RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.
as Purchaser,
and
GMAC MORTGAGE CORPORATION
as Designated Seller
DESIGNATED SELLER'S AGREEMENT
Dated as of December 1, 1996
Revolving Credit Loans
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.................................................. 2
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ARTICLE II
SALE OF REVOLVING CREDIT LOANS AND RELATED PROVISIONS
Section 2.1. Sale of Revolving Credit Loans............................... 2
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Section 2.2. Payment of Purchase Price.................................... 5
-------------------------
Section 2.3. Variable Funding Notes on or after the Closing Date.......... 6
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Section 2.4. Draws After an Amortization Event............................ 7
---------------------------------
ARTICLE III
EXAMINATION OF MORTGAGE FILES;
DUE DILIGENCE
Section 3.1. Delivery of Files............................................ 8
-----------------
Section 3.2. Due Diligence................................................ 8
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Section 3.3. Information in Prospectus Supplement......................... 9
------------------------------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 4.1. Designated Seller Representations and Warranties............. 9
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ARTICLE V
DESIGNATED SELLER'S COVENANTS
Section 5.1. Covenants of the Designated Seller........................... 17
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ARTICLE VI
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Page
Section 6.1. Closing....................................... 17
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Section 6.2. Closing Documents............................. 18
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ARTICLE VII
SERVICING
Section 7.1. Servicing..................................... 20
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ARTICLE VIII
INDEMNIFICATION BY THE DESIGNATED SELLER
WITH RESPECT TO THE REVOLVING CREDIT LOANS
Section 8.1. Indemnification With Respect to the Revolving Credit Loans.... 20
----------------------------------------------------------
Section 8.2. Limitation on Liability of the Designated Seller.............. 20
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ARTICLE IX
INDEMNIFICATION
Section 9.1. Indemnification............................................... 20
---------------
ARTICLE X
TERMINATION
Section 10.1. Termination................................................... 23
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1. Amendment......................................... 23
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Section 11.2. GOVERNING LAW..................................... 23
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Section 11.3. Costs............................................. 23
-----
Section 11.4. Notices........................................... 24
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Section 11.5. Severability of Provisions........................ 24
--------------------------
Section 11.6. Relationship of Parties........................... 24
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Section 11.7. Counterparts................................................ 24
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Section 11.8. Further Agreements.......................................... 25
------------------
Section 11.9. Intention of the Parties.................................... 25
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Section 11.10. Successors and Assigns; Assignment of This Agreement........ 25
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Section 11.11. Survival.................................................... 26
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Page
Exhibits
Exhibit 1 Revolving Credit Loan Schedule
Exhibit 2 Officer's Certificate of the Designated Seller
Exhibit 3 Board Resolutions of the Designated Seller
Exhibit 4 Opinion of the Designated Seller
Exhibit 5 Form of Underwriting Agreement
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This DESIGNATED SELLER'S AGREEMENT (this "Agreement"), dated
as of December 1, 1996, is made between GMAC Mortgage Corporation (the
"Designated Seller") and Residential Funding Mortgage Securities II, Inc. (the
"Purchaser").
W I T N E S S E T H :
WHEREAS, the Designated Seller owns Cut-off Date Loan Balances
and the Related Documents for the home equity lines of credit indicated on the
Revolving Credit Loan Schedule attached as Exhibit 1 hereto (collectively, the
"Revolving Credit Loans"), including rights to (a) any property acquired by
foreclosure or deed in lieu of foreclosure or otherwise, and (b) the proceeds of
any insurance policies covering the Revolving Credit Loans;
WHEREAS, the parties hereto desire that the Designated Seller
sell the Cut-off Date Loan Balances of the Revolving Credit Loans to the
Purchaser pursuant to the terms of this Agreement together with the Related
Documents on the Closing Date, and thereafter all Additional Balances created on
or after the Cut-off Date;
WHEREAS, the Purchaser will create the 1996-RHS4 LLC, a
limited liability company under Delaware law, and will transfer the Revolving
Credit Loans and all of its rights under this Agreement to the 1996-RHS4 LLC, as
a capital contribution to the 1996-RHS4 LLC;
WHEREAS, pursuant to the terms of the Operating Agreement, the Purchaser
will establish two classes of "ownership interests" in the 1996-RHS4 LLC: the
Class A Ownership Interest and the Class B Ownership Interest;
WHEREAS, pursuant to the terms of the Servicing Agreement, the
Master Servicer will service the Revolving Credit Loans directly or through one
or more Subservicers;
WHEREAS, pursuant to the terms of the Trust Agreement, the
Purchaser will sell the Class A Ownership Interest to the Issuer in exchange for
the cash proceeds of the Securities;
WHEREAS, pursuant to the terms of the Trust Agreement, the
Issuer will issue and transfer to or at the direction of the Purchaser, the
Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer
will issue and transfer to or at the direction of the Purchaser, the Notes,
consisting of the Term Notes and the Variable Funding Notes, secured by the
Class A Ownership Interest;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. For all purposes of this Designated
Seller's Agreement, except as otherwise expressly provided herein or unless the
context otherwise requires, capitalized terms not otherwise defined herein shall
have the meanings assigned to such terms in the Definitions contained in
Appendix A to the Indenture which is incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
ARTICLE II
SALE OF REVOLVING CREDIT LOANS AND RELATED PROVISIONS
Section 2.1. Sale of Revolving Credit Loans.
(a) The Designated Seller, by the execution and delivery of
this Agreement, does hereby sell, assign, set over, and otherwise convey to the
Purchaser, without recourse, all of its right, title and interest in, to and
under the following, and wherever located: (i) the Revolving Credit Loans
(including without limitation the Cut-off Date Loan Balances and all Additional
Balances; provided, however, that following the occurrence of an Amortization
Event, any subsequent loan balance represented by each Draw and interest thereon
will not be deemed transferred to the 1996-RHS4 LLC, and the Designated Seller
(in such event) shall retain ownership of each loan balance represented by each
such Draw made thereafter and interest thereon), all interest accruing thereon
and all collections in respect thereof received on or after the Cut-off Date;
(ii) the interest of the Designated Seller in any insurance policies in respect
of the Revolving Credit Loans; and (iii) all proceeds of the foregoing;
provided, however, that the Purchaser does not assume the obligation under each
Loan Agreement to fund Draws to the Mortgagor thereunder, and the Purchaser
shall not be obligated or permitted to fund any such Draws, it being agreed that
the Designated Seller will retain the obligation to fund future Draws. Such
conveyance shall be deemed to be made: (1) with respect to the Cut-off Date Loan
Balances, as of the Closing Date; and (2) with respect to the amount of each
Additional Balance created on or after the Cut-off Date, as of the later of the
Closing Date and the date that the corresponding Draw was made pursuant to the
related Loan Agreement, subject to the receipt by the Designated Seller of
consideration therefor as provided herein under clause (b) of Section 2.2. The
sale of the Revolving Credit Loans shall take place on December 20, 1996, or
such other date as shall be mutually acceptable to the parties hereto, subject
to and simultaneously with the deposit of the Revolving Credit Loans into the
Trust, the issuance of the Notes and Certificates, and the sale of the Notes by
the Purchaser pursuant to the Underwriting
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Agreement to be entered into by the Purchaser, the Designated Seller and the
Underwriter, a form of which is attached hereto as Exhibit 5.
(b) In connection with such conveyance, the Designated Seller
further agrees, at its own expense, on or prior to the Closing Date with respect
to the Loan Balance of the Revolving Credit Loans to indicate in its books and
records that the Revolving Credit Loans have been sold to the Purchaser pursuant
to this Agreement and to deliver to the Purchaser true and complete lists of all
of the Revolving Credit Loans specifying for each Revolving Credit Loan (i) its
account number and (ii) its Cut-off Date Loan Balance. Such lists, which form
part of the Revolving Credit Loan Schedule, shall be marked as Exhibit 1 to this
Agreement and are hereby incorporated into and made a part of this Agreement.
(c) In connection with such conveyance by the Designated
Seller, the Designated Seller shall on behalf of the Purchaser deliver to, and
deposit with the respective Custodian, on or before the Closing Date, with
respect to (i) below, or within 90 days of the Closing Date, with respect to
(ii) through (v) below, the following documents or instruments with respect to
each Revolving Credit Loan:
(i) the original Credit Line Agreement endorsed without
recourse in blank or, with respect to any Revolving Credit Loan as to
which the original Credit Line Agreement has been permanently lost or
destroyed and has not been replaced, a Lost Note Affidavit;
(ii) the original Mortgage with evidence of recording
thereon, or, if the original Mortgage has not yet been returned from
the public recording office, a copy of the original Mortgage certified
by the public recording office in which such original Mortgage has been
recorded, or a certified copy of such Mortgage in the event the
recording office keeps the original or if the original is lost;
(iii) assignments (which may be included in one or more
blanket assignments if permitted by applicable law) of the Mortgage in
recordable form as follows: (A) from the related originator to the
Designated Seller, and (B) from the Designated Seller to "The Chase
Manhattan Bank as trustee under that certain Indenture dated as of
December 1, 1996, for Residential Funding Mortgage Securities II, Inc.,
Home Equity Loan-Backed Term Notes, Series 1996-RHS4" c/o the
Designated Seller at an address specified by the Designated Seller;
(iv) originals of any intervening assignments of the
Mortgage, with evidence of recording thereon, or, if the original of
any such intervening assignment has not yet been returned from the
public recording office, a copy of such original intervening assignment
certified by the public recording office in which such original
intervening assignment has been recorded; and
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(v) a true and correct copy of each assumption,
modification, consolidation or substitution agreement, if any, relating
to the Revolving Credit Loan.
Within the time period for the review of each Mortgage File
set forth in Section 2.3 of the Custodial Agreement, if a material defect in any
Mortgage File is discovered which may materially and adversely affect the value
of the related Revolving Credit Loan, or the interests of the Indenture Trustee
(as pledgee of the Class A Ownership Interest), the Noteholders, the
Certificateholders or the Credit Enhancer in such Revolving Credit Loan,
including the Designated Seller's failure to deliver any document required to be
delivered to the Custodian on behalf of the Indenture Trustee (provided that a
Mortgage File will not be deemed to contain a defect for an unrecorded
assignment under clause (iii) above if the Designated Seller has submitted such
assignment for recording pursuant to the terms of the following paragraph), the
Designated Seller shall cure such defect, repurchase the related Revolving
Credit Loan at the Repurchase Price or substitute an Eligible Substitute Loan
for the related Revolving Credit Loan upon the same terms and conditions set
forth in Section 3.1 hereof for breaches of representations and warranties as to
the Revolving Credit Loans.
In instances where an original Mortgage or any original
intervening assignment of Mortgage was not, in accordance with clause (iv)
above, delivered by the Designated Seller to the respective Custodian in
accordance with the execution and delivery of this Agreement, the Designated
Seller will deliver or cause to be delivered the originals or certified copies
of such documents to such Custodian promptly upon receipt thereof.
Upon sale of the Revolving Credit Loans, the ownership of each
mortgage note, the mortgage and the contents of the related Mortgage File is
vested in the Purchaser and the ownership of all records and documents with
respect to the related Revolving Credit Loan prepared by or which come into the
possession of the Designated Seller as seller of the Revolving Credit Loans
hereunder or in its capacity as Master Servicer under the Servicing Agreement
shall immediately vest in the Purchaser and shall be retained and maintained in
trust by the Designated Seller or the Master Servicer at the will of the
Purchaser in such custodial capacity only. In the event that any original
document held by the Designated Seller of the Revolving Credit Loans hereunder
in its capacity as Master Servicer is required pursuant to the terms of this
Section to be part of a Mortgage File, such document shall be delivered promptly
to the Custodian. The Designated Seller's records will accurately reflect the
sale of each Revolving Credit Loan to the Purchaser.
The Purchaser hereby acknowledges its acceptance of all right,
title and interest to the property, conveyed to it pursuant to this Section 2.1.
(d) The parties hereto intend that the transactions set forth
herein constitute a sale by the Designated Seller to the Purchaser of all the
Designated Seller's right, title and interest in and to the Revolving Credit
Loans and other property as and to the extent described
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above. In the event the transactions set forth herein are deemed not to be a
sale, the Designated Seller hereby grants to the Purchaser a security interest
in all of the Designated Seller's right, title and interest in, to and under the
Revolving Credit Loans and such other property, to secure all of the Designated
Seller's obligations hereunder, and this Agreement shall constitute a security
agreement under applicable law. The Designated Seller agrees to take or cause to
be taken such actions and to execute such documents, including without
limitation the filing of any continuation statements with respect to the UCC-1
financing statements filed with respect to the Revolving Credit Loans by the
Purchaser on the Closing Date, and any amendments thereto required to reflect a
change in the name or corporate structure of the Designated Seller or the filing
of any additional UCC-1 financing statements due to the change in the principal
office of the Designated Seller, as are necessary to perfect and protect the
Purchaser's interests in each Revolving Credit Loan and the proceeds thereof.
(e) The Designated Seller hereby sells the Revolving Credit
Loans to the Purchaser without any obligation of the Purchaser or any successor
transferee to provide any amounts to General Motors Corporation, or any
affiliate or subsidiary thereof ("GM"), in connection with any program, whether
documented or not, including, without limitation, the GM Card Financial Network
Home Equity Credit Line, Home Equity Earnings Program, or any future program
between the Designated Seller and GM, whereby the borrower under any Revolving
Credit Loan receives any benefit or rebate or other amounts in connection with
the future purchase of a new car or otherwise. The Designated Seller hereby
retains all such obligations.
Section 2.2. Payment of Purchase Price.
(a) The "Purchase Price" for the Revolving Credit Loans
(including the Additional Balances) shall be (i) (A) an amount equal to
$126,739,700.00 in immediately available funds, the Variable Funding Notes and
Variable Funding Certificates, together with 1.0% of the Initial Certificates,
in respect of the Cut-off Date Loan Balances thereof and (B) in the case of each
Additional Balance transferred hereunder created on or after the Cut-off Date,
the principal amount of the related Draw under the Loan Agreement on the later
of the Closing Date and the date of the creation of such Additional Balance,
together with (ii) the Class B Ownership Interest.
(b) In consideration of the sale of the Revolving Credit Loans
from the Designated Seller to the Purchaser on the Closing Date, the Purchaser
shall pay to the Designated Seller on the Closing Date by wire transfer of
immediately available funds to a bank account designated by the Designated
Seller, the amount specified above in clause (a)(i)(A) for each Revolving Credit
Loan and the Purchaser shall transfer to the Designated Seller on the Closing
Date the Class B Ownership Interest; provided, that such payment may be on a net
funding basis if agreed by the Designated Seller and the Purchaser. With respect
to each Additional Balance transferred hereunder with respect to any Revolving
Credit Loan, the 1996-
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RHS4 LLC as assignee of the Purchaser shall pay or cause to be paid to the
Designated Seller or its designee the portion of the Purchase Price specified
above in clause (a)(i)(B) for such Additional Balance in one of the following
ways, as applicable: (i) for any Collection Period during the Revolving Period,
so long as an Amortization Event has not occurred, (a) a cash payment pursuant
to Section 3.03(ii) of the Servicing Agreement and Section 2.2(a)(i)(B) hereof
in an amount equal to the related Draw, if then available from Principal
Collections during the related Collection Period on the Revolving Credit Loans,
and (b) to the extent aggregate Draws exceed Principal Collections for such
Collection Period, an increase in the aggregate principal amount of the Variable
Funding Notes and Variable Funding Certificates or an issuance of new Variable
Funding Notes and Variable Funding Certificates in the proportions specified in
the Indenture and the Trust Agreement respectively, as of the Payment Date
corresponding to the Collection Period in which such Additional Balances were
created, equal to the amount by which Additional Balances exceeded Principal
Collections for such Collection Period, and (ii) for any Collection Period after
the end of the Revolving Period, so long as an Amortization Event has not
occurred, an increase in the aggregate principal amount of Variable Funding
Notes and Variable Funding Certificates or an issuance of new Variable Funding
Notes and Variable Funding Certificates in the proportions specified in the
Indenture and the Trust Agreement respectively as of each Payment Date in an
aggregate amount equal to the total of the related Draws for the corresponding
Collection Period.
Section 2.3. Variable Funding Notes on or after the Closing Date.
Subject to Section 4.02 of the Indenture, if at any time, the
Designated Seller holds Variable Funding Notes that have been exchanged for
Capped Funding Notes, the Purchaser agrees that, upon written request made by
the Designated Seller at any time, the Purchaser shall use its best reasonable
efforts to cause such Capped Funding Notes held by the Designated Seller to be
registered for resale by the Designated Seller pursuant to an effective
registration statement filed by the Purchaser in accordance with, and meeting
all requirements of, the Securities Act of 1933, as amended. The Purchaser shall
use its best reasonable efforts to cause such registration statement to become
effective with respect to such Capped Funding Notes as soon as practicable
within a mutually agreed reasonable time period after the Designated Seller's
request. It is contemplated that such registration statement will be the shelf
registration statement pursuant to which the Term Notes issued on the Closing
Date are to be offered, or one substantially similar thereto. In connection with
such registration statement and offering, the Designated Seller shall reimburse
the Purchaser for costs related thereto including registration fees, printing
fees, rating fees, legal fees, accountant's fees, blue sky registration fees and
expenses (if any), related expenses of the Credit Enhancer and other
out-of-pocket costs, if any. In connection with such registration statement and
related prospectus, the Designated Seller shall provide the Purchaser with an
updated Revolving Credit Loan Schedule and all other information reasonably
necessary to assure that the statements in the prospectus
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with respect to the Revolving Credit Loans and the Designated Seller (including
in its capacity as servicer of the Revolving Credit Loans) are complete and
correct in all material respects as of the date of sale of such Capped Funding
Notes by the Designated Seller. The registration statement shall not include any
information with respect to the Credit Enhancer, except for information approved
by the Credit Enhancer for use therein.
Section 2.4. Draws After an Amortization Event.
In the event that an Amortization Event occurs, any Draws made
on the Revolving Credit Loans thereafter shall not be deemed to be "Additional
Balances" hereunder, and the ownership of the related balances shall be retained
by the Designated Seller. Following an Amortization Event, on any Payment Date,
with respect to the related Collection Period, all Interest Collections and
Principal Collections in respect of each individual Revolving Credit Loan shall
be allocated on a pro rata basis as between the 1996-RHS4 LLC and the Designated
Seller, based on the relative proportions of the Loan Balance and the Excluded
Amount, respectively, as of the end of the calendar month immediately prior to
such Collection Period. Any losses incurred with respect to any individual
Revolving Credit Loan following an Amortization Event shall be allocated on a
pro rata basis between the 1996-RHS4 LLC and the Designated Seller, based on the
Loan Balance and the Excluded Amount thereof as of the date of liquidation of
such Revolving Credit Loan. Notwithstanding any other provision hereof or of the
Servicing Agreement, the payments and collections allocable to the Excluded
Amount need not be deposited in the Custodial Account and shall not be deposited
in the Distribution Account or the Payment Account, and shall be distributed by
the Master Servicer to the Designated Seller not less frequently than monthly in
accordance with reasonable instructions provided by the Designated Seller.
ARTICLE III
EXAMINATION OF MORTGAGE FILES;
DUE DILIGENCE
Section 3.1. Delivery of Files.
On such dates agreed to by the Designated Seller and the
Purchaser, the Designated Seller shall (a) deliver to the Purchaser magnetic
tapes acceptable to the Purchaser which contain such information about the
Mortgage Loans as may be reasonably requested by the Purchaser, and (b) either,
as specified by the Purchaser, deliver to the Purchaser, or its designee, in
escrow, or make available for examination during normal business hours, all
credit files, underwriting documentation and Mortgage Files relating to the
Mortgage Loans. If the Purchaser identifies any Mortgage Loans which in its sole
discretion do not conform to the Designated Seller's underwriting standards or
the representations and warranties in Section
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4.01(b) hereof such Mortgage Loans shall be deleted from the Mortgage Loan
Schedule. The Purchaser may, at its sole option and without notice to the
Designated Seller, accept all or part of the Mortgage Loans without conducting
any partial or complete examination. The fact that the Purchaser has conducted
or has failed to conduct any partial or complete examination of the credit
files, underwriting documentation or Mortgage Files relating to the Mortgage
Loans shall not affect the Purchaser's, the Indenture Trustee's or any
Securityholder's right to demand repurchase of the Mortgage Loans or other
relief as provided under this Agreement or to be provided under the Servicing
Agreement.
Section 3.2. Due Diligence.
On or prior to the Closing Date, in addition to the foregoing
examination of the Mortgage Files and related documents, the Designated Seller
agrees to allow the Purchaser, or its designee, or any representative of
Standard & Poor's Ratings Services or Xxxxx'x Investors Service, Inc. (together,
the "Rating Agencies") to examine and audit all books, records and files
pertaining to the Mortgage Loans, the Designated Seller's underwriting
procedures and the Designated Seller's ability to perform or observe all of the
terms, covenants and conditions of this Agreement and the Servicing Agreement.
Such examinations and audits shall take place at one or more offices of the
Designated Seller during normal business hours and shall not be conducted in a
manner that is disruptive to the Designated Seller's normal business operations,
and in the course of such examinations and audits, the Designated Seller will
make available to the Purchaser, or its designee, reasonably adequate
facilities, as well as the assistance of a sufficient number of knowledgeable
and responsible individuals who are familiar with the Mortgage Loans and the
terms of this Agreement and the Designated Seller shall cooperate fully with any
such review in all respects. On or prior to the Closing Date, the Designated
Seller agrees to provide the Purchaser, its affiliates or its designee with all
material information regarding the Designated Seller's financial condition as is
customarily provided to lenders, and to provide access to knowledgeable
financial or accounting officers for the purpose of answering questions with
respect to the Designated Seller's financial condition, financial statements as
provided to the Purchaser or other developments affecting the Designated Seller.
Section 3.3. Information in Prospectus Supplement.
The Purchaser and the Designated Seller shall agree on the
information relating to the Designated Seller to be included in the Prospectus
Supplement, including but not limited to financial information and information
regarding the status of the Designated Seller with respect to any regulatory
body or entity, and the presentation of such information in the Prospectus
Supplement. In connection therewith each party shall promptly inform the other
party of any information it reasonably wishes to include or exclude from the
Prospectus Supplement, and upon being so informed, the parties shall use their
best efforts to mutually agree, as promptly as possible, on the presentation and
content of information to be included in the Prospectus Supplement. The
Purchaser shall keep confidential any information regarding
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the Designated Seller which has been delivered into the Purchaser's possession
and which is not otherwise publicly available; provided, however, that such
information shall not be kept confidential (and the right to require
confidentiality under any confidentiality agreement shall be waived) to the
extent the parties agree to include such information in the Prospectus
Supplement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 4.1. Designated Seller Representations and Warranties. The
Designated Seller represents and warrants to the Purchaser, as of the Closing
Date (or if otherwise specified below, as of the date so specified):
(a) As to the Designated Seller:
(i) The Designated Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has the corporate power to own its
assets and to transact the business in which it is currently engaged.
The Designated Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or
leased by it requires such qualification and in which the failure to so
qualify would have a material adverse effect on the business,
properties, assets or condition (financial or other) of the Designated
Seller;
(ii) The Designated Seller has the power and authority
to make, execute, deliver and perform its obligations under this
Agreement and all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement;
(iii) The Designated Seller is not required to obtain the
consent of any other Person or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except for such consents, license, approvals or
authorization, or registration or declaration, as shall have been
obtained or filed, as the case may be;
(iv) The execution and delivery of this Agreement and
the performance of the transactions contemplated hereby by the
Designated Seller will not violate any material provision of any
existing law or regulation or any order or decree of any court
applicable to the Designated Seller or any provision of the Articles of
Incorporation or
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Bylaws of the Designated Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the
Designated Seller is a party or by which the Designated Seller may be
bound; and
(v) No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending,
or to the knowledge of the Designated Seller threatened, against the
Designated Seller or any of its properties or with respect to this
Agreement or the Certificates which in the opinion of the Designated
Seller has a reasonable likelihood of resulting in a material adverse
effect on the transactions contemplated by this Agreement.
(vi) This Agreement constitutes a legal, valid and
binding obligation of the Designated Seller, enforceable against the
Designated Seller in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity);
(vii) This Agreement constitutes a valid transfer and
assignment to the Purchaser of all right, title and interest of the
Designated Seller in and to the Cut-off Date Loan Balances with respect
to the Revolving Credit Loans, all monies due or to become due with
respect thereto, and all proceeds of such Cut-off Date Loan Balances
with respect to the Revolving Credit Loans and such funds as are from
time to time deposited in the Custodial Account (excluding any
investment earnings thereon) as assets of the Trust and all other
property specified in the definition of "Trust" as being part of the
corpus of the Trust conveyed to the Purchaser by the Designated Seller,
and upon payment for the Additional Balances, will constitute a valid
transfer and assignment to the Purchaser of all right, title and
interest of the Designated Seller in and to the Additional Balances,
all monies due or to become due with respect thereto, and all proceeds
of such Additional Balances and all other property specified in the
definition of "Trust" relating to the Additional Balances;
(viii) The Designated Seller is not in default with
respect to any order or decree of any court or any order, regulation or
demand or 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 the Master
Servicer or its properties or might have consequences that would
materially adversely affect its performance hereunder;
(b) As to the Revolving Credit Loans:
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(i) The information set forth in the Revolving Credit
Loan Schedule for such Revolving Credit Loans is true and correct in
all material respects as of the date or dates respecting which such
information is furnished;
(ii) The Cut-off Date Loan Balances have not been
assigned or pledged, the Designated Seller has good and marketable
title thereto and the Designated Seller is the sole owner and holder of
such Cut-off Date Loan Balances free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges,
charges of security interests of any nature and has full right and
authority, under all governmental and regulatory bodies having
jurisdiction over the ownership of the applicable Revolving Credit
Loans to sell and assign the same pursuant to this Agreement;
(iii) The related Credit Line Agreement and the Mortgage
have not been assigned or pledged, the Designated Seller has good and
marketable title thereto and the Designated Seller is the sole owner
and holder of the Revolving Credit Loan free and clear of any and all
liens, claims, encumbrances, participation interests, equities,
pledges, charges of security interests of any nature and has full right
and authority, under all governmental and regulatory bodies having
jurisdiction over the ownership of the applicable Revolving Credit
Loans to sell and assign the same pursuant to this Agreement;
(iv) To the best of the Designated Seller's knowledge, there is no valid
offset, defense or counterclaim of any obligor under any Loan Agreement or
Mortgage;
(v) To the best of the Designated Seller's knowledge, there is no
delinquent recording or other tax or fee or assessment lien against any related
Mortgaged Property;
(vi) To the best of the Designated Seller's knowledge, there is no
proceeding pending or threatened for the total or partial condemnation of the
related Mortgaged Property;
(vii) To the best of the Designated Seller's knowledge,
there are no mechanics' or similar liens or claims which have been
filed for work, labor or material affecting the related Mortgaged
Property which are, or may be liens prior or equal to, or subordinate
with, the lien of the related Mortgage, except liens which are fully
insured against by the title insurance policy referred to in clause
(xi);
(viii) As of the Cut-off Date, no Revolving Credit Loan was 30 days or more
delinquent;
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(ix) For each Revolving Credit Loan, the related Mortgage File contains
each of the documents and instruments specified to be included therein;
(x) To the best of the Designated Seller's knowledge,
the related Credit Line Agreement and the related Mortgage at the time
it was made complied in all material respects with applicable local,
state and federal laws;
(xi) A policy of title insurance was obtained by the
Designated Seller for credit line amounts in excess of $100,000 for the
entire line amount and a title search or other assurance of title
customary in the relevant jurisdiction was obtained with respect to
each Revolving Credit Loan as to which no title insurance policy or
binder was issued;
(xii) None of the Mortgaged Properties is a mobile home or a manufactured
housing unit that is not permanently attached to its foundation;
(xiii) As of the Cut-off Date no more than 22.4% of the
Revolving Credit Loans, by aggregate principal balance, are secured by
Mortgaged Properties located in Michigan and no more than 2.6% of the
Revolving Credit Loans, by aggregate principal balance, are secured by
Mortgaged Properties located in planned unit developments or
townhouses;
(xiv) As of the Cut-off Date the Combined Loan-to-Value Ratio for each
Revolving Credit Loan was not in excess of 100%;
(xv) [Reserved];
(xvi) The Designated Seller has not transferred the Revolving Credit Loans
to the Purchaser with any intent to hinder, delay or defraud any of its
creditors;
(xvii) The minimum monthly payment with respect to any
Revolving Credit Loan is not less than the interest accrued at the
applicable Loan Rate on the average daily Loan Balance during the
interest period relating to the date on which such minimum monthly
payment is due;
(xviii) Within a loan type, and except as required by
applicable law, each Loan Agreement and each Mortgage is substantially
similar one to the other and is an enforceable obligation of the
related Mortgagor;
(xix) To the best knowledge of the Designated Seller, the physical property
subject to each Mortgage is free of material damage and is in good repair;
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(xx) The Designated Seller has not received a notice of
default of any senior mortgage loan related to a Mortgaged Property
which has not been cured by a party other than the Master Servicer;
(xxi) Except with Revolving Credit Loans originated in
the State of Washington, each of the Credit Line Agreements has a
substantially similar definition of Prime as the Index applicable to
the related Loan Rate; each Revolving Credit Loan originated in
Washington has a substantially similar definition of Six-Month Treasury
Rate as the Index applicable to the related Loan Rate;
(xxii) None of the Revolving Credit Loans are reverse mortgage loans;
(xxiii) (A) No Revolving Credit Loan has an original term
to maturity in excess of 192 months. Except with respect to 10% of the
Revolving Credit Loans, on each date that the Loan Rates have been
adjusted prior to the Cut-off Date interest rate adjustments on the
Revolving Credit Loans were made in compliance with the related
Mortgage and Credit Line Agreement and applicable law. Over the term of
any Revolving Credit Loan, the Loan Rate may not exceed the related
Maximum Loan Rate, if any. (B) The Revolving Credit Loans have Maximum
Loan Rates which range between 14.00% and 21.00%. The Gross Margins for
the Revolving Credit Loans range between -0.25% and 4.00%, and the
weighted average Gross Margin for the Revolving Credit Loans is
approximately 1.90% as of the Cut-off Date. As of the Cut-off Date, the
Loan Rates on the Revolving Credit Loans range between 8.00 and 11.25%
and the weighted average Loan Rate is approximately 10.13% The weighted
average remaining term to scheduled maturity of the Revolving Credit
Loans on a contractual basis as of the Cut-off Date is approximately
117 months;
(xxiv) (A) Each Mortgaged Property with respect to the
Revolving Credit Loans consists of a single parcel of real property
with a single family or two- to four-family residence erected thereon,
or an individual condominium unit, planned unit development unit or
townhouse. (B) With respect to the Revolving Credit Loans (i)
approximately 4.59% (by Cut-off Date Balance are secured by real
property improved by individual condominium units, planned development
units or townhouses, (ii) approximately 94.30% (by Cut-off Date
Balance) are secured by real property with a single family residence
erected thereon, and (iii) approximately 1.11% (by Cut-off Date
Balance) are secured by real property with a two- to four-family
residence erected thereon;
(xxv) As of the Cut-off Date, the Credit Limits on the
Revolving Credit Loans range between approximately $10,000 and $500,000
with an average of $37,393. As of the Cut-off Date, no Revolving Credit
Loan had a principal balance in excess of
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$401,715 and the weighted average Credit Utilization Rate, based on the
Credit Limits of the Revolving Credit Loans is equal to approximately
66.8%;
(xxvi) No more than approximately 96.6% of the Revolving Credit Loans, by
aggregate principal balance as of the Cut-off Date are second liens;
(xxvii) A policy of hazard insurance and flood insurance,
if applicable, has been required from the Borrower for his Revolving
Credit Loan when the Revolving Credit Loan was originated;
(xxviii) There is no material default, breach, violation or
event of acceleration existing under the terms of any Credit Line
Agreement or Mortgage and, to the best of the Seller's knowledge, no
event which, with notice and expiration of any grace or cure period,
would constitute a material default, breach, violation or event of
acceleration under the terms of any Credit Line Agreement or Mortgage,
and no such material default, breach, violation or event of
acceleration has been waived by the Designated Seller involved in
originating or servicing a Revolving Credit Loan;
(xxix) No instrument of release or waiver has been
executed in connection with the Revolving Credit Loans, and no
Mortgagor has been released, in whole or in part from its obligations
in connection with a Revolving Credit Loan;
(xxx) With respect to each Revolving Credit Loan that is
a second lien, either (i) no consent for the Revolving Credit Loan was
required by the holder of the related prior lien, (ii) such consent has
been obtained and is contained in the mortgage file or (iii) no consent
for the Revolving Credit Loan was required by relevant law;
(xxxi) To the extent permitted by applicable law, the
Mortgage contains a customary provision for the acceleration of the
payment of the unpaid principal balance of the Revolving Credit Loan in
the event the related Mortgaged Property is sold without the prior
consent of the mortgagee thereunder.
Upon discovery by Designated Seller or upon notice from the
Purchaser, the Credit Enhancer, the 1996-RHS4 LLC, the Trustee, the Indenture
Trustee or any Custodian, as applicable, of a breach of any representation or
warranty in clause (a) above which materially and adversely affects the
interests of the Securityholders or the Credit Enhancer, as applicable, in any
Revolving Credit Loan, the Designated Seller shall, within 90 days of its
discovery or its receipt of notice of such breach, either (i) cure such breach
in all material respects or (ii) to the extent that such breach is with respect
to a Revolving Credit Loan or a Related Document, either (A) repurchase such
Revolving Credit Loan from the 1996-RHS4 LLC at the Repurchase Price, or (B)
substitute one or more Eligible Substitute Loans for such Revolving Credit Loan,
in each case in the manner and subject to the conditions and limitations set
forth below.
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Upon discovery by the Designated Seller or upon notice from
the Purchaser, the Credit Enhancer, the 1996-RHS4 LLC, the Trustee, the
Indenture Trustee or any Custodian, as applicable, of a breach of any
representation or warranty in this Subsection (b) with respect to any Revolving
Credit Loan, or upon the occurrence of a Repurchase Event, which materially and
adversely affects the interests of any Securityholders or the Credit Enhancer,
as applicable, or of the Purchaser in such Revolving Credit Loan (notice of
which shall be given to the Purchaser by the Designated Seller, if it discovers
the same), notwithstanding the Designated Seller's lack of knowledge with
respect to the substance of such representation and warranty, the Designated
Seller shall, within 90 days after the earlier of its discovery or receipt of
notice thereof, either cure such breach or Repurchase Event in all material
respects or either (i) repurchase such Revolving Credit Loan from the 1996-RHS4
LLC at the Repurchase Price, or (ii) substitute one or more Eligible Substitute
Loans for such Revolving Credit Loan, in each case in the manner and subject to
the conditions set forth below. The Repurchase Price for any such Revolving
Credit Loan repurchased by the Designated Seller shall be deposited or caused to
be deposited by the Master Servicer in the Custodial Account maintained by it
pursuant to Section 3.02 of the Servicing Agreement.
In the event that the Designated Seller elects to substitute
an Eligible Substitute Loan or Loans for a Deleted Loan pursuant to this Section
4.1, the Designated Seller shall deliver to the Custodian on behalf of the
1996-RHS4 LLC, with respect to such Eligible Substitute Loan or Loans, the
original Credit Line Agreement and all other documents and agreements as are
required by Section 2.1(c), with the Credit Line Agreement endorsed as required
by Section 2.1(c). No substitution will be made in any calendar month after the
Determination Date for such month. Monthly Payments due with respect to Eligible
Substitute Loans in the month of substitution shall not be part of the Trust and
will be retained by the Master Servicer and remitted by the Master Servicer to
the Designated Seller on the next succeeding Payment Date, provided that a
payment at least equal to the applicable Minimum Monthly Payment has been
received by the Trust, for such month in respect of the Deleted Loan. For the
month of substitution, distributions to the Distribution Account pursuant to the
Servicing Agreement will include the Monthly Payment due on a Deleted Loan for
such month and thereafter the Designated Seller shall be entitled to retain all
amounts received in respect of such Deleted Loan. The Master Servicer shall
amend or cause to be amended the Revolving Credit Loan Schedule to reflect the
removal of such Deleted Loan and the substitution of the Eligible Substitute
Loan or Loans and the Master Servicer shall deliver the amended Revolving Credit
Loan Schedule to the Trustee. Upon such substitution, the Eligible Substitute
Loan or Loans shall be subject to the terms of this Agreement and the Servicing
Agreement in all respects, the Designated Seller shall be deemed to have made
the representations and warranties with respect to the Eligible Substitute Loan
contained herein set forth in Section 4.1(b) (other than clauses (viii), (xiii),
(xiv) (xxiii)(B), (xxiv)(B), (xxv), and (xxvi) thereof) as of the date of
substitution, and the Designated Seller shall be obligated to repurchase or
substitute for any Eligible Substitute Loan as to which a Repurchase Event has
occurred as provided herein. In connection with the substitution of one or more
Eligible Substitute Loans for one or more
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Deleted Loans, the Master Servicer will determine the amount (such amount, a
"Substitution Adjustment Amount"), if any, by which the aggregate principal
balance of all such Eligible Substitute Loans as of the date of substitution is
less than the aggregate principal balance of all such Deleted Loans (after
application of the principal portion of the Monthly Payments due in the month of
substitution that are to be distributed to the Payment Account in the month of
substitution). The Designated Seller shall deposit the amount of such shortfall
into the Custodial Account on the day of substitution, without any reimbursement
therefor.
Upon receipt by the 1996-RHS4 LLC and the Custodian of written
notification, signed by a Servicing Officer, of the deposit of such Repurchase
Price or of such substitution of an Eligible Substitute Loan (together with the
complete related Mortgage File) and deposit of any applicable Substitution
Adjustment Amount as provided above, the Custodian, on behalf of the 1996-RHS4
LLC shall release to the Designated Seller the related Mortgage File for the
Revolving Credit Loan being repurchased or substituted for and the 1996-RHS4 LLC
shall execute and deliver such instruments of transfer or assignment prepared by
the Master Servicer, in each case without recourse, as shall be necessary to
vest in the Designated Seller or its designee such Revolving Credit Loan
released pursuant hereto and thereafter such Revolving Credit Loan shall not be
an asset of the 1996-RHS4 LLC.
It is understood and agreed that the obligation of the
Designated Seller to cure any breach, or to repurchase or substitute for, any
Revolving Credit Loan as to which such a breach has occurred and is continuing
shall, except to the extent provided in Section 6.1 of this Agreement,
constitute the sole remedy respecting such breach available to the Purchaser,
the 1996-RHS4 LLC, the Certificateholders (or the Trustee on behalf of the
Certificateholders) and the Noteholders (or the Indenture Trustee on behalf of
the Noteholders) against the Designated Seller.
It is understood and agreed that the representations and
warranties set forth in this Section 4.1 shall survive delivery of the
respective Mortgage Files to the 1996-RHS4 LLC, or its Custodians.
ARTICLE V
DESIGNATED SELLER'S COVENANTS
Section 5.1. Covenants of the Designated Seller. The
Designated Seller hereby covenants that, except for the transfer hereunder, the
Designated Seller will not sell, pledge, assign or transfer to any other Person,
or grant, create, incur or assume any Lien on any Revolving Credit Loan, or any
interest therein, except with respect to any Excluded Amount; the Designated
Seller will notify the 1996-RHS4 LLC, as assignee of the Purchaser, of the
existence of any Lien (other than as provided above) on any Revolving Credit
Loan immediately
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upon discovery thereof; and the Designated Seller will defend the right, title
and interest of the 1996-RHS4 LLC, as assignee of the Purchaser, in, to and
under the Revolving Credit Loans against all claims of third parties claiming
through or under the Designated Seller; provided, however, that nothing in this
Section 5.1 shall be deemed to apply to any Liens for municipal or other local
taxes and other governmental charges if such taxes or governmental charges shall
not at the time be due and payable or if the Designated Seller shall currently
be contesting the validity thereof in good faith by appropriate proceedings.
ARTICLE VI
CLOSING
Section 6.1. Closing. The closing of the sale of the Mortgage Loans shall
be held at the office of Xxxxxxx Xxxxxxxx & Xxxx at 10:00 A.M., New York time,
on the Closing Date.
The closing shall be subject to each of the following
conditions:
(a) All of the representations and warranties of the Designated Seller
herein shall be true and correct as of the Closing Date;
(b) All Closing Documents specified in Section 6.2 of
this Agreement, in such forms as are agreed upon and
acceptable to the Purchaser, shall be duly executed and
delivered by all signatories as required pursuant to the
respective terms thereof;
(c) The Designated Seller shall have delivered and
released to the Purchaser or its designee, all documents
required to be delivered to the Purchaser pursuant to Section
2 of this Agreement;
(d) The result of the examination and audit performed
by the Purchaser pursuant to Section 3 hereof shall be
satisfactory to the Purchaser in its reasonable determination
and the parties shall have agreed to the information to be
disclosed in the Prospectus Supplement pursuant to the final
paragraph of Section 3 hereof;
(e) All other terms and conditions of this Agreement
required to be complied with on or before the Closing Date
shall have been complied with and the Designated Seller shall
have the ability to comply with all terms and conditions and
perform all duties and obligations required to be complied
with or performed after the Closing Date;
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(f) The Closing Date may be postponed or cancelled in the reasonable
discretion of the Purchaser in the event of any material failure by the
Designated Seller to meet its obligations on a timely basis;
(g) All of the terms and conditions of the Underwriting Agreement
required to be complied with on or before the Closing Date shall have been
complied with; and
(h) The Designated Seller shall have paid all fees and expenses payable
by it to the Purchaser.
Both parties agree to use their best efforts to perform their
respective obligations hereunder in a manner which will enable the Purchaser to
purchase the Mortgage Loans on the Closing Date. In the event any of the
foregoing conditions is not satisfied and the failure to satisfy such condition
is attributable to the Designated Seller and is not a direct result of the
Purchaser's failure to perform its duties hereunder, (i) the Purchaser shall
have no obligation to consummate this transaction or continue to participate in
this transaction in any manner and (ii) the Designated Seller shall be
responsible for all net costs and out of pocket expenses for which the Purchaser
may be liable pursuant to this Agreement.
Section 6.2. Closing Documents. The Closing Documents shall consist of the
-----------------
following:
(a) the Mortgage Loan Files;
(b) This Agreement duly executed by the Purchaser and the Designated
Seller;
(c) Copies of all Basic Documents duly executed by the signatories
thereto, including all exhibits thereto;
(d) The Underwriting Agreement duly executed by the Purchaser and
the Underwriter, and all exhibits thereto duly executed by all applicable
signatories;
(e) An Officer's Certificate of the Designated Seller in the form of
Exhibit 2 annexed hereto, dated the Closing Date, and attached thereto
resolutions of the board of directors of the Designated Seller, in a form
substantially similar to Exhibit 3 annexed hereto, together with copies of the
documents governing the Designated Seller's organization
and certificate of good standing of the Designated Seller;
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(f) A true and complete copy, certified as such by an officer of the
Designated Seller, of each certificate or other evidence of merger or change of
name, signed or stamped by the applicable regulatory authority, if any of the
Mortgage Loans were acquired by the Designated Seller by merger or acquired or
originated by the Designated Seller while conducting business under a name
other than its present name;
(g) A cross-receipt dated the Closing Date duly executed by the
Designated Seller and the Underwriter;
(h) A written opinion of General Counsel for the Designated Seller,
substantially in the form of Exhibit 4 annexed hereto, with any modifications
required by the Rating Agencies and the Credit Enhancer, dated the Closing Date
and such other written opinions as may be reasonably required by the Rating
Agencies and the Credit Enhancer; and
(i) Such other documents, certificates and opinions as may be
reasonably required by the Purchaser, Purchaser's counsel, the Rating Agencies
or the Credit Enhancer.
ARTICLE VII
SERVICING
Section 7.1. Servicing. The Designated Seller will service the
Revolving Credit Loans pursuant to the terms and conditions of the Servicing
Agreement and will service the Revolving Credit Loans directly or through one or
more sub-servicers in accordance therewith.
ARTICLE VIII
INDEMNIFICATION BY THE DESIGNATED SELLER
WITH RESPECT TO THE REVOLVING CREDIT LOANS
Section 8.1. Indemnification With Respect to the Revolving
Credit Loans. The Designated Seller shall indemnify and hold harmless the
Purchaser from and against any loss, liability or expense directly arising from
the breach by the Designated Seller of its representations and warranties in
Section 4.1 of this Agreement which materially and adversely affects the
Purchaser's interest in any Revolving Credit Loan or from the failure by the
Designated Seller to perform its obligations under this Agreement in any
material respect, provided that the Designated Seller shall have no obligation
to indemnify the Purchaser in
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respect of any loss, liability or expense that arises as a result of the
Purchaser's willful malfeasance, bad faith or negligence or as a result of the
breach by the Purchaser of its obligations hereunder.
Section 8.2. Limitation on Liability of the Designated Seller.
None of the directors, officers, employees or agents of the Designated Seller
shall be under any liability to the Purchaser, it being expressly understood
that all such liability is expressly waived and released as a condition of, and
as consideration for, the execution of this Agreement. Except as and to the
extent expressly provided in the Servicing Agreement, the Designated Seller
shall not be under any liability to the 1996-RHS4 LLC, the Trust, the Trustee,
the Indenture Trustee or the Securityholders. The Designated Seller and any
director, officer, employee or agent of the Designated Seller may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder.
ARTICLE IX
INDEMNIFICATION
Section 9.1. Indemnification. (a) The Designated Seller agrees
to indemnify and hold harmless the Purchaser and its respective officers and
directors, and each person, if any who controls the Purchaser within the meaning
of either Section 15 of the Securities Act of 1933 (the "1933 Act") or Section
20 of the Securities Exchange Act of 1934 (the "1934 Act") from and against any
and all losses, claims, damages and liabilities caused by any untrue statement
or alleged untrue statement of a material fact contained in any information
furnished by Designated Seller for the Prospectus Supplement, it being
acknowledged that the only information furnished by the Designated Seller for
the Prospectus Supplement and to which this indemnity applies is the information
set forth under the following captions in the Prospectus Supplement:
"Description of the Mortgage Pool", "Servicing of Revolving Credit
Loans--Delinquency and Loss Experience of the Master Servicer's Portfolio",
"Description of the Servicing Agreement--The Master Servicer" and in the
subsections entitled "Master Servicer" and "The Mortgage Pool" under the caption
entitled "Summary" or elsewhere in the Prospectus Supplement with respect to the
subjects discussed under such captions if the information is furnished and
approved by the Designated Seller, or caused by any omission or alleged omission
by the Designated Seller to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading.
(b) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either Section 9.1(a) above, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and
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the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the reasonable fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the reasonable fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all such
indemnified parties. The indemnifying party may, at its option, at any time upon
written notice to the indemnified party, assume the defense of any proceeding
and may designate counsel satisfactory to the indemnified party in connection
therewith provided that the counsel so designated would have no actual or
potential conflict of interest in connection with such representation. Unless it
shall assume the defense of any proceeding, the indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
If the indemnifying party assumes the defense of any proceeding, it shall be
entitled to settle such proceeding with the consent of the indemnified party or,
if such settlement provides for release of the indemnified party in connection
with all matters relating to the proceeding which have been asserted against the
indemnified party in such proceeding by the other parties to such settlement,
without the consent of the indemnified party.
(c) If the indemnification provided for in this Section 9.1 is
unavailable to an indemnified party under Section 9.1(a) hereof then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the indemnified and indemnifying
parties in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the indemnified and indemnifying parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such parties and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(d) The Purchaser and the Designated Seller agree that it
would not be just and equitable if contribution pursuant to Section 9.1(c) were
determined by pro rata allocation or by
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any other method of allocation which does not take account of the considerations
referred to in Section 9.1(c) above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in this Section 9.1 shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim, except where the indemnified party is required to bear such
expenses pursuant to this Section 9.1, which expenses the indemnifying party
shall pay as and when incurred, at the request of the indemnified party, to the
extent that the indemnifying party will be ultimately obligated to pay such
expenses. In the event that any expenses so paid by the indemnifying party are
subsequently determined to not be required to be borne by the indemnifying party
hereunder, the party which received such payment shall promptly refund the
amount so paid to the party which made such payment. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in
this Section 9.1 shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by the
Purchaser or any person controlling the Purchaser or by or on behalf of the
Designated Seller and their respective directors or officers or any person
controlling the Designated Seller, and (iii) acceptance of and payment for any
of the Certificates.
ARTICLE X
TERMINATION
Section 10.1. Termination. The respective obligations and
responsibilities of the Designated Seller and the Purchaser created hereby shall
terminate, except for the Designated Seller's indemnity obligations as provided
herein, upon the termination of the 1996-RHS4 LLC pursuant to the terms of the
Operating Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1. Amendment. This Agreement may be amended from
time to time by the Designated Seller and the Purchaser by written agreement
signed by the Designated Seller and the Purchaser, with the consent of the
Credit Enhancer (which consent shall not be unreasonably withheld).
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Section 11.2. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.3. Costs. The Designated Seller shall pay directly
all of its own expenses, including out-of-pocket expenses and its attorney fees,
and its rating agency fees. In addition, the Designated Seller shall pay a fee
to the Purchaser, by wire transfer of immediately available funds on the Closing
Date, an amount equal to $375,000. In addition, in the event that this Agreement
is terminated, the Designated Seller will pay to the Purchaser an amount equal
to the Purchaser's out-of-pocket expenses, including but not limited to
attorney's fees and costs related to any examination by the Purchaser or its
designee of the Mortgage Files of the Designated Seller.
Section 11.4. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, postage prepaid, addressed
as follows:
(i) if to the Designated Seller:
GMAC Mortgage Corporation
000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Xxxxx X. Xxxxxxxxx, Chief Financial Officer
Attention: Home Equity Loan Trust 1996-RHS4
or, such other address as may hereafter be furnished to the Purchaser in writing
by the Designated Seller.
(ii) if to the Purchaser:
Residential Funding Mortgage Securities II, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Home Equity Loan Trust 1996-RHS4
or such other address as may hereafter be furnished to the Designated Seller in
writing by the Purchaser.
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Section 11.5. Severability of Provisions. If any one or more
of the covenants, agreements, provisions of terms of this Agreement shall be
held invalid for any reason whatsoever, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect the
validity of enforceability of the other provisions of this Agreement.
Section 11.6. Relationship of Parties. Nothing herein
contained shall be deemed or construed to create a partnership or joint venture
between the parties hereto, and the services of the Designated Seller shall be
rendered as an independent contractor and not as agent for the Purchaser.
Section 11.7. Counterparts. This Agreement may be executed in
one or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an original
and such counterparts, together, shall constitute one and the same agreement.
Section 11.8. Further Agreements. The Purchaser and the Designated Seller
each agree to execute and deliver to the other such additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
Section 11.9. Intention of the Parties. It is the intention of
the parties that the Purchaser is purchasing, and the Designated Seller is
selling, the Revolving Credit Loans, rather than a loan by the Purchaser to the
Designated Seller secured by the Revolving Credit Loans. Accordingly, the
parties hereto each intend to treat the transaction for Federal income tax
purposes as a sale by the Designated Seller, and a purchase by the Purchaser, of
the Revolving Credit Loans. The Purchaser will have the right to review the
Revolving Credit Loans and the Related Documents to determine the
characteristics of the Revolving Credit Loans which will affect the Federal
income tax consequences of owning the Revolving Credit Loans and the Designated
Seller will cooperate with all reasonable requests made by the Purchaser in the
course of such review.
Section 11.10. Successors and Assigns; Assignment of This
Agreement. This Agreement shall bind and inure to the benefit of and be
enforceable by the Designated Seller, Purchaser and their respective successors
and assigns. The obligations of the Designated Seller under this Agreement
cannot be assigned or delegated to a third party without the consent of the
Credit Enhancer and the Purchaser, which consent shall be at the Purchaser's
sole discretion, except that the Purchaser and the Credit Enhancer acknowledge
and agree that the Designated Seller may assign its obligations hereunder to any
Affiliate of the Designated Seller, to any Person succeeding to the business of
the Designated Seller, to any Person into which the Designated Seller is merged
and to any Person resulting from any merger, conversion or consolidation to
which the Designated Seller is a party. The parties hereto acknowledge that the
Purchaser is acquiring the Revolving Credit Loans for the purpose of
contributing them to the
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1996-RHS4 LLC who will in turn transfer the Class A Ownership Interest in the
1996-RHS4 LLC to an Trust that will issue Certificates representing interests in
and Notes secured by such Class A Ownership Interest. As an inducement to the
Purchaser to purchase the Revolving Credit Loans, the Designated Seller
acknowledges and consents to (i) the assignment by the Purchaser to the
1996-RHS4 LLC of all of the Purchaser's rights against the Designated Seller
pursuant to this Agreement insofar as such rights relate to Revolving Credit
Loans transferred to the 1996-RHS4 LLC and to the enforcement or exercise of any
right or remedy against the Designated Seller pursuant to this Agreement by the
1996-RHS4 LLC, (ii) the enforcement or exercise of any right or remedy against
the Designated Seller pursuant to this Agreement by or on behalf of the Issuer
as Managing Member and holder of the Class A Ownership Interest and (iii) the
Issuer's pledge of its interest in this Agreement to the Indenture Trustee and
the enforcement by the Indenture Trustee of any such right or remedy against the
Designated Seller following an Event of Default under the Indenture. Such
enforcement of a right or remedy by the 1996-RHS4 LLC, the Issuer or the
Indenture Trustee, as applicable, shall have the same force and effect as if the
right or remedy had been enforced or exercised by the Purchaser directly.
Section 11.11. Survival. The representations and warranties made herein by
the Designated Seller and the provisions of Article VIII hereof shall survive
the purchase of the Revolving Credit Loans hereunder.
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IN WITNESS WHEREOF, the Designated Seller and the Purchaser
have caused their names to be signed to this Designated Seller's Agreement by
their respective officers thereunto duly authorized as of the day and year first
above written.
RESIDENTIAL FUNDING MORTGAGE
SECURITIES II, INC.
as Purchaser
By:
Name: Xxxxx Xxxx
Title: Vice President
GMAC MORTGAGE CORPORATION
as Designated Seller
By:
Name:
Title:
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EXHIBIT 1
REVOLVING CREDIT LOAN SCHEDULE
TO BE PROVIDED UPON REQUEST
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EXHIBIT 2
OFFICER'S CERTIFICATE
I, _______________, hereby certify that I am the duly elected
_____________________ of GMAC Mortgage Corporation ("Designated Seller") a
corporation organized under the laws of the State of ________, and further
certify as follows:
1. Attached hereto as Exhibit A is a true and correct copy of
the Charter and By-laws of the Designated Seller, all of which are in
full force and effect on the date hereof. Attached hereto as Exhibit B
is a Certificate of Good Standing, dated __________. No event has
occurred since _________ which has affected the good standing of the
Designated Seller under the laws of the State of ________.
2. There are no actions, suits or proceedings pending or
threatened against or affecting the Designated Seller which if
adversely determined, individually or in the aggregate, would
materially adversely affect the Designated Seller's obligations under
the Designated Seller's Agreement dated _____________________ __, 1996
between the Designated Seller and Residential Funding Mortgage
Securities II, Inc. (the "Purchaser"), or the Underwriting Agreement
dated _________________________ __, 1996 among the Designated Seller,
the Purchaser and ___________________ (collectively, the "Agreements").
3. Each person who, as an officer or representative of the
Designated Seller, signed the Agreements and any other document
delivered prior hereto or on the date hereof in connection with the
transactions described in the Agreements was, at the respective times
of such signing and delivery, and is now, duly elected or appointed,
qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their
genuine signatures.
4. All of the Designated Seller's representations and
warranties contained in the Agreements are true and correct as of the
respective dates thereof and are true and correct in all material
respects as of the Closing Date, and no event of default in the
performance of any of the Designated Seller's covenants or agreements
under the Agreements has occurred and is continuing, nor has an event
occurred which with the passage of time or notice or both would become
such an event of default.
5. With respect to its transfer of the Mortgage Loans and the
transactions contemplated by the Agreements, the Designated Seller has
complied in all respects with all the agreements by which it is bound
and has satisfied in all respects all the conditions on its part to be
performed or satisfied prior to the Closing Date.
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6. The statements contained in the Prospectus Supplement dated
December 11, 1996 under the caption "Description of the Mortgage Pool"
to the extent such statements are based upon information regarding the
Mortgage Loans (as defined in the Designated Seller's Agreement) and
under the captions ["Servicing of Revolving Credit Loans--Delinquency
and Loss Experience of the Master Servicer's Portfolio," "Description
of the Servicing Agreement--The Master Servicer" and in the subsections
entitled "Master Servicer" and "The Mortgage Pool" under the caption
entitled "Summary"] or elsewhere in the Prospectus Supplement with
respect to the subjects discussed under such captions furnished or
approved by the Designated Seller is true and accurate in all material
respects and does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein not misleading.
7. Attached hereto as Exhibit C is a certified true copy of
the resolutions of the Board of Directors of the Designated Seller with
respect to the sale of the Mortgage Loans subject to the Agreements,
and the same are in full force and effect and have not been revoked,
repealed or amended.
8. Attached hereto as Exhibit D is a true and complete copy of
each certificate or other evidence of merger or change of name, signed
or stamped by the applicable regulatory authority.
9. The representations and warranties contained in paragraph
(b) of Section 4 of the Designated Seller's Agreement are true and
correct as of the Closing Date and the Designated Seller's obligations
to cure any breaches thereof and to repurchase or effect substitution
of any Mortgage Loan as to which such breaches are not cured as
described in such exhibits are enforceable against the Designated
Seller in accordance with its terms (subject to bankruptcy insolvency,
reorganization, receivership or moratorium, other similar laws
effecting the rights of creditors generally and by general equity
principles). The Designated Seller acknowledges and consents to the
assignment pursuant to the Designated Seller's Agreement of such
representations and warranties and related rights to the Trustee for
the benefit of Certificateholders.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Designated Seller.
Dated: _________________, 1996
---------------------------------
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Name:
Title:
I, , a [Assistant] Secretary of , hereby certify that
_______________________ is the duly elected, qualified and acting
________________ of the Designated Seller and that the signature appearing above
is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: _________________, 1996
------------------------------------
Name:
Title: [Assistant] Secretary
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EXHIBIT 3
RESOLUTION
[To be supplied by __________________________________.]
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EXHIBIT 4
December __, 1996
Residential Funding Mortgage
Securities II, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Standard & Poor's Ratings Services
00 Xxxxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Home Equity Loan-Backed Term Notes
Series 1996-RHS4
Dear Sirs:
I have acted as counsel to GMAC Mortgage Corporation (the "Designated
Seller"), a ________ corporation, in connection with the execution and delivery
by the Designated Seller of the Designated Seller's Agreement ("Designated
Seller's Agreement") between the Designated Seller and Residential Funding
Mortgage Securities II, Inc. (the "Purchaser") dated as of
___________________________ __, 1996 and the Underwriting Agreement
("Underwriting Agreement") among the Designated Seller, the Purchaser,
____________________________ and ___________________ dated as of
_______________________ __, 1996. The Designated Seller's Agreement and the
Underwriting Agreement are collectively referred to as the "Agreements". This
opinion is being delivered to you pursuant to Section 6.02(g) of the Designated
Seller's Agreement. Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Agreements.
As to matters of fact material to this opinion, I have relied, without
independent investigation, on (i) the representations and warranties of the
Designated Seller in the Agreements, (ii) relevant resolutions of the Board of
Directors of the Designated Seller and
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certificates of responsible officers of the Designated Seller and (iii)
certificates of public officials.
I have examined and relied on originals or copies, certified or
otherwise identified to my satisfaction, of the certificate of incorporation and
by-laws of the Designated Seller, records of proceedings taken by the Designated
Seller and such other corporate documents and records of the Designated Seller,
and have made such other investigations, as I have deemed relevant or necessary
for the purpose of this opinion. I have assumed, without independent
investigation, the genuineness of all signatures, the authenticity of all
documents submitted to me as originals and the conformity to original documents
of all documents submitted to me as certified, conformed or reproduction copies.
Based on the foregoing, I am of the opinion that:
1. The Designated Seller is a corporation validly existing and in good
standing under the laws of the State of ________ and is duly authorized and has
full power and authority to transact the business contemplated by the
Agreements, and to execute, deliver and comply with its obligations under the
Agreements, the execution, delivery and performance of which have been duly
authorized by all necessary corporate action on the part of the Designated
Seller.
2. The Designated Seller has the full power and authority and legal
right to own the Mortgage Loans and to transfer and convey the Mortgage Loans to
the Purchaser and has the power to engage in the transactions contemplated by
the Agreements and all requisite power, authority and legal right to execute and
deliver the Agreements and to perform and observe the terms and conditions of
such instruments.
3. The execution and delivery of the Agreements by the Designated
Seller and the Designated Seller's performance and compliance with the terms of
the Agreements do not (a) violate the Designated Seller's certificate of
incorporation or by-laws, (b) violate any ________ or federal law or regulation
or, to the best of my knowledge, any administrative decree or order known to me
to which the Designated Seller is subject or (c) to the best of my knowledge,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument known to me to which the Designated
Seller is a party or by which it is bound or to which any of its assets are
subject, which violation, default or breach would materially and adversely
affect the Designated Seller's ability to perform its obligations under the
Agreements.
4. Each of the Agreements constitute, assuming due authorization,
execution and delivery by the other parties thereto, the valid and binding
obligation of the Designated Seller enforceable against the Designated Seller in
accordance with its terms, except as enforcement may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights in general, (b) general equity principles
(regardless
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of whether such enforcement is considered in a proceeding in equity or at law)
and (c) limitations of public policy under applicable securities laws as to
rights of indemnity and contribution thereunder.
5. No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Designated Seller of the Agreements or the consummation of
the transactions contemplated by the Agreements except for such consents,
approvals, authorizations and orders (if any) that have been obtained.
6. To the best of my current actual knowledge, there are no actions,
proceedings or investigations pending or threatened against the Designated
Seller before any court, administrative agency or other tribunal (i) asserting
the invalidity of the Agreements, (ii) seeking to prevent the consummation of
any of the transactions contemplated in the Agreements, or (iii) which might
materially and adversely affect the performance by the Designated Seller of its
obligations under, or the validity or enforceability of, the Agreements.
I do not purport to be an expert on, or to express any opinion
concerning, any law other than the law of the State of New York and the federal
law of the United States of America.
This opinion is being delivered only to the parties to which
it is addressed, and is not to be used, quoted or relied upon by anyone other
than such parties.
Very truly yours,
------------------------------
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EXHIBIT 5
FORM OF UNDERWRITING AGREEMENT
[NY01:240674.6] 16069-00382 12/19/96 11:18pm
