EXHIBIT 4.2
UNAFFILIATED SELLER'S AGREEMENT
by and among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as Depositor,
WILSHIRE FINANCING COMPANY, L.L.C.,
as Unaffiliated Seller
and
WILSHIRE SERVICING CORPORATION,
as Servicer
Dated as of December 11, 1996
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................................... 2
Section 2.01. Agreement to Purchase........................ 2
Section 2.02. Purchase Price............................... 3
Section 2.03. Conveyance of Mortgage Loans;
Possession of Mortgage Files................. 3
Section 2.04. Delivery of Mortgage Loan
Documents.................................... 4
Section 2.05. Transfer of Mortgage Loans;
Assignment of Agreement...................... 5
Section 2.06. Books and Records............................ 5
Section 2.07. Cost of Delivery of Documents................ 5
ARTICLE THREE REPRESENTATIONS AND WARRANTIES................... 5
Section 3.01. Representations and Warranties
and Covenants of the
Unaffiliated Seller.......................... 5
Section 3.02. Breach of Representations and
Warranties; Repurchase of
Purchased Loans.............................. 10
ARTICLE FOUR COVENANTS........................................ 10
ARTICLE FIVE MISCELLANEOUS.................................... 11
Section 5.01. Conditions of Depositor's
Obligations.................................. 11
Section 5.02. Conditions of Unaffiliated
Seller's Obligations......................... 13
Section 5.03. Termination of Depositor's
Obligations.................................. 14
Section 5.04. Notices...................................... 14
Section 5.05. Severability of Provisions................... 14
Section 5.06. Agreement of Unaffiliated
Seller....................................... 15
Section 5.07. Survival..................................... 15
Section 5.08. Effect of Headings and Table of
Contents..................................... 15
Section 5.09. Successors and Assigns....................... 15
Section 5.10. Governing Law................................ 15
Section 5.11. Confirmation of Intent....................... 15
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Section 5.12. Execution in Counterparts.................... 16
Section 5.13. Costs........................................ 16
Section 5.14. Indemnification.............................. 17
Section 5.15. Miscellaneous................................ 21
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
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This Agreement, dated as of December 11, (the "Unaffiliated Seller's
Agreement") 1996, by and among Prudential Securities Secured Financing
Corporation, a Delaware corporation (the "Depositor"), Wilshire Financing
Company, L.L.C., a Delaware limited liability company (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 December 11, 1996 (the "Pooling and Servicing Agreement"), to be
entered into by and among the Depositor, the Unaffiliated Seller, the Servicer,
Source One Mortgage Services Corporation, as Backup Servicer (the "Backup
Servicer"), and Bankers Trust Company of California, N.A., as Trustee (the
"Trustee").
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, December 10, 1996.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Prospectus" means the Prospectus, dated December 4, 1996, 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 23, 1996, 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. 333-16511) 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.
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(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, New York, New York, at
10:00 a.m., New York time, on December 30, 1996 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 will deliver to the Unaffiliated Seller (i) an amount
in cash equal to $65,471,007.78, representing payment for the Class A
Certificates (not including expenses as described in Section 5.13 hereof), and
$3,698,094.15, representing payment for the Class B Certificates and the Class C
Certificates, all payable by wire transfer of same day funds, and (ii) the Class
RU Certificates and the Class RL 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
Schedule 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 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 under the
related Pooling and Servicing Agreement, if ever, to the Depositor. Upon the
sale of such Mortgage 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
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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 any obligation of the Originators or any other
Person in connection with the Depositor.
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).
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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.
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,
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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, assumed names or "doing business as"
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
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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 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 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) Its balance sheet as 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 at such date and the
results of its operations for the period ended on such date, all in
accordance with generally accepted
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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 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, 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 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
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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, assumed name or
"doing business as" 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 the Certificate Insurer or an Authorized Officer of the Trustee, as the
case may be, 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.
ARTICLE FOUR
COVENANTS
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.
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(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.
(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
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"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 and the Underwriting
Agreement, dated as of December 23, 1996 (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 Certificate of Formation and Operating
Agreement 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 the Rating Agencies that they have assigned
ratings to the Certificates as described in the Prospectus
Supplement;
(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);
(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
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the Unaffiliated Seller shall be entitled to
rely on the opinion); and
(viii) an opinion of counsel for the Certificate Insurer, in each
case 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).
(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; and
(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.
(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.
13
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 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 Xxx Xxx Xxxx Xxxxx, 00xx 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
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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.
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
15
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 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
16
incurred): (a) the fees and disbursements of the Depositor, including due
diligence and fees of counsel including fees and disbursements of $20,000 for
due diligence and fees of Depositor's counsel; (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 amounts are equal to 0.05% of the aggregate
Class A 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) (i) 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 or any amendment or supplement to the Prospectus Supplement
approved in writing by the Unaffiliated Seller, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Unaffiliated Seller will not be liable in any
17
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.
(ii) The Unaffiliated Seller agrees to indemnify and to hold
the Depositor harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Depositor may sustain in any way related
to the failure of the Unaffiliated Seller to perform its duties in
compliance with the terms of this Agreement. The Unaffiliated Seller shall
immediately notify the Depositor if a claim is made by a third party with
respect to this Agreement, and the Unaffiliated Seller shall assume the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy
any judgment or decree which may be entered against the Depositor in
respect of such claim. Pursuant to the Pooling and Servicing Agreement,
the Trustee shall reimburse the Unaffiliated Seller in accordance with the
Pooling and Servicing Agreement for all amounts advanced by the
Unaffiliated Seller pursuant to the preceding sentence except when the
claim relates directly to the failure of the Unaffiliated Seller to
perform its duties in compliance with the terms of this Agreement.
(b) The Depositor agrees 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, any amendment or supplement to the Prospectus or the Prospectus
18
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 set forth in subsection (a)(i) of this Section 5.14. This
indemnity agreement will be in addition to any liability which the Depositor may
otherwise have; provided, 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.
(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 gross 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 gross 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.
(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
19
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
subsection (b) 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) if the allocation provided by clause (i) is not permitted by applicable
law, 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 meaning of Section 15 of the
20
Securities Act, shall have the same rights to contribution as the Depositor, and
each director of 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]
21
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/ Xxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
WILSHIRE SERVICING CORPORATION
By: /s/ Xxxxxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: President
WILSHIRE FINANCING COMPANY, L.L.C.
By: /s/ Xxxxxxxx Xxxxxxxxxx
--------------------------------
Name: Xxxxxxxx Xxxxxxxxxx
Title: Authorized Agent
[Signature Page to Unaffiliated Seller's Agreement]
