EXHIBIT 10.1
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SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
as Purchaser
and
CREDIT-BASED ASSET SERVICING AND SECURITIZATION LLC
as Seller
MORTGAGE LOAN PURCHASE AGREEMENT
Fixed Rate and Adjustable Rate Mortgage Loans
Salomon Mortgage Loan Trust, Series 2001-CB4
C-BASS Mortgage Loan Asset-Backed Notes
Dated as of December 14, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS............................................................................1
ARTICLE II
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.01 SALE OF MORTGAGE LOANS.................................................................2
Section 2.02 OBLIGATIONS OF SELLER UPON SALE........................................................2
Section 2.03 PAYMENT OF PURCHASE PRICE FOR THE MORTGAGE LOANS. ....................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.01 SELLER REPRESENTATIONS AND WARRANTIES RELATING TO THE
MORTGAGE LOANS.........................................................................5
Section 3.02 SELLER REPRESENTATIONS AND WARRANTIES.................................................16
ARTICLE IV
SELLER'S COVENANTS
Section 4.01 COVENANTS OF THE SELLER...............................................................19
ARTICLE V
OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS
ARTICLE VI
TERMINATION
Section 6.01 TERMINATION...........................................................................20
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01 AMENDMENT.............................................................................20
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Section 7.02 GOVERNING LAW.........................................................................20
Section 7.03 NOTICES...............................................................................20
Section 7.04 SEVERABILITY OF PROVISIONS............................................................21
Section 7.05 COUNTERPARTS..........................................................................21
Section 7.06 FURTHER AGREEMENTS....................................................................21
Section 7.07 INTENTION OF THE PARTIES..............................................................21
Section 7.08 SUCCESSORS AND ASSIGNS; ASSIGNMENT OF THIS AGREEMENT..................................21
Section 7.09 SURVIVAL. ...........................................................................22
Schedule I Mortgage Loan Schedule
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MORTGAGE LOAN PURCHASE AGREEMENT, dated as of December 14,
2001 (the "AGREEMENT"), between CREDIT-BASED ASSET SERVICING AND SECURITIZATION
LLC ("C-BASS" or the "SELLER") and SALOMON BROTHERS MORTGAGE SECURITIES VII,
INC. (the "PURCHASER").
W I T N E S S E T H:
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WHEREAS, the Seller is the owner of either the notes or other
evidence of indebtedness (the "MORTGAGE NOTES") or other evidence of ownership
so indicated on Schedule I hereto, and the other documents or instruments
constituting the Mortgage File (collectively, the "MORTGAGE LOANS"); and
WHEREAS, the Seller, as of the date hereof, owns the mortgages
(the "MORTGAGES") on the properties (the "MORTGAGED PROPERTIES") securing such
Mortgage Loans, including rights (a) to any property acquired by foreclosure or
deed in lieu of foreclosure or otherwise, and (b) to the proceeds of any
insurance policies covering the Mortgage Loans or the Mortgaged Properties or
the obligors on the Mortgage Loans; and
WHEREAS, the parties hereto desire that the Seller sell the
Mortgage Loans to the Purchaser and the Purchaser purchase the Mortgage Loans
from the Seller pursuant to the terms of this Agreement; and
WHEREAS, pursuant to the terms of an Amended and Restated
Trust Agreement, dated as of December 14, 2001 (the "TRUST AGREEMENT"), between
the Purchaser, as depositor and Wilmington Trust Company as owner trustee, the
Purchaser will convey the Mortgage Loans to Salomon Mortgage Loan Trust, Series
2001-CB4.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. All capitalized terms used but not
defined herein and below shall have the meanings assigned thereto in the
Indenture, dated as of December 14, 2001 (the "Indenture"), between Salomon
Mortgage Loan Trust 2001-CB4 and U.S. Bank National Association as indenture
trustee (the "Indenture Trustee").
"CUSTODIAN": A custodian acceptable to the Indenture Trustee,
which may be the Indenture Trustee and which shall not be the Seller or any
affiliate of the Seller. The initial Custodian shall be The Bank of New York.
"INSURANCE AGREEMENT": With respect to any FHA Mortgage Loan,
the insurance
contract issued by the FHA and, with respect to any VA Mortgage Loan, the
guarantee issued by the Department of Veteran's Affairs.
ARTICLE II
SALE OF MORTGAGE LOANS; PAYMENT OF PURCHASE PRICE
Section 2.01 SALE OF MORTGAGE LOANS. The Seller does hereby
agree to and does hereby sell, assign, set over, and otherwise convey to the
Purchaser, without recourse, on the Closing Date, all its right, title and
interest, including any security interest therein for the benefit of the Seller,
in and to (i) each Mortgage Loan and the related Cut-off Date Principal Balance
thereof, including any Related Documents, (ii) all payments on or collections in
respect of the Mortgage Loans received after the Cut-off Date (except with
respect to any Arrearages); (iii) property which secured such Mortgage Loan and
which has been acquired by foreclosure or deed in lieu of foreclosure; (iv) its
interest in any insurance policies in respect of the Mortgage Loans; and (v) all
proceeds of any of the foregoing.
Section 2.02 OBLIGATIONS OF SELLER UPON SALE.
(a) In connection with any transfer pursuant to Section 2.01
hereof, the Seller further agrees, at its own expense, on or prior to the
Closing Date, (x) to indicate in its books and records that the Mortgage Loans
have been sold to the Purchaser pursuant to this Agreement and (y) to deliver to
the Purchaser and the Indenture Trustee a computer file containing a true and
complete list of all the Mortgage Loans specifying, among other things, for each
Mortgage Loan, as of the Cut-off Date, its account number and Cut-off Date
Principal Balance. Such file (the "MORTGAGE LOAN SCHEDULE") which shall be
marked as Schedule I to this Agreement and is hereby incorporated into and made
a part of this Agreement.
In connection with such transfer and assignment of the
Mortgage Loans, the Seller shall, on behalf of the Purchaser, deliver to and
deposit with, the Custodian, as the agent of the Indenture Trustee, the
following documents or instruments (with respect to each Mortgage Loan, a
"MORTGAGE FILE") with respect to each Mortgage Loan so transferred and assigned:
(i) the original Mortgage Note, endorsed either (A) in blank
or (B) in the following form: "Pay to the order of U.S. Bank National
Association, as Indenture Trustee under the Indenture, dated as of
December 14, 2001 between Salomon Mortgage Loan Trust 2001-CB4 and U.S.
Bank National Association, C-BASS Mortgage Loan Asset-Backed Notes,
without recourse", or with respect to any lost Mortgage Note, an
original lost note affidavit stating that the original mortgage note
was lost, misplaced or destroyed, together with a copy of the related
mortgage note;
(ii) the original Mortgage with evidence of recording thereon,
and the original recorded power of attorney, if the Mortgage was
executed pursuant to a power of attorney,
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with evidence of recording thereon or, if such Mortgage or power of
attorney has been submitted for recording but has not been returned
from the applicable public recording office, has been lost or is not
otherwise available, a copy of such Mortgage or power of attorney, as
the case may be, certified to be a true and complete copy of the
original submitted for recording;
(iii) an original Assignment of Mortgage, in form and
substance acceptable for recording. The Mortgage shall be assigned
either (A) in blank or (B) to "U.S. Bank National Association, as
Indenture Trustee under the Indenture, dated as of December 14, 2001
between Salomon Mortgage Loan Trust 2001-CB4 and U.S. Bank National
Association, C-BASS Mortgage Loan Asset-Backed Notes, without
recourse";
(iv) an original copy of any intervening Assignment of
Mortgage showing a complete chain of assignments;
(v) the original or a certified copy of lender's title
insurance policy;
(vi) the original or copies of each assumption, modification,
written assurance or substitution agreement, if any;
(vii) for each FHA Loan, the original Mortgage Insurance
Certificate; and
(viii) for each VA Loan, the original Loan Guaranty
Certificate.
The Seller shall within 90 days following the Closing Date,
with respect to each Mortgage Loan that is subject to the provisions of the
Homeownership and Equity Protection Act of 1994 place a legend on the original
Mortgage Note indicating the satisfaction of the provisions of such Act and the
regulations issued thereunder, to the effect that the Mortgage Loan is subject
to special truth in lending rules.
If any of the documents referred to in Section 2.02(ii), (iii)
or (iv) above has as of the Closing Date been submitted for recording but either
(x) has not been returned from the applicable public recording office or (y) has
been lost or such public recording office has retained the original of such
document, the obligations of the Seller to deliver such documents shall be
deemed to be satisfied upon (1) delivery to the Indenture Trustee or the
Custodian no later than the Closing Date, of a copy of each such document
certified by the Seller in the case of (x) above or the applicable public
recording office in the case of (y) above to be a true and complete copy of the
original that was submitted for recording and (2) if such copy is certified by
the Seller, delivery to the Indenture Trustee or the Custodian, promptly upon
receipt thereof of either the original or a copy of such document certified by
the applicable public recording office to be a true and complete copy of the
original. If the original lender's title insurance policy was not delivered
pursuant to Section 2.02(v) above, the Seller shall deliver or cause to be
delivered to the Indenture Trustee or the Custodian, a written commitment or
interim binder or preliminary report of title issued by the title insurance or
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escrow company, with the original to be delivered to the Indenture Trustee or
the Custodian, promptly upon receipt thereof. The Seller shall deliver or cause
to be delivered to the Indenture Trustee or the Custodian promptly upon receipt
thereof any other original documents constituting a part of a Mortgage File
received with respect to any Mortgage Loan, including, but not limited to, any
original documents evidencing an assumption or modification of any Mortgage
Loan.
Upon discovery or receipt of notice of any materially
defective document in, or that a document is missing from, a Mortgage File, the
Seller shall have 120 days to cure such defect or 150 days following the Closing
Date, in the case of missing Mortgages or Assignments, or deliver such missing
document to the Indenture Trustee or the Custodian. If the Seller does not cure
such defect or deliver such missing document within such time period, the Seller
shall either repurchase or substitute for such Mortgage Loan in accordance with
Section 3.01 hereof.
The Purchaser hereby acknowledges its acceptance of all right,
title and interest to the Mortgage Loans and other property, now existing and
hereafter created, conveyed to it pursuant to Section 2.01.
The parties hereto intend that the transaction set forth
herein be a sale by the Seller to the Purchaser of all the Seller's right, title
and interest in and to the Mortgage Loans and other property described above. In
the event the transaction set forth herein is deemed not to be a sale, the
Seller hereby grants to the Purchaser a security interest in all of the Seller's
right, title and interest in, to and under the Mortgage Loans and other property
described above, whether now existing or hereafter created, to secure all of the
Seller's obligations hereunder; and this Agreement shall constitute a security
agreement under applicable law. The Seller and the Purchaser shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such throughout the term of this Agreement.
(b) The Seller shall promptly but in no event later than 30
days after the Closing Date, submit for recording, in the appropriate public
office for real property records, each Assignment referred to in Section
2.02(a)(iii) and 2(a)(iv) above. In the event that any such Assignment is lost
or returned unrecorded because of a defect therein, the Seller shall promptly
prepare or cause to be prepared a substitute Assignment or cure or cause to be
cured such defect, as the case may be, and thereafter cause each such Assignment
to be duly recorded. The Seller shall furnish the Indenture Trustee or the
Custodian with a copy of each Assignment of Mortgage submitted for recording. In
the event that any Mortgage Note is endorsed in blank as of the Closing Date,
promptly following the Closing Date the Seller shall cause to be completed such
endorsements "Pay to the order of U.S. Bank National Association, as Indenture
Trustee under the Indenture, dated as of December 14, 2001 between Salomon
Mortgage Loan Trust 2001-CB4 and U.S. Bank National Association, C-BASS Mortgage
Loan Asset-Backed Notes, without recourse."
Section 2.03 PAYMENT OF PURCHASE PRICE FOR THE MORTGAGE LOANS.
In consideration
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of the sale of the Mortgage Loans from the Seller to the Purchaser on the
Closing Date, the Purchaser agrees to pay to the Seller on the Closing Date by
transfer of immediately available funds, as directed by the Seller, an amount
equal to $278,027,000 in respect of the Mortgage Loans (the "PURCHASE PRICE"),
net of an expense reimbursement amount of $_____________ (the "EXPENSE
REIMBURSEMENT AMOUNT"), and to transfer to the Seller or its designee on the
Closing Date, the Class IN, Class IX, Class IIN, Class IIX, Class R and Class
R-4 Notes (collectively, the "Private Notes") and the Equity Certificates
(together with the Private Notes, the "PRIVATE SECURITIES"). The Expense
Reimbursement Amount shall reimburse the Purchaser for the Purchaser's
Securities and Exchange Commission registration statement fees and the
Purchaser's registration statement administration fees allocable to the Trust.
The Seller shall pay, and be billed directly for, all expenses incurred by the
Purchaser in connection with the issuance of the Notes, including, without
limitation, printing fees incurred in connection with the prospectus relating to
the Notes, blue sky registration fees and expenses, fees and reasonable expenses
of Purchaser's counsel, fees of the rating agencies requested to rate the Notes,
accountant's fees and expenses and the fees and expenses of the Indenture
Trustee and other out-of-pocket costs, if any. If the Purchaser shall determine
that the Expense Reimbursement Amount is not sufficient to reimburse the
Purchaser for all expenses incurred by it that are subject to reimbursement by
the Seller hereunder as described above, the Seller shall promptly reimburse the
Purchaser for such additional amounts upon written notice by the Purchaser to
the Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH
Section 3.01 SELLER REPRESENTATIONS AND WARRANTIES RELATING TO
THE MORTGAGE LOANS. The Seller hereby represents and warrants to the Purchaser,
with respect to the Mortgage Loans, that as of the Closing Date or as of such
date specifically provided herein:
(a) The information set forth in the Mortgage Loan Schedule is
complete, true and correct as of the Cut-off Date.
(b) There are no delinquent taxes, ground rents, water
charges, sewer rents, assessments, including assessments payable in future
installments, or other outstanding charges affecting the related Mortgaged
Property.
(c) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by written
instruments, recorded in the applicable public recording office if necessary to
maintain the lien priority of the Mortgage and the interests of the Noteholders,
and which have been delivered to the Indenture Trustee; the substance of any
such waiver, alteration or modification has been approved by the title insurer,
to the extent required by the related policy, and is reflected on the Mortgage
Loan Schedule. No instrument of waiver, alteration or modification has been
executed, and no Mortgagor has been released, in whole or in part, except, in
connection with an assumption agreement approved by the title insurer, to the
extent
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required by the policy and, in the case of an FHA Loan or VA Loan, to the extent
required by the related Insurance Agreement, as applicable, and which assumption
agreement has been delivered to the Indenture Trustee and the terms of which are
reflected in the Mortgage Loan Schedule.
(d) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note and the
Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto.
(e) All buildings upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended coverage
and such other hazards as are customary in the area where the Mortgaged Property
is located, pursuant to insurance policies conforming to the requirements of the
Servicing Agreement. All such insurance policies contain a standard mortgagee
clause naming the Seller, its successors and assigns as mortgagee and all
premiums thereon have been paid. If upon origination of the Mortgage Loan, the
Mortgaged Property was in an area identified on a Flood Hazard Map or Flood
Insurance Rate Map issued by the Federal Emergency Management Agency as having
special flood hazards (and such flood insurance has been made available) a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect which policy conforms to the
requirements of the Federal National Mortgage Association ("FNMA") and the
Federal Home Loan Mortgage Corporation ("FHLMC"). The Mortgage obligates the
Mortgagor thereunder to maintain all such insurance at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to maintain such insurance at the Mortgagor's cost and expense and to
seek reimbursement therefor from the Mortgagor. All acts required to be
performed to preserve the rights and remedies of the Indenture Trustee in any
such insurance policies have been performed, including, without limitation, any
necessary notifications of insurers and assignments of policies or interests
therein.
(f) As of the date of origination of the Mortgage Loan, any
and all requirements of any federal, state or local law, including, without
limitation, usury, truth in lending, real estate settlement procedures, consumer
credit protection, equal credit opportunity or disclosure laws applicable to the
origination of the Mortgage Loans have been complied with. Any and all
requirements of any federal, state or local law, including, without limitation,
usury, truth in lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
servicing of the Mortgage Loans have been complied with.
(g) The Mortgage has not been satisfied, canceled,
subordinated (other than with respect to second lien loans, the subordination to
the first lien loan and with respect to third lien loans, the subordination to
the first and second lien loans) rescinded, in whole or in part, and the
Mortgaged Property has not been released from the lien of the Mortgage, in whole
or in part, nor has
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any instrument been executed that would effect any such satisfaction,
cancellation, subordination, rescission or release.
(h) The Mortgage is a valid, existing and enforceable first,
second or third lien on the Mortgaged Property, including all improvements on
the Mortgaged Property subject only to (1) the lien of current real property
taxes and assessments not yet due and payable, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording being acceptable to mortgage lending institutions
generally and, in the case of FHA Loans and VA Loans, to the FHA and VA,
respectively, and specifically referred to in the lender's title insurance
policy delivered to the originator of the Mortgage Loan, (3) 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 the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged Property and
which may not in any way prevent realization of the benefits of the related
Insurance Agreement, if applicable and (4) with respect to any second lien
mortgage loan, the lien of the related first mortgage loan and with respect to
any third lien mortgage loan, the lien of the related first and second mortgage
loan. Any security agreement, chattel mortgage or equivalent document related to
and delivered in connection with the Mortgage Loan establishes and creates a
valid, existing and enforceable first, second or third lien and first, second or
third priority security interest on the property described therein and the
Seller has full right to sell and assign the same to the Purchaser.
(i) The Mortgage Note and the related Mortgage are genuine and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms.
(j) The proceeds of the Mortgage Loan have been fully
disbursed to or for the account of the Mortgagor and there is no obligation for
the mortgagee to advance additional funds thereunder and any and all
requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage have been paid, and the Mortgagor is not entitled to
any refund of any amounts paid or due to the mortgagee pursuant to the Mortgage
Note or Mortgage.
(k) Immediately prior to the transfer and assignment
contemplated herein, the Seller was the sole owner and holder of the Mortgage
Loans and has good and marketable title to each Mortgage Loan, free and clear of
any and all liens, pledges, charges, claims, participation interests, mortgages,
security interests or encumbrances or other interests of any nature and has full
right and authority to sell and assign the same.
(l) Except with respect to any retail installment contract,
each Mortgage Loan is covered by an ALTA mortgagee title insurance policy
acceptable to FNMA or FHLMC, issued by a title insurer acceptable to (1) FNMA
and FHLMC, in the case of a conventional Mortgage Loan and (2) the FHA or VA, as
the case may be, in the case of an FHA Loan or a VA Loan, and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
(subject to the
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exceptions contained in (h)(1) and (2) above) the Seller, its successors and
assigns as to the first, second or third priority lien of the Mortgage in the
original principal amount of the Mortgage Loan and against any loss by reason of
the invalidity or unenforceability of the lien resulting from the provisions of
the Mortgage providing for adjustment in the mortgage interest rate and/or
monthly payment including any negative amortization thereunder. Additionally,
such mortgagee title insurance policy affirmatively insures ingress and egress
to and from the Mortgaged Property, and against encroachments by or upon the
Mortgaged Property or any interest therein. The Seller is the sole insured of
such mortgagee title insurance policy, and such lender's title insurance policy
is in full force and effect and will be in full force and effect upon the
consummation of the transactions contemplated by this Agreement. No claims have
been made under such mortgagee title insurance policy, and no prior holder of
the related Mortgage, including the Seller, has done, by act or omission,
anything which would impair the coverage of such mortgagee title insurance
policy.
(m) There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such lien) affecting the related Mortgaged Property
which are or may be liens prior to, or equal or coordinate with, the lien of the
related Mortgage.
(n) The collection practices used by the Servicer with respect
to each Mortgage Note and Mortgage have been in all respects legal, proper,
prudent and customary in the mortgage servicing industry.
(o) The Mortgage and related Mortgage Note contain customary
and enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged Property of
the benefits of the security provided thereby, including, (1) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (2) otherwise by
judicial foreclosure. There is no homestead or other exemption available to the
Mortgagor which would interfere with the right to sell the Mortgaged Property at
a trustee's sale or the right to foreclose the Mortgage. The Mortgagor has not
notified the Seller and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Soldiers and Sailors Civil Relief Act of
1940, as amended.
(p) The Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage on the Mortgaged
Property and the security interest of any applicable security agreement or
chattel mortgage.
(q) In the event the Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Mortgagor.
(r) No Mortgage Loan contains provisions pursuant to which
monthly payments
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are (1) paid or partially paid with funds deposited in any separate account
established by the Seller, the Mortgagor, or anyone on behalf of the Mortgagor,
(2) paid by any source other than the Mortgagor or (3) contains any other
similar provisions which may constitute a "buydown" provision. The Mortgage Loan
is not a graduated payment mortgage loan and the Mortgage Loan does not have a
shared appreciation or other contingent interest feature.
(s) The Mortgage Note, the Mortgage, the Assignment and any
other documents required to be delivered with respect to each Mortgage Loan
pursuant to Section 2.02 hereof have been delivered to the Indenture Trustee or
its designee, all in compliance with the specific requirements of Section 2.02
hereof.
(t) If the residential dwelling on the Mortgaged Property is a
condominium unit or a unit in a planned unit development (other than a de
minimis planned unit development) such condominium or planned unit development
project meets FNMA's eligibility requirements.
(u) None of the Mortgage Loans are secured by a leasehold
estate or constitute other than real property under applicable state law.
(v) The rights with respect to each Mortgage Loan are
assignable by the Seller without the consent of any Person other than consents
which will have been obtained on or before the Closing Date.
(w) The Mortgage Loans are not being transferred by the Seller
with any intent to hinder, delay or defraud any creditors of the Seller.
(x) All parties which have had any interest in each Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, and including,
without limitation, the Seller, are (or during the period in which they held and
disposed such interest, were) in compliance with any and all applicable
licensing requirements of the laws of the state wherein the property securing
the Mortgage is located to the extent that any noncompliance thereunder would
affect the value or marketability of the Mortgage Loans.
(y) To the best of Seller's knowledge, the Mortgaged Property
is free from any and all toxic or hazardous substances and there exists no
violation of any local, state or federal environmental law, rule or regulation.
(z) The Mortgaged Property is free from material damage.
(aa) Each Mortgage Loan has been serviced by the Servicer in
accordance with the terms thereof and Applicable Regulations.
(bb) [Reserved]
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(cc) [Reserved]
(dd) There is no proceeding pending for the total or partial
condemnation and no eminent domain proceedings pending affecting any Mortgaged
Property.
(ee) There was no fraud involved in the origination of any
Mortgage Loan by the applicable mortgagee or Mortgagor, and to the best of the
Seller's knowledge, there was no fraud by the appraiser or any other party
involved in the origination of any such Mortgage Loan.
(ff) Each mortgage file contains an appraisal of or a broker's
price opinion regarding the related Mortgaged Property indicating an appraised
value equal to the appraised value identified for such Mortgaged Property on the
Mortgage Loan Schedule. Each appraisal has been prepared on FNMA or FHLMC forms.
(gg) No improvements on any Mortgaged Property encroach on
adjoining properties (and in the case of a condominium unit, such improvements
are within the project with respect to that unit), and no improvements on
adjoining properties encroach upon such Mortgaged Property unless there exists
in the applicable Mortgage File a title policy with endorsements which insure
against losses sustained by the insured as a result of such encroachments.
(hh) Each Insurance Agreement is in full force and effect and
will be in full force and effect upon the consummation of the transactions
contemplated by this Agreement.
(ii) With respect to escrow deposits, if any, all such
payments are in the possession of, or under the control of, the Servicer and
there exists no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. No escrow deposits or
escrow advances or other charges or payments due the Servicer have been
capitalized under any Mortgage or the related Note.
(jj) No Mortgage Loan, other than a Bankruptcy Plan Mortgage
Loan, is subject to any pending bankruptcy or insolvency proceeding. To the
Seller's best knowledge, no material litigation or lawsuit relating to any
Mortgage Loan is pending.
(kk) The Seller used no selection procedures that identified
the Mortgage Loans as being less desirable or valuable than other comparable
mortgage loans originated or acquired by the Seller.
(ll) The sale, transfer, assignment and conveyance of Mortgage
Loans by the Seller pursuant to this Agreement will not result in any tax, fee
or governmental charge (other than income taxes and related taxes) payable by
the Seller, the Depositor or the Indenture Trustee to any federal, state or
local government other than taxes which have or will be paid by the Seller as
due ("TRANSFER TAXES"). In the event that the Depositor or the Indenture Trustee
receives actual notice of any Transfer Taxes arising out of the transfer,
assignment and conveyance of the Mortgage Loans,
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other than any taxes to be paid by the creditor, on written demand by the
Depositor, or the Indenture Trustee, or upon the Seller's otherwise being given
notice thereof by the Depositor or the Indenture Trustee, the Seller shall pay,
and otherwise indemnify and hold the Depositor and the Indenture Trustee
harmless, on an after-tax basis, from and against any and all such Transfer
Taxes (it being understood that the Noteholders, the Indenture Trustee and the
Depositor shall have no obligation to pay such Transfer Taxes).
(mm) With respect to each Mortgage Loan that is a "mortgage"
as such term is defined in 15 U.S.C. 1602(aa), no obligor has or will have a
claim or defense under such Mortgage Loan as a result of a violation of the Home
Ownership and Equity Protection Act of 1994.
(nn) With respect to the Mortgage Loans, the Mortgaged
Properties securing repayment of the related Mortgage Note, consists of a fee
simple interest in a single parcel or two contiguous parcels of real property
improved by a (A) detached or semi-detached one-family dwelling, (B) detached or
semi-detached two-to four family dwelling, (C) one-family unit in a FNMA
eligible condominium project, (D) detached or semi-detached one-family dwelling
in a planned unit development which is not a co-operative, (E) multi-family
dwelling or townhouse or (F) mobile home or manufactured dwelling which
constitutes real property.
(oo) Except for the Mortgage Loans identified on the Mortgage
Loan Schedule as delinquent, there is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and the Seller has not waived any default, breach, violation or
event of acceleration except, in the case of an FHA Loan or a VA Loan, by
written instruments, and the substance of which waiver has been approved by the
FHA or VA, as the case may be, to the extent required by the applicable
Insurance Agreement.
(pp) The Seller has no actual knowledge that with respect to
any Mortgage Loan (1) the Servicer has sent a notice of default to the related
Mortgagor which the Servicer is currently seeking to enforce, or (2) any
foreclosure proceedings have been commenced or acceleration been declared which
is currently pending. The Seller is not transferring any Mortgage Loan to the
Purchaser with the intention or knowledge that the Purchaser or the Trust will
acquire the related Mortgaged Property.
(qq) Except with respect to 6.50% of the Group I Mortgage
Loans and 6.72% of the Group II Mortgage Loans that are 30-59 days contractually
delinquent as of November 1, 2001, no Mortgage Loan is delinquent (other than
Re-performing Mortgage Loans and Bankruptcy Plan Mortgage Loans). The Seller has
not waived any default, breach, violation or event of acceleration, and the
Seller has not taken any action to waive any default, breach, violation or event
of acceleration, with respect to any Mortgage Loan.
(rr) Each Group I Mortgage Loan is a "qualified Mortgage"
within the meaning
11
of Section 860 G(a)(3) of the Code.
(ss) With respect to any Mortgage Loan which provides for an
adjustable interest rate, all rate adjustments have been performed in accordance
with the terms of the related Mortgage Note or subsequent modifications, if any.
(tt) At the time of their origination, all FHA Loans and VA
Loans conformed to HUD origination guidelines or VA origination guidelines, as
the case may be.
(uu) Each Group I Mortgage Loan is directly secured by a
Mortgage on a residential property, and either (1) substantially all of the
proceeds of the Group I Mortgage Loan were used to acquire, improve or protect
the portion of the residential property that consists of an interest in real
property (within the meaning of Treasury Regulations Sections 1.856-3(c) and
1.856-3(d)) and the interest in real property was the only security for the
Group I Mortgage Loan as of the Testing Date (as defined below), or (2) the fair
market value of the interest in real property which secures the Group I Mortgage
Loan was at least equal to 80% of the principal amount of the Group I Mortgage
Loan (a) as of the Testing Date, or (b) as of the Closing Date. For purposes of
the previous sentence, (1) the fair market value of the referenced interest in
real property shall first be reduced by (a) the amount of any lien on the
interest in real property that is senior to the Group I Mortgage Loan, unless
the Group I Mortgage Loan include both a first lien loan, a second lien loan and
a third lien loan on the same Mortgaged Property, in which case the 80% test
shall be applied in the aggregate, and (b) a proportionate amount of any lien on
the interest in real property that is on a parity with the Group I Mortgage
Loan, and (2) the "TESTING DATE" shall be the date on which the referenced Group
I Mortgage Loan was originated unless (a) the Group I Mortgage Loan was modified
after the date of its origination in a manner that would cause "significant
modification" of the Group I Mortgage Loan within the meaning of Treasury
Regulations Section 1.1001-3, and (b) the "significant modification" did not
occur at a time when the Group I Mortgage Loan was in default or when default
with respect to the Group I Mortgage Loan was reasonably foreseeable.
(vv) Not more than 45% of the aggregate Scheduled Principal
Balance of the Group II Mortgage Loans are "real estate mortgages." For this
purpose, a "real estate mortgage" is either (i) a Group II Mortgage Loan that is
principally secured by an interest in real property, the fair market value of
which was at least equal to 80 percent of the adjusted issue price of the Group
II Mortgage Loan at the time the Group II Mortgage Loan was originated. For
purposes of this test, the fair market value of the real property interest is
first reduced by the amount of any lien on the real property interest that is
senior to the Group II Mortgage Loan, and is reduced further by a proportionate
amount of any lien that is in parity with the Group II Mortgage Loan, or (ii) a
Group II Mortgage Loan substantially all of the proceeds of which were used to
acquire, improve, or protect an interest in real property that, at the
origination date, is the only security for the Group II Mortgage Loan.
(ww) With respect to each Mortgage Loan that is a mobile or
manufactured housing unit, such unit is a "single family residence" within the
meaning of Section 25(e)(1) of the Code, and
12
has a minimum of 400 square feet of living space, a minimum width of 102 inches
and is of a kind customarily used at a fixed location.
(xx) Any written agreement between the Mortgagor in respect of
a Mortgage Loan and the Servicer modifying such Mortgagor's obligation to make
payments under the Mortgage Loan (such modified Mortgage Loan, a "Modified
Mortgage Loan") involved the application of the Seller's underwriting standards
or some assessment of the Mortgagor's ability to repay the Modified Mortgage
Loan.
With respect to the representations and warranties set forth
in this Section 3.01 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 Depositor, the
Seller, the Servicer or 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 or the interest therein
of the Purchaser or the Purchaser's assignee, transferee or designee for the
benefit of the Noteholders 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.
Upon discovery by the Depositor, the Seller, the Servicer, the
Purchaser or any assignee, transferee or designee of the Purchaser of a breach
of any of the representations and warranties contained in this Article III that
materially and adversely affects the value of any Mortgage Loan or the interest
therein of the Purchaser or the Purchaser's assignee, transferee or designee for
the benefit of the Noteholders, the party discovering the breach shall give
prompt written notice to the others and in no event later than two Business Days
from the date of such discovery. Within 90 days of the earlier of its discovery
or its receipt of notice of any such breach of a representation or warranty, the
Seller shall promptly cure breach in all material respects, or in the event such
defect or breach cannot be cured, the Seller shall repurchase the affected
Mortgage Loan or cause the removal of such Mortgage Loan from the Trust Estate
and substitute for it one or more Eligible Substitute Mortgage Loans, in either
case, as set forth below.
Upon discovery or receipt of written notice by the Seller of
any materially defective document in, or that a document is missing from, a
Mortgage File or of the breach by the Seller of any representation, warranty or
covenant hereunder in respect of any Mortgage Loan which materially adversely
affects the value of such Mortgage Loan or the interest therein of the
Noteholders, the Seller shall deliver such missing document or cure such defect
or breach within 120 days or 150 days following the Closing Date, in the case of
missing Mortgages or Assignments from the date the Seller was notified of such
missing document, defect or breach, and if the Seller does not deliver such
missing document or cure such defect or breach in all material respects during
such period, the Seller shall repurchase such Mortgage Loan from the Trust
Estate at the Purchase Price on or prior to the Determination Date following the
expiration of such 120 day period (except as set forth below); provided that, in
connection with any such breach that could not reasonably have been cured within
such 120 day or 150 day period, if the Seller shall have commenced to cure such
breach
13
within such 120 day or 150 day period, the Seller shall be permitted to proceed
thereafter diligently and expeditiously to cure the same within the additional
period provided hereunder. In lieu of repurchasing any such Mortgage Loan as
provided above, the Seller may cause such Mortgage Loan to be removed from the
Trust Estate (in which case it shall become a Defective Mortgage Loan) and
substitute one or more Eligible Substitute Mortgage Loans in the manner and
subject to the limitations set forth below.
A Mortgage Loan that has an Arrearage cannot be substituted
for a Mortgage Loan that does not have an Arrearage.
Any substitution of Eligible Substitute Mortgage Loans for
Defective Mortgage Loans must be effected prior to the last Business Day that is
within two years after the Closing Date. As to any Defective Mortgage Loan for
which the Seller substitutes an Eligible Substitute Mortgage Loan or Loans, such
substitution shall be effected by the Seller delivering to the Indenture Trustee
or the Custodian, for such Eligible Substitute Mortgage Loan or Loans, the
Mortgage Note, the Mortgage, the Assignment to the Indenture Trustee, and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.02, together with an Officers' Certificate providing that
each such Eligible Substitute Mortgage Loan satisfies the definition thereof and
specifying the Substitution Adjustment Amount (as described below), if any, in
connection with such substitution. Monthly Payments due with respect to Eligible
Substitute Mortgage Loans in the month of substitution are not part of the Trust
Estate and will be retained by the Seller. For the month of substitution,
distributions to Noteholders will reflect the collections and recoveries in
respect of such Defective Mortgage Loan in the Collection Period preceding the
month of substitution and the Purchaser or the Seller, as the case may be, shall
thereafter be entitled to retain all amounts subsequently received in respect of
such Defective Mortgage Loan. The Seller shall give or cause to be given written
notice to the Noteholders that such substitution has taken place, shall amend
the Mortgage Loan Schedule to reflect the removal of such Defective Mortgage
Loan from the terms of the Trust Agreement and the Indenture and the
substitution of the Eligible Substitute Mortgage Loan or Loans and shall deliver
a copy of such amended Mortgage Loan Schedule to the Indenture Trustee. Upon
such substitution, such Eligible Substitute Mortgage Loan or Loans shall
constitute part of the Mortgage Pool and shall be subject in all respects to the
terms of the Trust Agreement and the Indenture and, in the case of a
substitution effected by the Seller, this Agreement, including, in the case of a
substitution effected by the Seller all applicable representations and
warranties thereof included in this Agreement as of the date of substitution.
For any month in which the Seller substitutes one or more
Eligible Substitute Mortgage Loans for one or more Defective Mortgage Loans, the
Servicer will determine the amount (the "Substitution Adjustment Amount"), if
any, by which the aggregate Purchase Price of all such Defective Mortgage Loans
exceeds the aggregate, as to each such Eligible Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Net Mortgage Rate.
On the date of such substitution, the Seller will deliver or cause to be
delivered to the Servicer for deposit in the Collection Account an amount equal
to the Substitution Adjustment Amount, if any, and the Indenture Trustee or the
14
Custodian, upon receipt of the related Eligible Substitute Mortgage Loan or
Loans and certification by the Servicer of such deposit, shall release to the
Seller the related Mortgage File or Files and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Seller shall deliver to it and as shall be necessary to vest therein any
Defective Mortgage Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and
deliver to the Indenture Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on the Trust
Estate, including, without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(l) of the Code or on "contributions after
the startup date" under Section 860G(d)(l) of the Code, or (b) any REMIC to fail
to qualify as a REMIC at any time that any Note is outstanding. If such Opinion
of Counsel can not be delivered, then such substitution may only be effected at
such time as the required Opinion of Counsel can be given.
Upon discovery by the Seller, the Servicer or the Indenture
Trustee that any Group I Mortgage Loan does not constitute a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code, the party
discovering such fact shall within two Business Days give written notice thereof
to the other parties. In connection therewith, the Seller shall repurchase or,
subject to the limitations set forth above, substitute one or more Eligible
Substitute Mortgage Loans for the affected Group I Mortgage Loan within 90 days
of the earlier of discovery or receipt of such notice with respect to such
affected Group I Mortgage Loan. In addition, upon discovery that a Group I
Mortgage Loan is defective in a manner that would cause it to be a "defective
obligation" within the meaning of Treasury regulations relating to REMICs, the
Seller shall cure the defect or make the required purchase or substitution no
later than 90 days after the discovery of the defect. Any such repurchase or
substitution shall be made in the same manner as set forth above, if made by the
Seller. The Indenture Trustee or the Custodian shall reconvey to the Seller the
Group I Mortgage Loan to be released pursuant hereto in the same manner, and on
the same terms and conditions, as it would a Group I Mortgage Loan repurchased
for breach of a representation or warranty.
With respect to the Group I Loans, any substitution of
Eligible Substitute Mortgage Loans for Defective Mortgage Loans must be effected
prior to the date which is two years after the Closing Date.
It is understood and agreed that the representations and
warranties set forth in this Section 3.01 shall survive delivery of the
respective Mortgage Files to the Indenture Trustee on behalf of the Purchaser
and shall inure to the benefit of the Noteholders notwithstanding any
restrictive or qualified endorsement or assignment.
It is understood and agreed that the obligations of the Seller
set forth in this Section 3.01 to cure, repurchase or substitute for a defective
Mortgage Loan constitute the sole remedies of the Purchaser, the Noteholders or
the Indenture Trustee on their behalf respecting a missing or defective document
or a breach of the representations or warranties contained in this Section 3.01.
15
Section 3.02 SELLER REPRESENTATIONS AND WARRANTIES. The Seller
hereby represents and warrants to the Purchaser that as of the Closing Date or
as of such date specifically provided herein:
(i) The Seller is duly organized, validly existing
and in good standing as a limited liability company under the laws of
the State of Delaware and has the power and authority to own its assets
and to transact the business in which it is currently engaged. The
Seller is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in
which the failure to so qualify would have a material adverse effect on
(a) its business, properties, assets or condition (financial or other),
(b) the performance of its obligations under this Agreement, (c) the
value or marketability of the Mortgage Loans, or (d) its ability to
foreclose on the related Mortgaged Properties.
(ii) The Seller has the power and authority to make,
execute, deliver and perform this Agreement and to consummate all of
the transactions contemplated hereunder and has taken all necessary
action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute
the Seller's legal, valid and binding obligations enforceable in
accordance with its terms, except as enforcement of such terms may be
limited by (1) bankruptcy, insolvency, reorganization, receivership,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies, (2)
general equity principals (regardless of whether such enforcement is
considered in a proceeding in equity or at law) or (3) public policy
considerations underlying the securities laws, to the extent that such
policy considerations limit the enforceability of the provisions of
this Agreement which purport to provide indemnification from securities
laws liabilities.
(iii) The Seller holds all necessary licenses,
certificates and permits from all governmental authorities necessary
for conducting its business as it is presently conducted, except for
such licenses, certificates and permits the absence of which,
individually or in the aggregate, would not have a material adverse
effect on the ability of the Seller to conduct its business as it is
presently conducted. It is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance,
validity or enforceability of this Agreement, except for such consents,
licenses, approvals or authorizations, or registrations or declarations
as shall have been obtained or filed, as the case may be, prior to the
Closing Date.
(iv) The execution, delivery and performance of this
Agreement by the Seller will not conflict with or result in a breach
of, or constitute a default under, any provision of any existing law or
regulation or any order or decree of any court applicable to the Seller
or any of its properties or any provision of its Limited Liability
Company
16
Agreement, or constitute a material breach of, or result in the
creation or imposition of any lien, charge or encumbrance upon any of
its properties pursuant to any mortgage, indenture, contract or other
agreement to which it is a party or by which it may be bound.
(v) No certificate of an officer, written statement
or report delivered pursuant to the terms hereof by the Seller contains
any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not
misleading.
(vi) The transactions contemplated by this Agreement
are in the ordinary course of the Seller's business.
(vii) The Seller is not insolvent, nor will the
Seller be made insolvent by the transfer of the Mortgage Loans, nor is
the Seller aware of any pending insolvency.
(viii) The Seller is not in violation of, and the
execution and delivery of this Agreement by it and its performance and
compliance with the terms of this Agreement will not constitute a
violation with respect to any order or decree of any court, or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and
adversely affect the Seller's condition (financial or otherwise) or
operations or any of the Seller's properties, or materially and
adversely affect the performance of any of its duties hereunder.
(ix) There are no actions or proceedings against, or
investigations of, the Seller pending or, to its knowledge, threatened,
before any court, administrative agency or other tribunal (i) that, if
determined adversely, would prohibit the Seller from entering into this
Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or (iii) that, if
determined adversely, would prohibit or materially and adversely affect
the Seller's performance of any of its respective obligations under, or
the validity or enforceability of, this Agreement.
(x) The Seller is not transferring the Mortgage Loans
to the Purchaser hereunder with any intent to hinder, delay or defraud
any of its creditors.
(xi) The Seller acquired title to the Mortgage Loans
in good faith, without notice of any adverse claims.
(xii) The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller pursuant to this
Agreement are not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction.
(xiii) The Seller understands that (a) the Private
Securities have not been and will not be registered or qualified under
the Securities Act of 1933, as amended (the
17
"SECURITIES ACT") or any state securities law, (b) the Purchaser is not
required to so register or qualify the Private Securities, (c) the
Private Securities may be resold only if registered and qualified
pursuant to the provisions of the Act or any state securities law, or
if an exemption from such registration and qualification is available,
(d) the Indenture contains restrictions regarding the transfer of the
Private Notes and (e) the Private Securities will bear a legend to the
foregoing effect.
(xiv) The Seller is acquiring the Private Securities
for its own account for investment only and not with a view to or for
sale in connection with any distribution thereof in any manner that
would violate the Securities Act or any applicable state securities
laws.
(xv) The Seller is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters, and, in particular, in such matters
related to securities similar to the Private Securities, such that it
is capable of evaluating the merits and risks of investment in the
Private Securities, (b) able to bear the economic risks of such an
investment and (c) an "accredited investor" within the meaning of Rule
501 (a) promulgated pursuant to the Securities Act.
(xvi) The Seller has been furnished with such
information concerning the Private Securities and the Purchaser as has
been requested by the Seller from the Purchaser and is relevant to the
Seller's decision to purchase the Private Securities. The Seller has
had any questions arising from such review answered by the Purchaser or
the Seller to the satisfaction of the Seller.
(xvii) The Seller has not and will not nor has it
authorized or will it authorize any person to (a) offer, pledge, sell,
dispose of or otherwise transfer any Private Security, any interest in
any Private Security or any other similar security to any person in any
manner, (b) solicit any offer to buy or to accept a pledge, disposition
of other transfer of any Private Security, any interest in any Private
Security or any other similar security from any person in any manner,
(c) otherwise approach or negotiate with respect to any Private
Security, any interest in any Private Security or any other similar
security with any person in any manner, (d) make any general
solicitation by means of general advertising or in any other manner or
(e) take any other action, that (as to any of (a) through (e) above)
would constitute a distribution of any Private Security under the
Securities Act, that would render the disposition of any Private
Security a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification
pursuant thereto. The Seller will not sell or otherwise transfer any of
the Private Securities, except in compliance with the provisions of the
Indenture.
(xviii) The Seller is not an employee benefit plan or
other retirement arrangement subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), (collectively,
an "ERISA Plan"), and is not acting on behalf of, as named fiduciary
of, as
18
trustee of, or investing the assets of an ERISA Plan.
ARTICLE IV
SELLER'S COVENANTS
Section 4.01 COVENANTS OF THE SELLER.
(a) The Seller hereby covenants that except for the transfer
hereunder, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any lien on any
Mortgage Loan, or any interest therein; the Seller will notify the Indenture
Trustee, as assignee of the Purchaser, of the existence of any lien on any
Mortgage Loan immediately upon discovery thereof, and the Seller will defend the
right, title and interest of the Trust, as assignee of the Purchaser, in, to and
under the Mortgage Loans, against all claims of third parties claiming through
or under the Seller; PROVIDED, HOWEVER, that nothing in this Section 4.01 shall
prevent or be deemed to prohibit the Seller from suffering to exist upon any of
the Mortgage Loans any liens for municipal or other local taxes and other
governmental charges if such taxes or governmental charges shall not at the time
be due and payable or if the Seller shall currently be contesting the validity
thereof in good faith by appropriate proceedings and shall have set aside on its
books adequate reserves with respect thereto.
(b) The Seller hereby covenants that neither it nor any
affiliate of the Seller will directly solicit any Mortgagor hereunder to
refinance the related Mortgage Loan. For the purposes of the foregoing, neither
the Seller nor any affiliate of the Seller shall be deemed to directly solicit
any Mortgagor if the Seller responds to a request from a Mortgagor regarding a
refinancing or if the Mortgagor receives marketing materials which are generally
disseminated.
ARTICLE V
OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS
(a) On or after March 31, 2002, as to any Mortgage Loan which
is Delinquent in payment by 120 days or more or any REO Property, the Seller
may, at its option, purchase such Mortgage Loan from the Issuer at the Purchase
Price for such Mortgage Loan provided that the Seller may exercise the purchase
right during the period commencing on the first day of the calendar quarter
succeeding the calendar quarter in which the Initial Delinquency Date occurred
and ending on the last Business Day of such calendar quarter. The "Initial
Delinquency Date" of a Mortgage Loan shall mean the date on which the Mortgage
Loan first became 120 days Delinquent or, in the event such loan is a
Re-Performing Mortgage Loan which is Delinquent 120 days or more as of the
Cut-Off Date, the date on which the such Re-Performing Mortgage Loan first
becomes an additional 30 days or ore Delinquent.
(b) If the Seller does not exercise the purchase right with
respect to a Mortgage
19
Loan during the period specified in the preceding paragraph, such Mortgage Loan
shall thereafter again become eligible for purchase pursuant to the preceding
paragraph only after the Mortgage Loan ceases to be 120 days or more Delinquent
and thereafter becomes 120 day Delinquent again.
ARTICLE VI
TERMINATION
Section 6.01 TERMINATION. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate
upon the termination of the Trust as provided in Section 8.01 of the Trust
Agreement.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01 AMENDMENT. This Agreement may be amended from
time to time by the Seller and the Purchaser, by written agreement signed by the
Seller and the Purchaser.
Section 7.02 GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 7.03 NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, postage prepaid, addressed
as follows:
if to the Seller:
Credit-Based Asset Servicing and Securitization LLC
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
or such other address as may hereafter be furnished to the Purchaser in writing
by the Seller.
if to the Purchaser:
Salomon Brothers Mortgage Securities VII, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
20
Attention: Mortgage Finance Group
or such other address as may hereafter be furnished to the Seller in writing by
the Purchaser.
Section 7.04 SEVERABILITY OF PROVISIONS. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 7.05 COUNTERPARTS. This Agreement may be executed in
one or more counterparts by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an original
and such counterparts, together, shall constitute one and the same agreement.
Section 7.06 FURTHER AGREEMENTS. The Purchaser and the Seller
each agree to execute and deliver to the other such additional documents,
instruments or agreements as may be necessary or reasonable and appropriate to
effectuate the purposes of this Agreement or in connection with the issuance of
any Series of Notes representing interests in the Mortgage Loans.
Without limiting the generality of the foregoing, as a further
inducement for the Purchaser to purchase the Mortgage Loans from the Seller, the
Seller will cooperate with the Purchaser in connection with the sale of any of
the securities representing interests in the Mortgage Loans. In that connection,
the Seller will provide to the Purchaser any and all information and appropriate
verification of information, whether through letters of its auditors and counsel
or otherwise, as the Purchaser shall reasonably request and will provide to the
Purchaser such additional representations and warranties, covenants, opinions of
counsel, letters from auditors, and certificates of public officials or officers
of the Seller as are reasonably required in connection with such transactions
and the offering of investment grade securities rated by the Rating Agencies.
Section 7.07 INTENTION OF THE PARTIES. It is the intention of
the parties that the Purchaser is purchasing, and the Seller is selling, the
Mortgage Loans rather than the pledging of the Mortgage Loans by the Seller to
secure a loan by the Purchaser to the Seller. Accordingly, the parties hereto
each intend to treat the transaction for Federal income tax purposes and all
other purposes as a sale by the Seller and a purchase by the Purchaser of the
Mortgage Loans. The Purchaser will have the right to review the Mortgage Loans
and the related Mortgage Files to determine the characteristics of the Mortgage
Loans which will affect the Federal income tax consequences of owning the
Mortgage Loans and the Seller will cooperate with all reasonable requests made
by the Purchaser in the course of such review.
Section 7.08 SUCCESSORS AND ASSIGNS; ASSIGNMENT OF THIS
AGREEMENT. This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, the Purchaser and the Indenture Trustee. The
obligations of the Seller under this Agreement cannot be assigned or
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delegated to a third party without the consent of the Purchaser and which
consent shall be at the Purchaser's sole discretion, except that the Purchaser
acknowledges and agrees that the Seller may assign its obligations hereunder to
any Person into which the Seller is merged or any corporation resulting from any
merger, conversion or consolidation to which the Seller is a party or any Person
succeeding to the business of the Seller. The parties hereto acknowledge that
the Purchaser is acquiring the Mortgage Loans for the purpose of contributing
them to a trust that will issue a series of notes representing undivided
interests in such Mortgage Loans. As an inducement to the Purchaser to purchase
the Mortgage Loans, the Seller acknowledges and consents to the assignment by
the Purchaser to the Indenture Trustee of all of the Purchaser's rights against
the Seller pursuant to this Agreement insofar as such rights relate to Mortgage
Loans transferred to the Indenture Trustee and to the enforcement or exercise of
any right or remedy against the Seller pursuant to this Agreement by the
Indenture Trustee. Such enforcement of a right or remedy by the Indenture
Trustee shall have the same force and effect as if the right or remedy had been
enforced or exercised by the Purchaser directly.
Section 7.09 SURVIVAL. The representations and warranties set
forth in Sections 3.01 and 3.02 hereof shall survive the purchase of the
Mortgage Loans hereunder.
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused
their names to be signed to this Mortgage Loan Purchase Agreement by their
respective officers thereunto duly authorized as of the day and year first above
written.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.,
as Purchaser
By: /S/ XXXXX XXXXX
-------------------------------
Name: Xxxxx Xxxxx
Title: Assistant Vice President
CREDIT-BASED ASSET SERVICING AND
SECURITIZATION LLC, as Seller
By: /S/ XXXX XXXXXXX
-------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
STATE OF _____________ )
)ss.:
COUNTY OF ___________ )
On the ____ day of December __ 2001 before me, a Notary Public
in and for said State, personally appeared ______________, known to me to be a
__________________________ of Salomon Brothers Mortgage Securities VII, Inc.,
the corporation that executed the within instrument, and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
----------------------------------------
Notary Public
STATE OF _____________ )
)ss.:
COUNTY OF ___________ )
On the ____ day of September 2001 before me, a Notary Public
in and for said State, personally appeared ______________, known to me to be a
__________________________ of Credit-Based Asset Servicing and Securitization
LLC, the corporation that executed the within instrument, and also known to me
to be the person who executed it on behalf of said corporation, and acknowledged
to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------------------
Notary Public
SCHEDULE I
MORTGAGE LOAN SCHEDULE
[FILED BY PAPER]
