EXHIBIT 4.2
UNAFFILIATED SELLER'S AGREEMENT
by and among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as Depositor,
WMFC 1997-2 INC.
as Unaffiliated Seller
and
WILSHIRE SERVICING CORPORATION,
as Servicer
Dated as of November 1, 1997
TABLE OF CONTENTS
Page
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ARTICLE ONE DEFINITIONS .......................................................1
SECTION 1.01 DEFINITIONS...................................................1
ARTICLE TWO PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS....................1
SECTION 2.01 AGREEMENT TO PURCHASE.........................................1
SECTION 2.02 PURCHASE PRICE................................................1
SECTION 2.03 CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES....1
SECTION 2.04 DELIVERY OF MORTGAGE LOAN DOCUMENTS...........................1
SECTION 2.05 TRANSFER OF MORTGAGE LOANS; ASSIGNMENT OF AGREEMENT...........1
SECTION 2.06 BOOKS AND RECORDS.............................................1
SECTION 2.07 COST OF DELIVERY OF DOCUMENTS.................................1
ARTICLE THREE REPRESENTATIONS AND WARRANTIES...................................1
SECTION 3.01 REPRESENTATIONS AND WARRANTIES AND COVENANTS
OF THE UNAFFILIATED SELLER....................................1
SECTION 3.02 BREACH OF REPRESENTATIONS AND WARRANTIES; REPURCHASE
OF PURCHASED LOANS............................................1
ARTICLE FOUR ..................................................................1
COVENANTS......................................................................1
ARTICLE FIVE MISCELLANEOUS.....................................................1
SECTION 5.01 CONDITIONS OF DEPOSITOR'S OBLIGATIONS.........................1
SECTION 5.02 CONDITIONS OF UNAFFILIATED SELLER'S OBLIGATIONS...............1
SECTION 5.03 TERMINATION OF DEPOSITOR'S OBLIGATIONS........................1
SECTION 5.04 NOTICES.......................................................1
SECTION 5.05 SEVERABILITY OF PROVISIONS....................................1
SECTION 5.06 AGREEMENT OF UNAFFILIATED SELLER..............................1
SECTION 5.07 SURVIVAL......................................................1
SECTION 5.08 EFFECT OF HEADINGS AND TABLE OF CONTENTS......................1
SECTION 5.09 SUCCESSORS AND ASSIGNS........................................1
SECTION 5.10 GOVERNING LAW.................................................1
SECTION 5.11 CONFIRMATION OF INTENT........................................1
SECTION 5.12 EXECUTION IN COUNTERPARTS.....................................1
SECTION 5.13 COSTS.........................................................1
SECTION 5.14 INDEMNIFICATION...............................................1
SECTION 5.15 MISCELLANEOUS.................................................1
Exhibit A - Schedule of Mortgage Loans
Exhibit B - Form of Officer's Certificate of a Member of the Unaffiliated Seller
Exhibit C - Form of Opinion of Counsel to the Unaffiliated Seller
This Agreement, dated as of November 1, 1997 (the
"Unaffiliated Seller's Agreement") by and among Prudential Securities Secured
Financing Corporation, a Delaware corporation (the "Depositor"), WMFC 1997-2
Inc, a Delaware corporation (the "Unaffiliated Seller") and Wilshire Servicing
Corporation, a Delaware corporation (the "Servicer").
W I T N E S S E T H:
WHEREAS, Exhibit A attached hereto and made a part hereof
lists certain residential mortgage loans (the "Mortgage Loans") owned by the
Unaffiliated Seller that the Unaffiliated Seller desires to sell to the
Depositor, and that the Depositor desires to purchase from the Unaffiliated
Seller such Mortgage Loans;
WHEREAS, it is the intention of the Unaffiliated Seller and
the Depositor that simultaneously with the Unaffiliated Seller's conveyance of
the Mortgage Loans to the Depositor on the Closing Date, the Depositor shall
deposit the Mortgage Loans in trust pursuant to a Pooling and Servicing
Agreement to be dated as of November 1, 1997 (the "Pooling and Servicing
Agreement"), to be entered into by and among the Depositor, the Unaffiliated
Seller, the Servicer, and Bankers Trust Company of California, N.A., as trustee
(the "Trustee") and as backup servicer (the "Backup Servicer").
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01 Definitions. Whenever used herein, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article:
"Agreement" means this Unaffiliated Seller's Agreement, as
amended or supplemented in accordance with the provisions hereof.
"Closing Date" shall have the meaning ascribed thereto in
Section 2.01(c).
"Schedule of Mortgage Loans" shall have the meaning ascribed
thereto in Section 2.01(b).
"Commission" means the United States Securities and Exchange
Commission.
"Cut-Off Date" means the close of business, October 31, 1997.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Prospectus" means the Prospectus, dated June 10, 1997,
relating to the offering by the Depositor from time to time of its Mortgage
Pass-Through Certificates (Issuable in Series) in the form in which it was or
will be filed with the Commission pursuant to Rule 424(b) under the Securities
Act with respect to the offer and sale of the Certificates.
"Prospectus Supplement" means the Prospectus Supplement, dated
December 4, 1997, relating to the offering of the Certificates in the form in
which it was or will be filed with the Commission pursuant to Rule 424(b) under
the Securities Act with respect to the offer and sale of the Certificates.
"Purchased Assets" shall have the meaning ascribed thereto in
Section 2.03.
"Purchased Loans" shall have the meaning ascribed thereto in
Section 2.03.
"Registration Statement" means that certain registration
statement on Form S-3, as amended (Registration No. 333-27355) relating to the
offering by the Depositor from time to time of its Mortgage Pass-Through
Certificates (Issuable in Series) as heretofore declared effective by the
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
Capitalized terms used herein that are not otherwise defined
shall have the respective meanings ascribed thereto in the Pooling and Servicing
Agreement.
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.01 Agreement to Purchase. (a) Subject to the terms
and conditions of this Agreement, the Unaffiliated Seller agrees to sell, and
the Depositor agrees to purchase on the Closing Date, the Mortgage Loans.
(b) Subject to Section 2.07, the Depositor and the
Unaffiliated Seller have agreed upon which of the Unaffiliated Seller's loans
are to be purchased by the Depositor on the Closing Date pursuant to this
Agreement, and the Unaffiliated Seller has prepared a schedule (the "Schedule of
Mortgage Loans") setting forth all of the Mortgage Loans to be purchased under
this Agreement, which schedule is attached hereto as Exhibit A.
(c) The closing for the purchase and sale of the Mortgage
Loans shall take place at the offices of Xxxxx Xxxxxxxxxx LLP, New York, New
York, at 11.00 a.m., New York time, on December 11, 1997 or such other place and
time as the parties shall agree (such time being herein referred to as the
"Closing Date").
Section 2.02 Purchase Price. On the Closing Date, as full
consideration for the Unaffiliated Seller's sale of the Mortgage Loans to the
Depositor, the Depositor
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will deliver to the Unaffiliated Seller (i) an amount in cash equal to $
127,612,439.42, representing payment for the Class A Certificates and the Class
M Certificates, (collectively the "Offered Certificates") (including accrued
interest through but not including the Closing Date, and not including expenses
as described in Section 5.13 hereof), and $ 11,441,476.44, representing payment
for the Class B Certificates (including accrued interest through but not
including the Closing Date) and the Class C Certificates, all payable by wire
transfer of same day funds, and (ii) the Class R Certificates.
Section 2.03 Conveyance of Mortgage Loans; Possession of
Mortgage Files. On the Closing Date, the Unaffiliated Seller hereby sells,
transfers, assigns, sets over and conveys to the Depositor, without recourse but
subject to the terms of this Agreement, all right, title and interest in and to
(i) the Mortgage Loans listed on the Schedule of Mortgage Loans, attached hereto
as Exhibit A (the "Purchased Loans"), (ii) the Loan Files with respect to the
Purchased Loans, (iii) all of the Unaffiliated Seller's right, title and
interest in the Loan Collateral, including, without limitation, insurance
policies and (iv) all monies due or to become due and all amounts received with
respect thereto after the Cut-Off Date, including, without limitation, insurance
policies (collectively, the "Purchased Assets"). Upon payment of the purchase
price for such Mortgage Loans as provided in Section 2.02 of this Agreement, the
Unaffiliated Seller shall have hereby, and shall be deemed to have, sold,
transferred, assigned, set over and conveyed to the Depositor such Purchased
Loans and the other Purchased Assets from and after the Closing Date until such
time as the Certificates are paid in full or such Mortgage Loan is repurchased,
if ever, under the related Pooling and Servicing Agreement. Upon the sale of
such Purchased Loans, the ownership of each related Note, each related Mortgage
and the contents of the related Loan File shall immediately vest in the
Depositor and the ownership of all related records and documents with respect to
each Mortgage Loan prepared by or which come into the possession of the
Unaffiliated Seller shall immediately vest in the Depositor. The contents of any
Loan File in the possession of the Unaffiliated Seller at any time after such
sale, and any scheduled payments of principal and interest on the Mortgage Loans
due after the Cut-Off Date and received by the Unaffiliated Seller, shall be
held in trust by the Unaffiliated Seller for the benefit of the Depositor as the
owner thereof, and shall be promptly delivered by the Unaffiliated Seller to or
upon the order of the Depositor.
It is the intention of the parties hereto that the conveyance
by the Unaffiliated Seller of the Mortgage Loans to the Depositor shall
constitute a purchase and sale of such Mortgage Loans and not a loan. In the
event, however, that a court of competent jurisdiction were to hold that the
transaction evidenced hereby constitutes a loan and not a purchase and sale, it
is the intention of the parties hereto that this Agreement shall constitute a
security agreement under applicable law, and that the Unaffiliated Seller shall
be deemed to have granted to the Depositor, a first priority perfected security
interest in all of the Unaffiliated Seller's right, title and interest in, to
and under the Mortgage Loans. The conveyance by the Unaffiliated Seller of the
Mortgage Loans to the Depositor shall not constitute and is not intended to
result in an assumption by the Depositor of any obligation of the Originators.
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Pursuant to the Pooling and Servicing Agreement, the Depositor
shall, on the Closing Date, assign all of its right, title and interest in and
to the Purchased Loans and the other Purchased Assets to the Trustee for the
benefit of the Owners of the Certificates.
Section 2.04 Delivery of Mortgage Loan Documents. On or prior
to the Closing Date, the Unaffiliated Seller shall deliver to the Trustee (as
assignee of the Depositor pursuant to the Pooling and Servicing Agreement), the
Loan File documents, as described in the related Pooling and Servicing
Agreement.
All original documents relating to the Mortgage Loans that are
not delivered to the Trustee (as assignee of the Depositor pursuant to the
Pooling and Servicing Agreement) as required by this Section 2.04 are and shall
be held by the Unaffiliated Seller in trust for the benefit of the Trustee on
behalf of the related Owners of the Certificates. In the event that any such
original document is required pursuant to the terms of this Section 2.04 to be a
part of a Loan File, such document shall be delivered promptly to the Trustee
(as assignee of the Depositor pursuant to the Pooling and Servicing Agreement).
From and after the sale of the Mortgage Loans to the Depositor
pursuant hereto, to the extent that the Unaffiliated Seller retains legal title
of record to any Mortgage Loans prior to the vesting of legal title in the
Trustee (as assignee of the Depositor pursuant to the Pooling and Servicing
Agreement), such title shall be retained in trust for the Depositor as the owner
of the Mortgage Loans and the Trustee, as the Depositor's assignee.
Section 2.05 Transfer of Mortgage Loans; Assignment of
Agreement. The Depositor has the right to assign its interest under this
Agreement to the Trustee as may be required to effect the purposes of the
Pooling and Servicing Agreement, without further notice to, or consent of, the
Unaffiliated Seller, and the Trustee shall succeed to such of the rights and
obligations of the Depositor hereunder as shall be so assigned. The Depositor
shall, pursuant to the Pooling and Servicing Agreement, assign all of its right,
title and interest in and to the Purchased Loans and the other Purchased Assets,
together with all other rights relating to the foregoing, to the Trustee for the
benefit of the Owners of the Certificates. The Unaffiliated Seller agrees that,
upon such assignment to the Trustee, all rights of the Depositor with respect to
the Purchased Loans and the other Purchased Assets will run to and be for the
benefit of the Trustee and the Trustee may enforce diligently, without joinder
of the Depositor, any and all of such rights.
Section 2.06 Books and Records. The sale of each Mortgage Loan
shall be reflected on the Unaffiliated Seller's balance sheet and other
financial statements as a sale of assets by the Unaffiliated Seller for
accounting purposes and for tax purposes. The Unaffiliated Seller shall be
responsible for maintaining, and shall maintain, a complete set of books and
records for each Mortgage Loan which shall be clearly marked to reflect the
ownership of each Mortgage Loan by the Trustee for the benefit of the Owners of
the related Certificates.
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Section 2.07 Cost of Delivery of Documents. The costs relating
to the delivery of the documents specified in this Article Two in connection
with the Mortgage Loans shall be borne by the Unaffiliated Seller.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties and Covenants of
the Unaffiliated Seller. (a) Pursuant to this Agreement, the Unaffiliated
Seller, as of the Closing Date, makes the following representations and
warranties with respect to itself, to the Depositor:
(i) It is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, is duly
qualified to do business and is in good standing in every jurisdiction
in which the nature of its business requires it to be so qualified.
(ii) It has the power and authority to own and convey all of
its properties and assets and to execute and deliver this Agreement and
to perform the transactions contemplated hereby.
(iii) The execution, delivery and performance by it of this
Agreement and the transactions contemplated hereby, (A) have been duly
authorized by all necessary corporate or other action on its part, (B)
do not contravene or cause it to be in default under (1) its
organizational documents, (2) any contractual restriction with respect
to any of its debt or contained in any material indenture, loan or
credit agreement, lease, mortgage, security agreement, bond, note, or
other agreement or instrument binding on or affecting it or its
property or (3) any law, rule, regulation, order, writ, judgment,
award, injunction or decree applicable to, binding on or affecting it
or its property, and (C) do not result in or require the creation of
any Adverse Claim.
(iv) This Agreement has been duly executed and delivered on
its behalf and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to
bankruptcy laws and other similar laws of general application affecting
creditors, and subject to the application of rules of equity, including
those respecting the availability of specific performance.
(v) All material actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations,
rights and licenses required to be taken, given or obtained, as the
case may be, by or from any Governmental Authority, that are necessary
in connection with the performance by it of its obligations as a seller
under this Agreement have been obtained and are in full force and
effect and are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) which could have a material
adverse impact on its performance of its obligations under this
Agreement.
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(vi) There is no action, suit, proceeding or investigation
pending or, to the best of its knowledge, threatened, before any court,
administrative agency or tribunal against it which, either in any one
instance or in the aggregate, may result in any material adverse change
in its business, operations, financial condition, properties or assets
or in any material prohibition or impairment of its right or ability to
carry on its business substantially as now conducted, or which would
draw into question the validity or enforceability of this Agreement or
any of the Purchased Loans or of any material action taken or to be
taken in connection with its obligations contemplated herein, or which
would be likely to impair materially its ability to perform under the
terms of this Agreement or that might prohibit its entering into this
Agreement or the consummation of any of the transactions contemplated
hereby.
(vii) It is not in violation of or in default with respect to,
any order or decree of any court or any order or demand of any
Governmental Authority, which violation or default would materially and
adversely affect its condition (financial or other) or operations or
its properties or its performance hereunder.
(viii) No defaulted Debt exists under any instrument or
agreement evidencing, securing or providing for the issuance of its
Debt.
(ix) The principal place of business and chief executive
office of the Unaffiliated Seller is located at the address set forth
in Section 5.04 hereof and, except as set forth in Section 5.04 hereof,
there are now no, and during the past four months there have not been
any, other locations where the Unaffiliated Seller, has been located
(as that term is used in the Uniform Commercial Code in the state of
such location).
(x) The legal name of the Unaffiliated Seller is as set forth
at the beginning of this Agreement and the Unaffiliated Seller has not
changed its name in the last four years, and during such period, the
Unaffiliated Seller did not use, nor does the Unaffiliated Seller now
use, any tradenames, fictitious names, or assumed names.
(xi) It is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement; it is paying
its Debts as they mature; it has not sold any Mortgage Loan to the
Depositor with intent to hinder, delay or defraud any entity to which
it was, or became, after the date that such transfer was made,
indebted; its sales of the Mortgage Loans to the Depositor have been
and will be made for reasonably equivalent value and fair
consideration; it has not incurred Debts beyond its ability to pay as
they mature; and it, after giving effect to the transactions
contemplated by this Agreement, will have an adequate amount of capital
to conduct its business in the foreseeable future.
(xii) For federal income tax, reporting and accounting
purposes, it will treat the sale of each Mortgage Loan sold pursuant to
this Agreement as a sale, or
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absolute assignment, of its full right, title and ownership interest in
such Mortgage Loan to the Depositor, and it has not in any other
respect accounted for or treated the transactions contemplated by this
Sale Agreement.
(xiii) It, or one of its affiliates, has and maintains all
permits, licenses, authorizations, registrations, approvals and
consents of Governmental Authorities (including, without limitation,
sales finance company licenses, if any) necessary for (A) its
activities and business as currently conducted and as proposed to be
conducted, (B) the ownership, use, operation and maintenance of its
properties, facilities and assets and (C) the performance by it of this
Agreement.
(xiv) It has filed on a timely basis all tax returns (federal,
state, and local) required to be filed and has paid or made adequate
provisions for the payment of all taxes, assessments and other
governmental charges due from it.
(xv) Each pension plan or profit sharing plan to which the
Unaffiliated Seller is a party has been fully funded in accordance with
its obligations set forth in such plan.
(xvi) With respect to it, there has occurred no event which
has a material adverse effect on its ability to perform its obligations
under this Agreement.
(xvii) The consolidated balance sheet of its ultimate parent
of the date of its most recently completed fiscal year and its related
statements of income and shareholders' equity for the fiscal year then
ended together with all quarterly reports with respect to completed
fiscal quarters occurring after such fiscal year until the date of this
representation and warranty, copies of which have been furnished to the
Depositor, fairly present its financial condition, business and
operations as of such date and the results of its operations for the
period ended on such date, all in accordance with generally accepted
accounting principles consistently applied, and since such date of the
most recent financial statements there has been no material adverse
change in any such condition, business or operations.
(xviii) It has valid business reasons for selling its
interests in the Purchased Loans rather than obtaining a loan with the
Purchased Loans as collateral.
(b) With respect to each Purchased Loan sold by the
Unaffiliated Seller pursuant to this Agreement, the Unaffiliated Seller, as of
the Closing Date, makes the representations and warranties set forth in Section
3.4 of the Pooling and Servicing Agreement for the benefit of the Depositor.
Such representations and warranties are incorporated by reference in this
Section 3(b), and the Depositor may rely thereon as if such representations and
warranties were fully set forth herein.
(c) It is understood and agreed that the representations and
warranties in this Section 3 shall survive the sale of the Purchased Loans and
the other Purchased Assets to the Depositor and any sale or assignment of the
Purchased Loans and the other Purchased Assets by the Unaffiliated Seller to the
Depositor and by the Depositor to the
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Trustee, for the benefit of the Trust, as the case may be, and shall continue so
long as any Purchased Loan shall remain outstanding.
(d) The Unaffiliated Seller acknowledges that, pursuant to
this Agreement, it has assigned all of its right, title and interest in and to
the Purchased Loans and the other Purchased Assets and its right to exercise the
remedies created by Section 4 hereof to the Depositor and that, pursuant to the
Pooling and Servicing Agreement, the Depositor has assigned all of its right,
title and interest in and to the Purchased Loans and the other Purchased Assets
and its right to exercise the remedies created by Section 4 hereof to the
Trustee, on behalf of the Owners of the Certificates, as the case may be. The
Unaffiliated Seller agrees that the Trustee, on behalf of the Owners of the
Certificates, may enforce directly, without joinder of the Depositor, the
repurchase obligations of the Unaffiliated Seller, set forth in Section 4 hereof
with respect to breaches of the representations and warranties set forth in this
Section 3.
(e) The Unaffiliated Seller covenants and agrees, so long as
any of the Certificates are outstanding, as follows:
(i) Any change in the location of the principal place of
business or chief executive office (as such terms are used in the
Uniform Commercial Code in the state of such location) of the
Unaffiliated Seller occurring after the Closing Date shall be
specifically disclosed to the Depositor and the Trustee in writing.
(ii) Any change in the legal name of the Unaffiliated Seller
and any use by any thereof of any tradename, fictitious name, or
assumed name occurring after the Closing Date shall be specifically
disclosed to the Depositor and the Trustee in writing.
Section 3.02 Breach of Representations and Warranties;
Repurchase of Purchased Loans. Upon discovery by the Unaffiliated Seller, the
Depositor or upon an Authorized Officer of the Trustee obtaining actual
knowledge of a breach by the Unaffiliated Seller of any of the representations
and warranties set forth in Section 3 hereof, without regard to any limitation
set forth in such representation or warranty concerning the knowledge of the
Unaffiliated Seller as to the facts stated therein which materially and
adversely affects the value, or the interest of the Trust in, any Mortgage Loan,
as the case may be, the party discovering such breach shall give prompt written
notice to the other parties. Thereafter, the Unaffiliated Seller shall, if such
breach materially and adversely affects the value of, or the interests of the
Trust or any Owner of a Certificate, as the case may be, in any Purchased Loan,
on the Servicer's Remittance Date in the month following the expiration of a
60-day period since the date of notice of such breach (the "Repurchase Date"),
if such breach remains uncured, repurchase such Purchased Loan by remitting to
the Principal and Interest Account, the related Repurchase Price. Any such
repurchase shall be made without recourse against, or warranty, express or
implied, of such transferring party.
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ARTICLE FOUR
COVENANTS
Section 4.01 Covenants of the Unaffiliated Seller. The
Unaffiliated Seller covenants with the Depositor as follows:
(a) The Unaffiliated Seller shall cooperate with the Depositor
and the firm of independent certified public accountants retained with respect
to the issuance of the Certificates in making available all information and
taking all steps reasonably necessary to permit the accountants' letters
required hereunder to be delivered within the times set for delivery herein.
(b) The Unaffiliated Seller hereby agrees to do all acts,
transactions, and things and to execute and deliver all agreements, documents,
instruments, and papers by and on behalf of the Unaffiliated Seller as the
Depositor or its counsel may reasonably request in order to consummate the
transfer of the Mortgage Loans to the Depositor and the subsequent transfer
thereof to the Trustee, and the rating, issuance and sale of the Certificates.
(c) The Unaffiliated Seller hereby agrees to arrange
separately to pay to the Trustee all of the Trustee's fees and expenses in
connection with the transactions contemplated by the Pooling and Servicing
Agreement subject to existing agreements to which the Unaffiliated Seller
assented at an earlier date. For the avoidance of doubt, the parties hereto
acknowledge that it is the intention of the parties that the Depositor shall not
pay any of the Trustee's fees and expenses in connection with the transactions
contemplated by the Pooling and Servicing Agreement.
ARTICLE FIVE
MISCELLANEOUS
Section 5.01 Conditions of Depositor's Obligations. The
obligations of the Depositor to purchase the Mortgage Loans will be subject to
the satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Mortgage Loans, such conditions shall be deemed
satisfied or waived.
(a) The obligations of the Unaffiliated Seller required to be
performed by it on or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects and all of the representations and warranties of the Unaffiliated
Seller under this Agreement shall be true and correct in all material respects
as of the Closing Date and no event shall have occurred which, with notice or
the passage of time, would constitute a default under this Agreement, and the
Depositor shall have received a certificate to the effect of the foregoing
signed by an authorized officer of the Unaffiliated Seller.
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(b) The Depositor shall have received a letter dated the date
of this Agreement, in form and substance reasonably acceptable to the Depositor
and its counsel, prepared by Xxxxxx Xxxxxxxx & Co., independent certified public
accountants, regarding the numerical information contained in the Prospectus
Supplement under the captions "Prepayment and Yield Considerations" and
"Description of the Mortgage Loans."
(c) The Mortgage Loans will be reasonably acceptable to the
Depositor, in its sole discretion.
(d) The Depositor shall have received the following additional
closing documents, in form and substance satisfactory to the Depositor and its
counsel:
(i) the Schedule of Mortgage Loans;
(ii) the Pooling and Servicing Agreement dated as of
November 1, 1997 and the Underwriting Agreement, dated as of December
4, 1997, (the "Underwriting Agreement"), between the Depositor and
Prudential Securities Incorporated (the "Underwriter"), and all
documents required thereunder, duly executed and delivered by each of
the parties thereto other than the Depositor;
(iii) officer's certificates of an officer of a member of
the Unaffiliated Seller, dated as of the Closing Date, in the form of
Exhibit B hereto, and attached thereto resolutions of the board of
directors of such member and a copy of the Unaffiliated Seller's
Articles of Incorporation and By-Laws and all amendments, revisions,
and supplements thereof, certified by an officer of a member of the
Unaffiliated Seller;
(iv) an opinion of the counsel for the Unaffiliated Seller
as to various corporate matters substantially in the form attached
hereto as Exhibit C (it being agreed that the opinion shall expressly
provide that the Trustee shall be entitled to rely on the opinion);
(v) letters from Fitch IBCA Inc. and Xxxxx'x Investors
Service Inc., that they have assigned ratings to the Offered
Certificates as described in the Prospectus Supplement, and ratings to
the Class B Certificates of at least "BB" and "Ba2" respectively;
(vi) an opinion of counsel for the Trustee in form and
substance acceptable to the Depositor, its counsel, and each Rating
Agency (it being agreed that the opinion shall expressly provide that
the Unaffiliated Seller shall be entitled to rely on the opinion); and
(vii) an opinion of counsel for the Servicer, in form and
substance acceptable to the Depositor, its counsel, and each Rating
Agency (it being agreed that the opinion shall expressly provide that
the Unaffiliated Seller shall be entitled to rely on the opinion); and
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(e) All documents contemplated by this Agreement shall be
satisfactory in form and substance to the Depositor and its counsel.
(f) The Unaffiliated Seller shall have furnished the Depositor
with such other certificates of their officers or others and such other
documents or opinions as the Depositor or its counsel may reasonably request.
Section 5.02 Conditions of Unaffiliated Seller's Obligations.
The obligations of the Unaffiliated Seller under this Agreement shall be subject
to the satisfaction, on the Closing Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be
performed by it at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Depositor contained in this Agreement
shall be true and correct as of the Closing Date.
(b) The Unaffiliated Seller shall have received the following
additional documents:
(i) the Pooling and Servicing Agreement, and all documents
required thereunder, in each case executed by the Depositor as
applicable;
(ii) an opinion of the counsel for the Depositor as to
securities and tax matters; and
(iii) an opinion of the counsel for the Depositor as to true
sale matters and confirmation of the rating of the Class B Certificates
of at least "BB"and "Ba2"by Fitch IBCA Inc. and Xxxxx'x Investors
Service Inc. respectively..
(c) The Depositor shall have furnished the Unaffiliated Seller with
such other certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Agreement as the
Unaffiliated Seller may reasonably request, and the Underwriting Agreement shall
have been duly performed and complied with.
Section 5.03 Termination of Depositor's Obligations. The
Depositor may terminate its obligations hereunder by notice to the Unaffiliated
Seller at any time before delivery of and payment of the purchase price for the
Mortgage Loans if: (i) any of the conditions described in Section 5.01 are not
satisfied when and as provided therein; (ii) there shall have been the entry of
a decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Unaffiliated Seller or
the Servicer, or for the winding up or liquidation of the affairs of the
Unaffiliated Seller or the Servicer; (iii) there shall have been the consent by
the Unaffiliated Seller or the Servicer to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Unaffiliated
Seller or the Servicer or relating to substantially all of the
11
property of the Unaffiliated Seller or the Servicer; or (iv) the Underwriter
terminates its obligations under the Underwriting Agreement (except as a result
of a failure solely due to a matter within the reasonable control of the
Depositor). The termination of the Depositor's obligations hereunder shall not
terminate the Depositor's rights hereunder or its right to exercise any remedy
available to it at law or in equity.
Section 5.04 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by facsimile and confirmed by a similar mailed writing, if to the
Depositor, addressed to the Depositor at Prudential Securities Secured Financing
Corporation, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxx Xxxx,
or to such other address as the Depositor may designate in writing to the
Unaffiliated Seller and if to the Unaffiliated Seller, addressed to the
Unaffiliated Seller at Wilshire Servicing Corporation, 0000 X.X. Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxx 00000, Attention: Xxxxxxxx Xxxxxxxxxx or to such other address
as the Unaffiliated Seller may designate in writing to the Depositor.
Section 5.05 Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
Section 5.06 Agreement of Unaffiliated Seller. The
Unaffiliated Seller agrees to execute and deliver such instruments and take such
actions as the Depositor may, from time to time, reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement.
Section 5.07 Survival. The parties to this Unaffiliated
Seller's Agreement agree that the representations, warranties and agreements
made by each of them herein and in any certificate or other instrument delivered
pursuant hereto shall be deemed to be relied upon by the other party hereto,
notwithstanding any investigation heretofore or hereafter made by such other
party or on such other party's behalf, and that the representations, warranties
and agreements made by the parties hereto in this Agreement or in any such
certificate or other instrument shall survive the delivery of and payment for
the Mortgage Loans.
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Section 5.08 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 5.09 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as expressly permitted by
the terms hereof, this Agreement may not be assigned, pledged or hypothecated by
any party hereto to a third party without the written consent of the other party
to this Agreement; provided, however, that the Depositor may assign its rights
hereunder to the Trustee on behalf of the Trust without the consent of the
Unaffiliated Seller.
Section 5.10 Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of New York (without
regard to conflicts of laws principles), and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
Section 5.11 Confirmation of Intent. It is the express intent
of the parties hereto that the conveyance of the Mortgage Loans by the
Unaffiliated Seller to the Depositor as contemplated by this Agreement be, and
be treated for all purposes as, a sale by the Unaffiliated Seller to the
Depositor of the Mortgage Loans. It is, further, not the intention of the
parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Unaffiliated Seller to the Depositor to secure a debt or other obligation of the
Unaffiliated Seller. However, in the event that, notwithstanding the intent of
the parties, the Mortgage Loans are held to continue to be property of the
Unaffiliated Seller then (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code; (b) the transfer of the Mortgage Loans provided for herein
shall be deemed to be a grant by the Unaffiliated Seller to the Depositor of a
security interest in all of the Unaffiliated Seller's right, title and interest
in and to the Mortgage Loans and all amounts payable on the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities or other
property; (c) the possession by the Depositor of Notes and such other items of
property as constitute instruments, money, negotiable documents or chattel paper
shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the Uniform
Commercial Code; and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the
Depositor for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of the Depositor pursuant to any provision
hereof shall also be deemed to be an assignment of any security interest created
hereby. The Unaffiliated Seller and the Depositor 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
13
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Unaffiliated Seller's Agreement.
Section 5.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
Section 5.13 Costs. In connection with the transactions
contemplated under this Agreement and the Pooling and Servicing Agreement, the
Unaffiliated Seller shall promptly pay (or shall promptly reimburse the
Depositor to the extent that the Depositor shall have paid or otherwise
incurred): (a) the fees and disbursements of the Depositor, including due
diligence fees, of $ 20,000.00 and fees of counsel (subject to an agreed expense
cap); (b) the fees of each Rating Agency, as separately agreed; (c) any of the
fees of the Trustee, as separately agreed, and the reasonable fees and
disbursements of the Trustee's counsel; (d) expenses incurred in connection with
printing the Prospectus, the Prospectus Supplement, any amendment or supplement
thereto, any preliminary prospectus and the Certificates; and (e) fees and
expenses relating to the filing of documents with the Commission relating to the
Class A Certificates (including, without limitation, periodic reports under the
Securities Exchange Act of 1934, as amended) and the shelf registration
amortization fee paid in connection with the issuance of Certificates, which
amount is equal to 0.05% of the aggregate Offered Certificate Principal Balance
on the Closing Date. For the avoidance of doubt, the parties hereto acknowledge
that it is the intention of the parties that the Depositor shall not pay any of
the Trustee's fees and expenses in connection with the transactions contemplated
by the Pooling and Servicing Agreement. All other costs and expenses in
connection with the transactions contemplated hereunder shall be borne by the
party incurring such expenses.
Section 5.14 Indemnification. (a) The Unaffiliated Seller
agrees to indemnify and hold harmless the Depositor, each of its directors, each
of its officers who have signed the Registration Statement, and each of its
directors and each person or entity who controls the Depositor or any such
person, within the meaning of Section 15 of the Securities Act, against any and
all losses, claims, damages or liabilities, joint and several, to which the
Depositor or any such person or entity may become subject, under the Securities
Act or otherwise, and will reimburse the Depositor and each such controlling
person for any legal or other expenses incurred by the Depositor or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Prospectus Supplement relating to the Certificates or any amendment or
supplement to the Prospectus Supplement relating to the Certificates or the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements in the Prospectus Supplement
relating to the Certificates or any amendment or supplement to the Prospectus
Supplement relating to the Certificates approved in writing by the Unaffiliated
Seller, in light of the circumstances under which they were made, not
misleading;
14
provided, however, that the Unaffiliated Seller will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Prospectus Supplement or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Unaffiliated Seller by the Underwriter or the Depositor
specifically for use therein. This indemnity agreement will be in addition to
any liability which the Unaffiliated Seller may otherwise have.
(b) The Depositor and the Underwriter agree to indemnify and
hold harmless the Unaffiliated Seller, each of its directors and each person or
entity who controls the Unaffiliated Seller or any such person, within the
meaning of Section 15 of the Securities Act, against any and all losses, claims,
damages or liabilities, joint and several, to which the Unaffiliated Seller or
any such person or entity may become subject, under the Securities Act or
otherwise, and will reimburse the Unaffiliated Seller and any such director or
controlling person for any legal or other expenses incurred by such party or any
such director or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, the
Prospectus Supplement, Computational Material, any amendment or supplement to
the Prospectus or the Prospectus Supplement or the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission is other
than a statement or omission relating to the information furnished to the
Unaffiliated Seller by the Underwriter or the Depositor specifically for use
therein; provided, however, that in no event shall the Depositor be liable to
the Unaffiliated Seller under this paragraph (b) in an amount in excess of the
Depositor's resale profit or the underwriting fee on the sale of the
Certificates. This indemnity agreement will be in addition to any liability
which the Depositor may otherwise have.
(c) The Unaffiliated Seller shall in addition indemnify and
hold harmless the Depositor for any losses, claims, damages, or liabilities to
which they become subject in connection with the offering for resale of the
Certificates of any materials which would constitute "computational materials",
"collateral term sheets" or "structural term sheets" (collectively,
"Computational Materials") under the Commission's "no-action letter" definitions
of such terms as of the date hereof, except to the extent that any such losses,
claims, damages or liabilities result from the negligence of the Depositor in
the preparation of such Computational Materials. The Depositor shall indemnify
and hold harmless the Unaffiliated Seller for any losses, claims, damages or
liabilities which result from the negligence of the Depositor in the preparation
of such Computational Materials; provided, however, that in no event shall the
Depositor be liable to the Unaffiliated Seller under this paragraph (c) in an
amount in excess of the Depositor's resale profit or the underwriting fee on the
sale of the Certificates.
15
(d) Promptly after receipt by an indemnified party under this
Section 5.14 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 Section 5.14, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. 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 reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 5.14 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party and would raise a potential conflict, the
indemnified party or parties shall have the right to select 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. The indemnifying party
shall not be liable for the expenses of more than one separate counsel.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 5.14 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
or (c) of this Section 5.14 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof); provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered (i) the relative benefits received by the Unaffiliated Seller on the
one hand, and the Depositor on the other, from the offering of the Certificates
or (ii) the relative benefits described in clause (i) as well as the relative
faults of the Unaffiliated Seller and the Depositor, taking into account the
Unaffiliated Seller's and the Depositor's relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission, and any other
equitable considerations appropriate in the circumstances. The Unaffiliated
Seller and the Depositor agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation. For
purposes of this Section 5.14, each director of the Depositor, each officer of
the Depositor who signed the Registration Statement, and each person, if any who
controls the Depositor within the
16
meaning of Section 15 of the Securities Act, shall have the same rights to
contribution as the Depositor, and each director of the Unaffiliated Seller, and
each person, if any who controls the Unaffiliated Seller within the meaning of
Section 15 of the Securities Act, shall have the same rights to contribution as
the Unaffiliated Seller.
Section 5.15 Miscellaneous. (a) (i) This Agreement supersedes
all prior agreements and understandings relating to the subject matter hereof,
(ii) this Agreement may be amended from time to time by the Unaffiliated Seller
and the Depositor by written agreement, without notice to or consent of the
related Owners to cure any ambiguity, to correct or supplement any provisions
herein, to comply with any changes in the Code, or to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be inconsistent with the provisions of this Agreement; provided, however,
that such action shall not, as evidenced by an officer's certificate, at the
expense of the party requesting the change, delivered to the Trustee, adversely
affect in any material respect the interests of any Owner; and provided,
further, that no such amendment shall reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Owner of such
Certificate, or change the rights or obligations of any other party hereto
without the consent of such party, (iii) this Agreement may be amended from time
to time by the Unaffiliated Seller and the Depositor with the consent of the
Owners of the Certificates for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Owners; provided, however, that no
such amendment shall be made unless the Trustee receives an officer's
certificate, that such change will not reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Owner of such
Certificate, and (iv) it shall not be necessary for the consent of any Owner
under this Section 5.15(a) to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof.
(b) The Depositor and the Unaffiliated Seller intend the
conveyance by the Unaffiliated Seller to the Depositor of all of its right,
title and interest in and to the Mortgage Loans pursuant to this Unaffiliated
Seller's Agreement to constitute a purchase and sale and not a loan.
[Signatures Commence on Following Page]
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IN WITNESS WHEREOF, the parties hereto have caused their names
to be signed by their respective officers thereunto duly authorized as of the
date first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By:/s/
---------------------------------
Name:
Title:
WILSHIRE SERVICING CORPORATION
By:/s/
---------------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: President
WMFC 1997-2 INC.
By:/s/
---------------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: President
[Signature Page to Unaffiliated Seller's Agreement]
Exhibit A
SCHEDULE OF MORTGAGE LOANS
A-1
Exhibit B
FORM OF OFFICER'S CERTIFICATE
OF THE UNAFFILIATED SELLER
[See Tab 11]
B-1
Exhibit C
FORM OF OPINION OF COUNSEL
TO THE UNAFFILIATED SELLER
[See Tab 17]
C-1
