Exhibit 10.40
EXECUTION COPY
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
Depositor,
ABFS 1998-2, INC.,
Unaffiliated Seller
and
AMERICAN BUSINESS CREDIT, INC.
HOMEAMERICAN CREDIT, INC., D/B/A UPLAND MORTGAGE, and
NEW JERSEY MORTGAGE INVESTMENT CORP.
Originators
---------------------------
UNAFFILIATED SELLER'S AGREEMENT
Dated as of June 1, 1998
TABLE OF CONTENTS
Page
ARTICLE ONE DEFINITIONS...........................................................................3
Section 1.01. Definitions...........................................................................3
ARTICLE TWO PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS.......................................6
Section 2.01. Agreement to Purchase the Initial Mortgage Loans......................................6
Section 2.02. Agreement to Purchase the Subsequent Mortgage Loans...................................6
Section 2.03. Purchase Price........................................................................8
Section 2.04. Conveyance of Mortgage Loans; Possession of Mortgage Files............................8
Section 2.05. Delivery of Mortgage Loan Documents...................................................9
Section 2.06. Acceptance of Mortgage Loans.........................................................11
Section 2.07. Transfer of Mortgage Loans; Assignment of Agreement..................................12
Section 2.08. Examination of Mortgage Files........................................................12
Section 2.09. Books and Records....................................................................13
Section 2.10. Cost of Delivery and Recordation of Documents........................................13
ARTICLE THREE REPRESENTATIONS AND WARRANTIES.......................................................13
Section 3.01. Representations and Warranties as to the Originators.................................13
Section 3.02. Representations and Warranties as to the Unaffiliated Seller.........................15
Section 3.03. Representations and Warranties Relating to the Mortgage Loans........................17
Section 3.04. Representations and Warranties of the Depositor......................................25
Section 3.05. Repurchase Obligation for Defective Documentation and for Breach of a Representation
or Warranty..........................................................................26
ARTICLE FOUR THE UNAFFILIATED SELLER..............................................................28
Section 4.01. Covenants of the Originators and the Unaffiliated Seller.............................28
Section 4.02. Merger or Consolidation..............................................................29
Section 4.03. Costs................................................................................29
Section 4.04. Indemnification......................................................................29
ARTICLE FIVE CONDITIONS OF CLOSING................................................................31
Section 5.01. Conditions of Depositor's Obligations................................................31
Section 5.02. Conditions of Unaffiliated Seller's Obligations......................................33
Section 5.03. Termination of Depositor's Obligations...............................................34
ARTICLE SIX MISCELLANEOUS........................................................................34
Section 6.01. Notices..............................................................................34
Section 6.02. Severability of Provisions...........................................................34
Section 6.03. Agreement of Unaffiliated Seller.....................................................35
Section 6.04. Survival.............................................................................35
Section 6.05. Effect of Headings and Table of Contents.............................................35
Section 6.06. Successors and Assigns...............................................................35
Section 6.07. Confirmation of Intent; Grant of Security Interest...................................35
Section 6.08. Miscellaneous........................................................................36
Section 6.09. Amendments...........................................................................36
Section 6.10. Third-Party Beneficiaries............................................................36
Section 6.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.........................37
Section 6.12. Execution in Counterparts............................................................37
Exhibit A - Mortgage Loan Schedule
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THIS UNAFFILIATED SELLER'S AGREEMENT, dated as of June 1,
1998, by and among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a
Delaware corporation, its successors and assigns (the "Depositor"), ABFS
1998-2, INC., a Delaware corporation and its successors (the "Unaffiliated
Seller"), AMERICAN BUSINESS CREDIT, INC., a Pennsylvania corporation ("ABC"),
HOMEAMERICAN CREDIT, INC. D/B/A UPLAND MORTGAGE, a Pennsylvania corporation
("Upland") and NEW JERSEY MORTGAGE INVESTMENT CORP., a New Jersey corporation
("NJMIC", and together with ABC and Upland, the "Originators").
WHEREAS, Exhibit A attached hereto and made a part hereof
lists certain fixed rate business and consumer purpose first and second lien
mortgage loans (the "Mortgage Loans") owned by the Originators that the
Originators desire to sell to the Unaffiliated Seller and the Unaffiliated
Seller desires to sell to the Depositor and that the Depositor desires to
purchase;
WHEREAS, it is the intention of the Originators, the
Unaffiliated Seller and the Depositor that simultaneously with the
Originators' conveyance of the Mortgage Loans to the Unaffiliated Seller and
the Unaffiliated Seller's conveyance of the Mortgage Loans to the Depositor on
the Closing Date, (a) the Depositor shall deposit the Mortgage Loans in a
trust pursuant to a Pooling and Servicing Agreement to be dated as of June 1,
1998 (the "Pooling and Servicing Agreement"), to be entered into by and among
the Depositor, as depositor, American Business Credit, Inc., as servicer (in
such capacity, the "Servicer") and The Chase Manhattan Bank, as trustee (the
"Trustee") and (b) the Trustee shall issue certificates evidencing beneficial
ownership interests in the property of the trust fund formed by the Pooling
and Servicing Agreement to the Depositor;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article:
"Accepted Servicing Practices" means the Servicer's normal
servicing practices, which in general will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service for their own
account mortgage loans of the same type as the Mortgage Loans in the
jurisdictions in which the related Mortgaged Properties are located.
"Agreement" means this Unaffiliated Seller's Agreement, as
amended or supplemented in accordance with the provisions hereof.
"Appraised Value" means the appraised value of the Mortgaged
Property based upon the appraisal made by or on behalf of the Originators.
"Certificate Insurer" means Financial Security Assurance
Inc., a stock insurance company organized and created under the laws of the
State of New York, and any successors thereto.
"Closing Date" shall have the meaning ascribed thereto in
Section 2.01(c).
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"Commission" means the Securities and Exchange Commission.
"Cut-Off Date" means, with respect to the Initial Mortgage
Loans, the Initial Cut-Off Date, and with respect to the Subsequent Mortgage
Loans, the Subsequent Cut-Off Date.
"Cut-Off Date Aggregate Principal Balance" means the
aggregate unpaid principal balance of the Initial Mortgage Loans as of the
Cut-Off Date (or, with respect to Initial Mortgage Loans which were originated
after the Cut-Off Date, as of the date of origination). The Cut-Off Date
Aggregate Principal Balance is $99,404,106.67.
"Cut-Off Date Principal Balance" means as to each Mortgage
Loan, its unpaid principal balance as of the Cut-Off Date (or, with respect to
Initial Mortgage Loans which were originated after the Cut-Off Date, as of the
date of origination).
"Deleted Mortgage Loan" means a Mortgage Loan replaced by or
to be replaced by a Qualified Substitute Mortgage Loan pursuant to the terms
of the Pooling and Servicing Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Initial Cut-Off Date" means the close of business on May
31, 1998 or, with respect to Initial Mortgage Loans originated after May 31,
1998, the date of origination of such Initial Mortgage Loans.
"Initial Mortgage Loans" means the Mortgage Loans
transferred and assigned to the Depositor on the Closing Date.
"Monthly Payment" means, as to any Mortgage Loan (including
any REO Mortgage Loan) and any Due Date, the payment of principal and interest
due thereon in accordance with the amortization schedule at the time
applicable thereto (after adjustment for any Curtailments and Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than Deficient
Valuations or similar proceeding or any moratorium or similar waiver or grace
period).
"Mortgage" means the mortgage or deed of trust creating a
first or second lien on an estate in fee simple in real property, and securing
a Mortgage Note, as amended or modified.
"Mortgage Interest Rate" means, as to any Mortgage Loan, the
fixed per annum rate at which interest accrues on the unpaid principal balance
thereof.
"Mortgage Loans" means such of the mortgage loans to be
sold, transferred and assigned to the Depositor on the Closing Date and each
Subsequent Transfer Date pursuant to Article Two hereof (including the related
Mortgage Notes and related Mortgages), all as identified in the Mortgage Loan
Schedule, and including any mortgage loan substituting or replacing a Mortgage
Loan pursuant to the terms of the Pooling and Servicing Agreement.
"Mortgage Loan Schedule" shall have the meaning ascribed
thereto in Section 2.01(b).
"Mortgage Note" means the note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
as amended or modified.
"Mortgaged Property" means the property subject to a Mortgage.
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"Mortgagor" means the obligor on a Mortgage Note.
"Pooling and Servicing Agreement" shall have the meaning
ascribed thereto in the recitals hereof.
"Prospectus" means the Prospectus dated June 10, 1997
relating to the offering by the Depositor from time to time of its
Pass-Through Certificates (Issuable in Series) in the form in which it was or
will be filed with the Securities Exchange Commission pursuant to Rule 424(b)
under the Securities Act with respect to the offer and sale of the
Certificates.
"Prospectus Supplement" means the Prospectus Supplement
dated June 2, 1998, relating to the offering of the Certificates in the form
in which it was or will be filed with the Commission pursuant to Rule 424(b)
under the Securities Act with respect to the offer and sale of the
Certificates.
"Qualified Appraiser" means an appraiser, duly appointed by
the Unaffiliated Seller, who had no interest, direct or indirect, in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan, and such appraiser and the appraisal made by such appraiser both satisfy
the requirements of Title XI of the Federal Institutions Reform, Recovery and
Enforcement Act of 1989 and the regulations promulgated thereunder, all as in
effect on the date the Mortgage Loan was originated.
"Registration Statement" means that certain registration
statement on Form S-3, as amended (Registration No. 333-27355) relating to the
offering by the Depositor from time to time of its Pass-Through Certificates
(Issuable in Series) as heretofore declared effective by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsequent Cut-Off Date" means the date specified in the
Addition Notice relating to Subsequent Mortgage Loans.
"Subsequent Mortgage Loans" means the Mortgage Loans
hereafter transferred and assigned to the Depositor on a Subsequent Transfer
Date.
"Termination Event" means the existence of any one or more of
the following conditions:
(a) a stop order suspending the effectiveness of the
Registration Statement shall have been issued or a proceeding for that
purpose shall have been initiated or threatened by the Commission; or
(b) subsequent to the execution and delivery of this
Agreement, a downgrading, or public notification of a possible change,
without indication of direction, shall have occurred in the rating
afforded any of the debt securities or claims paying ability of any
person providing any form of credit enhancement for any of the
Certificates, by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes
of Rule 436(g)(2) under the Securities Act; or
(c) subsequent to the execution and delivery of this
Agreement, there shall have occurred an adverse change in the
condition, financial or otherwise, earnings, affairs,
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regulatory situation or business prospects of the Certificate Insurer or
the Unaffiliated Seller reasonably determined by the Depositor to be
material; or
(d) subsequent to the date of this Agreement there shall
have occurred any of the following: (i) a suspension or material
limitation in trading in securities substantially similar to the
Certificates; (ii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State
authorities; or (iii) the engagement by the United States in
hostilities, or the escalation of such hostilities, or any calamity or
crisis, if the effect of any such event specified in this clause (iii)
in the reasonable judgment of the Depositor makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Certificates on the terms and in the manner contemplated in the
Prospectus Supplement.
"Unaffiliated Seller" means ABFS 1998-2, Inc., in its
capacity as Unaffiliated Seller of the Mortgage Loans under this Agreement and
any successor to ABFS 1998-2, Inc., whether through merger, consolidation,
purchase and assumption of ABFS 1998-2, Inc. or all or substantially all of
its assets or otherwise.
Capitalized terms used herein that are not otherwise defined
shall have the respective meanings ascribed thereto in the Pooling and
Servicing Agreement.
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Agreement to Purchase the Initial Mortgage
Loans. (a) (a) Subject to the terms and conditions of this Agreement, the
Originators agree to sell, and the Unaffiliated Seller agrees to purchase on
the Closing Date and immediately subsequent thereto, the Unaffiliated Seller
agrees to sell, and the Depositor agrees to purchase, the Mortgage Loans
having the Cut-Off Date Aggregate Principal Balance or, in accordance with
Section 2.08 hereof, such other balance as is evidenced by the actual Cut-Off
Date Aggregate Principal Balance of the Mortgage Loans accepted by the
Depositor on the Closing Date and listed in the Mortgage Loan Schedule.
(b) Subject to Section 2.08 hereof, the Depositor and the
Unaffiliated Seller have agreed upon which of the Unaffiliated Seller's
Mortgage Loans are to be purchased by the Depositor on the Closing Date
pursuant to this Agreement, and the Unaffiliated Seller has prepared a
schedule describing the Mortgage Loans (the "Mortgage Loan Schedule") setting
forth all of the Mortgage Loans to be purchased under this Agreement, which
schedule is attached hereto as Exhibit A. The Mortgage Loan Schedule shall
conform to the requirements of the Depositor and to the definition of
"Mortgage Loan Schedule" under the Pooling and Servicing Agreement.
(c) The closing for the purchase and sale of the Mortgage
Loans shall take place at the offices of Xxxxx Xxxxxxxxxx, New York, New York,
at 10:00 a.m., New York time, on June 18, 1998 or such other place and time as
the parties shall agree (such time being herein referred to as the "Closing
Date").
Section 2.02. Agreement to Purchase the Subsequent Mortgage
Loans. (a) Subject to the terms and conditions of this Agreement, the
Originators agree to sell, and the Unaffiliated Seller agrees to purchase on
the each Subsequent Transfer Date and immediately subsequent thereto, the
Unaffiliated Seller agrees to sell, and the Depositor agrees to purchase,
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Subsequent Mortgage Loans, having an Aggregate Principal Balance of up to
$20,595,893.33 as listed in the Mortgage Loan Schedule attached to the related
Addition Notice.
(b) Subject to Section 2.08 herein, the Mortgage Loans that
are to be purchased by the Depositor on a Subsequent Transfer Date pursuant to
this Agreement will be set forth on a Mortgage Loan Schedule to be attached to
the related Addition Notice.
(c) Subject to the satisfaction of the conditions set forth
in paragraph (d) below, (i) in consideration of the Unaffiliated Seller's
delivery on the related Subsequent Transfer Dates to or upon the order of the
Originators of the purchase price, the Originators shall on any Subsequent
Transfer Date sell, transfer, assign, set over and convey to the Trustee
without recourse but subject to terms and provisions of this Agreement, all of
the right, title and interest of the Originators in and to the Subsequent
Mortgage Loans, including all principal outstanding as of, and all interest
due after, the Subsequent Cut-Off Date, and all other assets included or to be
included in the Trust Fund for the benefit of the Certificateholders and the
Certificate Insurer and (ii) in consideration of the Depositor's delivery on
the related Subsequent Transfer Dates to or upon the order of the Unaffiliated
Seller of the purchase price, the Unaffiliated Seller shall on any Subsequent
Transfer Date sell, transfer, assign, set over and convey to the Trustee
without recourse but subject to terms and provisions of this Agreement, all of
the right, title and interest of the Originators in and to the Subsequent
Mortgage Loans, including all principal outstanding as of, and all interest
due after, the Subsequent Cut-Off Date, and all other assets included or to be
included in the Trust Fund for the benefit of the Certificateholders.
(d) The Subsequent Mortgage Loans and the other property and
rights related thereto described in paragraph (c) above shall be transferred
by the Depositor to the Trust only upon the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Unaffiliated Seller shall have provided the
Trustee, the Rating Agencies and the Certificate Insurer with a timely
Addition Notice, which shall include a Mortgage Loan Schedule listing
the Subsequent Mortgage Loans and shall have provided any other
information reasonably requested by any of the foregoing with respect
to the Subsequent Mortgage Loans;
(ii) the Unaffiliated Seller shall have deposited in the
Collection Account all collections of (x) principal in respect of the
Subsequent Mortgage Loans received after the related Subsequent
Cut-Off Date and (y) interest due on the Subsequent Mortgage Loans
after the related Subsequent Cut-Off Date;
(iii) as of each Subsequent Transfer Date, the Depositor
was not insolvent nor will be made insolvent by such transfer nor is
the Depositor aware of any pending insolvency;
(iv) such addition will not result in a material adverse
tax consequence to the Trust or the Holders of the Certificates;
(v) the Pre-Funding Period shall not have terminated;
(vi) the Unaffiliated Seller shall have delivered to the
Trustee an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (d) and that the
Subsequent Mortgage Loans comply with the provisions of Section
3.03(af) hereof and Section 2.03(c) of the Pooling and Servicing
Agreement;
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(vii) there shall have been delivered to the Certificate
Insurer, the Rating Agencies and the Trustee, independent Opinions of
Counsel with respect to the transfer of the Subsequent Mortgage Loans
substantially in the form of the Opinions of Counsel delivered to the
Certificate Insurer and the Trustee on the Startup Date (bankruptcy,
corporate and tax opinions); and
(viii) the Originators, the Seller and the Depositor
shall have delivered to the Trustee an executed subsequent transfer
agreement substantially in the form of Exhibit L to the Pooling and
Servicing Agreement.
(e) The obligation of the Depositor to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the requirements
set forth in Section 2.03(c) of the Pooling and Servicing Agreement.
Section 2.03. Purchase Price. (a) On the Closing Date, as
full consideration for the Unaffiliated Seller's sale of the Initial Mortgage
Loans to the Depositor, the Depositor will deliver to the Unaffiliated Seller
(i) an amount in cash equal to the sum of (A) 99.65%, 99.65%, 99.65%, 99.65%,
99.65% and 99.65% of the aggregate principal balance as of the Closing Date of
the Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, and Class A-6
Certificates, respectively, and (B) accrued interest on such principal balance
at the rate of 6.285%, 6.340%, 6.490%, 6.850% and 6.455% per annum, on the
Class X-0, Xxxxx X-0, Class A-4, Class A-5 and Class A-6 Certificates,
respectively, from (and including) June 1, 1998 to (but not including) June
18, 1998, payable by wire transfer of same day funds and (ii) the Class R
Certificates to be issued pursuant to the Pooling and Servicing Agreement.
On the Closing Date, as full consideration for the
Originators' sale of the Initial Mortgage Loans to the Unaffiliated Seller,
the Unaffiliated Seller will deliver to the Originators an amount in cash
equal to the sum of (A) 99.65%, 99.65%, 99.65%, 99.65%, 99.65% and 99.65% of
the aggregate principal balance as of the Closing Date of the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5 and Class A-6 Certificates, respectively,
and (B) accrued interest on such principal balance at the rate 6.285%, 6.340%,
6.490%, 6.850% and 6.455% per annum, on the Class X-0, Xxxxx X-0, Class A-4,
Class A-5 and Class A-6 Certificates, respectively, from (and including) June
1, 1998 to (but not including) June 18, 1998, payable by wire transfer of same
day funds.
(b) On each Subsequent Transfer Date, as full consideration
for the Originators' sale to the Unaffiliated Seller and the Unaffiliated
Seller's sale of the Subsequent Mortgage Loans to the Depositor, the Depositor
will deliver to the Unaffiliated Seller and the Unaffiliated Seller will
deliver to the Originators an amount in cash equal to the sum of 100% of the
aggregate Principal Balance of the Subsequent Mortgage Loans as of the related
Subsequent Cut-Off Date.
Section 2.04. Conveyance of Mortgage Loans; Possession of
Mortgage Files. (a) On the Closing Date and on each Subsequent Transfer Date,
the Originators shall sell, transfer, assign, set over and convey to the
Unaffiliated Seller, without recourse but subject to the terms of this
Agreement, all right, title and interest in and to the applicable Mortgage
Loans, including all principal outstanding as of, and all interest due after,
the Subsequent Cut-Off Date, the insurance policies relating to each such
Mortgage Loan and all right, title and interest in and to the proceeds of such
insurance policies from and after the Closing Date and the Unaffiliated Seller
shall sell, transfer, assign, set over and convey to the Depositor, without
recourse but subject to the terms of this Agreement, all right, title and
interest in and to the applicable Mortgage Loans, including all principal
outstanding as of, and all interest due after, the Subsequent Cut-Off Date,
the insurance policies relating to each such Mortgage Loan, all right,
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title and interest in and to the proceeds of such insurance policies and all
of its rights under this Agreement with respect to the Mortgage Loans from and
after the Closing Date. Upon payment of the purchase price for such Mortgage
Loans as provided in Section 2.03 of this Agreement, the Originators and the
Unaffiliated Seller shall have hereby, and shall be deemed to have, sold,
transferred, assigned, set over and conveyed such Mortgage Loans, the
insurance policies relating to each such Mortgage Loan, all right, title and
interest in and to the proceeds of such insurance policies and all of its
rights under this Agreement with respect to the Mortgage Loans from and after
the Closing Date.
(b) Upon the sale of such Mortgage Loans, the ownership of
each related Mortgage Note, each related Mortgage and the contents of the
related Mortgage File shall immediately vest in the Depositor and the
ownership of all related records and documents with respect to each Mortgage
Loan prepared by or which come into the possession of the Originators or the
Unaffiliated Seller shall immediately vest in the Depositor. The contents of
any Mortgage File in the possession of the Originators or the Unaffiliated
Seller at any time after such sale, and any principal collected and interest
due on the Mortgage Loans after the Cut-Off Date and received by the
Originators or the Unaffiliated Seller, shall be held in trust by the
Originators or the Unaffiliated Seller for the benefit of the Depositor as the
owner thereof, and shall be promptly delivered by the Originators or the
Unaffiliated Seller to or upon the order of the Depositor.
(c) Pursuant to the Pooling and Servicing Agreement, the
Depositor shall, on the Closing Date, assign all of its right, title and
interest in and to the applicable Mortgage Loans to the Trustee for the
benefit of the Certificateholders and the Certificate Insurer.
Section 2.05. Delivery of Mortgage Loan Documents. (a) On or
prior to the Closing Date or Subsequent Transfer Date, as applicable, the
related Originator shall deliver to the Unaffiliated Seller, and the
Unaffiliated Seller shall deliver to the Trustee (as assignee of the Depositor
pursuant to the Pooling and Servicing Agreement), each of the following
documents for each applicable Mortgage Loan:
(i) The original Mortgage Note, endorsed without
recourse in blank by the related Originator, including all intervening
endorsements showing a complete chain of endorsement;
(ii) The related original Mortgage with evidence of
recording indicated thereon or a copy thereof certified by the
applicable recording office;
(iii) The recorded mortgage assignment, or copy thereof
certified by the applicable recording office, if any, showing a
complete chain of assignment from the originator of the related
Mortgage Loan to the related Originator (which assignment may, at the
related Originator's option, be combined with the assignment referred
to in subpart (iv) hereof);
(iv) A mortgage assignment in recordable form (which, if
acceptable for recording in the relevant jurisdiction, may be included
in a blanket assignment or assignments) of each Mortgage from the
related Originator to the Trustee;
(v) Originals of all assumption, modification and
substitution agreements in those instances where the terms or
provisions of a Mortgage or Mortgage Note have been modified or such
Mortgage or Mortgage Note has been assumed; and
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(vi) An original policy of title insurance (or (A) a
copy of the title insurance policy, or (B) a binder thereof or copy of
such binder, together with a certificate from the related Originator
that the original Mortgage has been delivered to the title insurance
company that issued such binder for recordation).
In instances where the original recorded Mortgage and a
completed assignment thereof in recordable form cannot be delivered by the
related Originator to the Unaffiliated Seller, and by the Unaffiliated Seller
to the Trustee prior to or concurrently with the execution and delivery of
this Agreement (or, with respect to Subsequent Mortgage Loans, prior to or on
the Subsequent Transfer Date), due to a delay in connection with recording,
the related Originator may:
(x) In lieu of delivering such original recorded
Mortgage, deliver to the Trustee a copy thereof provided that the
related Originator certifies that the original Mortgage has been
delivered to a title insurance company for recordation after receipt
of its policy of title insurance or binder therefor; and
(y) In lieu of delivering the completed assignment in
recordable form, deliver to the Trustee the assignment in recordable
form, otherwise complete except for recording information.
(b) Pursuant to the Pooling and Servicing Agreement, the
Unaffiliated Seller shall be required to promptly submit, or cause to be
submitted by the related Originator, for recording in the appropriate public
office for real property records, each assignment referred to in (a) above.
The Trustee shall be required to retain a copy of each assignment submitted
for recording. In the event that any such assignment is lost or returned
unrecorded because of a defect therein, the Unaffiliated Seller or such
Originator shall promptly prepare a substitute assignment or cure such defect,
as the case may be, and thereafter the Unaffiliated Seller or such Originator
shall be required to submit each such assignment for recording.
(c) The Unaffiliated Seller or the related Originator shall,
within five Business Days after the receipt thereof, deliver or cause to be
delivered to the Trustee (as assignee of the Depositor pursuant to the Pooling
and Servicing Agreement): (i) the original recorded Mortgage and related power
of attorney, if any, in those instances where a copy thereof certified by the
related Originator was delivered to the Trustee (as assignee of the Depositor
pursuant to the Pooling and Servicing Agreement); (ii) the original recorded
assignment of Mortgage from the related Originator to the Trustee (as assignee
of the Depositor pursuant to the Pooling and Servicing Agreement), which,
together with any intervening assignments of Mortgage, evidences a complete
chain of assignment from the originator of the Mortgage Loan to the Trustee in
those instances where copies of such assignments certified by the related
Originator were delivered to the Trustee (as assignee of the Depositor
pursuant to the Pooling and Servicing Agreement); and (iii) the title
insurance policy or title opinion required in clause (a)(vi) above.
Notwithstanding anything to the contrary contained in this Section 2.05, in
those instances where the public recording office retains the original
Mortgage, power of attorney, if any, assignment or assignment of Mortgage
after it has been recorded or such original has been lost, the Unaffiliated
Seller or the related Originator shall be deemed to have satisfied its
obligations hereunder upon delivery to the Trustee (as assignee of the
Depositor pursuant to the Pooling and Servicing Agreement) of a copy of such
Mortgage, power of attorney, if any, assignment or assignment of Mortgage
certified by the public recording office to be a true copy of the recorded
original thereof. From time to time the Unaffiliated Seller or the related
Originator may forward or cause to be forwarded to the Trustee (as assignee of
the Depositor pursuant to the Pooling and Servicing Agreement) additional
original documents evidencing an assumption or modification of a Mortgage
Loan.
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(d) All original documents relating to the Mortgage Loans
that are not delivered to the Trustee (as assignee of the Depositor pursuant
to the Pooling and Servicing Agreement) as permitted by Section 2.05 (a) are
and shall be held by the Unaffiliated Seller or the related Originator in
trust for the benefit of the Trustee on behalf of the Certificateholders and
the Certificate Insurer. In the event that any such original document is
required pursuant to the terms of this Section 2.05 to be a part of a Mortgage
File, such document shall be delivered promptly to the Trustee (as assignee of
the Depositor pursuant to the Pooling and Servicing Agreement). From and after
the sale of the Mortgage Loans to the Depositor pursuant hereto, to the extent
that the Unaffiliated Seller or the related Originator retains legal title of
record to any Mortgage Loans prior to the vesting of legal title in the
Trustee (as assignee of the Depositor pursuant to the Pooling and Servicing
Agreement), such title shall be retained in trust for the Depositor as the
owner of the Mortgage Loans and the Trustee, as the Depositor's assignee.
Section 2.06. Acceptance of Mortgage Loans. (a) Pursuant to
the Pooling and Servicing Agreement, the Trustee has agreed to execute and
deliver on or prior to the Closing Date, or any Subsequent Transfer Date, an
acknowledgment of receipt of, for each Mortgage Loan, the original Mortgage
Note with respect to each Mortgage Loan (with any exceptions noted), in the
form attached as Exhibit E to the Pooling and Servicing Agreement and declares
that it will hold such documents and any amendments, replacements or
supplements thereto, as well as any other assets included in the definition of
Trust Fund in the Pooling and Servicing Agreement and delivered to the
Trustee, as Trustee in trust upon and subject to the conditions set forth in
the Pooling and Servicing Agreement for the benefit of the Certificateholders
and the Certificate Insurer. Pursuant to the Pooling and Servicing Agreement,
the Trustee has agreed, for the benefit of the Certificateholders and the
Certificate Insurer, to review (or cause to be reviewed) each Trustee's
Mortgage File within 30 days after the Closing Date or the Subsequent Transfer
Date, as applicable (or, with respect to any Qualified Substitute Mortgage
Loan, within 30 days after the receipt by the Trustee thereof), and to deliver
to the Unaffiliated Seller, the Servicer and the Certificate Insurer a
certification in the form attached to the Pooling and Servicing Agreement as
Exhibit F to the effect that, as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to it pursuant to
the Pooling and Servicing Agreement are in its possession, (ii) each such
document has been reviewed by it and has not been mutilated, damaged, torn or
otherwise physically altered (handwritten additions, changes or corrections
shall not constitute physical alteration if initialed by the Mortgagor),
appears regular on its face and relates to such Mortgage Loan, and (iii) based
on its examination and only as to the foregoing documents, the information set
forth on the Mortgage Loan Schedule accurately reflects the information set
forth in the Trustee's Mortgage File delivered on such date. Pursuant to the
Pooling and Servicing Agreement, the Trustee shall be under no duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable,
or appropriate for the represented purpose or that they are other than what
they purport to be on their face. Pursuant to the Pooling and Servicing
Agreement, within 90 days of the Closing Date, with respect to the Initial
Mortgage Loans, and within 90 days of the Subsequent Transfer Date, with
respect to any related Subsequent Mortgage Loans, the Trustee shall be
required to deliver (or cause to be delivered) to the Servicer, the
Unaffiliated Seller, the initial Certificateholders and the Certificate
Insurer a final certification in the form attached to the Pooling and
Servicing Agreement as Exhibit G to the effect that, as to each Mortgage Loan
listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in such certification as not
covered by such
11
certification), (i) all documents required to be delivered to it pursuant to
the Pooling and Servicing Agreement are in its possession, (ii) each such
document has been reviewed by it and has not been mutilated, damaged, torn or
otherwise physically altered (handwritten additions, changes or corrections
shall not constitute physical alteration if initialed by the Mortgagor),
appears regular on its face and relates to such Mortgage Loan, and (iii) based
on its examination and only as to the foregoing documents, the information set
forth on the Mortgage Loan Schedule accurately reflects the information set
forth in the Trustee's Mortgage File delivered on such date.
(b) The Pooling and Servicing Agreement provides that, if
the Trustee during the process of reviewing the Trustee's Mortgage Files finds
any document constituting a part of a Trustee's Mortgage File which is not
executed, has not been received, is unrelated to the Mortgage Loan identified
in the Mortgage Loan Schedule, or does not conform to the requirements of
Section 2.05 or the description thereof as set forth in the Mortgage Loan
Schedule, the Trustee shall promptly so notify the Servicer, the Unaffiliated
Seller, the related Originator and the Certificate Insurer. The Unaffiliated
Seller agrees that in performing any such review, the Trustee may conclusively
rely on the Unaffiliated Seller as to the purported genuineness of any such
document and any signature thereon. Each of the Originators and the
Unaffiliated Seller agrees to use reasonable efforts to remedy a material
defect in a document constituting part of a Mortgage File of which it is
notified. If, however, within 60 days after such notice neither the
Unaffiliated Seller nor any Originator has remedied the defect and the defect
materially and adversely affects the interest of the Certificateholders in the
related Mortgage Loan or the interests of the Certificate Insurer, then the
Unaffiliated Seller and the Originators shall be obligated to either
substitute in lieu of such Mortgage Loan a Qualified Substitute Mortgage Loan
or purchase such Mortgage Loan in the manner and subject to the conditions set
forth in Section 3.05.
(c) The failure of the Trustee or the Certificate Insurer to
give any notice contemplated herein within the time periods specified above
shall not affect or relieve the Unaffiliated Seller's obligation to repurchase
for any Mortgage Loan pursuant to this Section 2.06 or Section 3.05 of this
Agreement.
Section 2.07. Transfer of Mortgage Loans; Assignment of
Agreement. The Originators and the Unaffiliated Seller each hereby
acknowledges and agrees that the Depositor may assign its interest under this
Agreement to the Trustee as may be required to effect the purposes of the
Pooling and Servicing Agreement, without further notice to, or consent of, the
Unaffiliated Seller or the Originators, and the Trustee shall succeed to such
of the rights and obligations of the Depositor hereunder as shall be so
assigned. The Depositor shall, pursuant to the Pooling and Servicing
Agreement, assign all of its right, title and interest in and to the Mortgage
Loans and its right to exercise the remedies created by Sections 2.06 and 3.05
hereof for breaches of the representations, warranties, agreements and
covenants of the Unaffiliated Seller or the Originators contained in Sections
2.05, 2.06, 3.02 and 3.03 hereof to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer. Each of the Originators and
the Unaffiliated Seller agrees that, upon such assignment to the Trustee, such
representations, warranties, agreements and covenants will run to and be for
the benefit of the Trustee and the Trustee may enforce, without joinder of the
Depositor, the repurchase obligations of the Unaffiliated Seller and the
Originators set forth herein with respect to breaches of such representations,
warranties, agreements and covenants.
Section 2.08. Examination of Mortgage Files . Prior to the
Closing Date and each Subsequent Transfer Date, as applicable, the
Unaffiliated Seller shall make the Mortgage Files available to the Depositor
or its designee for examination at the Unaffiliated Seller's offices or at
such other place as the Unaffiliated Seller shall reasonably specify. Such
examination may
12
be made by the Depositor or its designee at any time on or before the Closing
Date or Subsequent Transfer Date, as the case may be. If the Depositor or its
designee makes such examination prior to the Closing Date or Subsequent
Transfer Date, as the case may be, and identifies any Mortgage Loans that do
not conform to the requirements of the Depositor as described in this
Agreement, such Mortgage Loans shall be deleted from the Mortgage Loan
Schedule and may be replaced, prior to the Closing Date or Subsequent Transfer
Date, as the case may be, by substitute Mortgage Loans acceptable to the
Depositor. The Depositor may, at its option and without notice to the
Unaffiliated Seller, purchase all or part of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Depositor or
the Trustee has conducted or has failed to conduct any partial or complete
examination of the Mortgage Files shall not affect the rights of the Depositor
or the Trustee to demand repurchase or other relief as provided in this
Agreement.
Section 2.09. Books and Records. The sale of each Mortgage
Loan shall be reflected on each of the Originators' and the Unaffiliated
Seller's accounting and other records, balance sheet and other financial
statements as a sale of assets by the Originators to the Unaffiliated Seller
and by the Unaffiliated Seller to the Depositor. Each of the Originators and
the Unaffiliated Seller shall be responsible for maintaining, and shall
maintain, a complete set of books and records for each Mortgage Loan which
shall be clearly marked to reflect the ownership of each Mortgage Loan by the
Trustee for the benefit of the Certificateholders and the Certificate Insurer.
Section 2.10. Cost of Delivery and Recordation of Documents.
The costs relating to the delivery and recordation of the documents specified
in this Article Two in connection with the Mortgage Loans shall be borne by
the Unaffiliated Seller.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the
Originators. Each of the Originators hereby represents and warrants to the
Unaffiliated Seller and the Depositor, as of the Closing Date, that:
(a) The Originator is a corporation duly organized, validly
existing and in good standing under the laws of (i) the State of Pennsylvania
(with respect to ABC and Upland) or (ii) the State of New Jersey (with respect
to NJMIC) and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in each state where
a Mortgaged Property is located if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by the
Originator and to perform its obligations as the Originator hereunder, and in
any event the Originator is in compliance with the laws of any such state to
the extent necessary to ensure the enforceability of the related Mortgage
Loan; the Originator has the full power and authority, corporate and
otherwise, to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Originator and the consummation of the transactions contemplated hereby have
been duly and validly authorized; this Agreement evidences the valid, binding
and enforceable obligation of the Originator; and all requisite corporate
action has been taken by the Originator to make this Agreement valid and
binding upon the Originator in accordance with its terms;
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(b) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery
and performance by the Originator of, or compliance by the Originator with,
this Agreement or the sale of the Mortgage Loans pursuant to the terms of this
Agreement or the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to the
Closing Date;
(c) Neither the execution and delivery of this Agreement,
the acquisition or origination of the Mortgage Loans by the Originator or the
transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, has or will conflict with or
result in a breach of any of the terms, conditions or provisions of the
Originator's charter or by-laws or any legal restriction or any agreement or
instrument to which the Originator is now a party or by which it is bound or
to which its property is subject, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Originator or
its property is subject, or impair the ability of the Trustee (or the Servicer
as the agent of the Trustee) to realize on the Mortgage Loans, or impair the
value of the Mortgage Loans;
(d) Neither this Agreement nor the information contained in
the Prospectus Supplement under the captions "The Mortgage Pool", "The
Originators, the Seller and the Servicer" and "Servicing of the Mortgage
Loans" nor any statement, report or other document prepared by the Originator
and furnished or to be furnished pursuant to this Agreement or in connection
with the transactions contemplated hereby contains any untrue statement or
alleged untrue statement of any material fact or omits to state a material
fact necessary to make the statements contained herein or therein, in light of
the circumstances under which they were made, not misleading;
(e) There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Originator, threatened before a court,
administrative agency or government tribunal against the Originator which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Originator, or in any material impairment of the right or
ability of the Originator to carry on its business substantially as now
conducted, or in any material liability on the part of the Originator, or
which would draw into question the validity of this Agreement, the Mortgage
Loans, or of any action taken or to be taken in connection with the
obligations of the Originator contemplated herein, or which would impair
materially the ability of the Originator to perform under the terms of this
Agreement or that might prohibit its entering into this Agreement or the
consummation of any of the transactions contemplated hereby;
(f) The Originator is not in violation of or in default with
respect to, and the execution and delivery of this Agreement by the Originator
and its performance of and compliance with the terms hereof will not
constitute a violation or default with respect to, any order or decree of any
court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which violation or default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Originator or its properties or might have consequences that
would materially and adversely affect its performance hereunder or under any
Subservicing Agreement;
(g) Upon the receipt of each Trustee's Mortgage File by the
Depositor under this Agreement, the Depositor will have good title on behalf
of the Trust Fund to each related Mortgage Loan and such other items
comprising the corpus of the Trust Fund free and clear of any lien created by
the Originator (other than liens which will be simultaneously released);
14
(h) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Originator, and
the transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Originator pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
(i) With respect to any Mortgage Loan purchased by the
Originator, the Originator acquired title to the Mortgage Loan in good faith,
without notice of any adverse claim;
(j) The Originator does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement. The Originator is solvent and the sale of the
Mortgage Loans by the Originator pursuant to the terms of this Agreement will
not cause the Originator to become insolvent. The sale of the Mortgage Loans
by the Originator pursuant to the terms of this Agreement was not undertaken
with the intent to hinder, delay or defraud any of the Originator's creditors;
(k) The Mortgage Loans are not intentionally selected in a
manner so as to affect adversely the interests of the Depositor or of any
transferee of the Depositor (including the Trustee);
(l) The Originator has determined that it will treat the
disposition of the Mortgage Loans pursuant to this Agreement as a sale for
accounting and tax purposes;
(m) The Originator has not dealt with any broker or agent or
anyone else that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans to the Depositor other than to
the Depositor or an affiliate thereof; and
(n) The consideration received by the Originator upon the
sale of the Mortgage Loans under this Agreement constitutes fair consideration
and reasonably equivalent value for the Mortgage Loans.
Section 3.02. Representations and Warranties as to the
Unaffiliated Seller. The Unaffiliated Seller hereby represents and warrants to
the Depositor, as of the Closing Date, that:
(a) The Unaffiliated Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all licenses necessary to carry on its business as now being conducted
and is licensed, qualified and in good standing in each state where a
Mortgaged Property is located if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by the
Unaffiliated Seller and to perform its obligations as the Unaffiliated Seller
hereunder, and in any event the Unaffiliated Seller is in compliance with the
laws of any such state to the extent necessary to ensure the enforceability of
the related Mortgage Loan; the Unaffiliated Seller has the full power and
authority, corporate and otherwise, to execute and deliver this Agreement and
to perform in accordance herewith; the execution, delivery and performance of
this Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement) by the Unaffiliated Seller and the consummation of the
transactions contemplated hereby have been duly and validly authorized; this
Agreement evidences the valid, binding and enforceable obligation of the
Unaffiliated Seller; and all requisite corporate action has been taken by the
Unaffiliated Seller to make this Agreement valid and binding upon the
Unaffiliated Seller in accordance with its terms;
15
(b) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery
and performance by the Unaffiliated Seller of or compliance by the
Unaffiliated Seller with this Agreement or the sale of the Mortgage Loans
pursuant to the terms of this Agreement or the consummation of the
transactions contemplated by this Agreement, or if required, such approval has
been obtained prior to the Closing Date;
(c) Neither the execution and delivery of this Agreement,
the acquisition or origination of the Mortgage Loans by the Unaffiliated
Seller or the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement, has or will
conflict with or result in a breach of any of the terms, conditions or
provisions of the Unaffiliated Seller's charter or by-laws or any legal
restriction or any agreement or instrument to which the Unaffiliated Seller is
now a party or by which it is bound or to which its property is subject, or
constitute a default or result in an acceleration under any of the foregoing,
or result in the violation of any law, rule, regulation, order, judgment or
decree to which the Unaffiliated Seller or its property is subject, or impair
the ability of the Trustee (or the Servicer as the agent of the Trustee) to
realize on the Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Neither this Agreement nor the information contained in
the Prospectus Supplement under the captions "The Mortgage Pool", "The
Originators, the Seller and the Servicer" and "Servicing of the Mortgage
Loans" nor any statement, report or other document prepared by the
Unaffiliated Seller and furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
any untrue statement or alleged untrue statement of any material fact or omits
to state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading;
(e) There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Unaffiliated Seller, threatened before a
court, administrative agency or government tribunal against the Unaffiliated
Seller which, either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations, financial condition,
properties or assets of the Unaffiliated Seller, or in any material impairment
of the right or ability of the Unaffiliated Seller to carry on its business
substantially as now conducted, or in any material liability on the part of
the Unaffiliated Seller, or which would draw into question the validity of
this Agreement, the Mortgage Loans, or of any action taken or to be taken in
connection with the obligations of the Unaffiliated Seller contemplated
herein, or which would impair materially the ability of the Unaffiliated
Seller to perform under the terms of this Agreement or that might prohibit its
entering into this Agreement or the consummation of any of the transactions
contemplated hereby;
(f) The Unaffiliated Seller is not in violation of or in
default with respect to, and the execution and delivery of this Agreement by
the Unaffiliated Seller and its performance of and compliance with the terms
hereof will not constitute a violation or default with respect to, any order
or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which violation or default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Unaffiliated Seller or its
properties or might have consequences that would materially and adversely
affect its performance hereunder or under any Subservicing Agreement;
(g) Upon the receipt of each Trustee's Mortgage File by the
Depositor under this Agreement, the Depositor will have good title on behalf
of the Trust Fund to each related Mortgage Loan and such other items
comprising the corpus of the Trust Fund free and clear of any lien created by
the Unaffiliated Seller (other than liens which will be simultaneously
released);
16
(h) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Unaffiliated
Seller, and the transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Unaffiliated Seller pursuant to this Agreement are not
subject to the bulk transfer or any similar statutory provisions in effect in
any applicable jurisdiction;
(i) With respect to any Mortgage Loan purchased by the
Unaffiliated Seller, the Unaffiliated Seller acquired title to the Mortgage
Loan in good faith, without notice of any adverse claim;
(j) The Unaffiliated Seller does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement. The Unaffiliated Seller is solvent and
the sale of the Mortgage Loans by the Unaffiliated Seller pursuant to the
terms of this Agreement will not cause the Unaffiliated Seller to become
insolvent. The sale of the Mortgage Loans by the Unaffiliated Seller pursuant
to the terms of this Agreement was not undertaken with the intent to hinder,
delay or defraud any of the Unaffiliated Seller's creditors;
(k) The Mortgage Loans are not intentionally selected in a
manner so as to affect adversely the interests of the Depositor or of any
transferee of the Depositor (including the Trustee);
(l) The Unaffiliated Seller has determined that it will
treat the disposition of the Mortgage Loans pursuant to this Agreement as a
sale for accounting and tax purposes;
(m) The Unaffiliated Seller has not dealt with any broker or
agent or anyone else that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans to the Depositor other than to
the Depositor or an affiliate thereof; and
(n) The consideration received by the Unaffiliated Seller
upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans.
Section 3.03. Representations and Warranties Relating to the
Mortgage Loans. The Originators represent and warrant to the Unaffiliated
Seller and the Unaffiliated Seller represents to the Depositor that, as of the
Closing Date, as to each Initial Mortgage Loan, and as of the Subsequent
Transfer Date, as to each Subsequent Mortgage Loan, immediately prior to the
sale and transfer of such Mortgage Loan by the Unaffiliated Seller to the
Depositor:
(a) The information set forth in each Mortgage Loan Schedule
is complete, true and correct;
(b) The information to be provided by the Unaffiliated
Seller or the Originators, directly or indirectly, to the Depositor in
connection with a Subsequent Mortgage Loan will be true and correct in all
material respects at the date or dates respecting which such information is
furnished;
17
(c) Each Mortgage is a valid first or second lien on a fee
simple (or its equivalent under applicable state law) estate in the real
property securing the amount owed by the Mortgagor under the Mortgage Note
subject only to (i) the lien of current real property taxes and assessments
which are not delinquent, (ii) with respect to any Mortgage Loan identified on
the Mortgage Loan Schedule as secured by a second lien, the related first
mortgage loan, (iii) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording of
such Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally in the area wherein the property
subject to the Mortgage is located or specifically reflected in the appraisal
obtained in connection with the origination of the related Mortgage Loan
obtained by the Unaffiliated Seller and (iv) other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage;
(d) Immediately prior to the transfer and assignment by the
related Originator to the Unaffiliated Seller and by the Unaffiliated Seller
to the Trustee, the Unaffiliated Seller and such Originator, as applicable,
had good title to, and was the sole owner of each Mortgage Loan, free of any
interest of any other Person, and the Unaffiliated Seller and such Originator
has transferred all right, title and interest in each Mortgage Loan to the
Trustee and the Unaffiliated Seller, as applicable;
(e) As of the Cut-Off Date, no payment of principal or
interest on or in respect of any Mortgage Loan remains unpaid for 30 or more
days past the date the same was due in accordance with the related Mortgage
Note without regard to applicable grace periods;
(f) No Mortgage Loan has Mortgage Interest Rate less than
7.99% per annum and the weighted average Mortgage Interest Rate of the
Mortgage Loans is 11.46%;
(g) At origination, no Mortgage Loan had an original term to
maturity of greater than 360 months;
(h) As of the Statistical Calculation Date, the weighted
average remaining term to maturity of the Mortgage Loans is 227 months;
(i) To the best knowledge of the Unaffiliated Seller and
each of the Originators, there is no mechanics' lien or claim for work, labor
or material (and no rights are outstanding that under law could give rise to
such lien) affecting the premises subject to any Mortgage which is or may be a
lien prior to, or equal or coordinate with, the lien of such Mortgage, except
those which are insured against by the title insurance policy referred to in
(ff) below;
(j) To the best knowledge of the Unaffiliated Seller and
each of the Originators, there is no delinquent tax or assessment lien against
any Mortgaged Property;
(k) Such Mortgage Loan, the Mortgage, and the Mortgage Note,
including, without limitation, the obligation of the Mortgagor to pay the
unpaid principal of and interest on the Mortgage Note, are each not subject to
any right of rescission (or any such rescission right has expired in
accordance with applicable law), set-off, counterclaim, or defense, including
the defense of usury, nor will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable, in whole or in part,
or subject to any right of rescission, set-off, counterclaim, or defense,
including the defense of usury, and no such right of rescission, set-off,
counterclaim, or defense has been asserted with respect thereto;
(l) To the best knowledge of the Unaffiliated Seller and
each of the Originators, the Mortgaged Property is free of material damage and
is in good repair, and there is no pending or threatened proceeding for the
total or partial condemnation of the Mortgaged Property;
18
(m) Neither the Originators nor the Unaffiliated Seller has
received a notice of default of any first mortgage loan secured by the
Mortgaged Property which has not been cured by a party other than the
Unaffiliated Seller;
(n) Each Mortgage Note and Mortgage are in substantially the
forms previously provided to the Trustee on behalf of the Unaffiliated Seller;
(o) No Mortgage Loan had, at the date of origination, a
Combined Loan-to-Value Ratio in excess of 100%, and the weighted average
Combined Loan-to-Value ratio of all Mortgage Loans as of the Statistical
Calculation Date is approximately 76.03%;
(p) The Mortgage Loan was not originated in a program in
which the amount of documentation in the underwriting process was limited in
comparison to the originator's normal documentation requirements;
(q) No more than the following percentages of the Mortgage
Loans by Principal Balance as of the Statistical Calculation Date are secured
by Mortgaged Properties located in the following states:
Percent of
State Principal Balance
-------------------------- --------------------------
Colorado 0.15%
Connecticut 1.22
Delaware 3.98
Florida 2.43
Georgia 7.60
Illinois 0.64
Indiana 0.29
Kentucky 0.48
Maryland 3.34
Massachusetts 0.03
Michigan 0.08
Mississippi 1.53
North Carolina 1.03
New Jersey 30.00
New York 14.58
Ohio 1.53
Pennsylvania 26.78
South Carolina 0.32
Tennessee 0.33
Virginia 3.66
-------------------------
100.00%
=========================
(r) The Mortgage Loans were not selected by the Unaffiliated
Seller or the Originators for sale hereunder or inclusion in the Trust Fund on
any basis adverse to the Trust Fund relative to the portfolio of similar
mortgage loans of the Unaffiliated Seller or the Originators;
(s) None of the Mortgage Loans constitutes a lien on
leasehold interests;
(t) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the related Mortgaged Property of the benefits of
the security including (A) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (B) otherwise by judicial foreclosure. To the
best of the Unaffiliated Seller's and the Originators' knowledge, there is no
homestead or other exemption available to the related Mortgagor which would
materially interfere with the right to sell the related Mortgaged Property at
a trustee's sale or the right to foreclose the related
19
Mortgage. The Mortgage contains customary and enforceable provisions for the
acceleration of the payment of the Principal Balance of such Mortgage Loan in
the event all or any part of the related Mortgaged Property is sold or
otherwise transferred without the prior written consent of the holder thereof;
(u) The proceeds of such Mortgage Loan have been fully
disbursed, including reserves set aside by the Unaffiliated Seller or the
Originators, there is no requirement for, and neither the Unaffiliated Seller
nor the Originators shall make any, future advances thereunder. Any future
advances made prior to the Cut-Off Date have been consolidated with the
principal balance secured by the Mortgage, and such principal balance, as
consolidated, bears a single interest rate and single repayment term reflected
on the applicable Mortgage Loan Schedule. The Principal Balance as of the
Cut-Off Date does not exceed the original principal amount of such Mortgage
Loan. Except with respect to no more than $150,000 of escrow funds, any and
all requirements as to completion of any on-site or off-site improvements and
as to disbursements of any escrow funds therefor have been complied with. All
costs, fees, and expenses incurred in making, or recording such Mortgage Loan
have been paid;
(v) All Mortgage Loans were originated in compliance with
the Originators' Underwriting Guidelines;
(w) The terms of the Mortgage and Mortgage Note have not
been impaired, waived, altered, or modified in any respect, except by a
written instrument which has been recorded, if necessary, to protect the
interest of the Trustee and which has been delivered to the Trustee. The
substance of any such alteration or modification is or as to Subsequent
Mortgage Loans will be reflected on the applicable Mortgage Loan Schedule and,
to the extent necessary, has been or will be approved by (i) the insurer under
the applicable mortgage title insurance policy, and (ii) the insurer under any
other insurance policy required hereunder for such Mortgage Loan where such
insurance policy requires approval and the failure to procure approval would
impair coverage under such policy;
(x) No instrument of release, waiver, alteration, or
modification has been executed in connection with such Mortgage Loan, and no
Mortgagor has been released, in whole or in part, except in connection with an
assumption agreement which has been approved by the insurer under any
insurance policy required hereunder for such Mortgage Loan where such policy
requires approval and the failure to procure approval would impair coverage
under such policy, and which is part of the Mortgage File and has been
delivered to the Trustee, and the terms of which are reflected in the
applicable Mortgage Loan Schedule;
(y) Other than delinquencies described in clause (e) above,
there is no default, breach, violation, or event of acceleration existing
under the Mortgage or the Mortgage Note and no event which, with the passage
of time or with notice and the expiration of any grace or cure period, would
constitute such a default, breach, violation or event of acceleration, and
neither the Originators nor the Unaffiliated Seller has waived any such
default, breach, violation or event of acceleration. All taxes, governmental
assessments (including assessments payable in future installments), insurance
premiums, water, sewer, and municipal charges, leaseholder payments, or ground
rents which previously became due and owing in respect of or affecting the
related Mortgaged Property have been paid. Neither the Originators nor the
Unaffiliated Seller has advanced funds, or induced, solicited, or knowingly
received any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage or the
Mortgage Note;
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(z) All of the improvements which were included for the
purposes of determining the Appraised Value of the Mortgaged Property were
completed at the time that such Mortgage Loan was originated and lie wholly
within the boundaries and building restriction lines of such Mortgaged
Property. Except for de minimis encroachments, no improvements on adjoining
properties encroach upon the Mortgaged Property. To the best of the
Unaffiliated Seller's and the Originators' knowledge, no improvement located
on or being part of the Mortgaged Property is in violation of any applicable
zoning law or regulation. All inspections, licenses, and certificates required
to be made or issued with respect to all occupied portions of the Mortgaged
Property (including all such improvements which were included for the purpose
of determining such Appraised Value) and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriters certificates, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied under
applicable law;
(aa) To the best of the Unaffiliated Seller's and the
Originators' knowledge, there do not exist any circumstances or conditions
with respect to the Mortgage, the Mortgaged Property, the Mortgagor, or the
Mortgagor's credit standing that can be reasonably expected to cause such
Mortgage Loan to become delinquent or adversely affect the value or
marketability of such Mortgage Loan, other than any such circumstances or
conditions permitted under the Originator's Underwriting Guidelines;
(bb) All parties which have had any interest in the
Mortgage, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (i)
in compliance with any and all applicable licensing requirements of the laws
of the state wherein the Mortgaged Property is located and (ii) (A) organized
under the laws of such state, (B) qualified to do business in such state, (C)
federal savings and loan associations or national banks having principal
offices in such state, (D) not doing business in such state, or (E) not
required to qualify to do business in such state;
(cc) The Mortgage Note and the Mortgage are genuine, and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting the enforcement of creditors' rights generally and
except that the equitable remedy of specific performance and other equitable
remedies are subject to the discretion of the courts. All parties to the
Mortgage Note and the Mortgage had legal capacity to execute the Mortgage Note
and the Mortgage and convey the estate therein purported to be conveyed, and
the Mortgage Note and the Mortgage have been duly and properly executed by
such parties or pursuant to a valid power-of-attorney that has been recorded
with the Mortgage;
(dd) The transfer of the Mortgage Note and the Mortgage as
and in the manner contemplated by this Agreement is sufficient either (i)
fully to transfer to the Depositor all right, title, and interest of the
Unaffiliated Seller and the Originators thereto as note holder and mortgagee
or (ii) to grant to the Depositor the security interest referred to in Section
6.07 hereof. The Mortgage has been duly assigned and the Mortgage Note has
been duly endorsed. The assignment of Mortgage delivered to the Trustee
pursuant to Section 2.04(a)(iv) is in recordable form and is acceptable for
recording under the laws of the applicable jurisdiction. The endorsement of
the Mortgage Note, the delivery to the Trustee of the endorsed Mortgage Note,
and such assignment of Mortgage, and the delivery of such assignment of
Mortgage for recording to, and the due recording of such assignment of
Mortgage in, the appropriate public recording office in the jurisdiction in
which the Mortgaged Property is located are sufficient to permit the Trustee
to avail itself of all protection available under applicable law against the
claims of any present or future creditors of the Unaffiliated Seller and the
Originators, and are sufficient to prevent any other sale, transfer,
assignment, pledge, or hypothecation of the Mortgage Note and Mortgage by the
Unaffiliated Seller or the Originators from being enforceable;
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(ee) Any and all requirements of any federal, state, or
local law including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity,
or disclosure laws applicable to such Mortgage Loan have been complied with,
and the Servicer shall maintain in its possession, available for the Trustee's
inspection, and shall deliver to the Trustee or its designee upon demand,
evidence of compliance with all such requirements. The consummation of the
transactions contemplated by this Agreement will not cause the violation of
any such laws;
(ff) Such Mortgage Loan is covered by an ALTA mortgage title
insurance policy or such other generally used and acceptable form of policy,
issued by and the valid and binding obligation of a title insurer qualified to
do business in the jurisdiction where the Mortgaged Property is located,
insuring the Unaffiliated Seller, and its successors and assigns, as to the
first or second priority lien, as applicable, of the Mortgage in the original
principal amount of such Mortgage Loan. The assignment to the Trustee of the
Unaffiliated Seller's interest in such mortgage title insurance policy does
not require the consent of or notification to the insurer. Such mortgage title
insurance policy is in full force and effect and will be in full force and
effect and inure to the benefit of the Trustee upon the consummation of the
transactions contemplated by this Agreement. No claims have been made under
such mortgage title insurance policy and neither the Unaffiliated Seller nor
any prior holder of the Mortgage has done, by act or omission, anything which
would impair the coverage of such mortgage title insurance policy;
(gg) All improvements upon the Mortgaged Property are
insured against loss by fire, hazards of extended coverage, and such other
hazards as are customary in the area where the Mortgaged Property is located
pursuant to insurance policies conforming to the requirements of Section 3.05
hereof. If the Mortgaged Property at origination was located in an area
identified on a flood hazard boundary map or flood insurance rate map issued
by the Federal Emergency Management Agency as having special flood hazards
(and such flood insurance has been made available), such Mortgaged Property
was covered by flood insurance at origination. Each individual insurance
policy is the valid and binding obligation of the insurer, is in full force
and effect, and will be in full force and effect and inure to the benefit of
the Trustee upon the consummation of the transactions contemplated by this
Agreement, and contain a standard mortgage clause naming the originator of
such Mortgage Loan, and its successors and assigns, as mortgagee and loss
payee. All premiums thereon have been paid. The Mortgage obligates the
Mortgagor to maintain all such insurance at the Mortgagor's cost and expense,
and upon the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at the Mortgagor's cost and
expense and to seek reimbursement therefor from the Mortgagor, and none of the
Unaffiliated Seller, the related Originator or any prior holder of the
Mortgage has acted or failed to act so as to impair the coverage of any such
insurance policy or the validity, binding effect, and enforceability thereof;
(hh) If the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, as no fees
or expenses are or will become payable by the Trustee or the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
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(ii) The Mortgaged Property consists of one or more parcels
of real property separately assessed for tax purposes. To the extent there is
erected thereon a detached or an attached one-family residence or a detached
two-to six-family dwelling, or an individual condominium unit in a low-rise
condominium, or an individual unit in a planned unit development, or a
commercial property, or a mixed use or multiple purpose property, such
residence, dwelling or unit is not (i) a unit in a cooperative apartment, (ii)
a property constituting part of a syndication, (iii) a time share unit, (iv) a
property held in trust, (v) a mobile home, (vi) a manufactured dwelling, (vii)
a log-constructed home, or (viii) a recreational vehicle;
(jj) There exist no material deficiencies with respect to
escrow deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made or which the
Unaffiliated Seller or the related Originator expects not to be cured, and no
escrow deposits or payments of other charges or payments due the Unaffiliated
Seller have been capitalized under the Mortgage or the Mortgage Note;
(kk) Such Mortgage Loan was not originated at a below market
interest rate. Such Mortgage Loan does not have a shared appreciation feature,
or other contingent interest feature;
(ll) The origination and collection practices used by the
Unaffiliated Seller, the Originators or the Servicer with respect to such
Mortgage Loan have been in all respects legal, proper, prudent, and customary
in the mortgage origination and servicing business;
(mm) The Mortgagor has, to the extent required by applicable
law, executed a statement to the effect that the Mortgagor has received all
disclosure materials, if any, required by applicable law with respect to the
making of fixed-rate mortgage loans. The Servicer shall maintain or cause to
be maintained such statement in the Mortgage File;
(nn) All amounts received by the Unaffiliated Seller or the
Originators with respect to such Mortgage Loan after the Cut-Off Date and
required to be deposited in the Certificate Account have been so deposited in
the Certificate Account and are, as of the Closing Date, or will be as of the
Subsequent Transfer Date, as applicable, in the Certificate Account;
(oo) The appraisal report with respect to the Mortgaged
Property contained in the Mortgage File was signed prior to the approval of
the application for such Mortgage Loan by a qualified appraiser, duly
appointed by the originator of such Mortgage Loan, who had no interest, direct
or indirect, in the Mortgaged Property or in any loan made on the security
thereof and whose compensation is not affected by the approval or disapproval
of such application;
(pp) When measured by the Cut-Off Date Balances of all
Mortgage Loans as of the Statistical Calculation Date, the Mortgagors with
respect to at least 85% of the Mortgage Loans represented at the time of
origination that the Mortgagor would occupy the Mortgaged Property as the
Mortgagor's primary residence;
(qq) Each of the Originators and the Unaffiliated Seller has
no knowledge with respect to the Mortgaged Property of any governmental or
regulatory action or third party claim made, instituted or threatened in
writing relating to a violation of any applicable federal, state or local
environmental law, statute, ordinance, regulation, order, decree or standard;
(rr) Each Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code;
(ss) With respect to second lien Mortgage Loans:
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(i) the Unaffiliated Seller has no knowledge that the
Mortgagor has received notice from the holder of the prior mortgage
that such prior mortgage is in default,
(ii) no consent from the holder of the prior mortgage is
needed for the creation of the second lien Mortgage or, if required,
has been obtained and is in the related Mortgage File,
(iii) if the prior mortgage has a negative amortization,
the Combined Loan-to-Value Ratio was determined using the maximum loan
amount of such prior mortgage,
(iv) the related first mortgage loan encumbering the
related Mortgaged Property does not have a mandatory future advance
provision, and
(v) the Mortgage Loans conform in all material respects
to the description thereof in the Prospectus Supplement.
(tt) Each of the Originators and the Unaffiliated Seller
further represents and warrants to the Trustee and the Certificateholders that
as of the Subsequent Cut-Off Date all representations and warranties set forth
in clauses (a) through (ss) above will be correct in all material respects as
to each Subsequent Mortgage Loan, and the representations so made in this
subsection (tt) as to the following matters will be deemed to be correct if:
(i) each Subsequent Mortgage Loan is not 30 or more days contractually
delinquent as of the related Subsequent Cut-Off Date; (ii) the original term
to maturity of each Subsequent Mortgage Loan does not exceed 360 months; (iii)
each Subsequent Mortgage Loan has a Mortgage Interest Rate of at least 7.90%;
(iv) the purchase of the Subsequent Mortgage Loans is consented to by the
Certificate Insurer and the Rating Agencies; (v) the principal balance of any
Subsequent Mortgage Loan does not exceed $375,000.00; (vi) no more than 15% of
the Subsequent Mortgage Loans are second liens; (vii) no Subsequent Mortgage
Loan has a CLTV of more than, (A) for consumer purpose loans, 95%, and (B) for
business purpose loans, 75%; (viii) no more than 40% of the Subsequent
Mortgage Loans are Balloon Loans; (ix) no more than 9% of the Subsequent
Mortgage Loans are secured by mixed-use properties, commercial properties, or
four or more unit multifamily properties; (x) no more than 3% of the
Subsequent Mortgage Loans are secured by commercial properties; and (xi)
following the purchase of the Subsequent Mortgage Loans by the Trust, the
Mortgage Loans (including the Subsequent Mortgage Loans) (A) will have a
weighted average Mortgage Rate, (I) for consumer purpose loans, of at least
11.25% and (II) for business purpose loans, of at least 15.80%; and (B) will
have a weighted average CLTV of not more than (I) for consumer purpose loans,
80%, and (II) for business purpose loans, 64%.
(uu) To the best of the Unaffiliated Seller's and the
Originators' knowledge, no error, omission, misrepresentation, negligence,
fraud or similar occurrence with respect to a Mortgage Loan has taken place on
the part of any person, including without limitation the Mortgagor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan;
(vv) Each Mortgaged Property is in compliance with all
environmental laws, ordinances, rules, regulations and orders of federal,
state or governmental authorities relating thereto. No hazardous material has
been or is incorporated in, stored on or under, released from, treated on,
transported to or from, or disposed of on or from, any Mortgaged Property such
that, under applicable law (A) any such hazardous material would be required
to be eliminated before the Mortgaged Property could be altered, renovated,
demolished or transferred, or (B) the owner
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of the Mortgaged Property, or the holder of a security interest therein, could
be subjected to liability for the removal of such hazardous material or the
elimination of the hazard created thereby. Neither the Seller or any Mortgagor
has received notification from any federal, state or other governmental
authority relating to any hazardous materials on or affecting the Mortgaged
Property or to any potential or known liability under any environmental law
arising from the ownership or operation of the Mortgaged Property. For the
purposes of this subsection, the term "hazardous materials" shall include,
without limitation, gasoline, petroleum products, explosives, radioactive
materials, polychlorinated biphenyls or related or similar materials, asbestos
or any material containing asbestos, lead, lead-based paint and any other
substance or material as may be defined as a hazardous or toxic substance by
any federal, state or local environmental law, ordinance, rule, regulation or
order, including, without limitation, CERCLA, the Clean Air Act, the Clean
Water Act, the Resource Conservation and Recovery Act, the Toxic Substances
Control Act and any regulations promulgated pursuant thereto; and
(ww) With respect to any business purpose loan, the related
Mortgage Note contains an acceleration clause, accelerating the maturity date
under the Mortgage Note to the date the individual guarantying such loan
becomes subject to any bankruptcy, insolvency, reorganization, moratorium, or
other similar laws affecting the enforcement of creditors' rights generally.
Section 3.04. Representations and Warranties of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Unaffiliated Seller, as of the date of execution of this Agreement and the
Closing Date, that:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to
purchase each Mortgage Loan and to execute, deliver and perform, and to enter
into and consummate all the transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, and, assuming the due authorization,
execution and delivery hereof by the Unaffiliated Seller, constitutes the
legal, valid and binding agreement of the Depositor, enforceable against the
Depositor in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or court
is required for the execution, delivery and performance of or compliance by
the Depositor with this Agreement or the consummation by the Depositor of any
of the transactions contemplated hereby, except such as have been made on or
prior to the Closing Date;
(e) The Depositor has filed or will file the Prospectus and
Prospectus Supplement with the Commission in accordance with Rule 424(b) under
the Securities Act; and
(f) None of the execution and delivery of this Agreement,
the purchase of the Mortgage Loans from the Unaffiliated Seller, the
consummation of the other transactions contemplated hereby, or the fulfillment
of or compliance with the terms and conditions of this Agreement, (i)
conflicts or will conflict with the charter or bylaws of the Depositor or
conflicts or
25
will conflict with or results or will result in a breach of, or constitutes or
will constitute a default or results or will result in an acceleration under,
any term, condition or provision of any indenture, deed of trust, contract or
other agreement or other instrument to which the Depositor is a party or by
which it is bound and which is material to the Depositor, or (ii) results or
will result in a violation of any law, rule, regulation, order, judgment or
decree of any court or governmental authority having jurisdiction over the
Depositor.
Section 3.05. Repurchase Obligation for Defective
Documentation and for Breach of a Representation or Warranty. (a) Each of the
representations and warranties contained in Sections 3.01, 3.02 and 3.03 shall
survive the purchase by the Depositor of the Mortgage Loans and the subsequent
transfer thereof by the Depositor to the Trustee and shall continue in full
force and effect, notwithstanding any restrictive or qualified endorsement on
the Mortgage Notes and notwithstanding subsequent termination of this
Agreement or the Pooling and Servicing Agreement.
(b) With respect to any representation or warranty contained
in Section 3.01 that is made to the best of the Originators' knowledge or
contained in Sections 3.02 or 3.03 hereof that is made to the best of the
Unaffiliated Seller's and the Originators' knowledge, if it is discovered by
the Servicer, any Subservicer, the Trustee, the Certificate Insurer or any
Certificateholder that the substance of such representation and warranty was
inaccurate as of the Closing Date and such inaccuracy materially and adversely
affects the value of the related Mortgage Loan, then notwithstanding the
Originators' or the Unaffiliated Seller's lack of knowledge with respect to
the inaccuracy at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty. Upon discovery by the Originators, the Unaffiliated Seller, the
Servicer, any Subservicer, the Trustee, the Certificate Insurer or any
Certificateholder of a breach of any of such representations and warranties
which materially and adversely affects the value of Mortgage Loans or the
interest of the Certificateholders, or which materially and adversely affects
the interests of the Certificate Insurer or the Certificateholders in the
related Mortgage Loan in the case of a representation and warranty relating to
a particular Mortgage Loan (notwithstanding that such representation and
warranty was made to the Originators' or the Unaffiliated Seller's best
knowledge), the party discovering such breach shall give pursuant to Section
3.03 of the Pooling and Servicing Agreement prompt written notice to the
others. Subject to the next to last paragraph of this Section 3.05, within 60
days of the earlier of its discovery or its receipt of notice of any breach of
a representation or warranty, the Unaffiliated Seller and the Originators
shall (a) promptly cure such breach in all material respects, or (b) purchase
such Mortgage Loan at a purchase price equal to the Principal Balance of such
Mortgage Loan as of the date of purchase, plus the greater of (i) all accrued
and unpaid interest on such Principal Balance and (ii) 30 days' interest on
such Principal Balance, computed at the Mortgage Interest Rate, net of the
Servicing Fee if the Unaffiliated Seller is the Servicer, plus the amount of
any unreimbursed Servicing Advances made by the Servicer with respect to such
Mortgage Loan, or (c) remove such Mortgage Loan from the Trust Fund (in which
case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans; provided, that, such substitution is
effected not later than the date which is 2 years after the Startup Day or at
such later date, if the Trustee and the Certificate Insurer receive an Opinion
of Counsel to the effect set forth below in this Section. Any such
substitution shall be accompanied by payment by the Unaffiliated Seller of the
Substitution Adjustment, if any, to be deposited in the Certificate Account
pursuant to the Pooling and Servicing Agreement. The Originators shall
cooperate with the Unaffiliated Seller to cure any breach and shall reimburse
the Unaffiliated Seller for the costs and expenses related to any cure,
substitution (including any Substitution Adjustment) or repurchase incurred by
the Unaffiliated Seller pursuant to this Section 3.05.
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(c) As to any Deleted Mortgage Loan for which the
Unaffiliated Seller or an Originator substitutes a Qualified Substitute
Mortgage Loan or Loans, the Unaffiliated Seller or such Originator shall
effect such substitution by delivering to the Trustee a certification in the
form attached to the Pooling and Servicing Agreement as Exhibit H, executed by
a Servicing Officer and the documents described in Section 2.06(a) for such
Qualified Substitute Mortgage Loan or Loans. Pursuant to the Pooling and
Servicing Agreement, upon receipt by the Trustee of a certification of a
Servicing Officer of such substitution or purchase and, in the case of a
substitution, upon receipt of the related Trustee's Mortgage File, and the
deposit of certain amounts in the Certificate Account pursuant to Section
2.07(b) of the Pooling and Servicing Agreement (which certification shall be
in the form of Exhibit H to the Pooling and Servicing Agreement), the Trustee
shall be required to release to the Servicer for release to the Unaffiliated
Seller the related Trustee's Mortgage File and shall be required to execute,
without recourse, and deliver such instruments of transfer furnished by the
Unaffiliated Seller as may be necessary to transfer such Mortgage Loan to the
Unaffiliated Seller or such Originator.
(d) Pursuant to the Pooling and Servicing Agreement, the
Servicer shall deposit in the Certificate Account all payments received in
connection with such Qualified Substitute Mortgage Loan or Loans after the
date of such substitution. Monthly Payments received with respect to Qualified
Substitute Mortgage Loans on or before the date of substitution will be
retained by the Unaffiliated Seller. The Trust Fund will own all payments
received on the Deleted Mortgage Loan on or before the date of substitution,
and the Unaffiliated Seller shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. Pursuant to
the Pooling and Servicing Agreement, the Servicer shall be required to give
written notice to the Trustee and the Certificate Insurer that such
substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the terms of the
Pooling and Servicing Agreement and the substitution of the Qualified
Substitute Mortgage Loan. The parties hereto agree to amend the Mortgage Loan
Schedule accordingly. Upon such substitution, such Qualified Substitute
Mortgage Loan or Loans shall be subject to the terms of the Pooling and
Servicing Agreement and this Agreement in all respects, and the Unaffiliated
Seller shall be deemed to have made with respect to such Qualified Substitute
Mortgage Loan or Loans, as of the date of substitution, the representations
and warranties set forth in Sections 3.02 and 3.03 herein. On the date of such
substitution, the Unaffiliated Seller will remit to the Servicer and pursuant
to the Pooling and Servicing Agreement the Servicer will deposit into the
Certificate Account an amount equal to the Substitution Adjustment, if any.
(e) It is understood and agreed that the obligations of the
Unaffiliated Seller and the Originator set forth in Section 2.06 and this
Section 3.05 to cure, purchase or substitute for a defective Mortgage Loan as
provided in Section 2.06 and this Section 3.05 constitute the sole remedies of
the Depositor, the Trustee, the Certificate Insurer and the Certificateholders
respecting a breach of the foregoing representations and warranties.
(f) Any cause of action against the Unaffiliated Seller or
an Originator relating to or arising out of the breach of any representations
and warranties or covenants made in Sections 2.06, 3.02 or 3.03 shall accrue
as to any Mortgage Loan upon (i) discovery of such breach by any party and
notice thereof to the Unaffiliated Seller or such Originator, (ii) failure by
the Unaffiliated Seller or such Originator to cure such breach or purchase or
substitute such Mortgage Loan as specified above, and (iii) demand upon the
Unaffiliated Seller or such Originator by the Trustee for all amounts payable
in respect of such Mortgage Loan.
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(g) Notwithstanding any contrary provision of this
Agreement, with respect to any Mortgage Loan which is not in default or as to
which no default is imminent, no purchase, or substitution pursuant to Section
2.06(b) or this Section 3.05 shall be made unless the Unaffiliated Seller
provides to the Trustee and the Certificate Insurer an Opinion of Counsel to
the effect that such purchase or substitution would not (i) result in the
imposition of taxes on "prohibited transactions" of the REMIC Trust, as
defined in Section 860F of the Code or a tax on contributions to the REMIC
Trust under the REMIC Provisions, or (ii) cause the REMIC Fund to fail to
qualify as a REMIC at any time that any Certificates are outstanding. Any
Mortgage Loan as to which purchase or substitution was delayed pursuant to
this paragraph shall be purchased or substituted (subject to compliance with
Section 2.06 and this Section 3.05) upon the earlier of (a) the occurrence of
a default or imminent default with respect to such loan and (b) receipt by the
Trustee and the Certificate Insurer of an Opinion of Counsel to the effect
that such purchase or substitution will not result in the events described in
clauses (i) and (ii) of the preceding sentence.
(h) Pursuant to the Pooling and Servicing Agreement, upon
discovery by the Unaffiliated Seller, the Servicer, the Trustee, the
Certificate Insurer or any Certificateholder that any Mortgage Loan does not
constitute a Qualified Mortgage, the party discovering such fact shall
promptly (and in any event within 5 days of the discovery) give written notice
thereof to the other parties. In connection therewith, the Unaffiliated Seller
or the related Originator shall repurchase or substitute a Qualified
Substitute Mortgage Loan for the affected Mortgage Loan within 90 days of the
earlier of such discovery by any of the foregoing parties, or the Trustee's or
the Unaffiliated Seller's receipt of notice, in the same manner as it would a
Mortgage Loan for a breach of representation or warranty contained in Sections
3.02 or 3.03. Pursuant to the Pooling and Servicing Agreement the Trustee
shall reconvey to the Unaffiliated Seller or the related Originator the
Mortgage Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would a Mortgage Loan repurchased for breach
of a representation or warranty contained in Sections 3.02 or 3.03.
(i) Notwithstanding anything in this Agreement or the
Pooling and Servicing Agreement to the contrary, the Unaffiliated Seller's
repurchase obligations hereunder shall not include failure of the Trustee to
record assignments of the Mortgage Loans referenced in clause (a)(iii) in
Section 2.05. All parties hereto acknowledge and agree that the Trustee has
the responsibility to record all such assignments of the Mortgage Loans to the
Trustee.
(j) Each of the Originators and the Unaffiliated Seller
shall be jointly and severally responsible for any repurchase, cure or
substitution obligation of any of the Originators or the Unaffiliated Seller
under this Agreement and the Pooling and Servicing Agreement.
ARTICLE FOUR
THE UNAFFILIATED SELLER
Section 4.01. Covenants of the Originators and the
Unaffiliated Seller. Each of the Originators and the Unaffiliated Seller
covenants to the Depositor as follows:
(a) The Originators and the Unaffiliated Seller shall
cooperate with the Depositor and the firm of independent certified public
accountants retained with respect to the issuance of the Certificates in
making available all information and taking all steps reasonably necessary to
permit the accountants' letters required hereunder to be delivered within the
times set for delivery herein.
(b) The Unaffiliated Seller agrees to satisfy or cause to be
satisfied on or prior to the Closing Date, all of the conditions to the
Depositor's obligations set forth in Section 5.01 hereof that are within the
Unaffiliated Seller's (or its agents') control.
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(c) The Originators and the Unaffiliated Seller hereby agree
to do all acts, transactions, and things and to execute and deliver all
agreements, documents, instruments, and papers by and on behalf of the
Originators or the Unaffiliated Seller as the Depositor or its counsel may
reasonably request in order to consummate the transfer of the Mortgage Loans
to the Depositor and the subsequent transfer thereof to the Trustee, and the
rating, issuance and sale of the Certificates.
Section 4.02. Merger or Consolidation. Each of the
Originators and the Unaffiliated Seller will keep in full effect its
existence, rights and franchises as a corporation and will obtain and preserve
its qualification to do business as a foreign corporation, in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement. Any Person into which any of the Originators or the Unaffiliated
Seller may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Originators or the
Unaffiliated Seller shall be a party, or any Person succeeding to the business
of the Originators or the Unaffiliated Seller, shall be approved by the
Certificate Insurer which approval shall not be unreasonably withheld. If the
approval of the Certificate Insurer is not required, the successor shall be an
established mortgage loan servicing institution that is a Permitted Transferee
and in all events shall be the successor of the Originators or the
Unaffiliated Seller without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Originators and the Unaffiliated Seller shall
send notice of any such merger or consolidation to the Trustee and the
Certificate Insurer.
Section 4.03. Costs. In connection with the transactions
contemplated under this Agreement and the Pooling and Servicing Agreement, the
Unaffiliated Seller shall promptly pay (or shall promptly reimburse the
Depositor to the extent that the Depositor shall have paid or otherwise
incurred): (a) the fees and disbursements of the Depositor's, the Seller's and
the Originator's counsel; (b) the fees of S&P and Xxxxx'x; (c) any of the fees
of the Trustee and the fees and disbursements of the Trustee's counsel; (d)
expenses incurred in connection with printing the Prospectus, the Prospectus
Supplement, any amendment or supplement thereto, any preliminary prospectus
and the Certificates; (e) fees and expenses relating to the filing of
documents with the Securities and Exchange Commission (including without
limitation periodic reports under the Exchange Act); (f) the shelf
registration amortization fee of 0.04% of the Class A Certificate Principal
Balance on the Closing Date, paid in connection with the issuance of
Certificates; and (g) all of the initial expenses (not to exceed $75,000) of
the Certificate Insurer including, without limitation, legal fees and
expenses, accountant fees and expenses and expenses in connection with due
diligence conducted on the Mortgage Files. For the avoidance of doubt, the
parties hereto acknowledge that it is the intention of the parties that the
Depositor shall not pay any of the Trustee's fees and expenses in connection
with the transactions contemplated by the Pooling and Servicing Agreement. All
other costs and expenses in connection with the transactions contemplated
hereunder shall be borne by the party incurring such expenses.
Section 4.04. Indemnification. (a) (i) The Originators and
the Unaffiliated Seller, jointly and severally, agree to indemnify and hold
harmless the Depositor, each of its directors, each of its officers who have
signed the Registration Statement, and each of its directors and each person
or entity who controls the Depositor or any such person, within the meaning of
Section 15 of the Securities Act, against any and all losses, claims, damages
or liabilities, joint and several, to which the Depositor or any such person
or entity may become subject, under the Securities Act or otherwise, and will
reimburse the Depositor and each such controlling person for any legal or
other expenses incurred by the Depositor or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise
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out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Prospectus Supplement or any amendment or
supplement to the Prospectus Supplement or the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements in the Prospectus Supplement or any amendment
or supplement to the Prospectus Supplement approved in writing by the
Originators or the Unaffiliated Seller, in light of the circumstances under
which they were made, not misleading, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission relates
to the information contained in the Prospectus Supplement referred to in
Section 3.01(d). This indemnity agreement will be in addition to any liability
which the Originators and the Unaffiliated Seller may otherwise have.
(ii) The Originators and the Unaffiliated Seller,
jointly and severally, agree to indemnify and to hold the Depositor
harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Depositor may sustain in any way
related to the failure of any of the Originators or the Unaffiliated
Seller to perform its duties in compliance with the terms of this
Agreement. The Originators or the Unaffiliated Seller shall
immediately notify the Depositor if a claim is made by a third party
with respect to this Agreement, and the Originators or the
Unaffiliated Seller shall assume the defense of any such claim and
pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Depositor in respect of such
claim. Pursuant to the Pooling and Servicing Agreement, the Trustee
shall reimburse the Unaffiliated Seller in accordance with the
Pooling and Servicing Agreement for all amounts advanced by the
Unaffiliated Seller pursuant to the preceding sentence except when
the claim relates directly to the failure of the Unaffiliated Seller
to perform its duties in compliance with the terms of this Agreement.
(b) The Depositor agrees to indemnify and hold harmless each
of the Originators and the Unaffiliated Seller, each of their respective
directors and each person or entity who controls the Originators or the
Unaffiliated Seller or any such person, within the meaning of Section 15 of
the Securities Act, against any and all losses, claims, damages or
liabilities, joint and several, to which the Originators or the Unaffiliated
Seller or any such person or entity may become subject, under the Securities
Act or otherwise, and will reimburse the Originators and the Unaffiliated
Seller and any such director or controlling person for any legal or other
expenses incurred by such party or any such director or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, the Prospectus Supplement, any
amendment or supplement to the Prospectus or the Prospectus Supplement or the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, but only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission is other than a statement or omission relating to the
information set forth in subsection (a)(i) of this Section 4.04; provided,
however, that in no event shall the Depositor be liable to the Unaffiliated
Seller under this paragraph (b) in an amount in excess of the Depositor's
resale profit or the underwriting fee on the sale of the Certificates. This
indemnity agreement will be in addition to any liability which the Depositor
may otherwise have.
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(c) Promptly after receipt by an indemnified party under
this Section 4.04 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under this Section 4.04, notify the indemnifying party
in writing of the commencement thereof, but the omission to so notify the
indemnifying party will not relieve the indemnifying party from any liability
which the indemnifying party may have to any indemnified party hereunder
except to the extent such indemnifying party has been prejudiced thereby. In
case any such action is brought against any indemnified party, and it notifies
the indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may elect
by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party. After
notice from the indemnifying party to such indemnified party of its election
to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party under this Section 4.04 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. The indemnifying party shall not
be liable for the expenses of more than one separate counsel.
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in the
preceding parts of this Section 4.04 is for any reason held to be unavailable
to or insufficient to hold harmless an indemnified party under subsection (a)
or subsection (b) of this Section 4.04 in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein,
the indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof); provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by the Originators and the
Unaffiliated Seller on the one hand, and the Depositor on the other, the
Originators', the Unaffiliated Seller's and the Depositor's relative knowledge
and access to information concerning the matter with respect to which the
claim was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Originators, the Unaffiliated Seller and the Depositor
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation. For purposes of this Section
4.04, each director of the Depositor, each officer of the Depositor who signed
the Registration Statement, and each person, if any who controls the Depositor
within the meaning of Section 15 of the Securities Act, shall have the same
rights to contribution as the Depositor, and each director of the Originators
or the Unaffiliated Seller, and each person, if any who controls the
Originators or the Unaffiliated Seller within the meaning of Section 15 of the
Securities Act, shall have the same rights to contribution as the Originators
and the Unaffiliated Seller.
ARTICLE FIVE
CONDITIONS OF CLOSING
Section 5.01. Conditions of Depositor's Obligations. The
obligations of the Depositor to purchase the Mortgage Loans will be subject to
the satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Mortgage Loans, such conditions shall be deemed
satisfied or waived.
31
(a) Each of the obligations of the Unaffiliated Seller
required to be performed by it on or prior to the Closing Date pursuant to the
terms of this Agreement shall have been duly performed and complied with and
all of the representations and warranties of the Unaffiliated Seller under
this Agreement shall be true and correct as of the Closing Date and no event
shall have occurred which, with notice or the passage of time, would
constitute a default under this Agreement, and the Depositor shall have
received a certificate to the effect of the foregoing signed by an authorized
officer of the Unaffiliated Seller.
(b) The Depositor shall have received a letter dated the
date of this Agreement, in form and substance acceptable to the Depositor and
its counsel, prepared by Deloitte & Touche LLP, independent certified public
accountants, regarding the numerical information contained in the Prospectus
Supplement under the captions "Prepayment and Yield Considerations" and "The
Mortgage Pool."
(c) The Mortgage Loans will be acceptable to the Depositor,
in its sole discretion.
(d) The Depositor shall have received the following
additional closing documents, in form and substance satisfactory to the
Depositor and its counsel:
(i) the Mortgage Loan Schedule;
(ii) the Pooling and Servicing Agreement dated as of
June 1, 1998 and the Underwriting Agreement dated as of June 2, 1998
between the Depositor and Prudential Securities Incorporated and all
documents required thereunder, duly executed and delivered by each of
the parties thereto other than the Depositor;
(iii) officer's certificates of an officer of each of
the Originators and the Unaffiliated Seller, dated as of the Closing
Date, and attached thereto resolutions of the board of directors and a
copy of the charter and by-laws;
(iv) copy of each of the Originators and the
Unaffiliated Seller's charter and all amendments, revisions, and
supplements thereof, certified by a secretary of each entity;
(v) an opinion of the counsel for the Originators and
the Unaffiliated Seller as to various corporate matters (it being
agreed that the opinion shall expressly provide that the Trustee shall
be entitled to rely on the opinion);
(vi) opinions of counsel for the Unaffiliated Seller, in
forms acceptable to the Depositor, its counsel, S&P and Xxxxx'x as to
such matters as shall be required for the assignment of a rating to
the Class A Certificates of AAA by S&P, and Aaa by Xxxxx'x (it being
agreed that such opinions shall expressly provide that the Trustee
shall be entitled to rely on such opinions);
(vii) a letter from Xxxxx'x that it has assigned a
rating of Aaa to the Class A Certificates;
(viii) a letter from S&P that it has assigned a rating
of AAA to the Class A Certificates;
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(ix) an opinion of counsel for the Trustee in form and
substance acceptable to the Depositor, its counsel, Xxxxx'x and S&P
(it being agreed that the opinion shall expressly provide that the
Unaffiliated Seller shall be entitled to rely on the opinion);
(x) an opinion or opinions of counsel for the Servicer,
in form and substance acceptable to the Depositor, its counsel,
Xxxxx'x and S&P (it being agreed that the opinion shall expressly
provide that the Unaffiliated Seller shall be entitled to rely on the
opinion); and
(xi) an opinion or opinions of counsel for the
Certificate Insurer, in each case in form and substance acceptable to
the Depositor, its counsel, Xxxxx'x and S&P (it being agreed that the
opinion shall expressly provide that the Unaffiliated Seller shall be
entitled to rely on the opinion).
(e) The Certificate Insurance Policy shall have been duly
executed, delivered and issued with respect to the Class A Certificates.
(f) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall be
satisfactory in form and substance to the Depositor and its counsel.
(g) The Unaffiliated Seller shall have furnished the
Depositor with such other certificates of its officers or others and such
other documents or opinions as the Depositor or its counsel may reasonably
request.
Section 5.02. Conditions of Unaffiliated Seller's
Obligations. The obligations of the Unaffiliated Seller under this Agreement
shall be subject to the satisfaction, on the Closing Date, of the following
conditions:
(a) Each of the obligations of the Depositor required to be
performed by it at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Depositor contained in this Agreement
shall be true and correct as of the Closing Date and the Unaffiliated Seller
shall have received a certificate to that effect signed by an authorized
officer of the Depositor.
(b) The Unaffiliated Seller shall have received the
following additional documents:
(i) the Pooling and Servicing Agreement, and all
documents required thereunder, in each case executed by the Depositor
as applicable; and
(ii) a copy of a letter from Xxxxx'x to the Depositor to
the effect that it has assigned a rating of Aaa to the Class A
Certificates and a copy of a letter from S&P to the Depositor to the
effect that it has assigned a rating of AAA to the Class A
Certificates.
(iii) an opinion of counsel for the Trustee in form and
substance acceptable to the Unaffiliated Seller and its counsel;
(iv) an opinion or opinions of counsel for the
Certificate Insurer, in each case in form and substance acceptable to
the Unaffiliated Seller and its counsel;
33
(v) an opinion of the counsel for the Depositor as to
securities and tax matters; and
(vi) an opinion of the counsel for the Depositor as to
true sale matters.
(c) The Depositor shall have furnished the Unaffiliated
Seller with such other certificates of its officers or others and such other
documents to evidence fulfillment of the conditions set forth in this
Agreement as the Unaffiliated Seller may reasonably request.
Section 5.03. Termination of Depositor's Obligations. The
Depositor may terminate its obligations hereunder by notice to the
Unaffiliated Seller at any time before delivery of and payment of the purchase
price for the Mortgage Loans if: (a) any of the conditions set forth in
Section 5.01 are not satisfied when and as provided therein; (b) there shall
have been the entry of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Unaffiliated Seller, or for the winding up or liquidation of the affairs
of the Unaffiliated Seller; (c) there shall have been the consent by the
Unaffiliated Seller to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Unaffiliated Seller
or of or relating to substantially all of the property of the Unaffiliated
Seller; (d) any purchase and assumption agreement with respect to the
Unaffiliated Seller or the assets and properties of the Unaffiliated Seller
shall have been entered into; or (e) a Termination Event shall have occurred.
The termination of the Depositor's obligations hereunder shall not terminate
the Depositor's rights hereunder or its right to exercise any remedy available
to it at law or in equity.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered to or mailed by registered mail, postage
prepaid, or transmitted by telex or telegraph and confirmed by a similar
mailed writing, if to the Depositor, addressed to the Depositor at Prudential
Securities Secured Financing Corporation, Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Asset Finance Group, or to such other address
as the Depositor may designate in writing to the Unaffiliated Seller and if to
the Unaffiliated Seller, addressed to the Unaffiliated Seller at ABFS 1998-2,
Inc., Xxxxxxxxxx Xxxxxx Xxxxxx, 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000, Attention: Xx. Xxxxxxx Xxxxxxxx, Xx., or to such
other address as the Unaffiliated Seller may designate in writing to the
Depositor.
Section 6.02. Severability of Provisions. Any part,
provision, representation, warranty or covenant of this Agreement which is
prohibited or which is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any part, provision, representation, warranty or
covenant of this Agreement which is prohibited or unenforceable or is held to
be void or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, the parties hereto waive any
provision of law which prohibits or renders void or unenforceable any
provision hereof.
34
Section 6.03. Agreement of Unaffiliated Seller. The
Unaffiliated Seller agrees to execute and deliver such instruments and take
such actions as the Depositor may, from time to time, reasonably request in
order to effectuate the purpose and to carry out the terms of this Agreement.
Section 6.04. Survival. The parties to this Agreement agree
that the representations, warranties and agreements made by each of them
herein and in any certificate or other instrument delivered pursuant hereto
shall be deemed to be relied upon by the other party hereto, notwithstanding
any investigation heretofore or hereafter made by such other party or on such
other party's behalf, and that the representations, warranties and agreements
made by the parties hereto in this Agreement or in any such certificate or
other instrument shall survive the delivery of and payment for the Mortgage
Loans.
Section 6.05. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 6.06. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as expressly permitted by
the terms hereof, this Agreement may not be assigned, pledged or hypothecated
by any party hereto to a third party without the written consent of the other
party to this Agreement and the Certificate Insurer; provided, however, that
the Depositor may assign its rights hereunder without the consent of the
Unaffiliated Seller.
Section 6.07. Confirmation of Intent; Grant of Security
Interest. It is the express intent of the parties hereto that the conveyance
of the Mortgage Loans by the Originators to the Unaffiliated Seller and by the
Unaffiliated Seller to the Depositor as contemplated by this Unaffiliated
Seller's Agreement be, and be treated for all purposes as, a sale of the
Mortgage Loans. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Originators to the
Unaffiliated Seller or by the Unaffiliated Seller to the Depositor to secure a
debt or other obligation of the Originators or the Unaffiliated Seller, as the
case may be. However, in the event that, notwithstanding the intent of the
parties, the Mortgage Loans are held to continue to be property of the
Originators or the Unaffiliated Seller then (a) this Unaffiliated Seller's
Agreement shall also be deemed to be a security agreement within the meaning
of Articles 8 and 9 of the Uniform Commercial Code; (b) the transfer of the
Mortgage Loans provided for herein shall be deemed to be a grant by the
Originators to the Unaffiliated Seller and by the Unaffiliated Seller to the
Depositor of a security interest in all of such parties' right, title and
interest in and to the Mortgage Loans and all amounts payable on the Mortgage
Loans in accordance with the terms thereof and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities
or other property; (c) the possession by the Depositor of Mortgage Notes and
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9-305 of the Uniform Commercial Code; and (d) notifications to persons holding
such property, and acknowledgments, receipts or confirmations from persons
holding such property, shall be deemed notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or agents
(as applicable) of the Depositor for the purpose of perfecting such security
interest under applicable law. Any assignment of the interest of the Depositor
pursuant to any provision hereof shall also be deemed to be an assignment of
any security interest created hereby. The Originators, the Unaffiliated Seller
and the Depositor shall, to the extent consistent with this Unaffiliated
Seller's Agreement, take such actions as may be necessary to ensure that, if
this Unaffiliated Seller's Agreement were deemed to create a security interest
in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.
35
Section 6.08. Miscellaneous. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.
Section 6.09. Amendments. (a) This Agreement may be amended
from time to time by the Originators, the Unaffiliated Seller and the
Depositor by written agreement, upon the prior written consent of the
Certificate Insurer, without notice to or consent of the Certificateholders to
cure any ambiguity, to correct or supplement any provisions herein, to comply
with any changes in the Code, or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, at the expense
of the party requesting the change, delivered to the Trustee, adversely affect
in any material respect the interests of any Certificateholder; and provided,
further, that no such amendment shall reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, or change the rights or obligations of any other party hereto
without the consent of such party.
(b) This Agreement may be amended from time to time by the
Unaffiliated Seller and the Depositor with the consent of the Certificate
Insurer, the Majority Certificateholders and the Holders of the majority of
the Percentage Interest in the Class R Certificates for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders; provided, however, that no such amendment shall be made unless the
Trustee receives an Opinion of Counsel, at the expense of the party requesting
the change, that such change will not adversely affect the status of the REMIC
Trust as a REMIC or cause a tax to be imposed on the REMIC, and provided
further, that no such amendment shall reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate or reduce the percentage for each Class the Holders of which are
required to consent to any such amendment without the consent of the Holders
of 100% of each Class of Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders
under this Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance
thereof.
Section 6.10. Third-Party Beneficiaries. The parties agree
that each of the Certificate Insurer and the Trustee is an intended
third-party beneficiary of this Agreement to the extent necessary to enforce
the rights and to obtain the benefit of the remedies of the Depositor under
this Agreement which are assigned to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer pursuant to the Pooling and
Servicing Agreement and to the extent necessary to obtain the benefit of the
enforcement of the obligations and covenants of the Unaffiliated Seller under
Section 4.01 and 4.04(a)(ii) of this Agreement. The parties further agree that
Prudential Securities Incorporated and each of its directors and each person
or entity who controls Prudential Securities Incorporated or any such person,
within the meaning of Section 15 of the Securities Act (each, an "Underwriter
Entity") is an intended third-party beneficiary of this Agreement to the
extent necessary to obtain the benefit of the enforcement of the obligations
and covenants of the Unaffiliated Seller with respect to each Underwriter
Entity under Section 4.04(a)(i) of this Agreement.
36
Section 6.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(b) THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH HEREBY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF MANHATTAN
IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL
DIRECTED TO THE ADDRESS SET FORTH IN SECTION 6.01 OF THIS AGREEMENT AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL
HAVE BEEN DEPOSITED IN THE U.S. MAIL, POSTAGE PREPAID. THE DEPOSITOR AND THE
UNAFFILIATED SELLER EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF
THE DEPOSITOR AND THE UNAFFILIATED SELLER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT EITHER'S RIGHT TO BRING ANY ACTION OR
PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH HEREBY
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE
RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 6.12. Execution in Counterparts. This Agreement may
be executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties, to this Unaffiliated
Seller's Agreement have caused their names to be signed by their respective
officers thereunto duly authorized as of the date first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By: /s/ Xxxx X. Xxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
ABFS 1998-2, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
AMERICAN BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
HOMEAMERICAN CREDIT, INC.,
D/B/A UPLAND MORTGAGE
By: /s/ Xxxxxxx M, Xxxxx
-----------------------------------
Name: Xxxxxxx M, Xxxxx
Title: Senior Vice President
NEW JERSEY MORTGAGE INVESTMENT
CORP.
By: /s/ Xxxxxxx M, Xxxxx
-----------------------------------
Name: Xxxxxxx M, Xxxxx
Title: Senior Vice President
