================================================================================
MORTGAGE LOAN PURCHASE AGREEMENT
Between
GREENPOINT MORTGAGE FUNDING, INC.,
as Seller
and
GREENPOINT MORTGAGE SECURITIES INC.,
as Purchaser
Dated as of __________, 200_
================================================================================
Table of Contents
Page
ARTICLE I Definitions.........................................................1
ARTICLE II Procedures for Purchase of Mortgage Loans; Conditions
Precedent; Settlements......................................1
Section 2.01. Purchase and Sale...........................................1
Section 2.02. Delivery of Documents; Purchase of Mortgage Loans...........1
Section 2.03. Survival of Representations.................................2
Section 2.04. Proceeds of Mortgage Loans..................................2
Section 2.05. Defective Mortgage Loans....................................3
ARTICLE III Intent of Parties; Security Interest..............................3
Section 3.01. Intent of Parties; Security Interest........................3
ARTICLE IV Representations and Warranties.....................................3
Section 4.01. Representations and Warranties of Seller....................3
Section 4.02. Representations and Warranties Regarding Mortgage Loans.....5
Section 4.03. Representations and Warranties of Purchaser................16
Section 4.04. Remedies for Breach of Representations and Warranties;
Repurchase Obligation.....................................17
ARTICLE V Covenants and Warranties of Seller.................................18
Section 5.01. Affirmative Covenants......................................18
Section 5.02. Negative Covenants.........................................20
ARTICLE VI Sale of Mortgage Loans from the Purchaser to the Trust............21
Section 6.01. Sale and Servicing Agreement...............................21
ARTICLE VII Seller's Servicing Obligations...................................22
Section 7.01. Seller's Servicing Obligations.............................22
ARTICLE VIII Fees and Expenses...............................................22
ARTICLE IX Termination; Additional Remedies..................................23
ARTICLE X Payment of Purchase Price..........................................23
Section 10.01. Purchase Price Payments....................................23
Section 10.02. The Purchaser Note.........................................23
ARTICLE XI Confidentiality...................................................24
ARTICLE XII Term.............................................................24
ARTICLE XIII Exclusive Benefit of Parties; Assignment........................25
i
ARTICLE XIV Amendment; Waivers...............................................25
ARTICLE XV Execution in Counterparts.........................................25
ARTICLE XVI Effect of Invalidity of Provisions...............................25
ARTICLE XVII Governing Law...................................................26
ARTICLE XVIII Notices........................................................26
ARTICLE XIX Entire Agreement.................................................26
ARTICLE XX Indemnities.......................................................26
ARTICLE XXI RESPA Obligations................................................27
ARTICLE XXII Survival........................................................28
ARTICLE XXIII Right of Set-off...............................................28
ARTICLE XXIV Consent to Service..............................................28
ARTICLE XXV Submission to Jurisdiction; Waiver of Trial by Jury..............28
ARTICLE XXVI Construction....................................................29
ARTICLE XXVII Further Agreements.............................................29
EXHIBIT A Form of Non-Negotiable GreenPoint Mortgage Securities Inc.
Promissory Note
SCHEDULE I: Mortgage Loan Schedule
ii
MORTGAGE LOAN PURCHASE AGREEMENT ("Agreement") dated as of
__________, 200_ between GreenPoint Mortgage Funding, Inc., a New York
corporation ("Seller"), and GreenPoint Mortgage Securities Inc., a Delaware
corporation ("Purchaser").
WHEREAS, Seller desires to sell to Purchaser the Mortgage Loans (as
hereinafter defined), and Purchaser desires to purchase such Mortgage Loans in
accordance with the terms and conditions set forth in this Agreement.
NOW, THEREFORE, the parties, in consideration of good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound, hereby agree as follows:
ARTICLE I
Definitions
All capitalized terms used in this Agreement and not otherwise
defined herein, shall have the meanings assigned thereto in Annex A to the
Indenture dated as of __________, 200_, between the Issuer and the Indenture
Trustee, as the same may be amended and supplemented from time to time.
ARTICLE II
Procedures for Purchase of Mortgage Loans; Conditions Precedent; Settlements
Section 2.01. Purchase and Sale. (a) On the Closing Date in
consideration for the Purchase Price the Seller hereby sells, transfers,
assigns, sets over and otherwise conveys to the Purchaser, without recourse, all
of its right, title and interest in, to and under, whether now existing or
hereafter created, (i) each Mortgage Loan, including its Principal Balance (and
any Additional Balances) and all collections in respect thereof received after
the Cut-Off Date; (ii) property that secured a Mortgage Loan that is acquired by
foreclosure or deed in lieu of foreclosure; (iii) the Seller's rights under the
hazard insurance policies; and (iv) all proceeds with respect to the foregoing
(collectively, the "Purchased Assets"). The Purchase Price on the Closing Date
shall be payable in a combination of cash and credit for a capital contribution
made to the Purchaser by the Seller.
(b) To the extent that the fair market value of any Additional
Balance is greater than the cash consideration paid by the Purchaser for such
Additional Balance, the difference between such fair market value and the amount
of such cash consideration shall be deemed to be a combination of a credit for a
capital contribution made to the Purchaser by the Seller and an increase in the
principal amount of the Purchaser Notes pursuant to Article X.
Section 2.02. Delivery of Documents; Purchase of Mortgage Loans.
Prior to the purchase of the Mortgage Loans:
(a) Seller shall have delivered to the Purchaser or any agent
appointed by the Purchaser the Mortgage File for each of the Mortgage Loans.
(b) Purchaser shall have received a Mortgage Loan Schedule
pertaining to the related Mortgage Loans.
(c) Purchaser shall have received copies of the resolutions of the
Board of Directors of Seller, certified by its respective Secretary, approving
this Agreement.
(d) Purchaser shall have received the Certificate of Incorporation
of Seller certified by the Secretary of State of the State of New York.
(e) Purchaser shall have received a certificate of the Secretary or
Assistant Secretary of Seller certifying (i) the names and signatures of the
officers authorized on its behalf to execute this Agreement, and any other
documents to be delivered by it hereunder and (ii) a copy of Seller's By-laws.
(f) Purchaser shall have received an opinion of counsel to Seller as
to the due authorization, execution and delivery by the Seller of this Agreement
and as to the validity and enforceability of the transfers contemplated
hereunder and addressing such other matters as the Purchaser may reasonably
request.
(g) Seller shall have instructed the applicable debtor, trustee,
paying agent, authenticating agent, transfer agent, registrar, predecessor in
interest, owner (if the Mortgage Loans are in the form of a security agreement),
or servicer, if any, in respect of the related Mortgage Loans to reflect on
their books and records the transfer of such Mortgage Loans to Purchaser, as
owner or secured party (if the Mortgage Loans are in the form of a security
agreement).
(h) Purchaser shall have received the most recent available standard
servicing or lien reports in summary form, if any, with respect to all of the
mortgages in Seller's portfolio similar to the Mortgage Loans.
(i) The Purchaser shall be permitted to perform its standard loan
review of each Mortgage Loan to be purchased.
(j) UCC-1 financing statements duly executed by Seller as debtor
shall have been filed in California and New York naming the Purchaser as secured
party and the Indenture Trustee on behalf of the Trust as assignee.
Section 2.03. Survival of Representations. The terms and conditions
of the purchase of each Mortgage Loan shall be as set forth in this Agreement.
Seller will be deemed on the Closing Date to have made to Purchaser the
representations and warranties set forth in Article IV hereof and such
representations and warranties of Seller shall be true and correct on and as of
the Closing Date.
Section 2.04. Proceeds of Mortgage Loans. The transfer and sale
hereby of all of the Seller's right, title and interest in and to each Mortgage
Loan shall include all proceeds, products and profits derived therefrom,
including, without limitation, all scheduled payments of principal of and
interest on such Mortgage Loans and other amounts due or payable or to become
2
due or payable in respect thereof and proceeds thereof, including, without
limitation, all moneys, goods and other tangible or intangible property received
upon the liquidation or sale thereof.
Section 2.05. Defective Mortgage Loans. If any Mortgage Loan is
re-transferred to the Purchaser pursuant to Section 2.03 of the Sale and
Servicing Agreement, the Seller shall, at the Purchaser's option, either (a)
repurchase such Mortgage Loan at the Repurchase Price, or (b) provide an
Eligible Substitute Mortgage Loan if the Seller has any such loans available for
sale at the time, subject to the terms and conditions of the Sale and Servicing
Agreement.
ARTICLE III
Intent of Parties; Security Interest
Section 3.01. Intent of Parties; Security Interest. Purchaser and
Seller confirm that the transactions contemplated herein are intended as
purchases and sales rather than as loan transactions. In the event, for any
reason, and solely in such event, any transaction hereunder is construed by any
court or regulatory authority as a loan or other purchase and sale of the
related Purchased Assets, Seller shall be deemed to have hereby pledged to
Purchaser as security for the performance by Seller of all of its obligations
from time to time arising hereunder and under any and all Purchases effected
pursuant thereto, and shall be deemed to have granted to Purchaser a security
interest in, the related Purchased Assets and all distributions in respect
thereof, and the proceeds of any and all of the foregoing whether now owned or
hereafter acquired, (collectively, the "Collateral"). In furtherance of the
foregoing, (i) this Agreement shall constitute a security agreement, (ii)
Purchaser shall have all of the rights of a secured party with respect to the
Collateral pursuant to applicable law and (iii) Seller shall execute all
documents, including, but not limited to, financing statements under the Uniform
Commercial Code as in effect in any applicable jurisdictions, as the Purchaser
may reasonably require to effectively perfect and evidence Purchaser's first
priority security interest in the Collateral. Seller also covenants not to
pledge, assign or grant any security interest to any other party in any Mortgage
Loan sold to Purchaser.
ARTICLE IV
Representations and Warranties
Section 4.01. Representations and Warranties of Seller. The Seller
represents, warrants and covenants to the Purchaser (i) as of the Closing Date
and (ii) on each date on which any Mortgage Loans are transferred from the
Seller to the Purchaser pursuant to Article II hereof, that:
(i) the Seller is duly organized, validly existing and in good
standing under the laws of the State of New York and is duly authorized
and qualified to transact any and all business contemplated by this
Agreement to be conducted by the Seller in any state in which a Mortgaged
Property is located to the extent necessary to ensure the enforceability
of each Mortgage Loan and the servicing of the Mortgage Loan in accordance
with the terms of this Agreement;
3
(ii) the Seller has the full corporate power and authority to
service each Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by this Agreement
and the execution, delivery and performance of this Agreement by the
Seller has been duly authorized by all necessary corporate action on the
part of the Seller; and this Agreement, assuming the due authorization,
execution and delivery thereof by the Purchaser, constitutes a legal,
valid and binding obligation of the Seller, enforceable against the Seller
in accordance with its respective terms, except to the extent that (a) the
enforceability thereof may be limited by federal or state bankruptcy,
insolvency, moratorium, receivership and other similar laws relating to
creditors' rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(iii) the execution and delivery of this Agreement by the Seller,
the servicing of the Mortgage Loans by the Seller hereunder, the
consummation by the Seller of the transactions herein contemplated, and
the fulfillment by the Seller of or compliance by the Seller with the
terms hereof will not (A) result in a breach of any term or provision of
the charter or by-laws of the Seller or (B) conflict with, result in a
breach, violation or acceleration of, or result in a default under, the
terms of any other material agreement or instrument to which the Seller is
a party or by which it may be bound, or any statute, order or regulation
applicable to the Seller of any court, regulatory body, administrative
agency or governmental body having jurisdiction over the Seller, which
breach, violation, default or non-compliance would have a material adverse
effect on (a) the business, operations, financial condition, properties or
assets of the Seller taken as a whole or (b) the ability of the Seller to
perform its obligations under this Agreement; and the Seller is not a
party to, bound by, or in breach or violation of any material indenture or
other material agreement or instrument, or subject to or in violation of
any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it,
which materially and adversely affects or, to the Seller's knowledge,
would in the future reasonably be expected to materially and adversely
affect, (x) the ability of the Seller to perform its obligations under
this Agreement or (y) the business, operations, financial condition,
properties or assets of the Seller taken as a whole;
(iv) the Seller is, and currently intends to remain, in good
standing and qualified to do business in each jurisdiction where failure
to be so qualified or licensed would have a material adverse effect on (a)
the business, operations, financial condition, properties or assets of the
Seller taken as a whole or (b) the enforceability of any Mortgage Loan or
the servicing of the Mortgage Loans in accordance with the terms of this
Agreement;
(v) there is no litigation pending or, to the Seller's best
knowledge, threatened against the Seller that would materially and
adversely affect the execution, delivery or enforceability of this
Agreement or the ability of the Seller to service the Mortgage Loans or
for the Seller to perform any of its other obligations hereunder in
accordance with the terms hereof;
(vi) no consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or
4
compliance by the Seller with, this Agreement or the consummation of the
transactions contemplated hereby, or if any such consent, approval,
authorization or order not relating to a future transaction is required,
the Seller has obtained the same;
(vii) the Seller has caused to be performed any and all acts
required to preserve the rights and remedies of the Purchaser in any
insurance policies of the Seller or a mortgagee applicable to the Mortgage
Loans sold by the Seller; and
(viii) the Seller is solvent and will not be rendered insolvent by
the transactions described herein and, after giving effect to the
transactions described herein, the Seller will not be left with an
unreasonably small amount of capital with which to engage in the ordinary
course of its business, and the Seller does not intend to incur, nor does
the Seller believe that it has incurred, debts beyond its ability to pay
as they mature. The Seller does not contemplate the commencement of
insolvency, liquidation or consolidation proceedings or the appointment of
a receiver, liquidator, conservator, trustee or similar official in
respect of the Seller or any of its respective assets.
Section 4.02. Representations and Warranties Regarding Mortgage
Loans. (a) Seller represents and warrants to Purchaser with respect to (i) each
Mortgage Loan as of the Closing Date and (ii) each Eligible Substitute Mortgage
Loan as of the applicable Transfer Date as follows:
(i) As of the Closing Date with respect to the Mortgage Loans and as
of the related Transfer Date with respect to any Eligible Substitute
Mortgage Loans and with respect to any HELOC Mortgage Loan, as of the date
any Additional Balance is created, the information set forth in the
Mortgage Loan Schedule for such Mortgage Loans is true and correct in all
material respects;
(ii) Each Mortgage Loan is being serviced by the Servicer;
(iii) The applicable Cut-Off Date Principal Balance has not been
assigned or pledged, and the Seller is the sole owner and holder of such
Cut-Off Date Principal Balance free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges, charges
or 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 Mortgage Loans, to sell, assign or transfer
the same pursuant to this Agreement and upon its acquisition of the
Mortgage Loans, the Purchaser will be the sole owner of the Cut-Off Date
Principal Balance free and clear of any and all liens claims,
encumbrances, participating interests, equities, pledges, charges, or
security interests of any nature;
(iv) Except with respect to liens released immediately prior to the
transfer herein contemplated, each Credit Line Agreement and each Mortgage
Note and related Mortgage has not been assigned or pledged and immediately
prior to the transfer and assignment herein contemplated, the Seller held
good, marketable and indefeasible title to, and was the sole owner and
holder of, each Mortgage Loan subject to no liens, charges, mortgages,
claims, participation interests, equities, pledges or security interests
of any nature, encumbrances or rights of others (collectively, a "Lien");
the Seller has full right and
5
authority under all governmental and regulatory bodies having jurisdiction
over the Seller, subject to no interest or participation of, or agreement
with, any party, to sell and assign the same pursuant to this Agreement;
and immediately upon the transfers and assignments herein contemplated,
the Seller shall have transferred all of its right, title and interest in
and to each Mortgage Loan and the Purchaser will hold good, marketable and
indefeasible title, to, and be the sole owner of, each Mortgage Loan
subject to no Liens;
(v) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, the related Mortgage is a valid and subsisting first or
second lien, as set forth on the Mortgage Loan Schedule with respect to
each related Mortgaged Property, and as of the applicable Cut-Off Date the
related Mortgaged Property is free and clear of all encumbrances and liens
having priority over the first or second lien, as applicable, of such
Mortgage except for liens for (i) real estate taxes and special
assessments not yet delinquent; (ii) any first mortgage loan secured by
such Mortgaged Property and specified on the Mortgage Loan Schedule; (iii)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording that are acceptable
to mortgage lending institutions generally or specifically reflected in
the appraisals; and (iv) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of
the security intended to be provided by such Mortgage;
(vi) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, there is no valid right to rescission offset, defense
(including the defense of usury) or counterclaim of any obligor under any
Loan Agreement or Mortgage;
(vii) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, there is no delinquent recording or other tax or fee or
assessment lien against any related Mortgaged Property;
(viii) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, there is no proceeding pending or threatened for the total
or partial condemnation of any Mortgaged Property, nor is such a
proceeding currently occurring, and such property is in good repair and 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 premises were intended;
(ix) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, 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 the lien
of the related Mortgage, except liens which are fully insured against by
the title insurance policy or other title protection referred to in clause
(xiv);
6
(x) No Minimum Monthly Payment is more than 59 days delinquent
(measured on a contractual basis);
(xi) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, for each Mortgage Loan, the related Mortgage File contains
each of the documents and instruments specified to be included therein;
(xii) The related Loan Agreement and the related Mortgage at
origination complied in all material respects with applicable state and
federal laws and regulations, including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity, recording or disclosure laws
applicable to the Mortgage Loans and consummation of the transactions
contemplated hereby, including without limitation the receipt of interest,
will not involve the violation or such laws;
(xiii) On the Closing Date with respect to the Mortgage Loans and to
the extent not already included in such filing, on the applicable Transfer
Date with respect to any Eligible Substitute Mortgage Loans, the Seller
has filed UCC-1 financing statements with respect to such Mortgage Loans;
(xiv) A lender's policy of title insurance, xxxxxxxXxxxx.xxx lender
master protection program (standard mortgage guaranty) or a commitment
(binder) to issue the same or an attorney's certificate or opinion of
title was effective on the date of the origination of each mortgage loan
and each such policy or certificate or opinion of title is valid and
remains in full force and effect;
(xv) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, none of the Mortgaged Properties is a mobile home or a
manufactured housing unit;
(xvi) As of the Cut-Off Date for the Mortgage Loans no more than (a)
____% of the Pool I Mortgage Loans (by Pool I Balance) and (b) ____% of
the Pool II Mortgage Loans (by Pool II Balance) are secured by Mortgaged
Properties located in one United States postal zip code;
(xvii) The Combined Loan-to-Value Ratio for each Pool I Mortgage
Loan was not in excess of 100% and the Combined Loan-to-Value Ratio for
each Pool II Mortgage Loan was not in excess of 100%;
(xviii) Each Pool I Mortgage Loan substantially conforms to all
applicable loan origination standards with respect to loan balances as of
the date of origination set forth by Xxxxxxx Mac.
(xix) No selection procedure reasonably believed by the Seller to be
adverse to the interests of the Noteholders or the Insurer was utilized in
selecting the Mortgage Loans for sale to the Purchaser, provided, however,
that the Mortgage Loans were selected from the pool of mortgage loans
originated in connection with the Seller's mortgage loan origination
program;
7
(xx) The Seller has not transferred the Mortgage Loans to the
Purchaser with any intent to hinder, delay or defraud any of its
creditors;
(xxi) The Minimum Monthly Payment with respect to any Mortgage Loan
is not less than the interest accrued at the applicable Loan Rate on the
average daily Principal Balance during the interest period relating to the
date on which such Minimum Monthly Payment is due;
(xxii) As of the Closing Date with respect to the Mortgage Loans and
the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, each Loan Agreement and each Mortgage Loan is genuine and
is a legal, valid, binding obligation and enforceable obligation of the
related Mortgagor, except as the enforceability thereof may be limited by
the bankruptcy, insolvency or similar laws affecting creditors' rights
generally;
(xxiii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, there has been no default, breach, violation or event of
acceleration of any senior mortgage loan related to a Mortgaged Property
that has not been cured by a party other than the Servicer;
(xxiv) The terms of each Mortgage Note and each Mortgage have not
been impaired, altered or modified in any respect, except by a written
instrument which (if such instrument is secured by real property) has been
recorded, if necessary, to protect the interest of the Noteholders and
which has been delivered to the Indenture Trustee. The substance of any
such alteration or modification is reflected on the related Mortgage Loan
Schedule and has been approved by the primary mortgage guaranty insurer,
if any;
(xxv) The definition of "prime rate" in each Credit Line Agreement
relating to a HELOC Mortgage Loan does not differ materially from the
definition in the form of Credit Line Agreement in Exhibit D to the Sale
and Servicing Agreement;
(xxvi) The weighted average remaining term to maturity of the Pool I
Mortgage Loans on a contractual basis as of the related Cut-Off Date is
approximately ____ months. The weighted average remaining term to maturity
of the Pool II Mortgage Loans on a contractual basis as of the related
Cut-Off Date is approximately ____ months. On each date that the Loan
Rates relating to HELOC Mortgage Loans have been adjusted, interest rate
adjustments on the HELOC Mortgage Loans were made in compliance with the
related Mortgages and Credit Line Agreement and applicable law. Over the
term of each HELOC Mortgage Loan, the Loan Rate may not exceed the related
Loan Rate Cap, if any. With respect to the Pool I HELOC Mortgage Loans,
the weighted average Loan Rate Cap is approximately ____%. With respect to
the Pool II HELOC Mortgage Loans, the weighted average Loan Rate Cap is
approximately ____%. With respect to the Pool I HELOC Mortgage Loans, the
margins range between ____% and ____% and the weighted average margin is
approximately ____% as of the related Cut-Off Date. With respect to the
Pool II HELOC Mortgage Loans, the margins range between ____% and ____%
and the weighted average margin is approximately ____% as of the related
Cut-Off Date. The Loan Rates on the Pool I Mortgage Loans range between
____% and ____%, the Loan Rates on the Pool II
8
Mortgage Loans range between ____% and ____%, and the weighted average
Loan Rate is approximately ____% for Pool I and ____% for Pool II;
(xxvii) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loans, each Mortgaged Property consists of a single parcel of
real property with a one-to-four unit single family residence erected
thereon, or an individual condominium unit, planned unit development unit
or townhouse;
(xxviii) No more than ____% (by Pool I Balance) of the Pool I
Mortgage Loans are secured by real property improved by individual
condominium units, planned development units or two-to-four family
residences erected thereon, and approximately ____% (by Pool I Balance) of
the Pool I Mortgage Loans are secured by real property with a one-family
residence erected thereon. No more than ____% (by Pool II Balance) of the
Pool II Mortgage Loans are secured by real property improved by individual
condominium units, planned development units or two-to-four family
residences erected thereon, and approximately ____% (by Pool II Balance)
of the Pool II Mortgage Loans are secured by real property with a
one-family residence erected thereon;
(xxix) Each Mortgage Note evidencing a Closed End Mortgage Loan is
comprised of one original promissory note and each such promissory note
constitutes an "instrument" for purposes of Section 9-105(1)(i) of the
UCC. There is no obligation on the part of the Seller or any other party
to make payments in addition to those made by the Mortgagor with respect
to the Closed End Mortgage Loans;
(xxx) The Credit Limits on the Pool I HELOC Mortgage Loans range
between $_____ and $_____ with an average of approximately $_____. The
Credit Limits on the Pool II HELOC Mortgage Loans range between $_____ and
$_____ with an average of approximately $_____. The Principal Balances on
the Pool I HELOC Mortgage Loans range between $_____ and $_____ with an
average of approximately $_____. The Principal Balances on the Pool II
HELOC Mortgage Loans range between $_____ and $_____ with an average of
approximately $_____. The Principal Balances on the Pool I Closed End
Mortgage Loans range between $_____ and $_____ with an average of
approximately $_____. The Principal Balances on the Pool II Closed End
Mortgage Loans range between $_____ and $_____ with an average of
approximately $_____. The average Credit Limit Utilization Rate (weighted
by credit line) of the Pool I HELOC Mortgage Loans is approximately ____%.
The average Credit Limit Utilization Rate (weighted by credit line) of the
Pool II HELOC Mortgage Loans is approximately ____%;
(xxxi) Substantially all of the Mortgage Loans are second liens, and
either (A) no consent for each Mortgage Loan was required by the holder of
the related senior lien, if any, prior to the making of such Mortgage Loan
or (B) such consent has been obtained and is contained in the related
Mortgage File;
(xxxii) This Agreement constitutes a valid transfer and assignment
to the Purchaser of all right, title and interest of the Seller in and to
the Cut-Off Date Principal Balances with respect to the applicable
Mortgage Loans, all monies due or to become due
9
with respect thereto and all proceeds of such Cut-Off Date Principal
Balances with respect to the Mortgage Loans and such funds as are from
time to time deposited in the Collection Account (excluding any investment
earnings thereon) and all other property specified in the definition of
"Trust" as being part of the corpus of the Trust conveyed to the Trust,
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 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;
(xxxiii) As of the Closing Date, no Mortgage Loan is the subject of
foreclosure proceedings and, to the best of the Seller's knowledge, no
obligor of any of the Mortgage Loans has filed for bankruptcy protection;
(xxxiv) The proceeds of each Closed End 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
completion of any on-site or off-site improvements and as to disbursements
of any escrow funds therefor have been complied with. All costs, fees and
expenses incurred in making or closing or recording such Closed End
Mortgage Loans were paid;
(xxxv) Each Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for
the realization against the related Mortgaged Property of the benefits of
the security, including (A) in the case of a Mortgage designated as a deed
of trust, by trustee's sale and (B) otherwise by judicial foreclosure.
Subject to applicable state law, there is no homestead or other exemption
available to the Mortgagor which would materially interfere with the
rights to sell the Mortgaged Property at a trustee's sale or the right to
foreclose upon the related Mortgage;
(xxxvi) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, except for events permissible under Section 4.02(a)(x) of
this Agreement, there is no default, breach, violation or event of
acceleration existing under any 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, would constitute a default, breach, violation
or event of acceleration; and the Seller has not waived any default,
breach, violation or event of acceleration;
(xxxvii) To the best knowledge of the Seller, all parties to the
Mortgage Note and the Mortgage had legal capacity to execute the Mortgage
Note and the Mortgage and each Mortgage Note and Mortgage have been duly
and properly executed by such parties; Each Mortgage and Mortgage Note is
the legal, valid and binding obligation of the related Mortgagor and is
enforceable by the Purchaser or any transferor of the Purchaser against
the Mortgagor in accordance with its terms, except only as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by law;
10
(xxxviii) As of the Cut-Off Date no more than ____% of the Principal
Balance of the Pool I Mortgage Loans, nor more than ____% of the Principal
Balance of the Pool II Mortgage Loans represent Mortgage Loans with
respect to which the related Mortgagor had a Credit Score of 600 or less
at the time of origination or whose Credit Score was unavailable.
(xxxix) As of the Closing Date with respect to the Mortgage Loans
and the applicable Transfer Date with respect to any Eligible Substitute
Mortgage Loan, no Mortgagor has been released, in whole or in part, except
in connection with an assumption agreement which has been approved by the
applicable title insurer (to the extent required by such title insurer)
and which is part of the Mortgage File delivered to the Indenture Trustee;
(xl) At the time of origination of each Mortgage Loan, the related
prior lien was not more than 30 days delinquent. Additionally, as of the
Closing Date, no senior mortgage loan on the related Mortgaged Property
was more than 59 days delinquent;
(xli) All required inspections, licenses and certificates with
respect to the use and occupancy of all occupied portions of all property
securing the Mortgages have been made, obtained or issued, as applicable;
(xlii) If the improvements securing a Mortgage Loan were in a
federally designated special flood hazard area as of the date of
origination, flood insurance to the extent required in Section 3.04 of the
Sale and Servicing Agreement covers the related Mortgaged Property (either
by coverage under the federal flood insurance program or by coverage by
private insurers);
(xliii) With respect to each Mortgage Loan, the related prior lien
does not provide for negative amortization;
(xliv) With respect to each Mortgage Loan, the maturity date of the
Mortgage Loan is prior to the maturity date of the related prior lien if
such prior lien provides for a balloon payment;
(xlv) All amounts received after the Cut-Off Date with respect to
the Mortgage Loans to which the Seller is not entitled will be deposited
into the Collection Account within one Business Day after the Closing
Date;
(xlvi) Each Pool I Mortgage Loan is secured by a property having an
appraised value as of origination of $_____ or less and each Pool II
Mortgage Loan is secured by a property having an appraised value as of
origination of $_____ or less;
(xlvii) Except for events permissible under Section 4.02(a)(x) of
this Agreement, there are no defaults in complying with the terms of the
Mortgage, and either (1) any taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges or ground rents which
previously became due and owing have been paid, or (2) an escrow of funds
has been established in an amount sufficient to pay for every such item
which remains unpaid and which has been assessed but is not yet due and
payable. There are no defaults in complying with the terms of any senior
mortgage on the related Mortgaged Property that
11
have not been cured by anyone other than the Servicer, except for any
payment defaults of less than 30 days. Except for payments in the nature
of escrow payments, including without limitation, taxes and insurance
payments, 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 Note, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage proceeds, whichever
is greater, to the day which precedes by one month the Due Date of the
first installment of principal and interest;
(xlviii) With respect to each Mortgage Loan, the improvements upon
each Mortgaged Property are covered by a valid and existing hazard
insurance policy with a carrier generally acceptable to the Servicer that
provides for fire and extended coverage representing coverage not less
than (a) the Credit Limit of such HELOC Mortgage Loan or (b) the Cut-Off
Date Principal Balance of such Closed End Mortgage Loan or (c) the maximum
insurable value of the Mortgaged Property;
(xlix) No misrepresentation of a material fact or fraud in respect
of the origination, modification or amendment of any Mortgage Loan has
taken place on the part of any person, including, without limitation, the
related Mortgagor, any appraiser, any builder or developer or any party
involved in the origination of such Mortgage Loan;
(l) With respect to the Pool I Mortgage Loans, the terms of the
Mortgage Note and the Mortgage have not been impaired, altered or modified
in any material respect, except by a written instrument which has been
recorded or is in the process of being recorded, if necessary, to protect
the interests of the Purchaser and which has been or will be delivered to
the Indenture Trustee on behalf of the Purchaser;
(li) As of the Cut-Off Date, except as otherwise indicated in the
pool tape, no Mortgage Loan is more than 30 days delinquent in payment of
principal and interest. In addition, none of the Mortgage Loans have been
30 or more days delinquent for two payment periods in the last 12 months;
(lii) With respect to the Pool I Mortgage Loans, approximately ____%
of the Mortgage Loans, as of the Closing Date, are fixed rate fully
amortizing Mortgage Loans having an original term to maturity from the
date on which the first monthly payment is due of not more than 30 years.
Each Mortgage Note with respect to a fixed rate and balloon Mortgage Note
will provide for a schedule of substantially level and equal Monthly
Payments which are sufficient to amortize fully the principal balance of
such Mortgage Loan over a period of time equal to the amortization period
of such Mortgage Note; provided, however, that certain Mortgage Loans
constituting approximately ____% of the aggregate balance of the Mortgage
Loans as of Cut-Off Date are balloon loans that provide for final monthly
payment substantially greater than the preceding monthly payments. All
such balloon loans provide for monthly payment based upon a 30 year
amortization schedule with a final balloon payment no later than the 15th
year;
(liii) Except for Mortgage Loans that are delinquent for a time
period less than that set forth in (li) above, there is no default,
breach, violation or event of acceleration
12
existing under any 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, would constitute a default, breach, violation or
event of acceleration; and neither the Seller, nor any other entity
involved in originating or servicing a Mortgage Loan, has waived any
default, breach, violation or event of acceleration;
(liv) None of the Mortgage Loans are cooperative share mortgages;
(lv) Each appraisal of a Mortgage Loan that was used to determine
the appraised value of the related Mortgaged Property was conducted
generally in accordance with the Seller's mortgage loan origination
program(s) and customary industry standards and included an assessment of
the fair market value of the related mortgaged property at the time of the
appraisal. The Mortgage File contains an appraisal of the applicable
Mortgaged Property;
(lvi) All individual insurance policies contain a standard mortgagee
clause naming the Seller, its successors and assigns, as mortgagee. All
premiums thereon have been paid. Each Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor's cost and
expense, and upon the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at the Mortgagor's
cost and expense and to seek reimbursement therefor from the Mortgagor;
(lvii) Any advances made after the date of origination of a Mortgage
Loan but prior to the Cut-Off Date have been consolidated with the
outstanding principal amount secured by the related 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 related Mortgage Loan;
(lviii) No improvement located on or being part of any Mortgaged
Property is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of each Mortgaged Property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been
made or obtained from the appropriate authorities and such Mortgaged
Property is lawfully occupied under the applicable law and all
improvements which were included for the purpose of determining the
appraised value of the Mortgaged Property lie wholly within the boundaries
and building restriction lines of such property, and no improvements on
adjoining property encroach upon the Mortgage Property;
(lix) The proceeds of each fixed rate and balloon Mortgage Loan have
been fully disbursed and there is no obligation on the part of the
mortgagee to make future advances thereunder and any and all requirements
as to completion of any on-site or off-site improvements and as to
disbursement of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, closing or recording the
Mortgage Loans were paid and the Mortgagor is not entitled to any refund
of amounts paid or due under the Mortgage Note;
13
(lx) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(lxi) All parties which have had any interest in the Mortgage Loan,
whether as originator, mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were):
(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 so as to require qualification or licensing, or (E)
not otherwise required or licensed in such state. To the best of Seller's
knowledge, all parties which have had any interest in the Mortgage Loan
were in compliance with any and all applicable licensing requirements of
the laws of the state wherein the Mortgaged Property is located or were
not required to be licensed in such state;
(lxii) Each document or instrument in the related Mortgage File is
in a form generally acceptable to prudent mortgage lenders that regularly
originate or purchase mortgage loans comparable to the Mortgage Loans for
sale to prudent investors in the secondary market that invest in mortgage
loans such as the Mortgage Loans;
(lxiii) Each original Mortgage was recorded and all subsequent
assignments of the original Mortgage (other than the assignment to the
Purchaser) have been recorded in the appropriate jurisdictions wherein
such recordation is necessary to perfect the lien thereof as against
creditors of the Seller, or is in the process of being recorded;
(lxiv) No Mortgage Loan was originated under a buydown plan;
(lxv) No Mortgage Loan is subject to the requirements of the Home
Ownership and Equity Protection Act of 1994 ("HOEPA") or is in violation
of any state or municipal law comparable to HOEPA;
(lxvi) The Servicer for each Mortgage Loan will accurately and fully
report its borrower credit files to all three credit repositories in a
timely manner;
(lxvii) No proceeds from any Mortgage Loan were used to purchase
single-premium credit insurance policies;
(lxviii) No Mortgage Loan has a prepayment penalty term longer than
five years after its origination;
(lxix) Each Mortgage Loan conforms, and all Mortgage Loans in the
aggregate conform, in all material respects, to the descriptions thereof
set forth in the Prospectus Supplement;
(lxx) Each Mortgage Loan was originated on or after ___________,
200_;
(lxxi) The Seller represents and warrants that the Seller currently
operates or actively participates in an on-going business (A) to originate
single family mortgage loans ("Loans"), and/or (B) to make periodic
purchases of Loans from originators or sellers, and/or
14
(C) to issue and/or purchase securities or bonds supported by the Loans, a
portion of which Loans are made to borrowers who are:
(a) low-income families (families with incomes of 80% or less
of area median income) living in low-income areas (a census
tract or block numbering area in which the median income does
not exceed 80 percent of the area median income); or
(b) very low-income families (families with incomes of 60% or
less of area median income).
(lxxii) Each Mortgage contains a provision for the acceleration of
the payment of the unpaid principal balance of the related Mortgage Loan
in the event the related Mortgaged Property is sold without the prior
consent of the mortgagee thereunder;
(lxxiii) To the best of Seller's knowledge, Pool I does not contain
the first and second lien mortgage loans relating to a single Mortgaged
Property if the aggregate original principal balance of such mortgage
loans exceeds Xxxxxxx Mac's loan limits. To the best of Seller's
knowledge, Pool I will not result in a violation of Xxxxxxx Mac's loan
limitations;
(lxxiv) Each Mortgage Loan was originated substantially in
accordance with Seller's underwriting criteria, which conform to the
underwriting criteria set forth in the Prospectus Supplement.
(lxxv) There exists no violation of any local, state or federal
environmental law, rule or regulation in respect of any Mortgaged Property
which violation has or could have a material adverse effect on the market
value of such Mortgaged Property. Seller has no knowledge of any pending
action or proceeding directly involving any such Mortgaged Property in
which compliance with any environmental law, rule or regulation is in
issue; and, to the best of Seller's knowledge, nothing further remains to
be done to satisfy in full all requirements of each such law, rule or
regulation constituting a prerequisite to the use and enjoyment of any
such Mortgaged Property;
(lxxvi) The Seller has caused or will cause to be performed any and
all acts required to be performed to preserve the rights and remedies of
the Indenture Trustee in any insurance policies applicable to the Mortgage
Loans including, without limitation, any necessary notifications of
insurers, assignment of policies or interests therein, and establishments
of co-insured, joint loss payee and mortgagee rights in favor of the
Indenture Trustee;
(lxxvii) 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;
(lxxviii) There is no obligation on the part of the Seller or any
other party to make payments in addition to those made by the Mortgagor;
(lxxix) With respect to each Mortgage constituting a deed of trust,
a trustee, duly qualified under existing law to serve as such, has been
properly designated and currently so
15
serves and is named in such Mortgage, and no fees or expenses are or will
become payable by the Noteholders or the Trust to the trustee under the
deed of trust, except in connection with a trustee's sale after default by
the Mortgagor;
(lxxx) Each Mortgagor has executed a statement to the effect that
such Mortgagor has received all disclosure materials including the notice
of the right of cancellation or rescission required by applicable law with
respect to the making of the Mortgage Loan and any waiver of any right of
cancellation or rescission exercised by the Mortgagor was in accordance
with applicable law and is binding on the Mortgagor.
(lxxxi) Each of the Mortgaged Properties relating to the seventy-six
Mortgage Loans included in the sample report provided to the Insurer for
which a reappraisal is received by the Insurer on or before __________,
200_, shall be reappraised for a value that is at least ____% of the
original appraisal that was provided to the Insurer with respect to such
Mortgaged Property; the Insurer shall have the discretion to waive such
requirement.
With respect to the representations and warranties set forth in this Section
4.02 that are made to the best of the Seller's knowledge or as to which the
Seller has no knowledge, if it is discovered by the Purchaser, the Servicer, the
Insurer or a Responsible Officer of the Indenture Trustee that the substance of
such representation and warranty is inaccurate and such inaccuracy materially
and adversely affects the value of the related Mortgage Loan then,
notwithstanding the Seller's lack of knowledge with respect to the substance of
such representation and warranty being inaccurate at the time the representation
or warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.
Section 4.03. Representations and Warranties of Purchaser. Purchaser
hereby makes the following representations and warranties, each of which
representations and warranties (i) is material and being relied upon by Seller
and (ii) is true in all respects as of the date of this Agreement:
(i) Purchaser has been duly organized and is validly existing as a
corporation under the laws of the State of Delaware.
(ii) Purchaser has the requisite power and authority and legal right
to execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of, this Agreement to be
performed by it.
(iii) This Agreement has been duly authorized and executed by
Purchaser, is valid, binding and enforceable against Purchaser in
accordance with its terms, and the execution, delivery and performance by
Purchaser of this Agreement does not conflict with any material term or
provision of any other agreement to which Purchaser is a party or any term
or provision of the Certificate of Incorporation or the By-laws of the
Purchaser, or any law, rule, equation, order, judgment, writ, injunction
or decree applicable to Purchaser of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
Purchaser.
16
(iv) No consent, approval, authorization or order of, registration
or filing with, or notice to any governmental authority or court is
required under applicable law in connection with the execution and
delivery by Purchaser of this agreement.
(v) There is no action, proceeding or investigation pending or, to
the best knowledge of Purchaser, threatened against Purchaser before any
court, administrative agency or other tribunal (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement, or (iii) which is
likely to materially and adversely affect the performance by Purchaser of
its obligations under, or the validity or enforceability of, this
Agreement.
(vi) By the purchase of Mortgage Loans, Purchaser represents to
Seller that Purchaser understands, and that Purchaser has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of, its investment in the Mortgage Loans.
Section 4.04. Remedies for Breach of Representations and Warranties;
Repurchase Obligation. It is understood and agreed that the representations and
warranties set forth in Sections 4.01 and 4.02 shall survive each sale of
Mortgage Loans to the Purchaser and shall inure to the benefit of the Purchaser
and subsequent transferees notwithstanding any restrictive or qualified
endorsement on any Mortgage Note or Assignment of Mortgage or the examination or
failure to examine any Mortgage File. With respect to the representations and
warranties contained in Sections 4.01 and 4.02 which are made to the best of the
Seller's knowledge or to the actual knowledge of the Seller, if it is discovered
by either the Seller or the Purchaser that the substance of such representation
and warranty is inaccurate and such inaccuracy materially and adversely affects
the value of the related Mortgage Loan or the Purchaser's interest therein, then
notwithstanding the Seller's lack of knowledge with respect to the inaccuracy at
the time the representation or warranty was made, the Seller shall repurchase
the related Mortgage Loan in accordance with this Section 4.04 as if the
applicable representation or warranty was breached, subject to the terms and
conditions of the Sale and Servicing Agreement. Upon discovery by either the
Seller or the Purchaser of a breach of any of the foregoing representations and
warranties which materially and adversely affects the value of the Mortgage
Loans or the interest of the Purchaser (or which materially and adversely
affects the interests of the Purchaser in the related Mortgage Loan in the case
of a representation and warranty relating to a particular Mortgage Loan), the
party discovering such breach shall give prompt written notice to the others.
Within 60 days of the earlier of either discovery by or notice to
the Seller of any breach of a representation or warranty which materially and
adversely affects the value of any Mortgage Loan or the Purchaser's interest
therein, the Seller shall use its best efforts promptly to cure such breach in
all material respects and, if such breach cannot be cured or is not cured or is
not being diligently pursued as evidenced by a notice acceptable to the
Purchaser, as evidenced by the Purchaser's agreement thereto, at the end of such
60-day period, the Seller shall, at the Purchaser's option, either (a)
repurchase such Mortgage Loan at the Repurchase Price or (b) provide an Eligible
Substitute Mortgage Loan, if the Seller has any such loans available for sale at
the time subject to the terms and conditions of the Sale and Servicing
Agreement.
17
At the time of repurchase or substitution, the Purchaser and the
Seller shall arrange for the assignment of such Mortgage Loan to the Seller and
the delivery by the Purchaser to the Seller of the related Mortgage Files.
In addition to such cure and repurchase obligation, the Seller shall
indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, a breach of
the representations and warranties contained in this Article IV (notwithstanding
any limitation in such representation and warranty as to the Seller's
knowledge). It is understood and agreed that the obligations of the Seller set
forth in this Section 4.04 to cure or repurchase a defective Mortgage Loan and
to indemnify the Purchaser as provided in this Section 4.04 constitute the sole
remedies of the Purchaser respecting a breach of the foregoing representations
and warranties.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Sections 4.01 or 4.02
shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the
Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by the
Seller to cure such breach or repurchase such Mortgage Loan as specified above,
and (iii) demand upon the Seller by the Purchaser for compliance with the
relevant provisions of this Agreement.
ARTICLE V
Covenants and Warranties of Seller
So long as this Agreement remains in effect or Seller shall have any
obligations hereunder, Seller hereby covenants and agrees with Purchaser as
follows:
Section 5.01. Affirmative Covenants.
(a) Until the later to occur of (i) the discharge and payment of all
of Seller's obligations under this Agreement and (ii) the Termination Date of
this Agreement, Seller shall, promptly upon preparation, but in no event later
than 60 days following the end of each such party's first three fiscal quarters,
deliver to Purchaser its unaudited company-prepared financial statements as of
the end of each such fiscal quarter, prepared in accordance with GAAP. Seller
shall, promptly upon preparation, but in no event later than 90 days following
the end of such party's fourth fiscal quarter, deliver to Purchaser its audited
and certified financial statements, prepared in accordance with GAAP, as of the
end of the most recently ended fiscal year, which audits and certifications
shall each be prepared by a nationally recognized independent accounting firm or
by a regionally recognized independent accounting firm with the prior written
consent of Purchaser, which consent shall not be unreasonably withheld. In all
cases, financial statements shall include, without limitation, a balance sheet,
a profit and loss statement and a statement of cash flows. Notwithstanding
anything in this Agreement to the contrary, if (x) the audited and certified
financial statements described in the immediately preceding sentence are not
delivered within the above-specified 90 days, (y) Seller is diligently using its
best efforts to deliver such financial statements, and (z) Seller provides
Purchaser with a notice specifying the
18
reason for the delay and a date, within a reasonable time period (as determined
by Purchaser), on which such financial statements will be delivered, and they
are so delivered; then failure to deliver such financial statements within the
above-specified 90 days, as the case may be, shall not be deemed to be an Event
of Termination of this Agreement.
(b) Upon request of Purchaser, Seller shall, to the extent lawful,
promptly upon filing, deliver to Purchaser copies of all material public filings
made by Seller with any governmental or quasi-governmental body.
(c) Seller shall (i) with respect to any Mortgage Loans serviced by
Seller or any of its affiliates or otherwise use its best efforts to cause to be
delivered to Purchaser monthly, the report, if any, prepared by the relevant
trustee or servicer setting forth payment activity, defaults and delinquencies
with respect to each Mortgage Loan acquired by Purchaser and (ii) prepare and
deliver reports each month, detailing, with respect to all Purchases, such
information as the Purchaser may from time to time reasonably request.
(d) Seller shall do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation in
its jurisdiction of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted
except where failure to maintain such authority would not have a material
adverse effect on the ability of Seller to conduct its business or to perform
its obligations under this Agreement.
(e) At all times during this Agreement, Seller shall possess
sufficient net capital and liquid assets (or ability to access the same) to
satisfy its obligations as they become due in the normal course of business.
(f) Seller will notify Purchaser in writing of any of the following
promptly upon learning of the occurrence thereof, describing the same and, if
applicable, any remedial steps being taken with respect thereto;
(i) The occurrence or likelihood of occurrence of an Event of
Termination hereunder;
(ii) The institution of any litigation, arbitration proceeding or
governmental proceeding which, in the opinion of counsel to Seller, will
have a material adverse effect on Seller or the Mortgage Loans;
(iii) The entry of any judgment or decree against Seller if the
aggregate amount of all judgments and decrees then outstanding against
Seller exceeds $10,000,000 after deducting (A) the amount with respect to
which Seller is insured and with respect to which the insurer has assumed
responsibility in writing, and (B) the amount for which Seller is
otherwise indemnified if the terms of such indemnification are reasonably
satisfactory to Purchaser; or
(iv) The occurrence or likelihood of any event which would allow the
obligee under any material loan agreement to which Seller is bound to
declare an event of default or accelerate the obligations of Seller
thereunder.
19
(g) Seller shall permit the Purchaser or its accountants, attorneys
or other agents access to all of the books and records relating to Mortgage
Loans purchased and retained by Purchaser for inspection and copying during
normal business hours at all places where Seller conducts business.
(h) Seller shall satisfy the obligation under any Credit Line
Agreement that provides for the funding of all future Draws thereunder.
Section 5.02. Negative Covenants.
(a) Seller shall not assign or attempt to assign this Agreement or
any rights hereunder, without first obtaining the specific written consent of
Purchaser.
(b) Seller shall not amend its Articles of Incorporation or By-laws,
which amendment shall have or is likely to have an adverse effect upon Purchaser
or its interests under this Agreement, without the prior written consent of
Purchaser.
(c) During the term of this Agreement, Seller shall not engage in
any business other than as a consumer and mortgage finance lender and servicer,
except with the prior written consent of Purchaser.
(d) Seller shall not (i) dissolve or terminate its existence or (ii)
transfer any assets to any affiliate except as otherwise expressly permitted or
contemplated hereby.
(e) Except with the written consent of the Purchaser, the Seller
shall not guarantee, endorse or otherwise in any way become or be responsible
for any obligations of any other person, entity or affiliate, including, without
limitation, whether directly or indirectly by agreement to purchase the
indebtedness of any other person or through the purchase of goods, supplies or
services, or maintenance of working capital or other balance sheet covenants or
conditions, or by way of stock purchase, capital contribution, advance or loan
for the purposes of paying or discharging any indebtedness or obligation of such
other person or otherwise; provided, however, that nothing contained herein
shall prevent Seller from indemnifying its officers, directors and agents
pursuant to its By-laws and its Articles of Incorporation.
(f) Seller will not commit any act in violation of applicable laws,
or regulations promulgated pursuant thereto that relate to the Mortgage Loans or
that materially and adversely affect the operations or financial conditions of
Seller.
(g) Seller, by entering into this Agreement, hereby covenants and
agrees that it will not at any time institute against the Issuer, or join in any
institution against the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or State bankruptcy or similar law in connection with any
obligations relating to the Notes or any of the Basic Documents.
20
ARTICLE VI
Sale of Mortgage Loans from the Purchaser to the Trust
Section 6.01. Sale and Servicing Agreement. It is the intent of the
Seller and the Purchaser that with respect to the Mortgage Loans, the Purchaser
shall concurrently sell all of its right, title and interest to the Mortgage
Loans and all other property conveyed to it hereunder to the Trust pursuant to
the Sale and Servicing Agreement.
With respect to such sale, the Seller agrees:
(i) to cooperate fully with the Purchaser and the Trust with respect
to all reasonable requests and due diligence procedures including
participating in meetings with Rating Agencies, the Insurer and such other
parties as the Purchaser shall designate and participating in meetings
with the Trust and providing information reasonably requested by the
Trust;
(ii) to execute the Sale and Servicing Agreement and all other
necessary documents to effect the transactions contemplated therein;
(iii) the Seller shall make the representations and warranties set
forth herein regarding the Seller and the Mortgage Loans as of the date of
the transfer to the Trust;
(iv) to deliver to the Purchaser for inclusion in any prospectus or
other offering material such publicly available information regarding the
Seller, its financial condition and the mortgage loan delinquency,
foreclosure and loss experience of its portfolio as is customarily set
forth in a prospectus supplement with respect to a comparable mortgage
pool, the underwriting of mortgage loans, the servicer, the servicing and
collection of mortgage loans, lending activities and loan sales of the
servicer, regulatory matters and delinquency and loss experience and any
additional information reasonably requested by the Purchaser, and to
deliver to the Purchaser unaudited consolidated financial statements of
the Seller, in which case the Purchaser shall bear the cost of having such
statements audited by certified public accountants if the Purchaser
desires such an audit, or as is otherwise reasonably requested by the
Purchaser and which the Seller is capable of providing without
unreasonable effort or expense, and to indemnify the Purchaser and its
affiliates for material misstatements or omissions contained in such
information;
(v) to deliver to the Purchaser and to any person designated by the
Purchaser, at the Purchaser's expense, such statements and audit letters
issued by reputable, certified public accountants pertaining to
information provided by the Seller pursuant to clause (iv) above as shall
be reasonably requested by the Purchaser (it being acknowledged by
Purchaser that the delivery of such statements and letters is subject to
the consent of such accountants);
(vi) to deliver to the Purchaser, and to any Person designated by
the Purchaser, such legal documents and in-house opinions of counsel as
are customarily delivered by originators or servicers, as the case may be,
and reasonably determined by the Purchaser to be necessary in connection
with the transactions contemplated by the Sale and Servicing
21
Agreement, it being understood that the cost of any opinions of outside
special counsel that may be required shall be the responsibility of the
Seller;
(vii) to cooperate fully with the Purchaser and any prospective
Purchaser with respect to the preparation of Mortgage Loan documents and
other documents and with respect to servicing requirements reasonably
requested by the Rating Agencies and the Insurer; and
(viii) to negotiate and execute one or more custodial and servicing
agreements among the Purchaser, the Seller and a third party
custodian/trustee which is generally considered to be a prudent
custodian/trustee in the secondary mortgage market designated by the
Purchaser in its sole discretion after consultation with the Seller, in
either case for the purpose of securitizing the Mortgage Loans.
ARTICLE VII
Seller's Servicing Obligations
Section 7.01. Seller's Servicing Obligations. The Seller, as an
independent contract servicer, shall service and administer the Mortgage Loans
in accordance with the terms and provisions set forth in Articles III, IV, V,
VII and VIII of the Sale and Servicing Agreement which sections are hereby
incorporated in this Agreement in their entirety (with, however, the changes and
adjustments as provided in this Agreement) as if the same were contained in this
Article VII.
To the extent any provision of any definition set forth in the Sale
and Servicing Agreement shall conflict with any provision set forth in this
Agreement, the provision or definition in this Agreement shall govern.
ARTICLE VIII
Fees and Expenses
The Purchaser shall pay any salaries and other compensation due its
employees and the legal fees and expenses of its attorneys and accountants. All
other costs and expenses incurred in connection with the transfer and delivery
of the Mortgage Loans pursuant to this Agreement or the Sale and Servicing
Agreement, including, without limitation, recording fees, fees for title policy
endorsements and continuations, and fees for recording intervening assignments
of Mortgage, shall be paid by the Seller. To the extent not paid out of the
Trust pursuant to Section 8.7(c)(i) of the Indenture, the Seller shall pay the
on-going fees of any custodian or trustee under the Sale and Servicing
Agreement, the Trust Agreement or the Indenture. The Seller shall pay (i) the
acceptance and file review fees of any custodian or trustee under this
Agreement, the Indenture, the Trust Agreement or the Sale and Servicing
Agreement and (ii) the costs of legal counsel and legal opinions, accounting
comfort letters and fees, printing of disclosure documents, rating agency fees,
Insurer up-front fees, SEC filing fees and the costs of any and all related
document preparations associated with the Sale and Servicing Agreement, the
Trust Agreement, the Indenture or this Agreement. The Seller also agrees to pay
22
the fees and other amounts for which the Seller or Servicer is obligated under
the Insurance Agreement.
ARTICLE IX
Termination; Additional Remedies
Upon the occurrence of a Rapid Amortization Event due to an act or
omission of the Seller (an "Event of Termination"), the Purchaser and its
assignees shall have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under the UCC of
each applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing, the occurrence of an Event of
Termination shall not deny to the Purchaser or its assignees any remedy in
addition to termination of its obligations to make purchases hereunder to which
the Purchaser or its assignee may be otherwise appropriately entitled, whether
by statute or applicable law, at law or in equity.
ARTICLE X
Payment of Purchase Price
Section 10.01. Purchase Price Payments. On the Business Day
following each day other than the Closing Date on which any Mortgage Loans are
purchased from the Seller by the Purchaser pursuant to Article II hereof or
Additional Balances relating to Mortgage Loans are funded by the Seller, on the
terms and subject to the conditions of this Agreement, the Purchaser shall pay
to the Seller the applicable Purchase Price by (i) making or causing to be made
a cash payment to the Seller or its designee in such amount determined by the
Purchaser, (ii) crediting the Seller with an additional capital contribution to
the Purchaser, (iii) automatically increasing the principal amount outstanding
under the Purchaser Note by the amount of the excess of the Purchase Price to be
paid to the Seller for such purchased assets over the amount of any cash payment
made on such day to the Seller and/or any capital contribution made by the
Seller to the Purchaser, subject to a cap on such note at any time equal to
$_____ or (iv) any combination of the foregoing.
Section 10.02. The Purchaser Note.
(a) On the Closing Date, the Purchaser shall deliver to the Seller a
promissory note, substantially in the form of Exhibit A, payable to the order of
the Seller (such promissory note, as the same has been or hereafter may be
amended, supplemented, endorsed or otherwise modified from time to time,
together with any promissory note issued from time to time in substitution
therefor or renewal thereof in accordance with this Agreement, being herein
called the "Purchaser Note"), which Purchaser Note shall, in accordance with its
terms, be subordinated to all interests of the Trust, all claims to the cash
flows from Trust assets and all obligations of the Purchaser, of any nature, now
or hereafter arising under or in connection with the Sale and Servicing
Agreement. The Purchaser Note shall evidence all amounts incurred thereunder
subsequent to the Closing Date as provided in this Agreement. Subject to the
foregoing, the Purchaser Note shall be payable in full on the date which is one
year and one day after the
23
Termination Date. The Purchaser Note shall bear interest at the "prime rate" as
determined by the Indenture Trustee from time to time in effect. The Purchaser
may prepay all or part of the outstanding balance of the Purchaser Note and
interest accrued thereon from time to time without any premium or penalty,
unless an Event of Default has occurred and is continuing or would result from
such prepayment or payment.
(b) The Servicer shall hold the Purchaser Note for the benefit of
the Seller, and shall make all appropriate recordkeeping entries with respect to
the Purchaser Note or otherwise to reflect the payments on and adjustments of
the Purchaser Note. The Servicer's books and records shall constitute rebuttable
presumptive evidence of the principal amount of and accrued interest on the
Purchaser Note at any time. The Seller hereby irrevocably authorizes the
Servicer to xxxx the Purchaser Note "CANCELLED" and to return the Purchaser Note
to the Purchaser upon the full and final payment thereof after the Termination
Date.
(c) The Seller hereby agrees not to transfer, assign, exchange or
otherwise convey or pledge, hypothecate or otherwise grant a security interest
in the Purchaser Note or any interest represented thereby, and any attempt to
transfer, assign, exchange, convey, pledge, hypothecate or grant a security
interest in the Purchaser Note or any interest represented thereby shall be void
and of no effect.
ARTICLE XI
Confidentiality
Purchaser and Seller each acknowledges that the information
heretofore provided to them pursuant to the operation of this Agreement, is
highly confidential, proprietary information of Seller or Purchaser, as the case
may be. Purchaser and Seller each agrees that it will hold such information in
strict confidence and will not disclose any part of such information to any
person or entity, other than to its accountants and lawyers to the extent
necessary for the performance of their duties and as required by law and other
than to such other persons to the extent necessary, as determined by the
Purchaser in its sole discretion, to complete the transactions contemplated
hereunder and in the Sale and Servicing Agreement including the offering and
issuance of the Notes; provided, however, that copies of this Agreement may be
included as part of any filing made pursuant to the Securities Act of 1933 and
the Securities Exchange Act of 1934 and any regulations promulgated thereunder.
In furtherance of the foregoing, Purchaser and Seller each covenants that it
will adhere to its established procedures for the maintenance of confidentiality
with respect to such information. Purchaser and Seller each further agrees that
it will not distribute such information within its own organization except to
persons with a need to know such information in connection with the transactions
contemplated by this Agreement.
ARTICLE XII
Term
This Agreement shall terminate on the Termination Date.
24
ARTICLE XIII
Exclusive Benefit of Parties; Assignment
This Agreement is for the exclusive benefit of the parties hereto
and their respective successors and assigns and shall not be deemed to give any
legal or equitable right to any other person except the Sponsor, the Trust, the
Noteholders and the Insurer. Notwithstanding the foregoing, the Seller covenants
and agrees that the representations and warranties contained in this Agreement
and the rights of the Purchaser hereunder are intended to benefit the Trust, the
Noteholders and the Insurer. This Agreement may not be assigned by any party
hereto without the prior written consent of the other party hereto except to the
Trust.
ARTICLE XIV
Amendment; Waivers
This Agreement may be amended from time to time only by written
agreement of Seller and Purchaser with the prior written consent of the Insurer,
which consent shall not be unreasonably withheld. Any forbearance, failure, or
delay by a party in exercising any right, power, or remedy hereunder shall not
be deemed to be a waiver thereof, and any single or partial exercise by a party
of any right, power or remedy hereunder shall not preclude the further exercise
thereof. Every right, power and remedy of a party shall continue in full force
and effect until specifically waived by it in writing. No right, power or remedy
shall be exclusive, and each such right, power or remedy shall be cumulative and
in addition to any other right, power or remedy, whether conferred hereby or
hereafter available at law or in equity or by statute or otherwise.
ARTICLE XV
Execution in Counterparts
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, and all of which shall constitute one and
the same instrument.
ARTICLE XVI
Effect of Invalidity of Provisions
In case any one or more of the provisions contained in this
Agreement should be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall in no way be affected, prejudiced or disturbed thereby.
25
ARTICLE XVII
Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to its rules regarding
conflict of laws.
ARTICLE XVIII
Notices
Any notices, consents, directions, demands and other communications
given under this Agreement (unless otherwise specified herein) shall be in
writing and shall be deemed to have been duly given when personally delivered at
or telecopied to the respective addresses or facsimile numbers, as the case may
be, set forth on the signature page hereof for Seller and Purchaser, or to such
other address or facsimile number as either party shall give notice to the other
party pursuant to this Section. Notices, consents, etc., may also be effected by
first class mail, postage prepaid sent to the foregoing addresses and will be
effective upon receipt by the intended recipient.
ARTICLE XIX
Entire Agreement
This Agreement, including the Exhibits and Schedules hereto,
contains the entire agreement of the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements between
them, whether oral or written, of any nature whatsoever with respect to the
subject matter hereof.
ARTICLE XX
Indemnities
Without limiting any other rights which Purchaser or Seller may have
hereunder or under applicable law, and in addition to any other indemnity
provided hereunder, Seller hereby agrees to indemnify Purchaser and its
respective officers, directors, agents and employees (each, an "Indemnified
Party") from and against any and all Losses incurred by any of them relating to
or resulting from:
(1) any representation or warranty made by Seller (or any officers,
employees or agents of Seller) under or in connection with this Agreement,
any periodic report required to be furnished thereunder or any other
information or document delivered by Seller pursuant hereto, which shall
have been false or incorrect in any material respect when made or deemed
made;
26
(2) the failure by Seller to (a) comply with any applicable law,
rule or regulation with respect to any Purchase or (b) perform or observe
any material obligation or covenant hereunder; or
(3) the failure by Seller (if so requested by Purchaser) to execute
and properly file, or any delay in executing and properly filing,
financing statements or other similar instruments or documents under the
Uniform Commercial Code of any applicable jurisdiction or other applicable
laws with respect to the Mortgage Loans.
Promptly after receipt by an Indemnified Party under this Article XX
of notice of the commencement of any action, such Indemnified Party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Article XX, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability that it may have to any Indemnified Party otherwise than
under this Article XX. In case any such action is brought against any
Indemnified Party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein, and to
the extent that it may elect by written notice delivered to the Indemnified
Party promptly after receiving the aforesaid notice from such Indemnified Party,
to assume the defense thereof, with counsel satisfactory to such Indemnified
Party; provided, however, that if the defendants in any such action include both
the Indemnified Party and the indemnifying party and the Indemnified Party or
parties shall have reasonably concluded that there may be legal defenses
available to it or them and/or other Indemnified Parties that are different from
or additional to those available to the indemnifying party, the Indemnified
Party or parties shall have the right to elect separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such Indemnified Party or parties. Upon receipt of notice from the
indemnifying party to such Indemnified Party of its election so to assume the
defense of such action and approval by the Indemnified Party of counsel, the
indemnifying party will not be liable for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof, unless (i) the Indemnified Party shall have employed separate counsel
in connection with the assertion of legal defenses in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by you in the case of Article XX, representing the
Indemnified Parties under this Article XX, who are parties to such action), (ii)
the indemnifying party shall not have employed counsel satisfactory to the
Indemnified Party to represent the Indemnified Party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the Indemnified Party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall only be in respect of the counsel referred to in such
clause (i) or (iii).
ARTICLE XXI
RESPA Obligations
Seller agrees to discharge on Purchaser's behalf all obligations,
including, without limitation, all disclosure obligations, which Purchaser may
have under the Real Estate Settlement Procedures Act of 1974, as amended, in
connection with Purchaser's purchases of Mortgage
27
Loans hereunder. Purchaser agrees to provide Seller with such information as is
reasonably necessary for Seller to discharge such obligations and hereby
appoints Seller as its agent in its name for the purposes of, and only for the
purposes of, performing such obligations. Seller hereby agrees to indemnify
Purchaser and its respective officers, directors, agents and employees from any
losses suffered by any such party in connection with Seller's obligations under
this Article XXI.
ARTICLE XXII
Survival
All indemnities and undertakings of Seller and Purchaser hereunder
shall survive the termination of this Agreement.
ARTICLE XXIII
Right of Set-off
Upon the occurrence of any event or circumstance which requires
Seller to make a payment hereunder, Purchaser is hereby authorized then or at
any time or times thereafter, without notice to Seller (any such notice being
expressly waived by Seller), to set-off and apply any and all deposits (general
or special, time or demand, provisional or final), at any time held and other
indebtedness at any time owing by Purchaser to or for the credit or the account
of Seller against any and all of the obligations of Seller now or hereafter
existing hereunder, irrespective of whether or not Purchaser shall have made any
demand hereunder. Purchaser agrees promptly to notify Seller after any such
set-off and application made by Purchaser; provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of Purchaser under this Article XXIII are in addition to other rights and
remedies which Purchaser may have.
ARTICLE XXIV
Consent to Service
Each party irrevocably consents to the service of process by
registered or certified mail, postage prepaid, to it at its address given
pursuant to Article XVIII hereof.
ARTICLE XXV
Submission to Jurisdiction; Waiver of Trial by Jury
With respect to any claim arising out of this Agreement each party
irrevocably submits to the exclusive jurisdiction of the courts of the State of
New York and the United States District Court located in the Borough of
Manhattan, City of New York, and each party irrevocably waives any objection
which it may have at any time to the laying of venue of any suit, action or
proceeding arising out of or relating hereto brought in any such court,
irrevocably
28
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum and further irrevocably waives
the right to object, with respect to such claim, suit, action or proceeding
brought in any such court, that such court does not have jurisdiction over such
party; provided that service of process is made as set forth in Article XXIV
hereof, or by any other lawful means. To the extent permitted by applicable law,
Purchaser and Seller each irrevocably waive all right of trial by jury in any
action, proceeding or counterclaim arising out of or in connection with this
Agreement or any matter arising hereunder.
ARTICLE XXVI
Construction
The headings in this Agreement are for convenience only and are not
intended to influence its construction. References to Articles, Sections,
Schedules and Exhibits in this Agreement are to the Articles, Sections of and
Schedules and Exhibits to this Agreement. The Schedules and Exhibits are hereby
incorporated into and form a part of this Agreement. In this Agreement, the
singular includes the plural, the plural the singular, the words "and" and "or"
are used in the conjunctive or disjunctive as the sense and circumstances may
require and the word "including" means "including, but not limited to." Unless
otherwise stated in this Agreement, in the computation of a period of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding."
ARTICLE XXVII
Further Agreements
The Seller and the Purchaser each agree to execute and deliver to
the other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of this
Agreement.
29
IN WITNESS WHEREOF, the Purchaser and the Seller have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the date first written above.
GREENPOINT MORTGAGE SECURITIES INC.,
as Purchaser
000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
By:
----------------------------------------
Name:
Title:
GREENPOINT MORTGAGE FUNDING, INC.,
as Seller
000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
By:
----------------------------------------
Name:
Title:
[Mortgage Loan Purchase Agreement]
EXHIBIT A
FORM OF NON-NEGOTIABLE
GREENPOINT MORTGAGE SECURITIES INC.
PROMISSORY NOTE
__________, 200_
EXCEPT TO THE EXTENT PROVIDED IN THE PURCHASE AGREEMENT REFERRED TO BELOW, THIS
PROMISSORY NOTE AND ANY INTEREST REPRESENTED HEREBY SHALL NOT BE TRANSFERRED,
ASSIGNED, EXCHANGED, CONVEYED, PLEDGED, HYPOTHECATED OR OTHERWISE THE SUBJECT OF
THE GRANT OF A SECURITY INTEREST AND ANY ATTEMPT TO TRANSFER, ASSIGN, EXCHANGE,
CONVEY, PLEDGE, HYPOTHECATE OR GRANT A SECURITY INTEREST IN THIS PROMISSORY NOTE
OR ANY INTEREST REPRESENTED HEREBY SHALL BE VOID AND OF NO EFFECT.
For VALUE RECEIVED, the undersigned, GREENPOINT MORTGAGE SECURITIES INC.,
a Delaware corporation (the "Purchaser"), promises to pay to GREENPOINT MORTGAGE
FUNDING, INC., a California corporation (the "Seller"), on the terms and subject
to the conditions set forth herein and in the Purchase Agreement referred to
below, the aggregate unpaid Purchase Price of all assets purchased and to be
purchased by the Purchaser pursuant to the Purchase Agreement, provided that
such amount shall in no event exceed $_____. Such amount as shown in the records
of the Seller will be rebuttable presumptive evidence of the principal amount
owing under this Note.
1. Purchase and Sale Agreement. This Note is the Purchaser Note described
in, and is subject to the terms and conditions set forth in, that certain
Mortgage Loan Purchase Agreement dated as of __________, 200_ (as the same may
be amended, supplemented, restated or otherwise modified in accordance with its
terms, the "Purchase Agreement"), between the Seller and the Purchaser.
Reference is hereby made to the Purchase Agreement for a statement of certain
other rights and obligations of the Purchaser and the Seller.
2. Definitions. Capitalized terms used (but not defined) herein have the
meanings ascribed thereto in the Purchase Agreement. In addition, as used
herein, the following terms have the following meanings:
"Bankruptcy Proceedings" has the meaning set forth in clause (a) of
paragraph 7 hereof.
"Final Maturity Date" means the date that falls one year and one day
after the Termination Date.
"Junior Liabilities" means all obligations of the Purchaser to the
Seller under this Note and under all similar notes issued by the Purchaser to
the Seller in connection with any previous or future securitization
transactions.
A-1
"Senior Liabilities" means all obligations of the Purchaser to the
Trust and any other obligations of the Purchaser arising under or in connection
with the Sale and Servicing Agreement, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or thereafter existing,
or due or to become due on or before the Final Maturity Date.
"Subordination Provisions" means, collectively, clauses (a) through
(i) of paragraph 7 hereof.
3. Interest. Subject to the Subordination Provisions and paragraph 10
hereof, the Purchaser promises to pay interest on the aggregate unpaid principal
amount of this Note outstanding on each day, at a variable rate equal to the
rate publicly announced by the Indenture Trustee from time to time as its "prime
lending rate."
4. Interest Payment Dates. Subject to the Subordination Provisions,
paragraph 10 hereof and Section 10.02 of the Purchase Agreement, the Purchaser
shall pay accrued interest on this Note on each Payment Date and on the Final
Maturity Date. The Purchaser also shall pay accrued interest on the principal
amount of each prepayment hereof on the date of each such prepayment.
5. Basis of Computation. Interest accrued hereunder shall be computed for
the actual number of days elapsed on the basis of a 360-day year.
6. Principal Payment Dates. Subject to the Subordination Provisions, any
unpaid principal of this Note shall be paid on the Final Maturity Date (or, if
such date is not a Business Day, the next succeeding Business Day). Subject to
the Subordination Provisions, paragraph 10 hereof and Section 10.02 of the
Purchase Agreement, the principal amount of and accrued interest on this Note
may be prepaid on any Business Day without premium or penalty.
7. Subordination Provisions. The Purchaser covenants and agrees, and the
Seller, by its acceptance of this Note, likewise covenants and agrees, that the
payment of all Junior Liabilities is hereby expressly subordinated in right of
payment to the payment and performance of the Senior Liabilities to the extent
and in the manner set forth in the following clauses of this paragraph 7:
(a) (i) In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar event relating to the Purchaser,
whether voluntary or involuntary, partial or complete, and whether in
bankruptcy, insolvency, receivership or other similar proceedings, or upon an
assignment for the benefit of creditors, or any other marshalling of the assets
and liabilities of the Purchaser or any sale of all or substantially all of the
assets of the Purchaser except pursuant to the Sale and Servicing Agreement
(such proceedings being herein collectively called "Bankruptcy Proceedings"),
and (ii) on and after the occurrence of an Event of Default, the Senior
Liabilities shall first be paid and performed in full and in cash before the
Seller shall be entitled to receive and to retain any payment or distribution in
respect of the Junior Liabilities. In order to implement the foregoing: (x) all
payments and distributions of any kind or character in respect of the Junior
Liabilities to which the Seller would be entitled except for this clause (a)
shall be made directly to the Indenture Trustee (for the benefit of the
A-2
Noteholders); and (y) the Seller hereby irrevocably agrees that the Indenture
Trustee (on behalf of the Noteholders), in the name of the Seller or otherwise,
may demand, xxx for, collect, receive and receipt for any and all such payments
or distributions, and file, prove and vote or consent in any such Bankruptcy
Proceedings with respect to any and all claims of the Seller relating to the
Junior Liabilities, in each case until the Senior Liabilities shall have been
paid and performed in full and in cash.
(b) following the occurrence of any of the events described in
clause (a)(i) or (ii), in the event that the Seller receives any payment or
other distribution of any kind or character from the Purchaser or from any other
source whatsoever, in respect of the Junior Liabilities, such payment or other
distribution shall be received in trust for the Indenture Trustee and shall be
turned over by the Seller to the Indenture Trustee (for the benefit of the
Noteholders) forthwith. All payments and distributions received by the Indenture
Trustee in respect of this Note, to the extent received in or converted into
cash, may be applied by the Indenture Trustee (for the benefit of the
Noteholders) first to the payment of any and all reasonable expenses (including
reasonable attorneys' fees and legal expenses) paid or incurred by the Indenture
Trustee or the Noteholders in enforcing these Subordination Provisions, or in
endeavoring to collect or realize upon the Junior Liabilities, and any balance
thereof shall, solely as between the Seller and the Noteholders, be applied by
the Indenture Trustee toward the payment of the Senior Liabilities in a manner
determined by the Indenture Trustee to be in accordance with the Indenture; but
as between the Purchaser and its creditors, no such payments or distributions of
any kind or character shall be deemed to be payments or distributions in respect
of the Senior Liabilities.
(c) Upon the final payment in full and in cash of all Senior
Liabilities, the Seller shall be subrogated to the rights of the Indenture
Trustee to receive payments or distributions from the Purchaser that are
applicable to the Senior Liabilities until the Junior Liabilities are paid in
full.
(d) These Subordination Provisions are intended solely for the
purpose of defining the relative rights of the Seller, on the one hand, and the
Indenture Trustee (on behalf of Noteholders), on the other hand. Nothing
contained in these Subordination Provisions or elsewhere in this Note (subject
to paragraph 10 hereof) is intended to or shall impair, as between the
Purchaser, its creditors (other than the Noteholders) and the Seller, the
Purchaser's obligation, which is unconditional and absolute, to pay the Junior
Liabilities as and when the same shall become due and payable in accordance with
the terms hereof (subject to paragraph 10 hereof) and of the Purchase Agreement
or to affect the relative rights of the Seller and creditors of the Purchaser
(other than the Noteholders).
(e) The Seller shall not, until the Senior Liabilities have been
finally paid and performed in full and in cash, (i) cancel, waive, forgive,
transfer or assign, or commence legal proceedings to enforce or collect, or
subordinate to any obligation of the Purchaser, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, or now or
thereafter existing, or due or to become due (other than the Senior
Liabilities), the Junior Liabilities or any rights in respect hereof or (ii)
convert the Junior Liabilities into an equity interest in the Purchaser, unless,
in the case of each of clauses (i) and (ii) above, the Seller shall have
received the prior written consent of the Indenture Trustee and the Insurer in
each case.
A-3
(f) The Seller shall not, except without the advance written consent
of the Indenture Trustee and the Insurer commence, or join with any other Person
in commencing, any Bankruptcy Proceedings with respect to the Purchaser until at
least one year and one day have passed since the Termination Date.
(g) If, at any time, any of the payment (in whole or in part) made
with respect to any Senior Liabilities is rescinded or must be restored or
returned by the Indenture Trustee or Noteholders (whether in connection with any
Bankruptcy Proceedings or otherwise), these Subordination Provisions shall
continue to be effective or shall be reinstated, as the case may be, as though
such payment had not been made.
(h) The Indenture Trustee (on behalf of Noteholders) may, from time
to time, with the consent of the Insurer without notice to the Seller, and
without waiving any of its rights under these Subordination Provisions, take any
or all of the following actions: retain or obtain an interest in any property to
secure any of the Senior Liabilities; (ii) retain or obtain the primary or
secondary obligations of any other obligor or obligors with respect to any of
the Senior Liabilities; (iii) extend or renew for one or more periods (whether
or not longer than the original period), alter or exchange any of the Senior
Liabilities, or release or compromise any obligation of any nature with respect
to any of the Senior Liabilities; (iv) amend, supplement, amend and restate, or
otherwise modify the Sale and Servicing Agreement or any related document; and
(v) release its security interest in or surrender, release or permit any
substitution or exchange for all or any part of any rights or property securing
any of the Senior Liabilities, or extend or renew for one or more periods
(whether or not longer than the original period) or release, compromise, alter
or exchange any obligations of any nature of any obligor with respect to any
such rights or property.
(i) The Seller hereby waives: (i) notice of acceptance of these
Subordination Provisions by any of the Noteholders, (ii) notice of the
existence, creation, non-payment or non-performance of all or any of the Senior
Liabilities; and (iii) all diligence in enforcement, collection or protection
of, or realization upon, the Senior Liabilities, or any thereof, or any security
therefor.
(j) These Subordination Provisions constitute a continuing offer
from the Purchaser to all Persons who become the holders of, or who continue to
hold, Senior Liabilities; and these Subordination Provisions are made for the
benefit of the Noteholders and the Insurer, and the Indenture Trustee may
proceed to enforce such provisions on behalf of each of such Persons.
8. General. No failure or delay on the part of the Seller in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Note shall in any event be effective unless (a) the same shall be in
writing and signed and delivered by the Purchaser and the Seller, and (b) all
consents required for such actions under the Purchase Agreement and the Sale and
Servicing Agreement shall have been received by the appropriate Persons. The
rights and remedies granted hereunder to the Indenture Trustee and the
Noteholders are subject to exercise as provided in the Purchase Agreement and
the Sale and Servicing Agreement.
A-4
9. Limitation on Interest. Notwithstanding anything in this Note to the
contrary, the Purchaser shall never be required to pay unearned interest on any
amount outstanding hereunder, and shall never be required to pay interest on the
principal amount outstanding hereunder at a rate in excess of the maximum
interest rate that may be contracted for, charged or received without violation
of applicable federal or state law.
10. Acknowledgment. The Seller acknowledges and agrees that it has no
rights to payment under this Note, and will not make any claim for payment
hereunder, unless funds are available for payment by the Purchaser in excess of
amounts due and payable by it at the time under the Sale and Servicing Agreement
and under all similar notes issued by the Purchaser to the Seller in connection
with any previous or future securitizations.
11. No Negotiation. This Note is not negotiable.
12. Governing Law. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.
13. Captions. Paragraph captions used in this Note are provided solely for
convenience of reference only and shall not affect the meaning or interpretation
of any provision of this Note.
GREENPOINT MORTGAGE SECURITIES INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
A-5
SCHEDULE I
MORTGAGE LOAN SCHEDULE
[On file with Indenture Trustee]
