EXHIBIT 10.48
WHOLE LOAN PURCHASE AND SALE AGREEMENT
MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
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between
[Xxxxxx Mortgage Corp.]
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Seller
and
PRUDENTIAL SECURITIES REALTY FUNDING CORPORATION
Purchaser
TABLE OF CONTENTS
Page
Section 1. Definitions................................................................. 1
Section 2. Procedures for Purchases of Mortgage Loans.................................. 8
Section 3. Sale of Mortgage Loans to Takeout Investor.................................. 9
Section 4. Completion Fee.............................................................. 12
Section 5. Servicing of the Mortgage Loans............................................. 13
Section 6. Trade Assignments........................................................... 14
Section 7. Transfers of Beneficial Interest in Mortgage Loans by Purchaser............. 15
Section 8. Record Title to Mortgage Loans; Intent of Parties; Security Interest........ 15
Section 9. Representations and Warranties.............................................. 16
Section 10. Covenants of Seller......................................................... 24
Section 11. Term........................................................................ 27
Section 12. Exclusive Benefit of Parties; Assignment.................................... 28
Section 13. Amendments; Waivers; Cumulative Rights...................................... 28
Section 14. Execution in Counterparts................................................... 28
Section 15. Effect of Invalidity of Provisions.......................................... 28
Section 16. Governing Law............................................................... 28
Section 17. Notices..................................................................... 28
Section 18. Entire Agreement............................................................ 29
Section 19. Costs of Enforcement........................................................ 29
Section 20. Consent to Service.......................................................... 29
Section 21. Submission to Jurisdiction.................................................. 29
Section 22. Jurisdiction Not Exclusive.................................................. 29
(i)
Section 23. Construction.................................................. 29
EXHIBITS
Exhibit A Trust Receipt
Exhibit B-1 Warehouse Lender's Release
Exhibit B-2 Warehouse Lender's Wire Instructions
Exhibit C-1 Seller's Release
Exhibit C-2 Seller's Wire Instructions
Exhibit D-1 Trade Assignment
Exhibit D-2 Trade Assignment (Blanket)
Exhibit 1 to
Exhibit D-2 Withdrawal of Consent to Blanket Trade Assignment
Exhibit E Purchaser's Wire Instructions
Exhibit F Confirmation
Exhibit G Notice of Rejection of Trade Assignment
Exhibit H Settlement Modification Letter
Exhibit I Takeout Confirmation
(ii)
EXHIBIT 10.48
MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
-----------------------------------------
This Mortgage Loan Purchase and Sale Agreement ("Agreement"), dated as
of the date set forth on the cover page hereof, is by and between PRUDENTIAL
SECURITIES REALTY FUNDING CORPORATION ("Purchaser") and the Seller whose name is
set forth on the cover page hereof ("Seller").
PRELIMINARY STATEMENT
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Seller may, in its sole discretion, offer to sell to Purchaser from
time to time a l00% undivided ownership interest in certain Mortgage Loans, and
Purchaser, in its sole discretion, may agree to purchase such Mortgage Loans
from Seller in accordance with the terms and conditions set forth in this
Agreement. Seller, subject to the terms hereof, will cause each Mortgage Loan
to be purchased by Takeout Investor. During the period from the purchase of a
Mortgage Loan to the sale of the Mortgage Loan to Takeout Investor, Purchaser
expects to rely entirely upon Seller to service such Mortgage Loan.
The parties hereto hereby agree as follows:
Section 1. Definitions.
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Capitalized terms used but not defined herein shall have the meanings
set forth in the Custodial Agreement. As used in this Agreement, the following
terms shall have the following meanings:
"Act of Insolvency": With respect to Seller, (a) the
commencement by Seller as debtor of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar law, or Seller's seeking the appointment of a receiver,
trustee, custodian or similar official for Seller or any substantial
part of its property, or (b) the commencement of any such case or
proceeding against Seller, or another's seeking such appointment, or
the filing against Seller of an application for a protective decree
which (1) is consented to or not timely contested by Seller, (2)
results in the entry of an order for relief, such an appointment, the
issuance of such a protective decree or the entry of an order having a
similar effect, or (3) is not dismissed within thirty (30) days, (c)
the making by Seller of a general assignment for the benefit of
creditors, or (d) the admission in writing by Seller that Seller is
unable to pay its debts as they become due or the nonpayment generally
by Seller of its debts as they become due.
"Assignee": As defined in Section 7.
"Business Day": Any day other than (a) a Saturday, Sunday or
other day on which banks located in The City of New York, New York are
authorized or obligated by law or executive order to be closed or (b)
any day on which Prudential Securities Realty Funding Corporation is
closed for business, provided that notice thereof shall have been
given not less than seven (7) calendar days prior to such day, and
provided further that such closing does not conflict with any business
between Seller and Purchaser scheduled for such date prior to the
giving of such notice.
"Collateral": As defined in Section 8(c).
"Commitment Amount": The aggregate outstanding principal amount
of Mortgage Loans to be purchased pursuant to a Takeout Commitment. If
the Commitment Amount is expressed as a fixed amount plus or minus a
percentage in the related Takeout Confirmation, then the amount
required to be delivered by Seller shall be the minimum amount of such
range and the amount required to be purchased by Takeout Investor
shall be the maximum amount of such range.
"Commitment Date": The date set forth in a Takeout Confirmation
as the commitment date.
"Commitment Guidelines": The guidelines, if any, issued by
Takeout Investor regarding the issuance of Takeout Commitments, as
amended from time to time by Takeout Investor.
"Commitment Number": With respect to a Takeout Commitment, the
number identified on the Takeout Confirmation as the commitment
number.
"Completion Fee": With respect to each Mortgage Loan Pool, an
amount equal to the Discount plus the Net Carry Adjustment, less any
reduction pursuant to Section 4(c), which amount shall be payable to
Seller by Purchaser as compensation to Seller for its services
hereunder in connection with the purchase of a Mortgage Loan Pool.
"Confirmation": A written confirmation of Purchaser's intent to
purchase a Mortgage Loan Pool,
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which written confirmation shall be substantially in the form attached
hereto as Exhibit F.
"Credit File": All Mortgage Loan papers and documents required
to be maintained pursuant to the Sale Agreement, and all other papers
and records of whatever kind or description whether developed or
originated by Seller or others, required to document or service the
Mortgage Loan provided, however, that such Mortgage Loan papers,
documents and records shall not include any Mortgage Loan papers,
documents or records which are contained in the Custodial File.
"Cure Date": With respect to a Mortgage Loan, the date occurring
20 Business Days after the Purchase Date.
"Custodial Account": As defined in Section 5(b).
"Custodial Agreement": The Custodial Agreement , dated as qf the
date set forth on the cover sheet thereof, among Seller, Purchaser and
Custodian.
"Custodial File": As defined in the Custodial Agreement.
"Custodian": The Custodian whose name is set forth on the cover
page of the Custodial Agreement and its permitted successors
thereunder.
"Cut-off Date": With respect to a Mortgage Loan, the last day of
a month on which the Settlement Date can.. occur if accrued interest
for such month is to be collected by Takeout Investor.
"Defective Mortgage Loan": With respect to any Mortgage Loan,
either (i) the Document File does not contain a document required to
be contained therein, (ii) any document within a Document File is, in
the judgment of Takeout Investor, defective or inaccurate in any
material respect, as determined upon evaluation of the Document File
against the requirements of the Sale Agreement or (iii) any document
in the Document File is not legal, valid and binding.
"Discount": With respect to Mortgage Loan Pool sold by Seller to
Purchaser, the amount set forth on the related Confirmation as the
Discount.
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"Document File": The Credit File and the Custodial File.
"Due Date": The day of the month on which the Monthly Payment is
due on a Mortgage Loan.
"Exhibit X-x Letter": As defined in Section 2 (a).
"Exhibit C-1 Letter": As defined in Section 2 (a).
"Expiration Date": With respect to any Takeout Commitment, the
expiration date thereof.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor
thereto.
"FNMA": Federal National Mortgage Association or any successor
thereto.
"Losses": Any and all losses, claims, damages, liabilities or
expenses (including reasonable attorneys' fees) incurred by any person
specified; provided, however, that "Losses" shall not include any
losses, claims, damages, liabilities or expenses which would have been
avoided had such person taken reasonable actions to mitigate such
losses, claims, damages, liabilities or expenses.
"Monthly Payment": The scheduled monthly payment of principal
and interest on a Mortgage Loan.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple in real property
securing a Mortgage Note.
"Mortgage Interest Rate": The annual rate of interest borne on a
Mortgage Note.
"Mortgage Loan": A conventional single family residential
mortgage loan which is subject to this Agreement, and which satisfies
the requirements of the Sale Agreement as the same may be modified
from time to time.
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"Mortgage Loan Pool": A group of Mortgage Loans purchased by
Purchaser hereunder and subject to a single Confirmation.
"Mortgage Note": The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
"Mortgaged Property": The property subject to the lien of the
Mortgage securing a Mortgage Note.
"Mortgagor": The obligor on a Mortgage Note.
"NCUA": National Credit Union Administration, or any successor
thereto.
"Net Carry Adjustment": As defined in Section 4 (b).
"Notice of Rejection of Trade Assignment": With respect to any
Mortgage Loan that Purchaser elects not to purchase, a notification by
Purchaser to Takeout Investor in the form of Exhibit G.
"OTS": Office of Thrift Supervision or any successor thereto.
"Parent Company": A corporation or other entity owning at least
50% of the outstanding shares of voting stock of Seller.
"Pass-Through Rate": With respect to each Mortgage Loan Pool
purchased by Purchaser hereunder, the rate at which interest from the
Mortgage is passed through to Purchaser which initially shall be the
rate of interest specified in the related Confirmation as the Pass-
Through Rate, subject to adjustment in the manner agreed to by
Purchaser and Seller.
"Price Adjustment": With respect to a Takeout Commitment, the
incremental percentage by which the trade price is adjusted by
applying the appropriate formula set forth in a price adjustment
summary sheet when delivered by Purchaser to Seller which price
adjustment summary sheet may be amended from time to time by
Purchaser's delivery to Seller of a new price adjustment summary
sheet.
"Purchase Date": With respect to any Mortgage Loan Pool
purchased by Purchaser hereunder, the date of
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payment thereof by Purchaser to Seller of the Purchase Price.
"Purchase Price": With respect to each Mortgage Loan Pool
purchased by Purchaser hereunder, an amount equal to the Trade
Principal less an amount equal to the product of the Trade Principal
and the Discount.
"Purchaser": Prudential Securities Realty Funding Corporation
and its successors in interest, including, but not limited to, a party
to whom a Trust Receipt is assigned as provided hereunder and in the
Custodial Agreement.
"Purchaser's Wire Instructions": The wire instructions set forth
in a letter in the form of Exhibit E.
"RTC": Resolution Trust Corporation or any successor thereto.
"Sale Agreement": The agreement providing for the purchase by
Takeout Investor of Mortgage Loans from Seller.
"Seller": The Seller whose name is set forth on the cover page
hereof, and its permitted successors hereunder.
"Seller's Wire Instructions": The wire instructions set forth in
a letter in the form of Exhibit C-2.
"Settlement Date": With respect to any Mortgage Loan, the date
of payment thereof by Takeout Investor to Purchaser of the Takeout
Proceeds.
"Settlement Modification Letter": A letter in the form of
Exhibit H.
"Successor Servicer": An entity designated by Purchaser, in
conformity with Section 17, to replace Seller as issuer and servicer,
mortgagee or seller/servicer of the Mortgage Loans evidenced by a
Trust Receipt.
"Takeout Commitment": A commitment of Seller to sell one or more
Mortgage Loans to Takeout Investor and of
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Takeout Investor to purchase one or more Mortgage Loans from Seller.
"Takeout Confirmation": The written notification to Seller from
Takeout Investor containing all of the relevant details of the Takeout
Commitment, including but not limited to the information set forth in
Exhibit I, which notification may take the form of a trade
confirmation.
"Takeout Investor": An Agency or a Conduit, as applicable.
"Takeout Proceeds": With respect to any Mortgage Loan Pool, the
related Trade Principal plus accrued interest as calculated in
accordance with Section 3 (a) (2) , as amended by any related
Settlement Modification Letter accepted by Purchaser.
"Third Party Underwriter": Any third party, including but not
limited to a mortgage loan pool insurer, who underwrites the Mortgage
Loan(s) prior to the purchase by Purchaser of the related Mortgage
Loan Pool.
"Third Party Underwriter's Certificate": A certificate issued by
a Third Party Underwriter with respect to a Mortgage Loan, certifying
that such Mortgage Loan complies with its underwriting requirements.
"Trade Assignment": The assignment by Seller to Purchaser of
Seller's rights under a specific Takeout Commitment, in the form of
Exhibit D-l, or of Seller's rights under all Takeout Commitments, in
the form of Exhibit D-2.
"Trade Price": The trade price set forth on a Takeout Commitment
less any applicable Price Adj ustment.
"Trade Principal": With respect to any Mortgage Loan Pool, the
aggregate outstanding principal balance of such Mortgage Loan
multiplied by a percentage equal to the Trade Price.
"Warehouse Lender": Any lender providing financing to Seller for
the purpose of originating or purchasing
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Mortgage Loans which has a security interest in such Mortgage Loans as
collateral for the obligations of Seller to such lender.
"Warehouse Lender's Wire Instructions": The wire instructions set
forth in a letter in the form of Exhibit B-2.
Section 2. Procedures for Purchases of Mortgage Loans
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(a) Purchaser may, in its sole discretion, from time to time, purchase
one or more Mortgage Loan Pools from Seller. Prior to Purchaser's election to
purchase any Mortgage Loan Pool, Purchaser shall have received from Custodian
(i) an original Trust Receipt relating to all Mortgage Loans (including the
Mortgage Loan Pool being purchased) relating to Cash Window Transactions or
Conduit Transactions, as applicable, the original fully completed and
authenticated by Custodian and (ii) a copy of the Takeout Confirmation related
to the Mortgage Loan(s) in such Mortgage Loan Pool, together with a Trade
Assignment in the form of Exhibit D-l or Exhibit D-2, executed by Seller and
Takeout Investor and (iii) an original letter in the form of Exhibit X-x (an
"Exhibit X-x Letter") from the applicable Warehouse Lender (if any), or an
original letter in the form of Exhibit C-l (an "Exhibit C-l Letter") in the
event that there is no Warehouse Lender. Simultaneously with the payment by
Purchaser of the Purchase Price, in accordance with the Warehouse Lender's Wire
Instructions or Seller's Wire Instructions, as applicable, with respect to a
Mortgage Loan pool, Seller hereby conveys to Purchaser all of Seller's right,
title and interest in and to the related Mortgage Loan(s) free and clear of any
lien, claim or encumbrance. Notwithstanding the satisfaction by Seller of the
conditions specified in this Section 2(a), Purchaser is not obligated to
purchase any Mortgage Loans offered to it hereunder.
(b) If Purchaser elects to purchase any Mortgage Loan Pool, Purchaser
shall pay the amount of the Purchase Price for such Mortgage Loan Pool by wire
transfer of immediately available funds in accordance with the Warehouse
Lender's Wire Instructions or if there is no Warehouse Lender, Seller's Wire
Instructions. Upon such payment and not otherwise, Purchaser shall be deemed to
have accepted the related Trade Assignment. In the event that Purchaser rejects
a Mortgage Loan for purchase for any reason and/or does not transmit the
applicable Purchase Price, (i) the Trust Receipt delivered by Custodian to
Purchaser in anticipation of such purchase shall automatically be null and void
and the previously existing Trust Receipt for that type of transaction shall be
in full force and effect, (ii) Purchaser shall not
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consummate the transactions contemplated in the applicable Takeout Confirmation
and shall deliver to Takeout Investor (with a copy to Seller and Custodian) a
Notice of Rejection of Trade Assignment, provided, however, that failure of
Purchaser to give such notice shall not affect the rejection by Purchaser of the
Trade Assignment, and (iii) if Purchaser shall nevertheless receive any portion
of the related Takeout Proceeds, Purchaser shall promptly pay such Takeout
Proceeds to Seller in accordance with Seller's Wire Instructions.
(c) The terms and conditions of the purchase of each Mortgage Loan
Pool shall be as set forth in this Agreement.
Section 3. Sale of Mortgage Loans to Takeout Investor.
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(a) With respect to Mortgage Loan(s) that Purchaser has elected to
purchase, Purchaser may, at its option, either (i) instruct Custodian to deliver
to Takeout Investor, in accordance with Takeout Investor's instructions, the
Custodial File in respect of such Mortgage Loans, in the manner and at the time
set forth in the Custodial Agreement, or (ii) provide for the delivery of the
Custodial File through an escrow arrangement satisfactory to Purchaser and
Takeout Investor. Seller shall on or after the Purchase Date, but in no event
later than the related Expiration Date, promptly deliver to Takeout Investor the
related Credit File and thereafter any and all additional documents requested by
Takeout Investor to enable Takeout Investor to purchase such Mortgage Loan(s) on
or before the related Cure Date.
(b) Except when Purchaser has accepted a Settlement Modification
Letter, unless the Takeout Proceeds are received by Purchaser (in immediately
available funds in accordance with Purchaser's Wire Instructions) with respect
to the Mortgage Loans in a Mortgage Pool, on or before the related Cure Date,
the Completion Fee relating to such Mortgage Pool shall not be payable until the
earlier to occur of (1) the date of receipt by Purchaser of the Takeout Proceeds
and (2) the satisfaction by Seller of its obligations pursuant to the exercise
by Purchaser of any remedial election authorized by this Section 3. Upon
receipt by Purchaser, prior to the Cure Date, of a Settlement Modification
Letter, duly executed by Takeout Investor and Seller, Purchaser may, at its
election, agree to the postponement of the Settlement Date and such other
matters as are set forth in the Settlement Modification Letter. If Purchaser
elects to accept a Settlement Modification Letter, Purchaser shall, not later
than two (2) Business Days after receipt of such Settlement Modification Letter
execute the Settlement Modification Letter
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and send, via facsimile, copies of such fully executed Settlement Modification
Letter to Seller and Takeout Investor. Upon execution by Purchaser of a
Settlement Modification Letter, Purchaser shall recalculate the amount of the
Completion Fee, if any, due to Seller using the new terms included in the
Settlement Modification Letter and shall pay to Seller, not later than two (2)
Business Days after Purchaser's receipt of such Settlement Modification Letter,
the amount of such recalculated Completion Fee.
(C) (1) If a breach by Seller of this Agreement results in any
Mortgage Loan being a Defective Mortgage Loan at the time of the delivery of the
related Trust Receipt to Purchaser and in Purchaser's sole judgement the defects
in such Mortgage Loan will not be cured (or in fact are not cured) by Seller
prior to the Cure Date, Purchaser, at its election, may require that Seller,
upon receipt of notice from Purchaser of its exercise of such right, either (i)
immediately repurchase Purchaser's ownership interest in such Defective Mortgage
Loan by remitting to Purchaser (in immediately available funds in accordance
with Purchaser's Wire Instructions) the amount paid by Purchaser for such
Defective Mortgage Loan plus interest at the Pass-Through Rate on the principal
amount thereof from the date of Purchaser's purchase of the related Mortgage
Loan Pool to the date of such repurchase or (ii) deliver to Custodian a Mortgage
Loan in exchange for such Defective Mortgage Loan, which newly delivered
Mortgage Loan shall be in all respects acceptable to Purchaser in Purchaser's
reasonable discretion. If the aggregate principal balance of all Mortgage
Loan(s) that are accepted by Purchaser pursuant to clause (ii) of the
immediately preceding sentence is less than the aggregate principal balance of
all Defective Mortgage Loan(s) that are being replaced by such Mortgage Loan(s),
Seller shall remit with such Mortgage Loan to Purchaser an amount equal to the
difference between the aggregate principal balance of the new Mortgage Loan(s)
accepted by Purchaser and the aggregate principal balance of the Defective
Mortgage Loan(s) being replaced thereby.
(c) (2) If Seller fails to comply with its obligations in the manner
described in Section 3 (c) (1), not later than the third day after receipt by
Seller of notice from Purchaser, Seller's rights and obligations to service
Mortgage Loan(s) as provided in this Agreement, shall terminate. If an Act of
Insolvency occurs at any time, Seller's rights and obligations to service the
Mortgage Loan(s), as provided in this Agreement, shall terminate immediately,
without any notice or action by Purchaser. Upon any such termination, Purchaser
is hereby authorized and empowered as the exclusive agent for Seller to
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sell and transfer such rights to service the Mortgage Loan(s) for such price and
on such terms and conditions as Purchaser shall reasonably determine, and Seller
shall not otherwise attempt to sell or transfer such rights to service without
the prior consent of Purchaser. Seller shall perform all acts and take all
action so that the Mortgage Loan(s) and all files and documents relating to such
Mortgage Loan(s) held by Seller, together with all escrow amounts relating to
such Mortgage Loan(s), are delivered to Successor Servicer. To the extent that
the approval of any Third Party Underwriter or any other insurer or guarantor is
required for any such sale or transfer, Seller shall fully cooperate with
Purchaser to obtain such approval. Upon exercise by Purchaser of its remedies
under this Section 3(c) (2), Seller hereby authorizes Purchaser to receive all
amounts paid by any purchaser of such rights to service the Mortgage Loan(s) and
to remit such amounts to Seller subject to Purchaser's rights of set-off under
this Agreement. Upon exercise by Purchaser of its remedies under this Section
3(c) (2), Purchaser's obligation to pay and Seller's right to receive any
portion of the Completion Fee relating to such Mortgage Loan(s) shall
automatically be cancelled and become null and void, provided that such
cancellation shall in no way relieve Seller or otherwise affect the obligation
of Seller to indemnify and hold Purchaser harmless as specified in Section 3(e).
(d) Each Mortgage Loan required to be delivered to Successor Servicer
by Section 3(c) (2) shall be delivered free of any servicing rights in favor of
Seller and free of any title, interest, lien, encumbrance or claim of any kind
of Seller. Seller shall deliver or cause to be delivered all files and documents
relating to each Mortgage Loan held by Seller to Successor Servicer. Seller
shall promptly take such actions and furnish to Purchaser such documents that
Purchaser deems necessary or appropriate to enable Purchaser to cure any defect
in each such Mortgage Loan or to enforce such Mortgage Loans, as appropriate.
(e) Seller agrees to indemnify and hold Purchaser and its assigns
harmless from and against all Losses resulting from or relating to any breach or
failure to perform by Seller of any representation, warranty, covenant, term or
condition made or to be performed by Seller under this Agreement.
(f) No exercise by Purchaser of its rights under this Section 3 shall
relieve Seller of responsibility or liability for any breach of this Agreement.
(g) Seller hereby grants Purchaser a right of set-off against the
payment of any amounts that may be due and payable to
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Purchaser from Seller, such right to be upon any and all monies or other
property of Seller held or received by Purchaser, or due and owing from
Purchaser to Seller.
Section 4. Completion Fee.
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(a) With respect to each Mortgage Loan Pool that Purchaser elects to
purchase hereunder, Purchase shall pay to Seller a Completion Fee. The
Completion Fee shall be payable by Purchaser as provided in subsection (e)
below.
(b) For purposes of calculating that portion of the Completion Fee
composed of the "Net Carry Adjustment", the Net Carry Adjustment shall be an
amount (which may be a negative number) equal to (A) the product obtained by
multiplying the number of days in the period beginning on the Purchase Date to
but not including the Settlement Date and the difference between (i) the product
of the rate of interest to be borne by the related Mortgage Loans in the
Mortgage Pool and the aggregate principal amount of such Mortgage Loans and (ii)
the daily application of the applicable Pass-Through Rate to the Purchase Price
(B) divided by 360.
(c) If a Mortgage Loan Pool is purchased by Purchaser in the month
prior to the month in which the related Settlement Date occurs, (A) all interest
which accrues on the related Mortgage Loans, on and after the Purchase Date,
through the last day of the month prior to the month in which such Settlement
Date occurs, shall be paid to Purchaser by Seller, as servicer, on the related
Settlement Date and (B) all interest which accrues on the Mortgage Loans in such
Mortgage Loan Pool on and after the first day of the month in which such
Settlement Date occurs, through the day immediately prior to such Settlement
Date, will be paid to Purchaser by Takeout Investor on such Settlement Date
unless such Settlement Date occurs after the Cut-off Date of such month in which
event Seller, as servicer, shall pay such amount to Purchaser on such Settlement
Date. If a Mortgage Loan Pool is purchased by Purchaser in the same month in
which the related Settlement Date occurs, (A) all interest, if any, which
accrues on such Mortgage Loan(s) from the first day of such month to but not
including the related Purchase Date shall be paid by Purchaser to Seller on such
Settlement Date, and (B) all interest which accrues on such Mortgage Loan(s),
on and after the Purchase Date to but not including the Settlement Date will be
paid to Purchaser by Takeout Investor on the Settlement Date unless such
Settlement Date occurs after the Cut-off Date or in a month in which interest
has been prepaid by the Mortgagor in either of which events Seller, as servicer,
shall pay such amount to
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Purchaser on such Settlement Date. For purposes of this paragraph all interest
payments shall be deemed to accrue at the applicable rate set forth in the
related Takeout Commitment.
(d) It is understood by Seller and Purchaser that, if Seller requests
and Purchaser agrees to pay the Completion Fee prior to the Settlement Date, the
amount of such Completion Fee shall be adjusted as mutually agreed by Seller and
Purchaser.
(e) The Completion Fee relating to each Mortgage Loan Pool is payable
on the earlier to occur of (1) the date of receipt by Purchaser of the Trade
Price and (2) the satisfaction by Seller of its obligations pursuant to this
Agreement notwithstanding the exercise by Purchaser of any remedial election
authorized herein.
Section 5. Servicing of the Mortgage Loans.
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(a) Seller shall service and administer the Mortgage Loan(s) on behalf
of Purchaser in accordance with prudent mortgage loan servicing standards and
procedures generally accepted in the mortgage banking industry and in accordance
with the requirements of Takeout Investor, provided that Seller shall at all
times comply with applicable law, and the requirements of any applicable insurer
or guarantor including, without limitation, any Third Party Underwriter, so that
the insurance in respect of any Mortgage Loan is not voided or reduced. Seller
shall at all times maintain accurate and complete records of its servicing of
each Mortgage Loan, and Purchaser may, at any time during Seller's business
hours on reasonable notice, examine and make copies of such records. In
addition, if a Mortgage Loan is not purchased by Takeout Investor on or before
the Cure Date, Seller shall at Purchaser's request deliver to Purchaser
monthly reports regarding the status of such Mortgage Loan, which reports shall
include, but shall not be limited to, a description of each Mortgage Loan in
default for more than thirty (30) days, and such other circumstances with
respect to any Mortgage Loan (whether or not such Mortgage Loan is included in
the foregoing list) that could materially adversely affect any such Mortgage
Loan, Purchaser's ownership of any such Mortgage Loan or the collateral securing
any such Mortgage Loan. Seller shall deliver such a report to Purchaser every
thirty (30) days until (i) the purchase by Takeout Investor of such Mortgage
Loan pursuant to the related Takeout Commitment or (ii) the exercise by
Purchaser of any remedial election pursuant to Section 3.
(b) Within five (5) business days of notice from Purchaser, Seller
shall establish and maintain a separate
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custodial account (the "Custodial Account") entitled "[Name of Seller] , in
trust for Prudential Securities Realty Funding Corporation and its assignees
under the Mortgage Loan Purchase and Sale Agreement dated [the date of this
Agreement]" and shall promptly deposit into such account in the form received
with any necessary endorsements all collections received in respect of each
Mortgage Loan that are payable to Purchaser as the owner of each such Mortgage
Loan.
(c) Amounts deposited in the Custodial Account with respect to
any Mortgage Loan shall be held in trust for Purchaser as the owner of such
Mortgage Loan and shall be released only as follows:
(1) Except as otherwise provided in Section 5 (c) (2), following
receipt by Purchaser or its designee of the Takeout Proceeds for such
Mortgage Loan from Takeout Investor or Seller amounts deposited in the
Custodial Account shall be released in accordance with Section 3 (a)
(2). Notwithstanding the foregoing, all amounts deposited in the
Custodial Account shall be paid to Seller upon the purchase by Takeout
Investor of the related Mortgage Loan(s) from Purchaser if, and to the
extent that, the amounts due and payable to Purchaser hereunder have
been set-off against the Purchase Price for the related Mortgage Loan
Pool or the Completion Fee relating to the Mortgage Loan(s) in such
Mortgage Loan Pool. The amounts paid to Seller (if any) pursuant to
this Section 5(c) (1) shall constitute Seller's sole compensation for
servicing the Mortgage Loans as provided in this Section 5.
(2) If Successor Servicer takes delivery of such Mortgage Loan
(either under the circumstances set forth in Section 3 or otherwise),
all amounts deposited in the Custodial Account shall be paid to
Purchaser promptly upon such delivery.
(3) If a Mortgage Loan is not purchased by Takeout Investor on
or before the Cure Date, during the period thereafter that Seller
remains as servicer, all amounts deposited in the Custodial Account
shall be released only in accordance with a Purchaser's written
instructions.
Section 6. Trade Assignments. Seller hereby assigns to Purchaser,
-----------------
free of any security interest, lien, claim or encumbrance of any kind, Seller's
rights, under each Takeout
-14-
Commitment as to which Takeout Investor has consented to assignment, to deliver
the Mortgage Loan(s) specified therein to the related Takeout Investor and to
receive the Takeout Proceeds therefor from such Takeout Investor. Purchaser
shall not be deemed to have accepted any Trade Assignment unless and until
it purchases the related Mortgage Loans, and nothing set forth herein shall be
deemed to impair Purchaser's right to reject any Mortgage Loan for any reason,
in its sole discretion.
Section 7. Transfers of Beneficial Interest in Mortgage Loans by
-----------------------------------------------------
Purchaser. Purchaser may, in its sole discretion, assign all of its right,
---------
title and interest in or grant a security interest in any Mortgage Loan sold by
Seller hereunder and all rights of Purchaser under this Agreement and the
Custodial Agreement, in respect of such Mortgage Loan to a tri-party custody and
clearing agent ("Assignee"), subject only to an obligation on the part of
Assignee to deliver each such Mortgage Loan to Takeout Investor pursuant to
Section 6 or to Purchaser to permit Purchaser or its designee to make delivery
thereof to a Takeout Investor pursuant to Section 6. It is anticipated that
such assignment to an Assignee will be made by Purchaser, and Seller hereby
irrevocably consents to such assignment.. No notice of such assignment shall be
given by Purchaser to Seller or Takeout Investor. Assignment by Purchaser of
the Mortgage Loans as provided in this Section 7 shall not release Purchaser
from its obligations otherwise under this Agreement .
Without limitation of the foregoing, an assignment of the Mortgage
Loans to an Assignee, as described in this Section 7, shall be effective upon
delivery to the Assignee of a duly executed and authenticated Trust Receipt.
Section 8. Record Title to Mortgage Loans; Intent of Parties;
--------------------------------------------------
Security Interest
-----------------
(a) From and after the issuance and delivery of the related Trust
Receipt, and subject to the remedies of Purchaser in Section 3, Seller shall
remain the last named payee or endorsee of each Mortgage Note and the mortgagee
or assignee of record of each Mortgage in trust for the benefit of Purchaser,
for the sole purpose of facilitating the servicing of such Mortgage Loan.
(b) Seller shall maintain a complete set of books and records for
each Mortgage Loan which shall be clearly marked to reflect the ownership
interest in each Mortgage Loan of the holder of the related Trust Receipt.
-15-
(c) Purchaser and Seller confirm that the transactions contemplated
herein are intended to be sales of the Mortgage Loans by Seller to Purchaser
rather than borrowings secured by the Mortgage Loans. In the event, for any
reason, any transaction is construed by any court or regulatory authority as a
borrowing rather than as a sale, Seller and Purchaser intend that Purchaser or
its Assignee, as the case may be, shall have a perfected first priority security
interest in the Mortgage Loans, the Custodial Account, and all proceeds thereof,
the Takeout Commitments and the proceeds of any and all of the foregoing
(collectively, the "Collateral"), free and clear of adverse claims. In such
case, Seller shall be deemed to have hereby granted to Purchaser or Assignee, as
the case may be, a first priority security interest in and lien upon the
Collateral, free and clear of adverse claims. In such event, this Agreement
shall constitute a security agreement, the Custodian shall be deemed to be an
independent custodian for purposes of perfection of the security interest
granted to Purchaser or Assignee, as the case may be, and Purchaser or Assignee,
as the case may be, shall have all of the rights of a secured party under
applicable law.
Section 9. Representations and Warranties
------------------------------
(a) Seller hereby represents and warrants to Purchaser as of the date
hereof and as of the date of each issuance and delivery of a Trust Receipt that:
(i) Seller is duly organized, validly existing and in good
standing under the laws of the state of its organization and has all
licenses necessary to carry on its business as now being conducted and
is licensed, qualified and in good standing in the state where the
Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type
conducted by Seller. Seller has all requisite power and authority
(including, if applicable, corporate power) 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 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 Seller; and all requisite action
(including, if applicable, corporate action) has been taken by Seller
to make this Agreement valid and binding upon Seller in accordance
with its terms;
-16-
(ii) No approval of the transactions contemplated by this
Agreement from the OTS, the NCUA, the FDIC or any similar federal or
state regulatory authority having jurisdiction over Seller is
required, or if required, such approval has been obtained. There are
no actions or proceedings pending or affecting Seller which would
adversely affect its ability to perform hereunder. The transfers,
assignments and conveyances provided for herein are not subject to the
bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
(iii) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of Seller and will
not result in the breach of any term or provision of the charter or
by-laws of Seller or result in the breach of any term or provision of,
or conflict with or constitute a default under or result in the
acceleration of any obligation under, any agreement, indenture or loan
or credit agreement or other instrument to which Seller or its
property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which Seller or its property
is subject;
(iv) This Agreement, the Custodial Agreement and every document
to be executed by Seller pursuant to this Agreement is and will be
valid, binding and subsisting obligations of Seller, enforceable in
accordance with their respective terms. No consents or approvals are
required to be obtained by Seller or its Parent Company for the
execution, delivery and performance of this Agreement or the Custodial
Agreement by Seller;
(v) Seller has not sold, assigned, transferred, pledged or
hypothecated any interest in any Mortgage Loan sold hereunder to any
person other than Purchaser, and upon delivery of a related Trust
Receipt to Purchaser, Purchaser will be the sole owner thereof, free
and clear of any lien, claim or encumbrance; --and
(vi) All information relating to Seller that Seller has
delivered or caused to be delivered to Purchaser, including, but not
limited to, all documents related to this Agreement, the Custodial
Agreement or Seller's financial statements, does not contain any
untrue statement of a material fact or omit to state a
-17-
material fact necessary to make the statements made therein or herein
in light of the circumstances under which they were made, not
misleading.
(b) Seller hereby represents, warrants and covenants to Purchaser
with respect to each Mortgage Loan as of the Purchase Date of such Mortgage Loan
that:
(i) The Mortgage Loan conforms in all respects to the
requirements of this Agreement, the Sale Agreement, the Commitment
Guidelines and the requirements of the related Third Party
Underwriter's Certificate;
(ii) Seller is the sole owner and holder of the Mortgage
Loan free and clear of any and all liens, pledges, charges or security
interests of any nature and has full right and authority, subject to no
interest or participation of, or agreement with, any other party, to
sell and assign the same pursuant to this Agreement;
(iii) No servicing agreement has been entered into with respect
to the Mortgage Loan, or any such servicing agreement has been
terminated and there are no restrictions, contractual or governmental,
which would impair the ability of Purchaser or Purchaser's designees
from servicing the Mortgage Loan;
(iv) The Mortgage is a valid and subsisting first lien on the
property therein described and the Mortgaged Property is free and clear
of all encumbrances and liens having priority over the first lien of
the Mortgage except for liens for real estate taxes and special
assessments not yet due and payable. Any pledge account, security
agreement, chattel mortgage or equivalent document related to, and
delivered to Purchaser with the Mortgage, establishes in Seller a valid
and subsisting first lien on the property described therein, and Seller
has full right to sell and assign the same to Purchaser;
(v) Neither Seller nor any prior holder of the Mortgage has
modified the Mortgage in any material respect; satisfied, canceled or
subordinated the Mortgage in whole or in part; released the Mortgaged
Property in whole or in part from the lien of the Mortgage; or executed
any instrument of release, cancellation, modification or satisfaction
unless such
-18-
release, cancellation, modification or satisfaction does not adversely
affect the value of the Mortgage Loan and is contained in the related
Document File;
(vi) The Mortgage Loan is not in default, and all Monthly
Payments due prior to the Purchase Date and all taxes , governmental
assessments, insurance premiums, water, sewer and municipal charges,
leasehold payments or ground rents have been paid. Seller has not
advanced funds, or induced or solicited any advance of funds by a
party other than the Mortgagor directly or indirectly, for the payment
of any amount required by the Mortgage Loan. The collection practices
used by each entity which has serviced the Mortgage Loan have been in
all respects legal, proper, prudent, and customary in the mortgage
servicing business. With respect to escrow deposits and payments in
those instances where such were required, there exist no deficiencies
in connection therewith for which customary arrangements for repayment
thereof have not been made and no escrow deposits or payments or other
charges or payments have been capitalized under any Mortgage or the
related Mortgage Note;
(vii) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Mortgage Note
and no .event which, with the passage of time or with notice and the
expiration of any grace of cure period, would constitute a default,
breach, violation or event of acceleration; and Seller has not waived
any default, breach, violation or event of acceleration;
(viii) The Mortgage Loan is not subject to any right of
rescission, 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;
(ix) The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in
-19-
accordance with its terms. All parties to the Mortgage Note and the
Mortgage had legal capacity to execute the Mortgage Note and the
Mortgage and each Mortgage Note and Mortgage have been duly and
properly executed by the Mortgagor;
(x) The Mortgage Loan meets, or is exempt from, applicable
state or federal laws, regulations and other requirements pertaining
to usury, and the Mortgage Loan is not usurious;
(xi) Any and all requirements of any federal, state or local
law including, without limitation, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, and Seller shall deliver to Purchaser upon demand,
evidence of compliance with all such requirements;
(xii) Either: (i) Seller and every other holder of the Mortgage,
if any, were authorized to transact and do business in the
jurisdiction in which the Mortgaged Property is located at all times
when such party held the Mortgage; or (ii) the loan of mortgage funds,
the acquisition of the Mortgage (if Seller was not the original
lender) , the holding of the Mortgage and the transfer of the Mortgage
did not constitute the transaction of business or the doing of
business in such jurisdiction;
(xiii) The proceeds of the Mortgage Loan have been fully
disbursed, there is no requirement for future advances thereunder and
any and all requirements as to completion of any on site or off-site
improvements and as to disbursements of any escrow funds, therefore,
have been complied with. All costs, fees and expenses incurred in
making, closing or recording the Mortgage Loans were paid;
(xiv) The related Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of
the benefits of the security, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise
by judicial foreclosure. There is no homestead or other exemption
available to
-20-
the Mortgagor which would interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
(xv) The Mortgage Loan was originated free of any "original
issue discount" with respect to which the owner of the Mortgage Loan
could be deemed to have income pursuant to Sections 1271 et seq. of
-- ---
the Internal Revenue Code;
(xvi) Each Mortgage Loan was originated by an institution
described in Section 3 (a) (41) (A) (ii) of the Securities Exchange
Act of 1934, as amended;
(xvii) At origination, the Mortgaged Property was free and clear
of all mechanics' and materialmen's liens or liens in the nature
thereof which are or could be prior to the Mortgage lien, and no
rights are outstanding that under law could give rise to any such
lien;
(xviii) All of the improvements which are included for the
purpose of determining the appraised value of the Mortgaged Property
lie wholly within the boundaries and building restriction lines of
such property, and no improvements on adjoining properties encroach
upon the Mortgaged Property;
(xix) At origination, no improvement located on or being part
of the Mortgaged Property was in violation of any applicable zoning
law or regulation and all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of
the Mortgaged Property, and with respect to the use and occupancy of
the same, including but not limited to certificates of occupancy and
fire underwriting certificates, had been made or obtained from the
appropriate authorities and the Mortgaged Property was lawfully
occupied under applicable law. No improvement located on or being part
of the Mortgaged Property is in violation of any applicable zoning law
or regulation and all inspections, licenses and certificates required
to be made or issued with respect to the Mortgaged Property, and with
respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and
-21-
the Mortgaged Property is lawfully occupied under applicable law;
(xx) There is no proceeding pending for the total or partial
condemnation of the Mortgaged Property and said property is undamaged
by waste, fire, earthquake or earth movement, windstorm, flood,
tornado or other casualty;
(xxi) The Custodial File contains and the Credit File contains
or shall contain prior to the Cure Date each of the documents and
instruments specified to be included therein duly executed and in due
and proper form and each such document or instrument is either in form
acceptable to FNMA or is a FNMA/FHLMC uniform instrument. Each
Mortgage Note and Mortgage are on forms approved by FNMA with such
riders as have been approved by FNMA; Seller is currently in
possession of the Custodial File for each Mortgage Loan and is in
possession or shall be prior to the Expiration Date of the Credit File
for each Mortgage Loan and there are no custodial agreements in effect
adversely affecting the rights of Seller to make the deliveries
required within the required time. Seller shall not deliver a Credit
File to Takeout Investor prior to the related Commitment Date;
(xxii) Each Mortgage Loan is covered by a mortgage title
insurance policy acceptable to FNMA, issued by, and the valid and
binding obligation of, a title insurer acceptable to FNMA and
qualified to do business in the jurisdiction where the Mortgaged
Property is . located, insuring Seller, its successors and assigns, as
to the first priority lien of the Mortgage in the original principal
amount of the Mortgage Loan, Seller is the named insured and the sole
insured of such mortgage title insurance policy, the assignment to
Purchaser of 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 Purchaser upon
the consummation of the transactions contemplated by this Agreement
and no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including Seller,
has done, by act or omission, anything which would
-22-
impair the coverage of such mortgage title insurance policy;
(xxiii) All buildings 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 fire and hazard insurance policies with extended
coverage or other insurance required by the Sale Agreement, in an
amount at least equal to the lesser of (i) the outstanding principal
balance of the Mortgage Loan or (ii) the maximum insurable value
(replacement cost without deduction for depreciation) of the
improvements constituting the Mortgaged Property. If applicable laws
limit the amount of such insurance to the replacement cost of the
improvements constituting the Mortgaged Property or to some other
amount, then such insurance is in an amount equal to the maximum
allowed by such laws. Such insurance amount is sufficient to prevent
the Mortgagor or the loss payee under the policy from becoming a co-
insurer. The insurer issuing such insurance is acceptable pursuant to
the Sale Agreement. All individual insurance policies contain a
standard mortgagee clause naming Seller, its successors and assigns,
as mortgagee and all premiums thereon have been paid. Each Mortgage
obligates the Mortgagor thereunder to maintain all such insurance at
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 Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor. Any flood insurance required by
applicable law has been obtained;
(xxiv) The original principal amount of the related Mortgage
Note either (a) was not more than 80% of the lesser of (i) the
purchase price of the Mortgaged Property paid by the Mortgagor at the
origination of the Mortgage Loan and (ii) the appraised value of the
Mortgaged Property, such appraised value being, for the purposes
hereof, the amount set forth in an appraisal. made in connection with
the origination of such Mortgage Loan, or (b) is and will be insured
as to payment defaults by a policy of primary mortgage guaranty
insurance in accordance with the Sale Agreement and all provisions of
such primary mortgage guaranty insurance policy have been and are
being complied with, such policy is in full force and effect,
-23-
and all premiums due thereunder have been paid. Any Mortgage Loan
subject to any such policy of primary mortgage guaranty insurance
obligates the Mortgagor thereunder to maintain such insurance and pay
all premiums and charges in connection therewith. The original
principal amount of each Mortgage Note was not more than 95% of the
purchase price of the related Mortgaged Property paid by the Mortgagor
at the origination of the Mortgage Loan. No action, event or state of
facts exists or has existed which, because involving or arising from
any dishonest, fraudulent, criminal, negligent or knowingly wrongful
act, error or omission by the Mortgagor or the originator or servicer
of the Mortgage Loan, would result in the exclusion from, denial of,
or defense to coverage which otherwise would be provided by such
insurance;
(xxv) At the time that the related Mortgage Loan was made the
Mortgagor represented that the Mortgagor would occupy such Mortgaged
Property as Mortgagor's primary residence;
(xxvi) The Mortgaged Property consists of a single parcel of
real property; and
(xxvii) There are no 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 private
institutional investors to regard the Mortgage Loan as an unacceptable
investment, cause the Mortgage Loan to become delinquent or adversely
affect the value or marketability of the Mortgage Loan.
The representations and warranties of Seller in this Section 9 are unaffected by
and supersede any provision in any endorsement of any Mortgage Loan or in any
assignment with respect to such Mortgage Loan to the effect that such
endorsement or assignment is without recourse or without representation or
warranty.
Section 10. Covenants of Seller. Seller hereby D covenants and agrees
-------------------
with Purchaser as follows:
(a) Seller shall deliver to Purchaser:
(i) Within one hundred twenty (120) days after the end of each
fiscal year of Seller, consolidated balance sheets of Seller and its
consolidated subsidiaries and
-24-
the related consolidated statements of income showing the financial
condition of Seller and its consolidated subsidiaries as of the close
of such fiscal year and the results of operations during such year,
and a consolidated statement of cash flows, as of the close of such
fiscal year, setting forth, in each case, in comparative form the
corresponding figures for the preceding year, all the foregoing
consolidated financial statements to be reported on by, and to carry
the report (acceptable in form and content to Purchaser) of an
independent public accountant of national standing acceptable to
Purchaser;
(ii) Within sixty (60) days after the end of each of the first
three fiscal quarters of each fiscal year of Seller, unaudited
consolidated balance sheets and consolidated statements of income, all
to be in a form acceptable to Purchaser, showing the financial
condition and results of operations of Seller and its consolidated
subsidiaries on a consolidated basis as of the end of each such
quarter and for the then elapsed portion of the fiscal year, setting
forth, in each case, in comparative form the corresponding figures for
the corresponding periods of the preceding fiscal year, certified by a
financial officer of Seller (acceptable to Purchaser) as presenting
fairly the financial position and results of operations of Seller and
its consolidated subsidiaries and as having been prepared in
accordance with generally accepted accounting principles consistently
applied, in each case, subject to normal year-end audit adjustments;
(iii) Promptly upon receipt thereof, a copy of each other report
submitted to Seller by its independent public accountants in
connection with any annual, interim or special audit of Seller;
(iv) Promptly upon becoming aware thereof, notice of (1) the
commencement of, or any determination in, any legal, judicial or
regulatory proceedings, (2) any dispute between Seller or its Parent
Company and any governmental or regulatory body, (3) any event or
condition, which, in any case of (1) or (2) if adversely determined,
would have a material adverse effect on (A) the validity or
enforceability of this Agreement, (B) the financial condition or
business operations of Seller, or (C) the ability of Seller to fulfill
its obligations under this Agreement or (4) any
-25-
material adverse change in the business, operations, prospects or
financial condition of Seller, including, without limitation, the
insolvency of Seller or its Parent Company;
(v) Promptly upon becoming available, copies of all financial
statements, reports, notices and proxy statements sent by its Parent
Company, Seller or any of Seller's consolidated subsidiaries in a
general mailing to their respective stockholders and of all reports
and other material (including copies of all registration statements
under the Securities Act of 1933, as amended) filed by any of them
with any securities exchange or with the Securities and Exchange
Commission or any governmental authority succeeding to any or all of
the functions of said Commission;
(vi) Promptly upon becoming available, copies of any press
releases issued by its Parent Company or Seller and copies of any
annual and quarterly financial reports and any reports on Form H-(b)12
which its Parent Company or Seller may be required to file with the
OTS or the RTC or comparable reports which a Parent Company or Seller
may be required to file with the FDIC or any other federal banking
agency containing such financial statements and other information
concerning such Parent Company's or Seller's business and affairs as
is required to be included in such reports in accordance with the
rules and regulations of the OTS, the RTC, the FDIC or such other
banking agency, as may be promulgated from time to time;
(vii) Such supplements to the aforementioned documents and such
other information regarding the operations, business, affairs and
financial condition of its Parent Company, Seller or any of Seller's
consolidated subsidiaries as Purchaser may request;
(viii) A copy of (1) the articles of incorporation of Seller and
any amendments thereto, certified by the Secretary of State of
Seller's state of incorporation, (2) a copy of Seller's by-laws,
together with any amendments thereto; (3) a copy of the resolutions
adopted by Seller's Board of Directors authorizing Seller to enter
into this Agreement and the Custodial Agreement and authorizing one or
more of Seller's officers to execute the documents related to this
Agreement and the Custodial Agreement, and (4) a
-26-
certificate of incumbency and signature of each officer of Seller
executing any document in connection with this Agreement;
(ix) Neither Seller nor any affiliate thereof will acquire at
any time any economic interest in or obligation with respect to any
Mortgage Loan;
(x) Under generally accepted accounting principles ("GAAP")
and for federal income tax purposes, Seller will report each sale of a
Mortgage Loan to the Purchaser hereunder as a sale of the ownership
interest in the Mortgage Loan. Seller has been advised by or has
confirmed with its independent public accountants that the foregoing
transactions will be so classified under GAAP;
(xi) The consideration received by Seller upon the sale of each
Mortgage Loan Pool will constitute reasonably equivalent value and
fair consideration for the ownership interest in the Mortgage Loans
included therein;
(xii) Seller will be solvent at all relevant times prior to, and
will not be rendered insolvent by, any sale of a Mortgage Loan to the
Purchaser; and
(xiii) Seller will not sell any Mortgage Loan to the Purchaser
with any intent to hinder, delay or defraud any of Seller's creditors.
(b) Seller shall comply, in all material respects, with all laws,
rules and regulations to which it is or may become subject.
(c) Seller shall, upon request of Purchaser, promptly execute and
deliver to Purchaser all such other and further documents and instruments of
transfer, conveyance and assignment, and shall take such other action as
Purchaser may require more effectively to transfer, convey, assign to and vest
in Purchaser and to put Purchaser in possession of the property to be
transferred, conveyed, assigned and delivered hereunder and otherwise to carry
out more effectively the intent of the provisions under this Agreement.
Section 11. Term. This Agreement shall continue in effect until
----
terminated as to future transactions by written instruction signed by either
Seller or Purchaser and delivered to
-27-
the other, provided that no termination will affect the obligations hereunder as
to any of the Mortgage Loans purchased hereunder .
Section 12. Exclusive Benefit of Parties; Assignment. This Agreement
----------------------------------------
is for the exclusive benefit of the parties hereto and their respective
successors and assigns and shall not be deemed to give any legal or equitable
right to any other person, including the Custodian. Except as provided in
Section 7, no rights or obligations created by this Agreement may be assigned by
any party hereto without the prior written consent of the other parties.
Section 13. Amendments; Waivers; Cumulative Rights. This Agreement
--------------------------------------
may be amended from time to time only by written agreement of Seller and
Purchaser.. Any forbearance, failure or delay by either party in exercising any
right, power or remedy hereunder shall not be deemed to be a waiver thereof, and
any single or partial exercise by Purchaser of any right, power or remedy
hereunder shall not preclude the further exercise thereof. Every right, power
and remedy of Purchaser shall continue in full force and effect until
specifically waived by Purchaser in writing. No right, power or remedy shall be
exclusive, and each such right, power or remedy shall be cumulative and in
addition to any other right, power or remedy, whether conferred hereby or
hereafter available at law or in equity or by statute or otherwise .
Section 14. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
Section 15. Effect of Invalidity of Provisions. In case any one or
----------------------------------
more of the provisions contained in this Agreement should be or become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall in
no way be affected, prejudiced or disturbed thereby.
Section 16. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York, without regard
to conflict of laws rules.
Section 17. Notices. Any notices, consents, elections, directions and
-------
other communications given under this Agreement shall be in writing and shall be
deemed to have been duly given when telecopied or delivered by overnight
courier,
-28-
personally delivered, or on the third day following the placing thereof in the
mail, first class postage prepaid, to the respective addresses set forth on the
cover page hereof for Seller and Purchaser, or to such other address as either
party shall give notice to the other party pursuant to this Section 17. Notices
to any Assignee shall be given to such address as Assignee shall provide to
Seller in writing.
Section 18. Entire Agreement. This Agreement and the Custodial
----------------
Agreement contain the entire agreement between the parties hereto with respect
to the subject matter hereof, and supersede all prior and contemporaneous
agreements between them, oral or written, of any nature whatsoever with respect
to the subject matter hereof.
Section 19. Costs of Enforcement. In addition to any other
--------------------
indemnity specified in this Agreement, in the event of a breach by Seller of
this Agreement, the Custodial Agreement or a Takeout Commitment, Seller agrees
to pay the reasonable attorneys' fees and expenses of Purchaser and/or Assignee
incurred as a consequence of such breach.
Section 20. Consent to Service. Each party irrevocably consents to
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the service of process by registered or certified mail, postage prepaid, to it
at its address given in or pursuant to Section 17.
Section 21. Submission to Jurisdiction. With respect to any claim
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arising out of this Agreement each party (a) irrevocably submits to the
nonexclusive 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
(b) irrevocably waives (i) any objection which it may have at any time to the
laying of venue of any suit, action or proceeding arising out of or relating
hereto brought in any such court, (ii) any claim that any such suit, action or
proceeding brought in any such court has been brought in any inconvenient forum
and (iii) the right to object, with respect to such claim suit, action or
proceeding brought in any such court, that such court does not have jurisdiction
over such party.
Section 22. Jurisdiction Not Exclusive. Nothing-herein will be
--------------------------
deemed to preclude either party hereto from bringing an action or proceeding in
respect of this Agreement in any jurisdiction other than as set forth in Section
21.
Section 23. Construction The headings in this Agreement are for
------------
convenience only and are not intended to
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influence its construction. References to Sections, Exhibits and Annexes in this
Agreement are to the Sections of and Exhibits to this Agreement. The Exhibits
are part of this Agreement, and are incorporated herein by reference. The
singular includes the plural, the plural the singular, and the words "and" and
"or" are used in the conjunctive or disjunctive as the sense and circumstances
may require.
IN WITNESS WHEREOF, Purchaser and Seller have duly executed this
Agreement as of the date and year set forth on the cover page hereof.
PRUDENTIAL SECURITIES REALTY FUNDING CORPORATION
By
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Name: Xxxxxxx Pillar
Title: X.X.
XXXXXX MORTGAGE CORP.
BY /s/ XXXXXX XXXXX
--------------------------------------
Name: Xxxxxx Xxxxx
Title: President
Address (if different from cover page):
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