a)                     not later than 90 days after and as of the end of each fiscal year, an audited financial statement of Borrower, prepared by Borrower, to include balance sheet, income statement and statement of cash flow, and within 15 days after filing, but in no event later than each November 15, copies of Borrower’s filed federal income tax returns for such year;

 

(b)                    not later than 45 days after and as of the end of each fiscal quarter, a financial statement of Borrower, prepared by Borrower, to include balance sheet and income statement;

 

(c)                     not later than 15 days after and as of the end of each fiscal quarter, copies of current account statements for deposit, brokerage and other accounts containing unencumbered liquid assets of Integrated and its subsidiaries as necessary for Bank to calculate compliance with the liquidity covenant set forth below;

 

(d)                    within 30 days after filing, but in no event later than November 15 of each year, copies of each guarantor’s filed federal income tax returns for the prior year;

 

(e)                     contemporaneously with each annual financial statement of Borrower required hereby, a certificate of the chief financial officer of Borrower that (i) there exists no Event of Default, nor any condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of Default, and (ii) Borrower is in material compliance with, and has appropriate internal control processes, policies and procedures in place to remain in material compliance with, all federal, state and local laws, rules and regulations applicable to Borrower’s business; and

 

(f)                       from time to time such other information as Bank may reasonably request.

 

SECTION 4.4.                                  COMPLIANCE.  Preserve and maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower’s continued existence and with the requirements of all laws, rules, regulations and orders of any governmental authority applicable to Borrower and/or its business.

 

SECTION 4.5.                                  INSURANCE.  Maintain and keep in force, for each business in which Borrower is engaged, insurance of the types and in amounts customarily carried in similar lines of business, including but not limited to fire, extended coverage, public liability, flood, property damage and workers’ compensation, with all such insurance carried with companies and in amounts satisfactory to Bank, and deliver to Bank from time to time at Bank’s request schedules setting forth all insurance then in effect.

 

SECTION 4.6.                                  FACILITIES.  Keep all properties useful or necessary to Borrower’s business in good repair and condition, and from time to time make necessary repairs, renewals and replacements thereto so that such properties shall be fully and efficiently preserved and maintained.

 

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SECTION 4.7.                                  TAXES AND OTHER LIABILITIES.  Pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real or personal, including without limitation federal and state income taxes and state and local property taxes and assessments, except (a) such as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision, to Bank’s satisfaction, for eventual payment thereof in the event Borrower is obligated to make such payment.

 

SECTION 4.8.                                  LITIGATION.  Promptly give notice in writing to Bank of any litigation pending or threatened against Borrower with a claim in excess of $500,000.00.

 

SECTION 4.9.                                  FINANCIAL CONDITION.  Maintain Borrower’s financial condition as follows using generally accepted accounting principles consistently applied and used consistently with prior practices (except to the extent modified by the definitions herein and except for the fact that, for the purposes of this Section 4.9, Borrower’s financial condition shall not be consolidated with Integrated, Impac or any other entity):

 

Net income after taxes not less than $1.00 on an annual basis, determined as of each fiscal year end, commencing with the fiscal year ending December 31, 2011, and pre-tax profit not less than $1.00 on a quarterly basis, determined as of each fiscal quarter end, commencing with the fiscal quarter ending June 30, 2011.

 

SECTION 4.10.                            NOTICE TO BANK.  Promptly (but in no event more than five (5) days after the occurrence of each such event or matter) give written notice to Bank in reasonable detail of:  (a) the occurrence of any Event of Default, or any condition, event or act which with the giving of notice or the passage of time or both would constitute an Event of Default; (b) any change in the name or the organizational structure of Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any termination or cancellation of any insurance policy which Borrower is required to maintain, or any uninsured or partially uninsured loss through liability or property damage, or through fire, theft or any other cause affecting Borrower’s property.

 

SECTION 4.11.                            LIQUIDITY.  Cause Integrated and its wholly-owned subsidiaries to maintain, on a combined basis, unencumbered liquid assets (with “liquid assets” defined as cash, cash equivalents and/or publicly traded/quoted marketable securities acceptable to Bank in its sole discretion) with Bank and/or an affiliate of Bank, with an aggregate fair market value not at any time less than Three Million Two Hundred Thousand Dollars ($3,200,000.00).

 

SECTION 4.11.                            FINANCE REGULATIONS.   Comply, in all material respects, with all laws, regulations and directives with respect to finance, including the California Unruh Act, California Civil Code Sections 1799.90 et seq., the Federal Trust in Lending Act and the Federal Equal Credit Act, all may be amended from time to time.

 

ARTICLE V

NEGATIVE COVENANTS

 

Borrower further covenants that so long as Bank remains committed to extend credit to Borrower pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower will not without Bank’s prior written consent:

 

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SECTION 5.1.                                  USE OF FUNDS.  Use any of the proceeds of any credit extended hereunder except for the purposes stated in Article I hereof.

 

SECTION 5.2.                                  CAPITAL EXPENDITURES.  Make any additional investment in fixed assets in any fiscal year in excess of an aggregate of $100,000.00.

 

SECTION 5.3.                                  LEASE EXPENDITURES.  Incur operating lease expense in any fiscal year in excess of an aggregate of $1,000,000.00.

 

SECTION 5.4.                                  SECTION 5.4.                       OTHER INDEBTEDNESS.  Create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to Bank, (b) any other liabilities of Borrower existing as of, and disclosed to Bank prior to, the date hereof, and (c) borrowings hereafter by Borrower from Alliance Bank, East West Bank, New Century Bank, MetLife Bank and ViewPoint Bank (collectively, the “Existing Mortgage Lenders”) under the mortgage-warehouse lines which are in place between Borrower and each of the Existing Mortgage Lenders as of the date hereof (the “Mortgage Credit Lines”).

 

SECTION 5.5.                                  MERGER, CONSOLIDATION, TRANSFER OF ASSETS.  Merge into or consolidate with any other entity; make any substantial change in the nature of Borrower’s business as conducted as of the date hereof; acquire all or substantially all of the assets of any other entity; nor sell, lease, transfer or otherwise dispose of all or a substantial or material portion of Borrower’s assets except in the ordinary course of its business.

 

SECTION 5.6.                                  GUARANTIES.  Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of Borrower as security for, any liabilities or obligations of any other person or entity, except any of the foregoing in favor of Bank.

 

SECTION 5.7.                                  LOANS, ADVANCES, INVESTMENTS.  Make any loans or advances to or investments in any person or entity, except (a) any of the foregoing existing as of, and disclosed to Bank prior to, the date hereof, and (b) loans made hereafter by Borrower to its affiliates in the ordinary course of business, so long as the outstanding principal balance of loans made by Borrower to its affiliates does not exceed $7,000,000.00 in the aggregate at any time.

 

SECTION 5.8.                                  DIVIDENDS, DISTRIBUTIONS.  Declare or pay any dividend or distribution either in cash, stock or any other property on Borrower’s stock now or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire any shares of any class of Borrower’s stock now or hereafter outstanding.

 

SECTION 5.9                                     SECTION 5.9                          PLEDGE OF ASSETS.  Mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of Borrower’s assets now owned or hereafter acquired, except any of the foregoing in favor of Bank or which is existing as of, and disclosed to Bank in writing prior to, the date hereof, including without limitation the security interests granted by Borrower to the Existing Mortgage Lenders to secure the Mortgage Credit Lines.  Nothing herein is intended to obligate Bank to (i) subordinate any rights of Bank to any rights of any of the Existing Mortgage Lenders with respect to any deposit account or other type of account maintained by Borrower with Bank, or (ii) enter into any control agreement with any of the Existing Mortgage Lenders with respect to any such account.

 

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ARTICLE VI

EVENTS OF DEFAULT

 

SECTION 6.1.                                  The occurrence of any of the following shall constitute an “Event of Default” under this Agreement:

 

(a)                     Borrower shall fail to pay when due any principal, interest, fees or other amounts payable under any of the Loan Documents.

 

(b)                    Any financial statement or certificate furnished to Bank in connection with, or any representation or warranty made by Borrower or any other party under this Agreement or any other Loan Document shall prove to be incorrect, false or misleading in any material respect when furnished or made.

 

(c)                     Any default in the performance of or compliance with any obligation, agreement or other provision contained herein or in any other Loan Document (other than those specifically described as an “Event of Default” in this section 6.1), and with respect to any such default that by its nature can be cured, such default shall continue for a period of twenty (20) days from its occurrence.

 

(d)                    Any default in the payment or performance of any obligation, or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower, any guarantor hereunder or any general partner or joint venturer in Borrower if a partnership or joint venture (with each such guarantor, general partner and/or joint venturer referred to herein as a “Third Party Obligor”) has incurred any debt or other liability to any person or entity, including Bank.

 

(e)                     Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts as they become due, or shall make a general assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time (“Bankruptcy Code”), or under any state or federal law granting relief to debtors, whether now or hereafter in effect; or Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered against Borrower or any Third Party Obligor by any court of competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors.

 

(f)                       The filing of a notice of judgment lien against Borrower or any Third Party Obligor; or the recording of any abstract of judgment against Borrower or any Third Party Obligor in any county in which Borrower or such Third Party Obligor has an interest in real property; or the service of a notice of levy and/or of a writ of attachment or execution, or other like process, against the assets of Borrower or any Third Party Obligor; or the entry of a judgment against Borrower or any Third Party Obligor; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or commenced against Borrower or any Third Party Obligor.

 

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(g)                    There shall exist or occur any event or condition that Bank in good faith believes impairs, or is substantially likely to impair, the prospect of payment or performance by Borrower, any Third Party Obligor, or the general partner of either if such entity is a partnership, of its obligations under any of the Loan Documents.

 

(h)                    The death or incapacity of Borrower or any Third Party Obligor if an individual. The dissolution or liquidation of Borrower or any Third Party Obligor if a corporation, partnership, joint venture or other type of entity; or Borrower or any such Third Party Obligor, or any of its directors, stockholders or members, shall take action seeking to effect the dissolution or liquidation of Borrower or such Third Party Obligor.

 

(i)                        Any change in control of Borrower or any entity or combination of entities that directly or indirectly control Borrower, with “control” defined as ownership of an aggregate of twenty-five percent (25%) or more of the common stock, members’ equity or other ownership interest (other than a limited partnership interest).

 

SECTION 6.2.                                  REMEDIES.  Upon the occurrence of any Event of Default:  (a) all indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Bank’s option and without notice become immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are hereby expressly waived by Borrower; (b) the obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law.  All rights, powers and remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of an Event of Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.

 

ARTICLE VII

MISCELLANEOUS

 

SECTION 7.1.                                  NO WAIVER.  No delay, failure or discontinuance of Bank in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy.  Any waiver, permit, consent or approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in writing and shall be effective only to the extent set forth in such writing.

 

SECTION 7.2.                                  NOTICES.  All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing delivered to each party at the following address:

 

	
BORROWER:
    	
 
    	
EXCEL   MORTGAGE SERVICING, INC.
    
	
 
    	
 
    	
19500   Jamboree Road
    
	
 
    	
 
    	
Irvine,   CA 92612
    

 

 

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BANK:
    	
 
    	
WELLS   FARGO BANK, NATIONAL ASSOCIATION
    
	
 
    	
 
    	
2030   Main Street, Suite 900
    
	
 
    	
 
    	
Irvine,   CA 92614
    

 

or to such other address as any party may designate by written notice to all other parties.  Each such notice, request and demand shall be deemed given or made as follows:  (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy, upon receipt.

 

SECTION 7.3.                                  COSTS, EXPENSES AND ATTORNEYS’ FEES.  Borrower shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of Bank’s in-house counsel), expended or incurred by Bank in connection with (a) the negotiation and preparation of this Agreement and the other Loan Documents, Bank’s continued administration hereof and thereof, and the preparation of any amendments and waivers hereto and thereto, (b) the enforcement of Bank’s rights and/or the collection of any amounts which become due to Bank under any of the Loan Documents, and (c) the prosecution or defense of any action in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity.

 

SECTION 7.4.                                  SUCCESSORS, ASSIGNMENT.  This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Borrower may not assign or transfer its interests or rights hereunder without Bank’s prior written consent.  Bank reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Bank’s rights and benefits under each of the Loan Documents.  In connection therewith, Bank may disclose all documents and information which Bank now has or may hereafter acquire relating to any credit subject hereto, Borrower or its business, any guarantor hereunder or the business of such guarantor, or any collateral required hereunder.

 

SECTION 7.5.                                  ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other Loan Documents constitute the entire agreement between Borrower and Bank with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof.  This Agreement may be amended or modified only in writing signed by each party hereto.

 

SECTION 7.6.                                  NO THIRD PARTY BENEFICIARIES.  This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party.

 

SECTION 7.7.                                  TIME.  Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents.

 

11

 

SECTION 7.8.                                  SEVERABILITY OF PROVISIONS.  If any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement.

 

SECTION 7.9.                                  INDEMNITY.                       In addition to the payment of costs and expenses pursuant to Section 7.3 above, Borrower hereby agrees to indemnify and hold harmless Bank and the directors, officers, employees and agents of and counsel to Bank (collectively “Indemnitees” and individually “Indemnitee”) from and against any liabilities, obligations, losses, damages, penalties, actions, causes of action, judgments, suits, claims, costs and expenses of any kind or nature whatsoever, including without limitation the reasonable fees, costs and expenses of counsel to Indemnitees (including without limitation allocated fees, costs and expenses of in-house counsel of Bank), in connection with any administrative, investigative or judicial proceeding, irrespective of whether such Indemnitee shall be designated a party thereto, which may be imposed on, incurred by or asserted against such Indemnitee, in any manner relating to or arising out of this Agreement, any borrowings hereunder, the use or intended use of the proceeds of any borrowings hereunder or Borrower’s lending activities (collectively, “Indemnified Liabilities”); provided, however, that Borrower’s obligations to Indemnitees under this paragraph shall not extend to any losses, damages, liabilities, actions or claims against any Indemnitee arising as a result of the gross negligence or willful misconduct of such Indemnitee.  Borrower shall make all payments required to be made under this section 7.9 promptly upon demand by Bank.  The obligations of Borrower under this Section 7.9 shall survive the termination of this Agreement and the discharge of Borrower’s other obligations hereunder.

 

SECTION 7.10.                            NON-LIABILITY OF BANK.                                        The relationship between Borrower and Bank is, and shall at all times remain, solely that of Borrower and lender.  Bank shall not under any circumstance be construed to be a partner or joint venturer of Borrower.  Bank shall not under any circumstance be deemed to be in a fiduciary relationship with Borrower or to owe any fiduciary duty to Borrower.   Bank does not undertake or assume any responsibility or duty to Borrower to review, inspect, supervise, pass judgment upon or inform Borrower of any matter in connection with Borrower’s loan agreements with its customers, Borrower’s other property or the operations of Borrower.  Any review, inspection, supervision, exercise of judgment or supply of information undertaken by Bank in connection with any such matter is solely for the protection of Bank, and Borrower is not entitled to rely thereon.  Nothing contained herein shall be deemed an assumption by Bank of any obligations of Borrower to any of its customers.

 

SECTION 7.11.                            COUNTERPARTS.  This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement.

 

SECTION 7.12.                            GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of California.

 

SECTION 7.13 .                         ARBITRATION.

 

(a)                     Arbitration.  The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise in any way arising out of or relating to (i) any credit subject hereto, or any of the Loan Documents, and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit.

 

12

 

(b)                    Governing Rules.  Any arbitration proceeding will (i) proceed in a location in California selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

 

(c)                     No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding.  This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

 

(d)                    Arbitrator Qualifications and Powers.  Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney licensed in the State of California or a neutral retired judge of the state or federal judiciary of California, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all disputes in accordance with the substantive law of California and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award.  The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California Rules of Civil Procedure or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

 

13

 

(e)                     Discovery.  In any arbitration proceeding, discovery will be permitted in accordance with the Rules.  All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation and that no alternative means for obtaining information is available.

 

(f)                       Class Proceedings and Consolidations.  No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed any Loan Document, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

 

(g)                    Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and expenses of the arbitration proceeding.

 

(h)                    Real Property Collateral; Judicial Reference.  Notwithstanding anything herein to the contrary, no dispute shall be submitted to arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of California, thereby agreeing that all indebtedness and obligations of the parties, and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable.  If any such dispute is not submitted to arbitration, the dispute shall be referred to a referee in accordance with California Code of Civil Procedure Section 638 et seq., and this general reference agreement is intended to be specifically enforceable in accordance with said Section 638.  A referee with the qualifications required herein for arbitrators shall be selected pursuant to the AAA’s selection procedures.  Judgment upon the decision rendered by a referee shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645.

 

(i)                        Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation.  If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Loan Documents or the subject matter of the dispute shall control.  This arbitration provision shall survive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

 

(j)                        Small Claims Court.  Notwithstanding anything herein to the contrary, each party retains the right to pursue in Small Claims Court any dispute within that court’s jurisdiction.  Further, this arbitration provision shall apply only to disputes in which either party seeks to recover an amount of money (excluding attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small Claims Court.

 

14

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first written above.

 

	
 
    	
 
    	
WELLS   FARGO BANK,
    
	
EXCEL   MORTGAGE SERVICING, INC.
    	
 
    	
NATIONAL   ASSOCIATION
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
Todd   Taylor, Secretary/Treasurer
    	
 
    	
 
    	
Erin   Boyl, Assistant Vice President
    

 

15Exhibit 10.5

 

Supplemental Indenture No. 1

to

Indenture

dated as of November 26, 2010

between

LVII 2010-R1, as Issuer

and

Deutsche Bank National Trust Company, as Indenture Trustee

 

Supplemental Indenture No. 1 (this “Amendment”), dated as of May 17, 2011, which shall be its effective date (“Effective Date”), between LVII 2010-R1, as issuer (the “Issuer”) and Deutsche Bank National Trust Company, as indenture trustee (the “Indenture Trustee”) in connection with the Indenture, dated as of November 26, 2010 (the “Indenture”), between the Issuer and the Indenture Trustee. Capitalized terms not defined herein have the meanings assigned to them in the Indenture.

 

1.             This Amendment is effected pursuant to Section 8.02(1) of the Indenture.

 

2.             The definition of Accrual Period in Section 1.01 of the Indenture is hereby deleted and replaced with the following:

 

“Accrual Period”: With respect to each Payment Date and each Class of Notes, the period from the previous Payment Date (or, in the case of the first Accrual Period, from the Closing Date) to the day prior to the current Payment Date. All payments of interest on the Notes for any Payment Date shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. Notwithstanding the foregoing, each Accrual Period shall be deemed to consist of 30 days; provided that, the Accrual Period for the first Payment Date after the Closing Date shall be deemed to be five days; provided further, that the Accrual Period for the second Payment Date after the Closing Date shall be deemed to be 26 days; and provided further that, the Accrual Period for the first Payment Date after the Supplemental Deposit Date shall be deemed to be ten days.

 

3.             The definition of Initial Reserve Account Balance is hereby added to Section 1.01 of the Indenture:

 

“Initial Reserve Account Balance”: $1,438,746.07.

 

4.                                       The definition of Payment Date is hereby deleted and replaced with the following:

 

“Payment Date”: Payments on the Securities shall be made (i) on any date during which the Notes are outstanding, the second Business Day immediately following the Underlying Distribution Date, and (ii) after the Note Balance on the Notes has been reduced to zero, the same day as the Underlying Distribution Date.

 

5.             The definition of Scheduled Interest Payment Amount is hereby deleted and replaced with the following:

 

 

“Scheduled Interest Payment Amount”: With respect to any Payment Date, as set forth in the chart below.

 

	
 
    	
 
    	
 
    	
 
    	
Scheduled Interest
    	
 
    
	
Payment Date
    	
 
    	
Note Balance ($)
    	
 
    	
Payment Amount ($)
    	
 
    
	
May 27,   2011
    	
 
    	
9,680,555.55
    	
 
    	
28,472.22
    	
 
    
	
June 27,   2011
    	
 
    	
9,111,111.10
    	
 
    	
80,671.30
    	
 
    
	
July 27,   2011
    	
 
    	
8,541,666.65
    	
 
    	
75,925.93
    	
 
    
	
August 27,   2011
    	
 
    	
7,972,222.20
    	
 
    	
71,180.56
    	
 
    
	
September 27,   2011
    	
 
    	
7,402,777.75
    	
 
    	
66,435.18
    	
 
    
	
October 27,   2011
    	
 
    	
6,833,333.30
    	
 
    	
61,689.81
    	
 
    
	
November 27,   2011
    	
 
    	
6,263,888.85
    	
 
    	
56,944.44
    	
 
    
	
December 27,   2011
    	
 
    	
5,694,444.40
    	
 
    	
52,199.07
    	
 
    
	
January 27,   2012
    	
 
    	
5,124,999.95
    	
 
    	
47,453.70
    	
 
    
	
February 27,   2012
    	
 
    	
4,555,555.50
    	
 
    	
42,708.33
    	
 
    
	
March 27,   2012
    	
 
    	
3,986,111.05
    	
 
    	
37,962.96
    	
 
    
	
April 27,   2012
    	
 
    	
3,416,666.60
    	
 
    	
33,217.59
    	
 
    
	
May 27,   2012
    	
 
    	
2,847,222.15
    	
 
    	
28,472.22
    	
 
    
	
June 27,   2012
    	
 
    	
2,277,777.70
    	
 
    	
23,726.85
    	
 
    
	
July 27,   2012
    	
 
    	
1,708,333.25
    	
 
    	
18,981.48
    	
 
    
	
August 27,   2012
    	
 
    	
1,138,888.80
    	
 
    	
14,236.11
    	
 
    
	
September 27,   2012
    	
 
    	
569,444.35
    	
 
    	
9,490.74
    	
 
    
	
October 27,   2012
    	
 
    	
0.00
    	
 
    	
4,745.37
    	
 
    

 

6.             The definition of Scheduled Principal Payment Amount is hereby deleted and replaced with the following:

 

“Scheduled Principal Payment Amount”: With respect to any Payment Date, as set forth in the chart below.

 

	
 
    	
 
    	
 
    	
 
    	
Scheduled
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Principal
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Payment
    	
 
    
	
Payment Date
    	
 
    	
Note Balance ($)
    	
 
    	
Amount ($)
    	
 
    
	
Supplemental   Deposit Date
    	
 
    	
10,250,000.00
    	
 
    	
 
    	
 
    
	
May 27,   2011
    	
 
    	
9,680,555.55
    	
 
    	
569,444.45
    	
 
    
	
June 27,   2011
    	
 
    	
9,111,111.10
    	
 
    	
569,444.45
    	
 
    
	
July 27,   2011
    	
 
    	
8,541,666.65
    	
 
    	
569,444.45
    	
 
    
	
August 27,   2011
    	
 
    	
7,972,222.20
    	
 
    	
569,444.45
    	
 
    
	
September 27,   2011
    	
 
    	
7,402,777.75
    	
 
    	
569,444.45
    	
 
    
	
October 27,   2011
    	
 
    	
6,833,333.30
    	
 
    	
569,444.45
    	
 
    
	
November 27,   2011
    	
 
    	
6,263,888.85
    	
 
    	
569,444.45
    	
 
    
	
December 27,   2011
    	
 
    	
5,694,444.40
    	
 
    	
569,444.45
    	
 
    
	
January 27,   2012
    	
 
    	
5,124,999.95
    	
 
    	
569,444.45
    	
 
    
	
February 27,   2012
    	
 
    	
4,555,555.50
    	
 
    	
569,444.45
    	
 
    
	
March 27,   2012
    	
 
    	
3,986,111.05
    	
 
    	
569,444.45
    	
 
    
	
April 27,   2012
    	
 
    	
3,416,666.60
    	
 
    	
569,444.45
    	
 
    
	
May 27,   2012
    	
 
    	
2,847,222.15
    	
 
    	
569,444.45
    	
 
    
	
June 27,   2012
    	
 
    	
2,277,777.70
    	
 
    	
569,444.45
    	
 
    
	
July 27,   2012
    	
 
    	
1,708,333.25
    	
 
    	
569,444.45
    	
 
    
	
August 27,   2012
    	
 
    	
1,138,888.80
    	
 
    	
569,444.45
    	
 
    
	
September 27,   2012
    	
 
    	
569,444.35
    	
 
    	
569,444.45
    	
 
    
	
October 27,   2012
    	
 
    	
0.00
    	
 
    	
569,444.35
    	
 
    

 

 

7.             The definition of Supplemental Deposit Date is hereby added to Section 1.01 of the Indenture:

 

“Supplemental Deposit Date”: May 17, 2011.

 

8.             Section 2.03(a) of the Indenture is hereby deleted and replaced with the following:

 

The Aggregate Note Balance of the Class A Notes that may be authenticated and delivered under this Indenture (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 2.04 and 2.05 below) is $10,250,000. The Final Maturity Date for the Notes is the Payment Date in October 2012.

 

9.             Section 2.15(a) of the Indenture is hereby deleted and replaced with the following:

 

No later than the Closing Date, the Indenture Trustee shall establish and maintain with itself a separate, segregated trust account titled, “Reserve Account, Deutsche Bank National Trust Company, as Indenture Trustee, in trust for the Indenture Trustee, the Owner Trustee and the Noteholders of LVII 2010-R1, Resecuritization Trust Securities, Series 2010-R1”. Upon written instruction by the Depositor, amounts on deposit in the Reserve Account shall be invested and reinvested in Permitted Investments, for the benefit of the Reserve Account. If such amounts are invested in Permitted Investments, any and all investment earnings from any such Permitted Investments shall be for the benefit of the Trust, and the risk of loss of moneys on deposit in the Note Account resulting from such investments shall be borne by the Trust. The Indenture Trustee shall not be liable for the selection of investments that are Permitted Investments or for investment losses incurred thereon and shall have no obligation to invest any funds held in any accounts under the Indenture in the absence of timely written direction. On the Supplemental Deposit Date, the Indenture Trustee shall pay $200,000 from the Reserve Fund to the holders of the Owner Trust Certificates and subsequent to such payment, the amount in the Reserve Fund shall equal the Initial Reserve Account Balance.

 

10.           Section 2.16 is here added to the Indenture:

 

Section 2.16.          Supplemental Deposit Date.

 

On the Supplemental Deposit Date, any proceeds to which the Issuer is entitled shall be paid directly to the holder of the Owner Trust Certificates on behalf of the Issuer. These proceeds will be deemed to have been included in the Trust and used in connection with the cancellation of the existing Note and the issuance of a new Note.

 

11.           Exhibit A of the Exhibits to the Indenture is hereby deleted in its entirety and replaced with the following:

 

 

EXHIBIT A

 

FORM OF NOTE

 

LVII 2010-R1

 

CLASS A NOTES

RESECURITIZATION TRUST NOTES, SERIES 2010-R1

 

	
Note   Rate: 10.00% per annum
    	
 
    	
Aggregate   Note Balance as of the Supplemental Deposit Date: $10,250,000
    
	
 
    	
 
    	
 
    
	
Date   of Indenture: As of November 26, 2010
    	
 
    	
Initial   Note Balance of this Note as of the Supplemental Deposit Date: $[                        ]
    
	
 
    	
 
    	
 
    
	
First   Payment Date: May 27, 2011
    	
 
    	
Final   Maturity Date: October 2012
    
	
 
    	
 
    	
 
    
	
Indenture   Trustee: Deutsche Bank National Trust Company
    	
 
    	
CUSIP:   31681P AB1
    
	
 
    	
 
    	
 
    
	
Issuer:   LVII 2010-R1
    	
 
    	
Owner   Trustee: Wilmington Savings Fund Society, FSB
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Note   No. 1
    

 

 

THIS NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE. ANY RESALE, PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS NOTE OR ANY INTEREST HEREIN WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 2.04 OF THE INDENTURE REFERRED TO HEREIN.

 

NO TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT (“PLAN”) THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR (B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS NOTE OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT.

 

THIS NOTE REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID SOLELY FROM THE COLLATERAL SECURING THIS NOTE. NEITHER THIS NOTE NOR THE COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY OTHER PERSON.

 

PAYMENTS IN REDUCTION OF THE NOTE BALANCE OF THIS NOTE MAY BE MADE MONTHLY AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING NOTE BALANCE HEREOF AT ANY TIME MAYBE LESS THAN THE AMOUNT SHOWN ABOVE.

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

 

This certifies that Cede & Co. is the registered owner (the “Holder”) of this Note which is one of the Notes (collectively, the “Notes”) issued by the Issuer referred to above pursuant to the Indenture, dated as of November 26, 2010, as amended by the Supplemental Indenture No. 1, dated as of May 17, 2011 (together, the “Indenture”), each among the Issuer referred to above and the Indenture Trustee referred to above, on behalf of the holders of the Notes (the “Noteholders”), a summary of certain of the pertinent provisions of which is set forth hereafter. To the extent not defined herein, capitalized terms used herein have the respective meanings assigned in the Indenture. This Note is issued under and is subject to the terms, provisions and conditions of the Indenture, to which Indenture the Holder of this Note by virtue of the acceptance hereof assents and by which such Holder is bound.

 

Pursuant to the terms of the Indenture, payments on the Notes shall be made (1) on any date during which the Notes are outstanding, the second Business Day immediately following the Underlying Distribution Date, and (ii) after the Note Balance on the Notes has been reduced to zero, the same day as the Underlying Distribution Date. All payments made under the Indenture on this Note will be made by the Indenture Trustee by check mailed on or before the Payment Date to the Person entitled thereto at such Person’s address appearing on the Note Register, by wire transfer to such account as such Noteholder shall designate by written instruction received by the Indenture Trustee not later than five business days prior to the Record Date related to the applicable Payment Date). Notwithstanding the foregoing, the final payment on this Note will be made in like manner, but only upon presentation and surrender of this Note at the offices of the Indenture Trustee. Notwithstanding anything herein to the contrary, no payments will be made with respect to a Note that has previously been surrendered as contemplated by the preceding sentence or, with limited exception, that should have been surrendered as contemplated by the preceding sentence.

 

The Notes are limited in right of payment to certain distributions on the Underlying Certificates, all as more specifically set forth herein and in the Indenture. As provided in the Indenture, withdrawals from the Note Account may be made from time to time for purposes other than, and, in certain cases, prior to, payments to Noteholders, such purposes including the reimbursement of certain expenses incurred by the Indenture Trustee under the Indenture.

 

Any payment to the Holder of this Note in reduction of the Note Balance hereof is binding on such Holder and all future Holders of this Note and any Note issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such payment is made upon this Note.

 

The Notes are issuable in fully registered form only without coupons in minimum denominations specified in the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, this Note is exchangeable for new Notes in authorized denominations evidencing the same aggregate Note Balance, as requested by the Holder surrendering the same.

 

 

No transfer, sale, pledge or other disposition of this Note or interest therein shall be made unless that transfer, sale, pledge or other disposition is exempt from the registration and/or qualification requirements of the Securities Act and any applicable state securities laws, or is otherwise made in accordance with the Securities Act and such state securities laws. If a transfer of this Note is to be made without registration under the Securities Act (other than in connection with the initial issuance thereof), then the Note Registrar shall refuse to register such transfer unless it receives (and upon receipt, may conclusively rely upon) a certificate from the Noteholder desiring to effect such transfer substantially in the form attached as Exhibit C-1 to the Indenture and a certificate from such Noteholder’s prospective transferee in the form attached as Exhibit C-2 to the Indenture (which in the case of the Book-Entry Notes, the Noteholder and the Noteholder’s prospective transferee will be deemed to have represented such certification) to the effect that, among other things, the transfer is being made to a transferee that is a QIB in accordance with Rule 144A. None of the Issuer, the Depositor, the Indenture Trustee, the Owner Trustee, the Administrators or the Note Registrar is obligated to register or qualify any Notes under the Securities Act or any other securities law or to take any action not otherwise required under the Indenture to permit the transfer of this Note or interest therein without registration or qualification. Any Noteholder desiring to effect a transfer of this Note or interest therein shall, and does hereby agree to, indemnify the Issuer, the Depositor, the Indenture Trustee, the Owner Trustee, the Administrators and the Note Registrar against any liability that may result if the transfer is not so exempt or is not made in accordance with such federal and state laws.

 

No transfer of this Note or any interest herein to a Plan subject to ERISA or Section 4975 of the Code, any Person acting directly or indirectly, on behalf of any such Plan or any Person using Plan Assets to acquire this Note shall be made.

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register upon surrender of this Note for registration of transfer at the offices of the Note Registrar, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes in authorized denominations evidencing the same aggregate Note Balance will be issued to the designated transferee or transferees.

 

No service charge will be imposed for any registration of transfer or exchange of this Note, but the Owner Trustee, the Indenture Trustee or the Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of this Note.

 

The Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Note Registrar and any agent thereof may treat the Person in whose name this Note is registered as the owner hereof for all purposes, and none of the Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Note Registrar or any such agent shall be affected by notice to the contrary.

 

The Indenture will be discharged (except with respect to certain continuing rights specified in the Indenture) (a)(l) upon the delivery to the Note Registrar for cancellation of all of the Notes other than Notes which have been mutilated, lost or stolen and have been replaced or paid and Notes for which money has been deposited in trust for the full payment thereof (and

 

 

thereafter repaid to the Issuer and discharged from such trust) as provided in the Indenture or (2) at such time as all Notes not previously canceled by the Note Registrar have become, or, on the next Payment Date, will become, due and payable and the Issuer shall have deposited with the Indenture Trustee an amount sufficient to repay all of the Notes and (b) the Issuer shall have paid all other amounts payable under the Indenture.

 

Modifications of and amendments to the Indenture may be made by the Owner Trustee on behalf of the Issuer and the Indenture Trustee with the consent of the Noteholders of not less than 66-2/3% in aggregate Note Balance (not including any Notes known by the Indenture Trustee to be held by the Issuer or any affiliates thereof); provided that no such modification or amendment may, without the consent of the Noteholder of each outstanding Note affected thereby, among other things, (i) change the Final Maturity Date or the Payment Date of any principal, interest or other amount on any Note, or reduce the Note Balance thereof or the Note Rate thereon, or authorize the Indenture Trustee to agree to delay the timing of, or reduce the payments to be made on, the Underlying Certificates except as provided herein, or change the coin or currency in which the principal of any Note or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Final Maturity Date thereof; (ii) reduce the percentage of the then Aggregate Note Balance of the Outstanding Notes, the consent of whose Noteholders is required for any such supplemental indenture, or the consent of whose Noteholders is required for any waiver of defaults hereunder and their consequences provided for in this Indenture, or for any other reason under this Indenture (including for actions taken by the Indenture Trustee pursuant to Section 5.01 (a) of the Indenture); (iii) change any obligation of the Issuer to maintain an office or agency in the places and for the purposes specified in Section 9.01 of the Indenture; (iv) except as otherwise expressly provided in this Indenture, deprive any Noteholder of the benefit of a first priority security interest in the Trust Estate as provided in this Indenture; (v) modify Section 2.09 or Section 9.06 of the Indenture; or (vi) release from the lien of the Indenture (except as specifically permitted hereby on the date of execution hereof) all or any part of any Trust Estate.

 

Unless the certificate of authentication hereon has been executed by the Note Registrar, by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid for any purpose.

 

The registered Holder hereof, by its acceptance hereof, agrees that it will look solely to the Trust Estate (to the extent of its rights therein) for payments hereunder.

 

This Note shall be construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed in said State, and the obligations, rights and remedies of the Holder hereof shall be determined in accordance with such laws.

 

 

IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed by Wilmington Savings Fund Society, FSB, not in its individual capacity but solely as Owner Trustee.

 

	
Dated: May       , 2011
    	
 
    
	
 
    	
 
    
	
 
    	
LVII   2010-R1
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   Wilmington Savings Fund Society, FSB, not in its individual capacity but   solely in its capacity as Owner Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Authorized   Signatory
    

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Notes referred to in the within-mentioned Indenture.

 

	
Dated: May       , 2011
    	
 
    
	
 
    	
 
    
	
 
    	
DEUTSCHE   BANK NATIONAL TRUST COMPANY
    
	
 
    	
as   Note Registrar
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Authorized   Officer
    

 

 

12.           Conditions Precedent to this Amendment. The following conditions precedent to the effectiveness of this Amendment have been fulfilled:

 

(a)           This Amendment shall also constitute the Issuer Request therefor required by Section 5.01 of the Indenture, the receipt of which is hereby acknowledged by the Indenture Trustee, and the Issuer reaffirms its representations in Section 9.04(a) with respect to the new Notes being issued pursuant to this Amendment.

 

(b)           This Amendment shall also constitute the written instruction from the Certificateholders required by Section 4.03 (a) of the Trust Agreement, the receipt of which is hereby acknowledged by the Owner Trustee.

 

(c)           The opinions of counsel required by Section 8.04 of the Indenture have been received by the Indenture Trustee.

 

(d)           On or prior to the Supplemental Deposit Date, the existing Class A Note, dated November 26, 2010 (CUSIP 31681P AA3) has been delivered to the Note Registrar and cancelled by the Note Registrar pursuant to Section 2.12 of the Indenture.

 

13.           This Amendment is subject to the terms of the indenture as modified and supplemented herein. The indenture continues in full force and effect as modified herein and provided therein.

 

14.           The statements contained in this Amendment are to be taken as that of the Issuer and the Initial Purchaser, and the Indenture Trustee assumes no responsibility for their correctness. The Indenture Trustee makes no representation as to the validity or sufficiency of this Amendment (except as may be made with respect to the validity of the Indenture Trustee’s obligations hereunder) and in entering into this Amendment, the Indenture Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct of or affecting the liability of or affording protection to the Indenture Trustee.

 

15.           It is expressly understood and agreed by the parties hereto that (a) this Amendment is executed and delivered by Wilmington Savings Fund Society, FSB, not individually or personally, but solely as Owner Trustee of LVII 2010-R1, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Savings Fund Society, FSB but is made and intended for the purpose for binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Savings Fund Society, FSB, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto and (d) under no circumstances shall Wilmington Savings Fund Society, FSB be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Amendment or any other related documents.

 

 

The undersigned have executed this Amendment as of the date hereof.

 

	
 
    	
LVII 2010-R1,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: Wilmington Savings Fund Society, FSB,   not in its individual capacity but solely as Owner Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Raye D. Goldsborough
    
	
 
    	
Name:
    	
Raye D. Goldsborough
    
	
 
    	
Title:
    	
Assistant Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DEUTSCHE BANK NATIONAL TRUST COMPANY, not   in its individual capacity but solely as Indenture Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Karlene Benvenuto
    
	
 
    	
Name:
    	
Karlene Benvenuto
    
	
 
    	
Title:
    	
Authorized Signer
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mei Nghia
    
	
 
    	
Name:
    	
Mei Nghia
    
	
 
    	
Title:
    	
Authorized Signer
    

 

 

CERTIFICATION AND CONSENT

 

The undersigned, Impac Mortgage Holdings, Inc. and Guggenheim Securities, LLC, as 100% Certificateholder and as Noteholder of 100% of the beneficial interest in the Aggregate Note Balance of the Outstanding Notes, respectively, each hereby represents and warrants that prior to the Effective Date and as of the Effective Date (i) it is the sole Certificateholder or sole Noteholder, as applicable, of the Notes or Certificates, as applicable, described below, (ii) it is duly authorized to deliver this Certification and Consent to the Indenture Trustee, (iii) that such power has not been granted or assigned to any other Person, (iv) each of them consents to the entering into this Amendment by the Issuer and Indenture Trustee and hereby directs the Issuer and the Indenture Trustee to execute and deliver this Amendment, and (v) the Indenture Trustee may conclusively rely upon this Certification and Consent for all such purposes.

 

 

	
IMPAC MORTGAGE HOLDINGS, INC.,
    	
 
    
	
as 100% Certificateholder
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ [ILLEGIBLE]
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

 

GUGGENHEIM SECURITIES, LLC,

as Noteholder of 100% of the beneficial interest in the Aggregate Note Balance of the Outstanding Notes (including the existing Note and the new Note)

 

 

	
By:
    	
/s/ Kevin Richmond
    	
 
    
	
Name:
    	
Kevin Richmond
    	
 
    
	
Title:
    	
Vice President

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