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EXHIBIT 10.2
MORTGAGE LOAN
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
PACIFIC CREST INVESTMENT AND LOAN
AS BUYER
AND
PACIFIC THRIFT AND LOAN
AS SELLER
DATED AS OF NOVEMBER 20, 1996
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions ................................... 1
Section 1.02. Forms ......................................... 4
Section 1.03. Recitals, Table of Contents, Titles and
Headings ...................................... 4
Section 1.04. Interpretation ................................ 4
ARTICLE II
PURCHASE AND SALE OF THE LOANS
Section 2.01. Agreement to Sell and Purchase Mortgage Loans . 5
Section 2.02. Release of Servicing........................... 5
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01. Representations, Warranties and Covenants of
the Buyer ..................................... 5
Section 3.02. Representations, Warranties and Covenants of
Seller ........................................ 6
Section 3.03. Representations, Warranties and Covenants
Relating to Mortgage Loans .................... 8
Section 3.04. Defects; Remedies for Breach of Representations
and Warranties ................................ 14
Section 3.05. Performance Holdback........................... 15
Section 3.06. Seller's and Buyer's Indemnification Covenants. 16
Section 3.07. Premium Protection............................. 17
ARTICLE IV
CLOSING OF PURCHASE OF MORTGAGE LOANS
Section 4.01. Payment ....................................... 17
Section 4.02. Assignment and Delivery of Loan Documents ..... 17
Section 4.03. Additional Conditions to Closing .............. 18
Section 4.04. Mortgage Loan Review Prior to Purchase ........ 20
Section 4.05. Casualty or Condemnation Prior to Closing...... 20
Section 4.06. Indemnification................................ 00
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XXXXXXX X
XXXXXXXXXXXXX PROVISIONS
Section 5.01. Amendments, Changes and Modifications ....... 21
Section 5.02. Governing Law ............................... 21
Section 5.03. Notices ..................................... 21
Section 5.04. Assignment Of Rights To Third Parties ....... 22
Section 5.05. Transfer of Mortgage Loans .................. 22
Section 5.06. Subsequent Documentation .................... 22
Section 5.07. Severability ................................ 22
Section 5.08. Rights Cumulative; Waivers .................. 22
Section 5.09. Counterparts ................................ 22
Section 5.10. Remedies Not Exclusive . .................... 22
Section 5.11. Survival .................................... 23
Section 5.12. Term of Agreement ........................... 23
Section 5.13. Limitation on Liability of parties .......... 23
Section 5.14. Access to Seller's Records .................. 23
Section 5.15. Agreement to Pay Attorneys' Fees ............ 23
Section 5.16. Integrated Agreement ........................ 23
Section 5.17. Reports and Payments Due on Weekends and
Holidays .................................... 23
EXHIBIT A-MORTGAGE LOAN SCHEDULE
EXHIBIT B-SELLER'S OPINION OF COUNSEL
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MORTGAGE LOAN
PURCHASE AND SALE AGREEMENT
THIS MORTGAGE LOAN PURCHASE AND SALE AGREEMENT (the "Agreement"), is
made and entered into as of November 20, 1996 by and between PACIFIC CREST
INVESTMENT AND LOAN, a California corporation (the "Buyer") and PACIFIC THRIFT
AND LOAN, a California corporation (the "Seller") .
W I T N E S S E T H:
WHEREAS, Seller desires to sell and Buyer desires to purchase the
Mortgage Loans which were originated and funded by Seller and which are the
subject of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the Seller and Buyer each agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. All words and phrases defined in this
Article I (except as expressly provided otherwise herein or unless the context
otherwise requires) shall have the respective meanings specified in this
Article I for all purposes of this Agreement.
"ADA" means the Americans with Disabilities Act.
"Agreement" means this Mortgage Loan Purchase and Sale Agreement
entered into by and between the Buyer and the Seller, and all exhibits,
amendments and supplements hereto.
"Assignment of Mortgage" means an assignment of the Mortgage in
recordable form or equivalent instrument sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale and assignment of all of the Seller's right, title and interest
in and to the related Mortgage Loan to the Buyer, to be executed by the Seller
in connection with each Mortgage Loan purchased by the Buyer hereunder.
"Business Day" means any day of the week other than Saturday, Sunday,
or a day which shall be a legal holiday in California, or a day on which
industrial loan companies are authorized or obligated by law or executive order
to close.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"Closing Date" means that date mutually agreed upon by Seller and
Buyer for the actual conveyance of all or a portion of the Mortgage Loans by
Seller to Buyer.
"Cut-Off Date" means November 21, 1996.
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"Debtor Relief Laws" means any applicable liquidation,
conservatorship, bankruptcy, insolvency, rearrangement, moratorium,
reorganization, or similar debtor relief laws affecting the enforcement of
creditors' rights generally and general equitable principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law)
from time to time in effect in the State or under the Laws of the United
States.
"Defect" has the meaning set forth in Section 3.04 hereof.
"Escrow Account" means an account maintained by the Seller into which
monies collected to obtain or maintain insurance or property taxes shall be
deposited, which account will be assigned by the Seller to the Buyer on the
Closing Date of the Mortgage Loan to which it relates.
"Hazardous Substances" means (i) those substances included within the
definitions of any one or more of the terms "hazardous substances", "hazardous
materials", and "toxic substances" in CERCLA, RCRA, and the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Subsection 1801 et.seq.) and with
respect to any Loan secured by Mortgaged Property located in any jurisdiction,
and in the regulations promulgated pursuant thereto; (ii) those substances
listed in the United States Department of Transportation Table (49 CFR
Subsection 172.101 and amendments thereto) or by the Environmental Protection
Agency (or any successor agency) (40 CFR 302 and amendments thereto) as
hazardous substances; (iii) such other substances, materials, and wastes that
are or become regulated under applicable local laws, state or federal laws, or
that are classified as hazardous or toxic under federal, state, or local laws
or regulations; and (iv) any materials, wastes, or substances that are (A)
petroleum; (B) polychlorinated biphenyl; (C) within the definition of
"hazardous substance" set forth in Section 311 of the Clean Water Act (33
U.S.C. Subsection 1321) or designated as "toxic pollutants" subject to Chapter
26 of the Clean Water Act pursuant to Section 307 of the Clean Water Act (33
U.S.C. Subsection 1317; (D) flammable explosives; (E) friable asbestos; or (F)
radioactive materials; provided, however, that Hazardous Substances shall not
include non-friable asbestos to the extent that the existence of same is not in
violation of any applicable law, regulation, or ruling.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions or decrees of the United States or any agency
thereof, or any state or political subdivision thereof, or any court of
competent jurisdiction thereof.
"Mortgage" means the instrument securing a Mortgage Loan that creates
a lien on a Mortgaged Property subject to Permitted Encumbrances, and that
shall be in form acceptable to the Buyer.
"Mortgage Documents" means the original or certified copies of all of
the agreements, certificates, legal opinions or other documents evidencing, or
related to the origination and servicing of, a Mortgage Loan, including, but
not limited to, the original Mortgage Note, the original Mortgage, original
Assignment of Mortgage, appraisals, guarantees, insurance certificates, credit
reports, lender's title insurance policy, and environmental assessment and
soils reports, as applicable to a Mortgage Loan.
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"Mortgage Interest Rate" means the annual rate of interest borne by a
Mortgage Note as shown on the Mortgage Loan Schedule.
"Mortgage Loan" means an individual mortgage loan which is transferred
to the Buyer pursuant to this Agreement, together with the rights and
obligations of a holder thereof and payments thereon and proceeds therefrom,
the Mortgage Loans originally subject to this Agreement being identified on the
Mortgage Loan Schedule. Any mortgage loan which, although intended by the
parties hereto to have been, and which purportedly was, transferred and
assigned to the Buyer by the Seller (as indicated by the Mortgage Loan
Schedule), in fact was not transferred and assigned to the Buyer for any reason
whatsoever shall nevertheless be considered a "Mortgage Loan" for all purposes
of this Agreement.
"Mortgage Loan Schedule" means the schedule attached hereto as Exhibit
A setting forth certain information regarding the Mortgage Loans as of the
Cut-Off Date and prepayments in full, if any, between the Cut-Off Date and the
Closing Date, in the form provided to the Seller by the Buyer or acceptable in
another form to the Buyer, to be submitted by the Seller with Mortgage Loans
delivered to the Buyer for purchase pursuant to this Agreement.
"Mortgage Note" means the promissory note evidencing the obligation to
repay a Mortgage Loan, that shall be in the form acceptable to the Buyer.
"Mortgaged Property" means the underlying real property securing a
Mortgage Loan, consisting of a fee simple estate in a single contiguous parcel
of land improved by a commercial structure.
"Mortgagor" means the obligor(s) on a Mortgage Note, or a subsequent
owner of a Mortgaged Property who has assumed the Mortgage in accordance with
this Agreement.
"Notice Address" means:
(a) Buyer: Pacific Crest Investment and Loan
00000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attn: Mr. Xxxx Xxxxxxx
(b) Seller: Pacific Thrift and Loan
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, XX 00000
Attn: Mr. Xxxxxxx Xxxxx
"Officer" means any duly authorized officer of the Seller involved in,
or responsible for, the sale of the Mortgage Loans whose name appears on a list
furnished by the Seller to the Buyer, as such list may be amended from time to
time.
"Origination" means the execution of a Mortgage Note and Mortgage by a
Mortgagor and the concurrent origination and funding of a Mortgage Loan by the
Seller.
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"Permitted Encumbrances" means with respect to a Mortgage those liens,
covenants, conditions, restrictions, rights-of-way, easements, and other
matters that are of public record as of the date of the recording of a
Mortgage, none of which matters materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value
or marketability of the Mortgaged Property.
"Prior Lien" means, with respect to any Mortgage Loan which is not a
first priority lien, each mortgage loan relating to the corresponding Mortgaged
Property having a prior priority lien and which has been disclosed by Seller on
the Mortgage Loan Schedule.
"Purchase Price" means the price to be paid by the Buyer to the Seller
for the Mortgage Loans, which shall consist of cash in the amount equal to
______ of the aggregate outstanding principal balance of the Mortgage Loans,
plus accrued and unpaid interest thereon based on the interest rates set forth
in the related Mortgage Notes, plus any accrued late charges or other expenses,
from the Cut-Off Date to but excluding the Closing Date.
"RCRA" means the Resource Conservation and Recovery Act, as amended.
"Responsible Officer" means the President or Chief Executive Officer
of the Seller.
"Structural Defects" means any physical defects in the foundation,
roof, load bearing walls and structural support elements except for ordinary
wear and tear.
Section 1.02. FORMS. All forms specified by the text hereof or by
reference to exhibits attached hereto shall be substantially as set forth
herein, subject to such changes agreed to between Buyer and Seller that do not
alter the substantive rights of the parties hereto, or as may be required by
applicable Laws hereafter enacted.
Section 1.03. RECITALS, TABLE OF CONTENTS, TITLES AND HEADINGS. The
terms and phrases used in the recitals of this Agreement have been included for
convenience of reference only and the meaning, construction and interpretation
of such words and phrases for purposes of this Agreement shall be determined
solely by reference to Section 1.01 hereof. The table of contents, titles and
headings of the articles and sections of this Agreement have been inserted for
convenience and reference only and are not to be considered a part hereof and
shall not in any way modify or restrict any of the terms or provisions hereof
and shall never be considered or given any effect in construing this Agreement
or any provision hereof or in ascertaining intent, if any question of intent
should arise.
Section 1.04. INTERPRETATION. Unless the context requires
otherwise, words of the masculine gender shall be construed to include
correlative words of the feminine and neuter genders and vice versa, and words
of the singular number shall be construed to include correlative words of the
plural number and vice versa. This Agreement, and all the terms and provisions
hereof, shall be liberally construed to effect the purposes set forth herein
and to sustain the validity of this Agreement. The provisions of this
Agreement were negotiated by all of the parties hereto, and this Agreement
shall be deemed to have been drafted by all of the
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parties hereto; accordingly, any rule of construction that a document is to be
construed against the drafting party shall not be applicable.
ARTICLE II
PURCHASE AND SALE OF THE LOANS
Section 2.01. AGREEMENT TO SELL AND PURCHASE MORTGAGE LOANS.
(a) On the Closing Date, the Seller agrees to sell,
transfer, assign, set over and convey to the Buyer, and the Buyer
agrees to purchase, at the Purchase Price, all rights, title and
interest of the Seller in and to the Mortgage Loans in an aggregate
principal amount equal to the amount set forth in the Mortgage Loan
Schedule, the servicing rights (as described below), and the Mortgage
Documents, all upon the terms and conditions set forth herein. Except
as provided below with respect to Mortgage Loans reacquired by the
Seller pursuant to Section 3.04 hereof, all other payments made on
each Mortgage Loan on and after the Cut-Off Date shall belong to the
Buyer.
(b) The Seller intends that the conveyance of the
Seller's right, title and interest in and to the Mortgage Loans
pursuant to this Agreement shall constitute a purchase and sale of the
Mortgage Loans and proceeds thereof and not a pledge of security for a
loan.
Section 2.02. RELEASE OF SERVICING. The Mortgage Loans shall be
sold and conveyed to the Buyer on a servicing-released basis. As of the Closing
Date, all rights, obligations, liabilities and responsibilities with respect to
the servicing of the Mortgage Loans shall be performed and undertaken by the
Buyer.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
BUYER. The Buyer represents and warrants to, and covenants with, the Seller
that:
(a) Buyer is an industrial loan company duly organized,
validly existing, and in good standing under the Laws of the State of
California, is duly qualified and in good standing to transact
business, and possesses all requisite authority, power, licenses,
permits and franchises to execute, deliver and comply with its
obligations under the terms of this Agreement, the execution, delivery
and performance of which have been duly authorized by all necessary
corporate action.
(b) The execution and delivery of this Agreement by the
Buyer in the manner contemplated herein and the performance and
compliance with the terms hereof by it shall not violate: (i) its
charter or bylaws, or (ii) any Laws that could have any material
adverse effect whatsoever upon the validity, performance or
enforceability of any of the
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terms of this Agreement applicable to the Buyer, and will not
constitute a material default (or an event that, with notice or lapse
of time or both, would constitute a material default) under, or result
in the breach of, any material contract, agreement or other instrument
to which the Buyer is a party or that may be applicable to it or any
of its assets.
(c) The execution and delivery of this Agreement by the
Buyer in the manner contemplated herein and the performance and
compliance with the terms hereof by it do not require the consent or
approval of any governmental authority, or if such consent or approval
is required, it has been obtained.
(d) Assuming due authorization, execution and delivery by
each other party hereto, this Agreement and all of the obligations of
the Buyer hereunder are the legal, valid and binding obligations of
the Buyer, enforceable in accordance with the terms of this Agreement,
except as such enforcement may be limited by applicable Debtor Relief
Laws.
Section 3.02. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER. The Seller represents and warrants, and covenants with, the Buyer that:
(a) Seller is an industrial loan company duly organized,
validly existing, and in good standing under the Laws of the State of
California and has all licenses necessary to carry on its business as
now being conducted with full power and authority to own its
properties and conduct its business as such properties are presently
owned and such business is presently conducted; Seller is licensed,
qualified and in good standing in each jurisdiction where the
Mortgaged Property is located and in each jurisdiction in which it
owns or leases property if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by
Seller and perform its obligations hereunder; Seller has the corporate
power and authority to execute and deliver this Agreement and to
perform in accordance herewith and therewith; 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 and thereby have
been duly and validly authorized by all necessary corporate action;
this Agreement evidences the valid, binding and enforceable obligation
of Seller; and all requisite corporate action has been taken by Seller
to make this Agreement valid, binding and enforceable upon Seller in
accordance with the respective terms of each, subject to the effect of
Debtor Relief Laws, none of which will affect the ownership of the
Mortgage Loans by the Buyer;
(b) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations,
rights and licenses required to be taken, given or obtained, as the
case may be, by or from any federal, state or other governmental
authority or agency that are necessary or advisable in connection with
the sale of the Mortgage Loans to the Buyer and the execution and
delivery by Seller of the Agreement and related documents, have been
duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending
proceedings or
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appeals (administrative, judicial or otherwise) and either the time
within which any appeal therefrom may be taken or review thereof may
be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other related
documents on the part of Seller and the performance by Seller of its
obligations under this Agreement and such of the other related
documents to which it is a party;
(c) The consummation of the transactions contemplated by
this Agreement will not result in the breach of any terms or
provisions of the certificate of incorporation or bylaws 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 material agreement, indenture or loan or credit
agreement or other material 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;
(d) Neither this Agreement nor any statement, report or
other document furnished or to be furnished pursuant to this Agreement
or in connection with the transactions contemplated hereby and thereby
contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements contained herein or
therein not misleading;
(e) 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;
(f) There is no action, suit, proceeding or investigation
pending or threatened against Seller which, either in any one instance
or in the aggregate, may (i) result in any material adverse change in
the business, operations, financial condition, properties or assets of
Seller or in any material impairment of the right or ability of Seller
to carry on its business substantially as now conducted, or in any
material liability on the part of Seller or of any action taken or to
be taken in connection with the obligations of Seller contemplated
herein, or which would be likely to impair the ability of Seller to
perform under the terms of this Agreement or (ii) which would draw
into question the validity of this Agreement or the Mortgage Loans;
(g) The Seller was, on the Origination of each Mortgage
Loan and during the entire period that it held each Mortgage Loan, and
is on the Closing Date, a lender authorized and approved by, and in
good standing with, the Department of Corporations of the State of
California.
(h) Seller is not in 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 default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of Seller or its properties or
might have consequences that would materially and adversely affect its
performance hereunder;
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(i) No information, certificate of an Officer, statement
furnished in writing, or report required hereunder, delivered to the
Buyer or its agents, to the knowledge of the Seller, contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the information, certificate, statement or report
not misleading, and there has been no material adverse change in the
financial condition of the Seller since the date of the Seller's most
recent financial statements delivered to the Buyer;
(j) The sale of each Mortgage Loan shall be reflected on
the Seller's balance sheet and other financial statements as a sale of
assets by the Seller. The Seller will not take any action or omit to
take any action which would cause the transfer of the Mortgage Loans
to the Buyer to be treated as anything other than a sale to the Buyer
of all of the Seller's right, title and interest in and to each
Mortgage Loan;
(k) The transfer, assignment and conveyance of the Loans
by the Seller pursuant to this Agreement is not subject to the bulk
transfer or any similar statutory provisions in effect in any
applicable jurisdiction. The Seller is not transferring the Mortgage
Loans with an actual intent to hinder, delay or defraud any of its
creditors. The Seller is solvent and will not be rendered insolvent by
the sale of the Mortgage Loans;
(l) In the opinion of the Seller, it has received fair
consideration and reasonably equivalent value in exchange for the sale
of the Mortgage Loans pursuant to this Agreement; and
(m) Seller will be in full compliance with all applicable
federal and state regulatory capital requirements upon completion of
the sale effected hereunder. Seller is not operating under any order
by any federal or state agency regulating its activities that would
restrict its ability to enter into or perform this Agreement.
Section 3.03. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO
MORTGAGE LOANS. Seller represents and warrants to the Buyer, with respect to
each Mortgage Loan, as of the Closing Date (except when another date is
specifically included), as follows:
(a) The information with respect to each Mortgage Loan
set forth in the Mortgage Loan Schedule is true and correct;
(b) All of the original documentation set forth in
Section 4.02 hereof (including all material documents related thereto)
has been or will be delivered to the Buyer on or prior to the Closing
Date;
(c) Each Mortgaged Property pledged as primary collateral
contains a commercial building thereon, or as otherwise stated on the
Mortgage Loan Schedule, and all Mortgaged Property improvements that
were considered in determining the appraised value of the related
Mortgaged Property lay wholly within the legal boundaries and building
restrictions of the Mortgaged Property and such building does not
constitute other than real property under state law;
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(d) No Mortgage Loan is cross-collateralized with any
other loan not included in the Mortgage Loans or with any Mortgage
Loan that is not identified as being cross-collateralized with another
loan on the Mortgage Loan Schedule;
(e) No Mortgage Note provides for any extension of the
original term;
(f) Each Mortgage has been duly filed or recorded and is
a valid and subsisting first or junior lien of record on the Mortgaged
Property including the land and all buildings on the Mortgaged
Property subject only to any applicable Prior Liens on such Mortgaged
Property;
(g) Immediately prior to the sale and assignment of the
Mortgage Loans hereunder contemplated, the Seller held good and
indefeasible legal title to, and was the sole owner of, each Mortgage
Loan conveyed by the Seller subject to no liens, pledges, charges,
mortgages, encumbrances or rights of others except as set forth in
Section 3.03(f) hereof; and immediately upon the sale and assignment
herein contemplated, the Buyer will hold good and indefeasible legal
title to, and be the sole owner of, each Mortgage, Mortgage Note and
Mortgage Loan subject to no liens, pledges, charges, mortgages,
encumbrances or rights of others except as set forth in Section
3.03(f);
(h) As of the Cut-Off Date, (i) no Mortgage Loan is 15
or more days delinquent in payment, and (ii) none of the Mortgage
Loans has been 30 or more days delinquent in payment at any time
during the prior 12-month period.
(i) Upon origination of each Mortgage Loan there was no
delinquent tax or assessment lien on any Mortgaged Property and each
Mortgaged Property and all improvements thereon are free of Structural
Defects and are in good repair. The Mortgaged Property is assessed
separate and apart from any other property for local property tax
purposes and the Mortgagor receives a tax xxxx clearly identifying the
property tax paid on the Mortgaged Property;
(j) With respect to each Mortgaged Property and all
improvements thereon, there are no violations of any zoning, housing
or building law, ordinance, regulation, or any restrictive covenant as
a result of the maintenance, operation, occupancy or use of such
Mortgaged Property such that the violation would materially or
adversely affect the operation, occupancy or other use of such
Mortgaged Property in its present manner; and as of the Cut-Off Date,
all material licenses, permits, inspections, authorizations,
certifications and approvals required by all governmental authorities
having jurisdiction over the operation of each Mortgaged Property has
been performed or issued and paid for and are in full force and
effect.
(k) None of the Mortgages, Mortgage Notes or Mortgage
Loans are 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 any Mortgage Note or 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,
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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) Neither the Mortgagor nor any previous owner, tenant,
occupant or user of any Mortgaged Property, or any property adjacent
thereto, used, generated, released, discharged, stored or disposed of
any Hazardous Substance on, under, in, or about any Mortgaged Property
in violation of any applicable law, or any property adjacent thereto,
or transported any Hazardous Substance to or from any Mortgaged
Property, or any property adjacent thereto in violation of any
applicable law;
(m) Each Mortgage Loan at the time it was made complied
in all material respects with applicable state and federal laws and
regulations, including, without limitation, usury, equal credit
opportunity, disclosure, consumer and recording laws;
(n) Each Mortgage Loan was originated and underwritten by
the Seller in accordance with underwriting criteria generally
acceptable to financial institutions in connection with their regular
mortgage lending activities and in accordance with the underwriting
criteria established by the Seller; and since origination, each
Mortgage Loan has been serviced exclusively by the Seller;
(o) With respect to each Mortgage Loan which provides for
an adjustable Mortgage Interest Rate, all of the terms of each such
Mortgage Loan pertaining to such adjustments are enforceable and will
not affect the priority of the lien of the related Mortgage;
(p) The improvements upon each Mortgaged Property are
covered by a valid and existing hazard insurance policy with a
generally acceptable carrier that provides for fire and extended
coverage representing coverage in an amount which is at least equal to
the (i) the full insurable value of such improvements and (ii) the
minimum amount required to compensate for damage or loss on a full
replacement cost basis; provided, however, that in no event shall the
amount of such insurance be less than the minimum amount necessary to
prevent the beneficiary thereof from becoming a co-insurer; and the
Seller, and its successors and assigns are named beneficiaries of each
such insurance policy;
(q) If the Mortgaged Property is in an area identified in
the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, a Flood Insurance Policy is in effect
with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage described in Section
3.03(p) hereof;
(r) All insurance policies referred to in Sections
3.03(p) and 3.03(q) are endorsed with standard mortgagee clauses with
losses payable to the Seller as holder of the Mortgage Loans;
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(s) The Seller has caused and will cause to be performed
any and all acts required to be performed to preserve the rights and
remedies of the Buyer in any insurance policies applicable to the
Mortgage Loans;
(t) Each Mortgage and Mortgage Note are genuine and each
is the legal, valid and binding obligation of the maker thereof and is
enforceable in accordance with its terms;
(u) Each original Mortgage was recorded, and all
subsequent assignments of the original Mortgage have been recorded in
the appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof;
(v) Each Mortgage Loan is secured by a Mortgaged
Property; and the title of the Trustor to the Mortgaged Property is in
fee simple title and not subject to any ground lease estate or lesser
estate;
(w) The terms of each Mortgage Note and the Mortgage have
not been impaired, waived, altered or modified in any respect, except
by a written instrument reflected on the Mortgage Documents and no
provision of any Mortgage or Mortgage Note has been "xxxxxx out" or
erased unless such modification has been initialed by each of the
parties to the related Mortgage Loan;
(x) No instrument of release, modification, alteration or
waiver has been executed in connection with the 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 and which has
been delivered to the Seller, which assumption agreement is part of
the Mortgage Documents and the terms of which are reflected in the
Mortgage Documents nor has any instrument been executed that would
effect any such release, cancellation, subordination or rescission;
(y) There are no defaults in complying with the terms of
the Mortgage and all property taxes, insurance premiums (other than
insurance premiums reflected on the Mortgage Loan Schedule),
municipal charges, and to the best of Seller's knowledge, all
governmental assessments which previously became due and owing have
been paid; and the Seller has not 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;
(z) There is no proceeding pending or threatened for the
total or partial condemnation of the Mortgaged Property, nor is such a
proceeding currently occurring, and all such Mortgage Property is
undamaged by waste, fire, earthquake or earth movement, windstorm,
flood, tornado or other casualty, so as to affect adversely the value
of the Mortgaged Property as security for the Mortgage Loan or the use
for which the Mortgaged Property was intended;
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(aa) A lender's title insurance policy regarding each
Mortgage Loan became effective as of the origination of such loan
which policy is, and shall be, valid and is, and shall remain, in full
force and effect; such title insurance shows whether any prior lien
secures an open-end obligation requiring future advances; any such
insurance policy has been issued by a title insurer qualified to do
business in which the related mortgaged property is located, insuring
the priority of the lien of the mortgage in the original principal
amount of the related mortgage note, which policy is in the then
current American Land Title Association's form customarily used in the
state in which the mortgaged property is located. Upon the sale of
the Mortgage Loan to Buyer, Buyer shall be vested with all right,
title and interest to Seller and to the proceeds derived from such
policy.
(ab) The proceeds of the Mortgage Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. Any and all requirements as to
disbursements of any escrow funds therefor and as otherwise set forth
in the Mortgage Loan documents have been complied with. All costs,
fees and expenses incurred in making or closing or recording the
Mortgage Loans were paid;
(ac) The related Mortgage Note is not and has not been
secured by any collateral, pledged account or other security except
the lien of the corresponding Mortgage;
(ad) The Mortgage Note and/or the Mortgage obligates the
Trustor to maintain the insurance policies referred to in section
3.03(p) and, where applicable, section 3.03(q), at such Trustor's
expense;
(ae) There is no obligation on the part of the Seller to
make payments in addition to those made by the Mortgagor;
(af) The origination and collection practices used by the
Seller with respect to the Mortgage Note and Mortgage have been in all
respects legal, proper, prudent and customary in the commercial
mortgage lending and servicing business and have complied in all
material respects with applicable state and federal laws and
regulations, including, without limitation, usury, equal credit
opportunity, disclosure, consumer and recording laws;
(ag) With respect to each Mortgage constituting 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, or a valid substitution of trustee has been
recorded or may be recorded and no fees or expenses are or will become
payable by the Buyer to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor;
(ah) No Mortgage Loan has a shared appreciation feature,
or other contingent interest feature;
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(ai) To the best of Seller's knowledge, with respect to
each Mortgage Loan that is not a first mortgage loan, each related
Prior Lien was and is not 15 or more days delinquent;
(aj) With respect to each Mortgage Loan that is not a
first mortgage loan, either (i) no consent for the Mortgage Loan is or
was required by the holder of any related Prior Lien or (ii) such
consent has been obtained and is contained in the Mortgage Documents;
(ak) The related Mortgage Loan is evidenced by a Mortgage
Note and secured by a Mortgage creating a valid, enforceable lien on
such Mortgaged Property, subject only to Permitted Encumbrances;
(al) With respect to each Mortgage Loan that is not a
first mortgage loan, the maturity date of the Mortgage Loan is prior
to the maturity date of any related Prior Lien that provides for a
balloon payment, and the related Prior Lien that requires a balloon
payment also provides a refinancing option;
(am) The Mortgaged Property is located in the state
identified in the Mortgage Loan Schedule.
(an) All parties which have had any interest in the
Mortgage Loan, 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, or (B) qualified to do business in such state, or (C) federal
savings and loan associations or national banks having principal
offices in such state, or (D) not doing business in such state;
(ao) The Mortgage contains an enforceable provision for
the acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event the related Mortgaged Property is sold
without the prior consent of the mortgagee thereunder;
(ap) Any future advances made prior to the Cut-Off Date
have been consolidated with the outstanding principal amount secured
by the Mortgage, and the secured principal amount, as consolidated,
bears a single interest rate and single repayment term reflected on
the Mortgage Loan Schedule. The consolidated principal amount does not
exceed the original principal amount of the Mortgage Loan, other than
as stated on the Mortgage Loan Schedule. The Mortgage Note does not
permit or obligate the Buyer to make future advances to the Mortgagor
at the option of the Mortgagor;
(aq) The related Mortgage contains customary and
enforceable provisions which 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
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foreclosure. There is no homestead or other exemption available to the
Mortgagor which would materially interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
(ar) 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 or cure period, or both, would constitute a
default, breach, violation or event of acceleration; and the Seller
has not waived any default, breach, violation or event of
acceleration;
(as) All parties to each Mortgage Note and each Mortgage
had legal capacity to enter into the related Mortgage Loan and to
execute and deliver the Mortgage Note and the Mortgage and each
Mortgage Note and Mortgage have been duly and properly executed by
such parties;
(at) The Mortgagor of a Mortgage Loan has not conveyed
such Mortgagor's right, title or interest to or in the Mortgaged
Property to any party. The related Mortgage Note is not, and has not
been, secured by any collateral except the lien of the related
Mortgage and the Mortgage was not given as collateral or security for
the performance of obligations of any person other than the Mortgagor;
(au) The Seller did not use any adverse selection
procedures in selecting the Mortgage Loans from among the outstanding
mortgage loans in the Seller's portfolio and Seller has no knowledge
of any circumstances or conditions with respect to the Mortgage Loan,
the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor's
credit standing that can be reasonably expected to cause prudent
private investors in the secondary market to regard the Mortgage Loan
as an unacceptable investment, cause the Mortgage Loan to become
delinquent, adversely affect the value or marketability of the
Mortgage Loan or which would not otherwise qualify such Mortgage Loan
for purchase hereunder; and
(av) The Seller has no knowledge of any circumstances or
conditions not reflected in the representations set forth herein, or
in the Mortgage Documents with respect to any Mortgage, the related
Mortgage Property or the related Mortgagor which in the Seller's
opinion could reasonably be expected to materially and adversely
affect the value of related Mortgage Property, or the marketability of
the related Mortgage Loan or cause the related Mortgage Loan to become
delinquent or otherwise in default.
Section 3.04. DEFECTS; REMEDIES FOR BREACH OF REPRESENTATIONS AND
WARRANTIES.
(a) Following the Purchase of any Mortgage Loan, and
notwithstanding any review of the Mortgage Documents pursuant to
Section 4.04 hereof, if: (i) any document constituting a part of the
Mortgage Documents, in the judgment of the Buyer, is materially
defective or inaccurate, except for inadvertent or unintended errors
made by a borrower on an application in connection with a Mortgage
Loan, (ii) the Seller or the Buyer discovers that any document
executed by one or more of the parties to the
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Mortgage Loan is not valid and binding, (iii) any representation or
warranty of the Seller contained in this Agreement, in the judgment of
the Buyer, is untrue or incorrect or (iv) notification to the Seller
from the Buyer that a Mortgage Loan does not conform to any one or
more of the characteristics for such Mortgage Loan set forth on the
Mortgage Loan Schedule provided to Buyer pursuant to Section 4.03(c)
hereof (any of the foregoing being referred to as a "Defect" with
respect to the related Mortgage Loan), the Seller shall (X) cure such
Defect (other than a Defect under clause (iv)) within a period of
sixty (60) days from the time it discovers or receives from Buyer
notice of the existence of such Defect or such shorter period as may
be required by Law or this Agreement, or (Y) in the case of a Defect
under clause (iv) repurchase such Mortgage Loan for the amounts
described in Section 3.04(b) below.
(b) The Seller hereby agrees that if any Defect cannot be
cured within such sixty (60) day period, or such shorter period as
applicable, it will: (A) not later than thirty (30) days after notice
to it respecting such Defect as to a Mortgage Loan with an outstanding
principal balance, repurchase the related Mortgage Loan from the Buyer
at a price equal to (1) 100% of the unpaid principal balance of such
Mortgage Loan plus (2) any accrued and unpaid late charges and any
accrued and unpaid interest at the annual rate borne by the Mortgage
Note to the date of the repurchase, plus (3) any fees and expenses
charged by third parties relating to the Mortgage Loan, plus (4) any
premium paid by the Buyer in connection with the purchase of that
Mortgage Loan, reduced by an amount on a prorated, declining basis
over a 60-month period (for example, if Seller is required to
repurchase that Mortgage Loan in the 13th month after the Closing
date, the amount to be deducted from the premium to be returned to
Buyer shall be calculated by multiplying the dollar amount of premium
paid by Buyer times a fraction the numerator of which shall be equal
to the number of full months elapsed after the Closing Date, and the
denominator of which shall be 60; therefore, in this example, the
fraction would equal 12/60, which fraction would be multiplied by the
amount of premium paid by Buyer to determine the amount to be deducted
from the premium to be returned to Buyer, plus (5) all expenses
incurred by the Buyer in connection with the purchase of that Mortgage
Loan, including expenses relating to the review of such Mortgage Loan,
and (B) in all cases, whether or not the Mortgage Loan has been repaid
or otherwise satisfied, indemnify and hold harmless the Buyer and its
respective successors and assigns for any loss, damage, forfeiture,
penalty or expenses (including reasonable attorneys' fees) incurred by
any of them in connection with the defective Mortgage Loan. The
repurchase proceeds for a Mortgage Loan repurchased pursuant to this
Section 3.04 to which a Defect relates shall be remitted by the Seller
as instructed by Buyer, with notice to the Buyer of the amount of such
remittance and the Mortgage Loan concerned and, upon compliance with
all of the terms of this Section by the Seller, the Buyer shall assign
and deliver (or cause to be assigned and delivered) the related
Mortgage Documents to the Seller, without recourse. The Seller hereby
waives any statute of limitations or other Law that might otherwise be
raised in defense to any repurchase hereunder. If the Seller fails to
repurchase a Mortgage Loan to which a Defect relates, at the time and
in the manner provided in this Section 3.04, the Buyer may pursue any
and all other remedies available under this Agreement or as otherwise
may be provided by law.
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Section 3.05. PERFORMANCE HOLDBACK. Buyer shall withhold from the
Purchase Price on the Closing Date an amount equal to 10% of the Purchase Price
(the "Performance Holdback") which amount shall be held by Buyer until no later
than 5:00 p.m. on ________________, for the purpose of allowing Buyer
sufficient time in order to confirm the transaction histories of each Mortgage
Loan set forth on the Mortgage Loan Schedule, attached hereto as Exhibit "A",
which transaction histories Seller has agreed to provide Buyer on the Closing
Date pursuant to Section 2.01 of this Agreement. Seller agrees that the
existence of this Performance Holdback shall not relieve Seller of any
responsibilities or obligations to Buyer under the terms and conditions of this
Agreement nor from any and all warranties and representations made by Seller to
Buyer under the terms of this Agreement. Buyer shall pay Seller simple
interest at the per annum rate of 5.25% on the Performance Holdback amount from
the Closing Date until the date Buyer remits the Performance Holdback amount to
Seller; provided, however, Buyer shall not be required to pay any such interest
on any portion of the Performance Holdback amount not ultimately remitted by
Buyer to Seller.
Section 3.06. SELLER'S AND BUYER'S INDEMNIFICATION COVENANTS.
(a) SELLER'S INDEMNIFICATION COVENANTS. The Seller shall
indemnify, save, and keep the Buyer and its successors and assigns
harmless against and from all liabilities, demands, claims, actions,
or causes of action, assessments, losses, fines, penalties, costs,
damages, and expenses, including reasonable attorneys' and expert
witness' fees, sustained or incurred by the Buyer or its successors or
assigns as a result of or arising out of or by virtue of:
(i) The material inaccuracy of any
representation or warranty made by the Seller to the Buyer in
Sections 3.02 and 3.03 of this Agreement;
(ii) The breach by the Seller of any of
the covenants set forth in this Agreement to be performed by
the Seller; or
(iii) Any and all liabilities of the Buyer
to third parties and reasonable out-of-pocket costs and
expenses, and losses incurred by the Buyer in connection
therewith arising out of acts or omissions (including, without
limitation, any lender or servicer liability claims of any
Mortgagor) of the Seller (and any predecessor to the Seller by
merger or otherwise) in regard to any Mortgage Loan.
(b) BUYER'S INDEMNIFICATION COVENANTS. The Buyer shall
indemnify, save, and keep the Seller and its successors and assigns
harmless against and from all liabilities, demands, claims, actions,
or causes of action, assessments, losses, fines, penalties, costs,
damages, and expenses, including reasonable attorneys' and expert
witness' fees, sustained or incurred by the Seller or its successors
or assigns as a result of or arising out of or by virtue of:
(i) The material inaccuracy of any
representation or warranty made by the Buyer to the Seller in
Section 3.01 of this Agreement; or
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(ii) The breach by the Buyer of any of
the covenants set forth in this Agreement to be performed by
the Buyer.
(iii) Any and all liabilities of the
Seller to third parties and reasonable out-of-pocket costs and
expenses, and losses incurred by the Seller in connection
therewith arising out of acts or omissions (including, without
limitation, any lender or servicer liability claims of any
Mortgagor) of the Buyer (and any predecessor to the Buyer by
the merger or otherwise) in regard to any Mortgage Loan.
(c) SELLER'S RIGHTS TO DEFEND. In the event that a claim
is made against the Seller as to matters described in Subsection
3.06(a)(iii), the Buyer shall give the Seller written notice thereof.
The Seller shall have the right, but not the obligation, to assume the
defense of the claim with counsel of its own choosing reasonably
satisfactory to the Buyer and shall have the right to reasonably
approve any settlement with respect to which the Seller is obligated
to indemnify the Buyer. Regardless of which party is in control of
the defense, the Seller and the Buyer shall cooperate fully with each
other and shall make available to each other all relevant books and
records during normal business hours and shall furnish each other such
assistance as each may reasonably require in connection with such
defense.
Section 3.07. PREMIUM PROTECTION. Seller acknowledges that Buyer has
paid a premium to Seller in connection with Buyer's purchase of the Mortgage
Loans based on the remaining term of the Mortgage Loans. Therefore, it is
agreed by the parties that with respect to each Mortgage Loan that does not
contain a prepayment penalty in favor of the holder thereof, that it would be
fair and equitable that in the event a Mortgagor prepays such a Mortgage Loan
in its entirety within 60 months of the Closing Date, that Buyer shall be
entitled to a refund of the premium paid to Seller for such Mortgage Loan, on a
prorated, declining basis over said 60-month period. For example, if such a
Mortgage Loan prepays in the 5th month after the Closing Date (i.e. 4 full
months have elapsed), the amount of premium to be refunded to Buyer shall be
calculated by multiplying the dollar amount of premium paid by Buyer times a
fraction the numerator of which shall be equal to 60 minus the number of full
months after the Closing Date in which the prepayment occurs, and the
denominator of which shall be 60; therefore, in the above example, the fraction
would equal 56/60. As an additional example, if such a Mortgage Loan prepays
in the 13th month after the Closing Date (i.e. 12 full months have elapsed),
such fraction would equal 48/60, which fraction would be multiplied by the
amount of premium paid by Buyer to determine the amount of refund due to Buyer.
ARTICLE IV
CLOSING OF PURCHASE OF MORTGAGE LOANS
Section 4.01. PAYMENT. On the Closing Date, the Buyer shall pay to
the Seller the amount of the Purchase Price (net of any amount relating to the
purchase price of any Mortgage
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Loan the Buyer shall have elected not to purchase pursuant to this Agreement,
and net of the Performance Holdback set forth in Section 3.05 of this
Agreement). The closing shall, at the Buyer's option, be either by telephone,
confirmed by letter or wire or conducted in person at the place designated by
the Buyer.
Section 4.02. ASSIGNMENT AND DELIVERY OF LOAN DOCUMENTS.
(a) On or prior to the Closing Date, the Seller shall
deliver to the Buyer the following documents or instruments with
respect to each Mortgage Loan conveyed to the Buyer:
(i) The original Mortgage Note, endorsed "Pay to
the order of Pacific Crest Investment and Loan" and signed in
the name of the Seller by an Officer;
(ii) The original Mortgage, with evidence of
recording thereon;
(iii) The original Assignment of Mortgage from the
Seller to the Buyer that shall be in the form acceptable to
the Buyer, for recordation by the Buyer;
(iv) Mortgage Loan application, title report,
credit reconciliation worksheet, credit investigation receipts
and approval sheet;
(v) Originals of all assumption and modification
agreements, if any;
(vi) An original or certified copies of all
insurance policies relating to a Mortgage Loan naming the
Seller as an insured and all endorsements thereto or binders
therefor;
(vii) Originals or certified copies of all
assignment of rents or lessor's interest in leases;
(viii) Originals or certified copies of all rent
rolls, leases or rental agreements, estoppel certificates or
non-disturbance, attornment or subordination agreements;
(ix) UCC financing statements with evidence of
recording indicated thereon and the assignments thereof (that
shall be in the form acceptable to the Buyer) naming the Buyer
as the secured party; and
(x) All other documents and materials contained in
the Mortgage Documents.
The endorsements required pursuant to Subsection 4.02(a)(i) and the
assignments required pursuant to Subsection 4.02(a)(iii) shall be stated to be
"without recourse." It is understood, however, that notwithstanding that such
endorsements and assignments or any other Mortgage Documents are stated to be
without recourse, the Mortgage Loans are sold subject to the terms
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and provisions of this Agreement, including, without limitation, the
representations, warranties, covenants and undertakings of the Seller provided
for in this Agreement, and the obligations of the Seller to the Buyer with
respect to the Mortgage Loans shall be governed by this Agreement.
(b) The Seller shall, within five Business Days after the
receipt thereof, and in any event, within 30 days or immediately upon
receipt from the county recorder's office of the jurisdiction thereof
following the Closing Date, deliver or cause to be delivered to the
Buyer any additional original Mortgage Documents.
(c) All recording required pursuant to this Section 4.02
shall be accomplished at the expense of the Seller.
Section 4.03. ADDITIONAL CONDITIONS TO CLOSING. With respect to the
Closing Date, the Buyer's obligation to consummate the purchase of the Mortgage
Loans pursuant to this Agreement is subject to the satisfaction of the
following conditions:
(a) The Seller shall further perform any other action or
deed as the Buyer may reasonably request to cause the proper filing or
recording of each Mortgage and Assignment of Mortgage in such other
places and in such other manner, form or condition satisfactory to the
Buyer;
(b) All Mortgagor payments on account of taxes, site
inspection fees or insurance collected by the Seller with respect to a
Mortgage Loan prior to the submission of such Mortgage Loan to the
Buyer shall be held by the Seller in an Escrow Account. All such
Escrow Accounts shall be transferred to the Buyer on or before the
Closing Date;
(c) The Seller shall also provide to the Buyer the
Mortgage Loan Schedule and such other reports or information regarding
the Mortgage Loans as may be reasonably requested by Buyer;
(d) All representations and warranties of the Seller set
forth in Sections 3.02 and 3.03 of this Agreement shall be true and
shall take into account all of the Mortgage Loans in the aggregate;
provided, however, that the Buyer shall have no obligation to purchase
any individual Mortgage Loan as to which the representations and
warranties set forth in Sections 3.02 and 3.03 are not true and
correct with respect to such Mortgage Loan; provided further, however,
that in the event the Buyer elects not to purchase such Mortgage Loan,
the purchase price for the Mortgage Loans shall be recalculated in
order to reflect the deletion of such Loan as of the Cut-Off Date; and
no event shall have occurred which, with notice or the passage of
time, would constitute a default under this Agreement;
(e) The Buyer shall have received prior to the Closing
Date the expected final Mortgage Loan Schedule;
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(f) The Seller shall provide to the Buyer the opinion of
Seller's counsel in the form of Exhibit B attached hereto;
(g) The Seller shall provide to the Buyer a copy of the
Seller's letter to each Mortgagor and any guarantor(s) advising of the
sale and transfer of servicing of the related Mortgage Loan to Buyer,
in form and content acceptable to the Buyer and dated within 5 days of
the Closing Date; and
(h) The Seller shall provide to the Buyer a copy of a
resolution of the board of directors of Seller, certified by the
secretary of Seller, to the effect that the execution of this
Agreement by Seller, and the performance of the obligations of Seller
under this Agreement, have been duly authorized by the board of
directors of Seller, or are within the scope and coverage of a general
authorization adopted by the board of directors of Seller, and stating
that said resolution is in full force and effect and the application
of which includes the officers of Seller who are signatories hereto.
Section 4.04. MORTGAGE LOAN REVIEW PRIOR TO PURCHASE.
(a) Prior to the Cut-Off Date, the Buyer shall have the
right to inspect the Mortgage Documents. If the Buyer so elects, the
Seller shall deliver to the Buyer or its designated agent, with
respect to each Mortgage Loan to be purchased on the Closing Date, the
Mortgage Documents. The Seller shall pay all costs of preparing and
furnishing to the Buyer the Mortgage Loan file, including original and
certified copies of the respective Mortgage Documents and instruments
in the transaction.
(b) Prior to the Cut-Off Date, the Buyer shall have the
right to review such documents with respect to each Mortgage Loan and
shall approve or disapprove such Mortgage Loan for purchase hereunder.
Any Mortgage Loan with respect to which the Mortgage Loan file is
deemed to be defective, or any Mortgage Loan that is otherwise not
acceptable for purchase in the sole discretion of the Buyer, may be
returned by the Buyer, with all documents submitted in accordance with
this Section 4.04, to the Seller. At the Buyer's election, the Seller
may cure any disapproved Mortgage Loan, if possible, or the Buyer, in
its sole discretion, may hold such Mortgage Documents pending
correction of the defect as specified in a notice or other
communication to the Seller. The Seller must resubmit any such
Mortgage Loan for purchase hereunder in accordance with the procedures
of this Section 4.04. The examination of a Mortgage Loan file by the
Buyer hereunder shall not constitute a waiver of any warranty,
representation or covenant by the Seller, the Mortgagor or any other
party connected with the Mortgage Loan, with respect to such Mortgage
Loan.
(c) Notwithstanding the delivery procedures of this
Section 4.04, the Buyer may, in its sole discretion, accept Mortgage
Loan files that contain certified copies of the Mortgage and the
Assignment of Mortgage in lieu of the originals of same, and may
approve the pertinent Mortgage Loan for purchase hereunder without
such originals if
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the Mortgage Loan file is otherwise complete, all other Mortgage
Documents are present, and the Mortgage Loan otherwise qualifies for
purchase hereunder. The purchase of such Mortgage Loan is subject in
all respects to Section 3.04 hereof, and the original Mortgage, and
the original Assignment of Mortgage, must be delivered to the Buyer
within two months from the Closing Date to prevent a Defect from
occurring.
Section 4.05. CASUALTY OR CONDEMNATION PRIOR TO CLOSING.
(a) In the event of damage to any Mortgaged Property by
fire or other casualty, act of God or any other event prior to the
Closing Date, Seller agrees to promptly give the Buyer written notice
of such casualty. The Seller shall bear the risk of loss until, and
the Buyer shall bear the risk of loss on and after, the Closing Date
of each Mortgaged Property (as mortgagee).
(b) The Seller agrees to give the Buyer written notice of
any action or proceeding instituted or pending prior to the Closing
Date, in eminent domain or for condemnation, affecting any part of any
Mortgaged Property promptly after the Seller's receipt of notice
thereof.
(c) In the event of damage to or eminent domain or
condemnation of a Mortgaged Property prior to the Closing Date as
described in Subsections 4.05(a) and (b) above, and whether or not the
Seller has given the required notice to the Buyer, the Seller agrees
that this Agreement shall be automatically terminated with respect to
any such Mortgage Loan and that such Mortgage Loan shall be
automatically deleted in accordance with the terms hereof and, in such
event, the purchase price payable by the Buyer on the Closing Date
shall be reduced by the purchase price of such Mortgage Loan as set
forth on the Mortgage Loan Schedule or the Seller shall immediately
repurchase each such Mortgage Loan from the Buyer pursuant to Section
3.04(b) if the Buyer has already paid the Seller for such Mortgage
Loan.
Section 4.06. INDEMNIFICATION PROCEDURES.
In the event an indemnification duty of either party arises under
Section 3.06, the following procedures shall apply: neither party (the
"Indemnifying Party") shall be obligated to indemnify the other party (the
"Indemnified Party") from any claims to the extent that such claims result from
the action or inaction of the Indemnified Party; the Indemnified Party shall
promptly notify the Indemnifying Party of any claim, and the Indemnifying Party
shall have the right to assume the defense with respect thereto and control the
defense thereof with counsel of the Indemnifying Party's choice, subject to the
Indemnified Party's reasonable right of approval/disapproval of such choice; if
the Indemnifying Party does not elect to assume such defense, the Indemnified
Party shall assume the defense of such claim, and the Indemnifying Party shall
reimburse the Indemnified Party for the Indemnified Party's legal fees and
expenses and costs of investigation with respect to such claim; provided,
however, that in no event shall the Indemnified Party consent to the settlement
of any claim with a third party where the Indemnifying Party would be liable
therefore hereunder without the prior written consent of the Indemnifying
Party. It is understood that the obligations of the Seller and the Buyer under
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Section 3.06 and this Section 4.06 shall survive the sale of the Mortgage Loans
to the Buyer and the transfer of servicing on the Closing Date.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. AMENDMENTS, CHANGES AND MODIFICATIONS. This Agreement
may be amended, changed, modified or altered only with the written consent of
the Buyer and the Seller by an instrument in writing that specifically refers
to this Agreement and that is executed by all parties adversely affected by
such amendment, change, modification or alteration.
Section 5.02. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of California, and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.
Section 5.03. NOTICES. All notices, certificates or other
communications hereunder shall be deemed given when delivered or four (4)
Business Days after mailing by United States Postal Service, postage prepaid,
return receipt requested, addressed to the appropriate Notice Address. The
Buyer or the Seller may, by notice given hereunder, designate any further or
different address to which subsequent notices, certificates and other
communications shall be sent.
Section 5.04. ASSIGNMENT OF RIGHTS TO THIRD PARTIES. With respect
to any Mortgage Loan, the Buyer and any subsequent holder shall have the right,
at any time after the Closing Date, to assign its rights under this Agreement
to any subsequent transferee of such Mortgage Loan. The Seller may not assign
any of its rights or duties under this Agreement without the Buyer's prior
written consent. This Agreement shall inure to the benefit of the Seller, the
Buyer and their respective permitted successors and assigns.
Section 5.05. TRANSFER OF MORTGAGE LOANS. The Seller acknowledges
irrevocably that the Buyer may transfer the Mortgage Loans at any time and
consents to the assignment, in whole or in part, of this Agreement and all
rights hereunder and thereunder to the holders.
Section 5.06. SUBSEQUENT DOCUMENTATION. At any time, and from time
to time hereafter, upon the reasonable request of the Buyer, and without
payment of further consideration to the Seller, the Seller will do, execute,
acknowledge and deliver, and will cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances as may be required in order to better assign,
transfer, grant, convey, assure and confirm to the Buyer, or to collect and
reduce to possession, any or all of the Loans as provided for herein.
Section 5.07. SEVERABILITY. Each part of this Agreement is intended
to be severable. If any term, covenant, condition or provision hereof is
unlawful, invalid, or unenforceable for any reason whatsoever, and such
illegality, invalidity, or unenforceability does not affect the remaining parts
of this Agreement, then all such remaining parts hereof shall be valid and
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enforceable and have full force and effect as if the invalid or unenforceable
part had not been included.
Section 5.08. RIGHTS CUMULATIVE; WAIVERS. The rights of each of the
parties under this Agreement are cumulative and may be exercised as often as
any party considers appropriate. The rights of each of the parties hereunder
shall not be capable of being waived or varied otherwise than by an express
waiver or variation in writing. Any failure to exercise or any delay in
exercising any of such rights shall not operate as a waiver or variation of
that or any other such right. Any defective or partial exercise of any of such
rights shall not preclude any other or further exercise of that or any other
such right. No act or course of conduct or negotiation on the part of any party
shall in any way preclude such party from exercising any such right or
constitute a suspension or any variation of any such right.
Section 5.09. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall constitute one and the same
instrument, and either party hereto may execute this Agreement by signing any
such counterpart.
Section 5.10. REMEDIES NOT EXCLUSIVE. Except as provided otherwise
herein, the rights and remedies of the parties provided in the Agreement are
cumulative and not exclusive and are in addition to any other rights and
remedies now or hereafter provided by law.
Section 5.11. SURVIVAL. Notwithstanding anything to the contrary
herein, the expiration or the termination of this Agreement shall not affect
any obligations of the Seller or the Buyer under this Agreement. Each and every
representation, warranty and covenant herein shall survive the Closing Date and
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of the Seller or the Buyer or (ii) the
observance or performance of any covenant, agreement or obligation hereunder.
There shall be no merger of the representations and warranties of the Seller
into the closing documents or otherwise under any circumstances, but instead
shall be independently enforceable.
Section 5.12. TERM OF AGREEMENT. This Agreement shall continue in
full force and effect so long as the Buyer shall own any Mortgage Loans
purchased from the Seller and will be supplemented from time to time by the
parties, as and if necessary.
Section 5.13. LIMITATION ON LIABILITY OF PARTIES. Each party to
this Agreement shall be liable under this Agreement only to the extent that
obligations are imposed upon the party against whom enforcement is sought.
Section 5.14. ACCESS TO SELLER'S RECORDS. The Buyer may from time
to time request the Seller to allow the inspection of any of the Seller's
books and records pertaining to this Agreement and the Seller shall allow such
inspections and access to such books and records at reasonable times during the
Seller's normal business hours and upon reasonable terms.
Section 5.15. AGREEMENT TO PAY ATTORNEYS' FEES. If any action at
law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be
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entitled to reasonable attorney's fees, costs, and necessary disbursements in
addition to any other relief to which the prevailing party may be entitled.
Section 5.16. INTEGRATED AGREEMENT. This Agreement and the
documents, instruments and agreements executed and delivered pursuant to this
Agreement, constitute the entire agreement between the parties with respect to
the subject of the transactions contemplated hereby and supersedes all prior
letters or agreements with respect thereto.
Section 5.17. REPORTS AND PAYMENTS DUE ON WEEKENDS AND HOLIDAYS.
Any report, certificate, or payment required hereunder falling due on a
Saturday, Sunday or other day on which industrial loan companies in the State
of California are authorized or obligated by Law or executive order to close
shall be due on the next succeeding day which is not a Saturday, Sunday or a
day on which industrial loan company's are authorized or obligated by Law or
executive order to close.
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IN WITNESS WHEREOF, this Mortgage Loan Purchase and Sale Agreement has
been executed as of the date first above written.
PACIFIC CREST INVESTMENT AND LOAN,
as Buyer
By: /s/ X. X. XXXXXXX
---------------------------------------
Name: X. X. Xxxxxxx
-------------------------------------
Title: Executive Vice President
------------------------------------
PACIFIC THRIFT AND LOAN,
as Seller
By: /s/ XXXXX XXXXXXXX
---------------------------------------
Name: Xxxxx Xxxxxxxx
-------------------------------------
Title: Vice President
------------------------------------
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