EXHIBIT 4.4
EXECUTION COPY
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PURCHASE AND SALE AGREEMENT
BEAR XXXXXXX ASSET BACKED SECURITIES, INC.
DEPOSITOR
and
IHE FUNDING CORP. II
TRANSFEROR
DATED AS OF August 31, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS..........................................1
Section 1.01 Definitions..........................................1
ARTICLE II. PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS......3
Section 2.01 Agreement to Purchase................................3
Section 2.02 Purchase Price.......................................3
Section 2.03 Conveyance of Mortgage Loans; Possession of Mortgage.3
Section 2.04 Delivery of Mortgage Loan Documents..................4
Section 2.05 Transfer of Mortgage Loans; Assignment of Agreement..4
Section 2.06 Examination of Mortgage..............................4
Section 2.07 Books and Records....................................4
Section 2.08 Cost of Delivery and Recordation of Documents........4
Section 2.09 Information in Prospectus Supplement.................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES.......................5
Section 3.01 Representations and Warranties as to the Transferor..5
Section 3.02 Representations and Warranties Relating to the
Mortgage Loans.......................................7
Section 3.03 Representations and Warranties of the Depositor.....10
Section 3.04 Repurchase Obligation for Defective
Documentation and for Breach of a Representation
or Warranty.........................................10
ARTICLE IV. THE TRANSFEROR......................................12
Section 4.01 Covenants of the Transferor.........................12
Section 4.02 Merger or Consolidation.............................12
Section 4.03 Indemnification.....................................13
article V. CONDITIONS OF CLOSING...............................13
Section 5.01 Conditions of Depositor's Obligations...............13
Section 5.02 Conditions of Transferor's Obligations..............14
Section 5.03 Termination of Depositor's Obligations..............14
article VI. MISCELLANEOUS.......................................14
Section 6.01 Notices.............................................14
Section 6.02 Severability of Provisions..........................15
Section 6.03 Agreement of Transferor.............................15
Section 6.04 Survival............................................15
Section 6.05 Effect of Headings and Table of Contents............15
Section 6.06 Successors and Assigns..............................15
Section 6.07 Confirmation of Intent; Grant of Security Interest..15
Section 6.08 Costs...............................................16
Section 6.09 Miscellaneous.......................................16
Section 6.10 Amendments..........................................16
Section 6.11 Third Party Beneficiaries...........................17
Section 6.12 GOVERNING LAW.......................................17
Section 6.13 Execution in Counterparts...........................17
This Purchase and Sale Agreement, dated as of August 31, 2001, by and
between IHE Funding Corp. II, a Delaware corporation, its successors and assigns
(the "Transferor"), and Bear Xxxxxxx Asset Backed Securities, Inc. and its
successors (the "Depositor").
W I T N E S S E T H:
WHEREAS, Exhibit A attached hereto and made a part hereof as such
Exhibit A may be amended from time to time to reflect additions and deletions
lists certain mortgage loans secured by first or more junior mortgages on one-to
four-family residential properties owned by the Transferor that the Transferor
desires to sell to the Depositor and that the Depositor desires to purchase;
WHEREAS, it is the intention of the Transferor and the Depositor that
simultaneously with the Transferor's conveyance of the Mortgage Loans (as
defined herein) to the Depositor on the Closing Date, (a) the Depositor shall
deposit the Mortgage Loans in a Delaware business trust (the "Issuer" or the
"Trust") pursuant to a Sale and Servicing Agreement to be dated as of August 31,
2001 (the "Sale and Servicing Agreement"), to be entered into by and among the
Depositor, as depositor, Transferor, as seller, Xxxxx Union Bank and Trust
Company, as master servicer (in such capacity, the "Master Servicer"), the
Issuer and Xxxxx Fargo Bank, Minnesota, National Association, as indenture
trustee (the "Indenture Trustee") and (b) the Issuer shall pledge the Mortgage
Loans to the Indenture Trustee to secure repayments of Notes pursuant to an
Indenture between the Trust and the Indenture Trustee dated as of August 31,
2001.
WHEREAS, as a matter of convenience and in light of the ultimate
transfer to the Indenture Trustee of the Mortgage Notes, Loan Agreements and the
Mortgages securing the obligations of each Mortgagor under the related Mortgage
Notes or Loan Agreements, as applicable, Xxxxx Union Bank and Trust Company, as
seller under the Mortgage Loan Sale Agreement (as defined below) has caused the
Mortgage Notes and Loan Agreements to be endorsed in a manner suitable for the
delivery to the Indenture Trustee and has caused the assignment of the Mortgage
Loans to be made directly to the Indenture Trustee, without providing or
indicating on any endorsement of the Mortgage Notes and Loan Agreements or
assignment of the Mortgage Loans to any respective interim endorsees or interim
assignees;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I.
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. Capitalized terms used herein and not otherwise
defined shall have the respective meanings ascribed thereto in the Indenture.
"AGREEMENT" means this Purchase and Sale Agreement, as amended or
supplemented in accordance with the provisions hereof.
"CLOSING DATE" shall have the meaning ascribed thereto in Section
2.01(c) hereof.
"CUT-OFF DATE AGGREGATE PRINCIPAL BALANCE" means the aggregate unpaid
principal balance of the Mortgage Loans as of the Cut-Off Date. The Cut-Off Date
Aggregate Principal Balance of the initial Mortgage Loans is $448,861,417.43.
"CUT-OFF DATE PRINCIPAL BALANCE" means as to each Mortgage Loan, its
unpaid Principal Balance as of the Cut-Off Date.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"MASTER SERVICER" means Xxxxx Union Bank and Trust Company, in its
capacity as servicer of the Mortgage Loans and as the Master Servicer under the
Sale and Servicing Agreement, or any successor appointed pursuant to the Sale
and Servicing Agreement.
"MORTGAGE DOCUMENTS" shall have the meaning ascribed thereto in
Section 2.04 hereof.
"MORTGAGE LOAN SALE AGREEMENT" means that certain Mortgage Loan Sale
Agreement dated as of August 31, 2001 by and between Seller and Transferor.
"SALE AND SERVICING AGREEMENT" shall have the meaning ascribed thereto
in the recitals hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means Xxxxx Union Bank and Trust Company, in its capacity as
Seller of the Mortgage Loans under the Mortgage Loan Sale Agreement and any
successor to Xxxxx Union Bank and Trust Company, whether through merger,
consolidation, purchase and assumption of Xxxxx Union Bank and Trust Company or
all or substantially all of its assets or otherwise.
"TERMINATION EVENT" means the existence of any one or more of the
following conditions:
(a) a stop order suspending the effectiveness of the Registration
Statement shall have been issued or a proceeding for that purpose shall have
been initiated or threatened by the Commission; or
(b) subsequent to the execution and delivery of this Agreement, a
downgrading, or public notification of a possible change, without indication of
direction, shall have occurred in the rating afforded any of the debt securities
or claims paying ability of any person providing any form of credit enhancement
for any of the Notes, by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act.
ARTICLE II.
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.01 AGREEMENT TO PURCHASE. Subject to the terms and
conditions of this Agreement, the Transferor hereby sells, transfers, conveys,
and assigns and the Depositor hereby purchases the Mortgage Loans.
(a) Subject to Section 2.07, the Depositor and the Transferor have
agreed upon which of the Transferor's Mortgage Loans are purchased by the
Depositor pursuant to this Agreement, and the Transferor has prepared a Mortgage
Loan Schedule. The Mortgage Loan Schedule is attached hereto as Exhibit A.
(b) The closing for the purchase and sale of the Mortgage Loans shall
take place at the offices of Stroock & Stroock & Xxxxx LLP, New York at 10:00
a.m., New York time, on September 28 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 Transferor's sale of the Initial Mortgage Loans to the
Depositor, the Depositor will deliver to the Transferor the Certificates
together with an amount in cash equal to $456,370,201.78, payable in immediately
available funds.
Section 2.03 CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE.
Effective as of the Closing Date, the Transferor 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 the
Mortgage Loans, the insurance policies relating to each such Mortgage Loan, if
any, and all right, title and interest in and to the proceeds of such insurance
policies from and after the Closing Date.
(a) Upon the sale of such Mortgage Loans, the ownership of each
related Mortgage Note or Loan Agreement, each related Mortgage and the contents
of the related Mortgage 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 Transferor shall
immediately vest in the Depositor. The contents of any Mortgage File in the
possession of the Transferor 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 Transferor (excluding interest accruing on or prior to
the Cut-Off Date, which shall be retained by the Transferor), shall be held in
trust by the Transferor for the benefit of the Depositor as the owner thereof,
and shall be promptly delivered by the Transferor to or upon the order of the
Depositor.
(b) Pursuant to the Sale and Servicing Agreement, the Depositor shall,
on the Closing Date, irrevocably transfer, assign, set over and otherwise convey
all of its right, title and interest in and to the applicable Mortgage Loans and
all of its rights (exclusive of its obligations) under this Agreement to the
Issuer and, pursuant to the Indenture, the Issuer will pledge all of its rights
(exclusive of its obligations) under the Sale and Servicing Agreement to the
Indenture Trustee for the benefit of the Noteholders.
Section 2.04 DELIVERY OF MORTGAGE LOAN DOCUMENTS. Pursuant to the
Mortgage Loan Sale Agreement, the Transferor has caused the Seller to deliver
Mortgage Notes or Loan Agreements, Mortgages, assignments of Mortgage and other
documents related to each Mortgage Loan (the "Mortgage Documents") to the
Indenture Trustee. Pursuant to the Sale and Servicing Agreement, the Depositor
has caused the Indenture Trustee to issue certain acknowledgements of receipt
and other certifications relating to the Mortgage Documents.
Section 2.05 TRANSFER OF MORTGAGE LOANS; ASSIGNMENT OF AGREEMENT. The
Transferor hereby acknowledges and agrees that the Depositor, in accordance with
the Sale and Servicing Agreement, may transfer the Mortgage Loans and assign its
interest in this Agreement to the Issuer and the Indenture Trustee as may be
required to effect the purposes of the Sale and Servicing Agreement, without
further notice to, or consent of, the Transferor, and the Issuer or the
Indenture Trustee shall succeed to such of the rights and obligations of the
Depositor as shall be so assigned.
Section 2.06 EXAMINATION OF MORTGAGE. Prior to the Closing Date, the
Transferor shall make the Mortgage Files available to the Depositor or its
designee for examination at the Transferor's offices or at such other place as
the Transferor shall reasonably specify. The Depositor or its designee may make
such examination at any time on or before the Closing Date. If the Depositor or
its designee makes such examination prior to the Closing Date and identifies any
Mortgage Loans that do not conform to the requirements of the Depositor as
described in this Agreement, such Mortgage Loans shall be deleted from the
Mortgage Loan Schedule and may be replaced, prior to the Closing Date by
substitute Mortgage Loans acceptable to the Depositor. The Depositor may, at its
option and without notice to the Transferor, purchase all or part of the
Mortgage Loans without conducting any partial or complete examination.
Section 2.07 BOOKS AND RECORDS. The sale of each Mortgage Loan shall
be reflected on the Transferor's accounting and other records, balance sheet and
other financial statements as a sale of assets by the Transferor to the
Depositor.
Section 2.08 COST OF DELIVERY AND RECORDATION OF DOCUMENTS. The costs
relating to the delivery and recordation of the documents referred to in Section
2.04 and specified in Article II of the Mortgage Loan Sale Agreement in
connection with the Mortgage Loans shall be borne by the Transferor.
Section 2.09 INFORMATION IN PROSPECTUS SUPPLEMENT. The Transferor and
the Depositor shall agree on the information relating to such parties and their
respective Affiliates to be included in the Prospectus Supplement, including
financial information and information regarding the status of such parties and
such Affiliates with respect to any regulatory body or entity, and the
presentation of such information in the Prospectus Supplement. In connection
therewith, each party shall promptly inform the other party hereto of any
information it reasonably wishes to include or exclude from the Prospectus
Supplement, and upon being so informed, the parties shall use their best efforts
to mutually agree as promptly as possible upon the presentation and content of
the information to be included in the Prospectus Supplement. The Depositor shall
keep confidential any information regarding the Transferor or its respective
Affiliates that has been delivered into the Depositor's possession and that is
not otherwise publicly available; provided, that such information shall not be
kept confidential, and the right to require confidentiality under any
confidentiality agreement shall be waived, to the extent the parties hereto
agree to include such information in the Prospectus Supplement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS AND WARRANTIES AS TO THE TRANSFEROR. The
Transferor hereby represents and warrants to the Depositor and Indenture Trustee
as of the Closing Date that:
(a) Transferor is a corporation duly organized and validly existing
under the laws of the State of Delaware and has all licenses necessary to carry
on its business as now being conducted and is duly licensed and qualified in
each such state that requires licensing or qualification in order to conduct
business of the type conducted by the Transferor and to perform its obligations
as the Transferor hereunder, and in any event the Transferor is in compliance
with the laws of any such state to the extent necessary to ensure the
enforceability of the related Mortgage Loan; the Transferor has the full power
and authority, corporate and otherwise, to execute and deliver this Agreement
and to perform in accordance herewith; the execution, delivery and performance
of this Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement) by the Transferor and the consummation of the
transactions contemplated hereby have been duly and validly authorized; this
Agreement evidences the valid, binding and enforceable obligation of the
Transferor; and all requisite corporate action has been taken by the Transferor
to make this Agreement valid and binding upon the Transferor in accordance with
its terms;
(b) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Transferor of or compliance by the Transferor with this
Agreement or the sale of the Mortgage Loans pursuant to the terms of this
Agreement or the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to the Closing
Date;
(c) Neither the execution and delivery of this Agreement, the
acquisition or origination of the Mortgage Loans by the Transferor or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, has or will conflict with or result in a
breach of any of the terms, conditions or provisions of the Transferor's charter
or by-laws or any legal restriction or any agreement or instrument to which the
Transferor is now a party or by which it is bound or to which its property is
subject, or constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Transferor or its property is subject, or impair
the ability of the Depositor to realize on the Mortgage Loans, or impair the
value of the Mortgage Loans;
(d) Neither this Agreement nor any statement, report or other document
prepared by the Transferor and furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
any untrue statement or alleged untrue statement of any material fact or omits
to state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading;
(e) Except as disclosed in the Prospectus Supplement, there is no
action, suit, proceeding or investigation pending or, to the knowledge of the
Transferor, threatened before a court, administrative agency or government
tribunal against the Transferor which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Transferor, or in
any material impairment of the right or ability of the Transferor to carry on
its business substantially as now conducted, or in any material liability on the
part of the Transferor, or which would draw into question the validity of this
Agreement, the Mortgage Loans, or of any action taken or to be taken in
connection with the obligations of the Transferor contemplated herein, or which
would materially impair the ability of the Transferor 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;
(f) The Transferor is not in violation of or in default with respect
to, and the execution and delivery of this Agreement by the Transferor and its
performance of and compliance with the terms hereof will not constitute a
violation or default with respect to, any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or governmental
agency, which violation or default might have consequences that would materially
and adversely affect the condition (financial or other) or operations of the
Transferor or its properties or might have consequences that would materially
and adversely affect its performance hereunder or under any subservicing
agreement;
(g) Upon the receipt of each Mortgage File by the Indenture Trustee as
ultimate assignee of the Depositor under the Sale and Servicing Agreement, the
Depositor or the Indenture Trustee will have good title to each related Mortgage
Loan free and clear of any lien created by the Transferor (other than liens
which will be simultaneously released);
(h) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Transferor, and the
transfer, assignment and conveyance of the Mortgage Notes, Loan Agreements and
the Mortgages by the Transferor pursuant to this Agreement are not subject to
the bulk transfer or any similar statutory provisions or any federal or state
regulations applicable to a banking corporation in effect in any applicable
jurisdiction;
(i) With respect to any Mortgage Loan purchased by the Transferor, the
Transferor acquired title to the Mortgage Loan in good faith, without notice of
any adverse claim not otherwise disclosed to the Depositor;
(j) The Transferor does not believe, nor does it have any reason or
cause to believe, that it cannot perform each and every covenant contained in
this Agreement. The Transferor is solvent and the sale of the Mortgage Loans by
the Transferor pursuant to the terms of this Agreement will not cause the
Transferor to become insolvent. The sale of the Mortgage Loans by the Transferor
pursuant to the terms of this Agreement was not undertaken with the intent to
hinder, delay or defraud any of the Transferor's creditors;
(k) The Mortgage Loans are not intentionally selected by the
Transferor for sale to the Depositor in a manner so as to affect adversely the
interests of the Depositor or of any transferee of the Depositor (including the
Indenture Trustee);
(l) The Transferor has not dealt with any broker or agent or anyone
else that may be entitled to any commission or compensation in connection with
the sale of the Mortgage Loans to the Depositor other than to the Depositor or
an affiliate thereof; and
(m) The consideration received by the Transferor upon the sale of the
Mortgage Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Mortgage Loans.
Section 3.02 REPRESENTATIONS AND WARRANTIES RELATING TO THE MORTGAGE
LOANS. As to each Mortgage Loan (and the related Mortgage, Mortgage Notes or
Loan Agreements, as applicable, Assignments and Mortgaged Property, and
including any Subsequent Mortgage Loans), Transferor shall be deemed to make the
following representations and warranties to Depositor and Indenture Trustee as
of the Closing Date.
(a) With respect to any Mortgage Loan, the information set forth in
the Mortgage Loan Schedule for the Mortgage Loan is true and correct in all
material respects;
(b) The Mortgage Loans are not assigned or pledged, and Transferor is
the sole owner and holder of the Mortgage Loans free and clear of any and all
Liens (other than Permitted Liens) and has full right and authority, under all
governmental and regulatory bodies having jurisdiction over the ownership of the
Mortgage Loans, to sell, assign and transfer the same;
(c) None of the Mortgage Documents is assigned or pledged, and
Transferor is the sole owner and holder of the Mortgage Loans free and clear of
any and all Liens (other than Permitted Liens), and has full right and
authority, under all governmental and regulatory bodies having jurisdiction over
the ownership of the Mortgage Loans, to sell, assign and transfer the same;
(d) To the best of Transferor's knowledge, the related Mortgages
create a valid and subsisting first or more junior lien with respect to each
Mortgaged Property; and as of the Cut-Off Date, such Mortgaged Property is free
and clear of all encumbrances and Liens having priority over the first or more
junior lien, as applicable, of such Mortgage, except for Permitted Liens;
(e) To the best of Transferor's knowledge, there is no valid offset,
defense or counterclaim of any Mortgagor under any Mortgage Document;
(f) Other than amounts that constitute Permitted Liens, to the best of
Transferor's knowledge, there is no delinquent recording or other tax, fee or
assessment lien against any of the Mortgaged Properties;
(g) To the best of Transferor's knowledge, there is no proceeding
pending or threatened for the total or partial condemnation of any of the
Mortgaged Properties, and such Mortgaged Properties are free of material damage;
(h) Other than amounts that constitute Permitted Liens, to the best of
Transferor's knowledge, no mechanics' or similar liens have been filed for work,
labor or materials affecting any of the Mortgaged Properties that are or may
become liens prior or equal to the liens of the related Mortgages;
(i) No monthly payment of principal or interest is more than 59 days
delinquent (measured on a contractual basis);
(j) The Mortgage Files contain each of the documents and instruments
specified to be included therein;
(k) The Mortgage Documents at origination complied in all material
respects with applicable state and federal laws, including usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity and disclosure laws applicable to the Mortgage Loans;
(l) On the Closing Date, with respect to the Mortgage Loans,
Transferor has filed UCC-1 financing statements naming Transferor as
debtor/seller and Depositor as secured party/purchaser with respect to the
Mortgage Loans;
(m) A property profile, title search, limited coverage policy or title
insurance policy was obtained with respect to each Mortgage Loan, to the extent
consistent with the normal credit and underwriting policies of Seller;
(n) Reserved.
(o) As of any Subsequent Transfer Date, taking into account the
Subsequent Mortgage Loans being transferred, no more than 45% (by aggregate
Principal Balance) of the Mortgage Loans in Group II and no more than 45% (by
aggregate Principal Balance) of all of the Mortgage Loans in Groups I, II and
III constitute "real estate mortgages" for the purposes of Treasury Regulation
ss. 301.7701(i)-1(d) under the Code. For this purpose a Mortgage Loan
constitutes a "real estate mortgage" if it satisfies either test set out in
paragraph (i) or paragraph (ii) below:
(i) The fair market value of the interest in real property
securing the obligation was at least equal to 80 percent of the
adjusted issue price of the obligation at the time the obligation was
originated (or, if later, the time the obligation was significantly
modified). For purposes of this paragraph (a), the fair market value
of the real property interest must be first reduced by the amount of
any lien on the real property interest that is senior to the
obligation being tested, and must be further reduced by a
proportionate amount of any lien that is in parity with the obligation
being tested. The adjusted issue price of an obligation is its issue
price plus the amount of accrued original issue discount, if any, as
of the date of determination.
(ii) Substantially all of the proceeds of the obligation were
used for one or more of the following purposes: (i) to acquire an
interest in real property; (ii) to improve an interest in real
property; or (iii) to protect an interest in real property, that, at
the origination date, is the only security for the obligation. For
this purpose only, substantially all of the proceeds of the
obligations means two-thirds or more of the gross proceeds. For
purposes of this paragraph (b), the use of the proceeds of the related
Mortgage Loan to retire an existing lien against the related Mortgaged
Property is considered use of the proceeds to protect an interest in
real property;
(p) No selection procedure reasonably believed by Transferor to be
adverse to the interests of Depositor, the Indenture Trustee or the Noteholders
was utilized in selecting the Mortgage Loans;
(q) Transferor has not transferred the Mortgage Loans with any intent
to hinder, delay or defraud any of its creditors;
(r) The monthly principal and interest payment with respect to each
Mortgage Loan that is not a HELOC is sufficient to pay accrued interest on and
amortize the outstanding Principal Balance of such Mortgage Loan;
(s) Each Mortgage Loan and the related Mortgage Documents is a legal,
valid and binding obligation of the related Mortgagor, enforceable against the
related Mortgagor, except as the enforceability thereof may be limited by the
effect of bankruptcy, insolvency or similar laws affecting creditors' rights
generally;
(t) To the best of Transferor's knowledge, there has been no default
on any senior mortgage loan relating to a Mortgaged Property that has not been
cured by a Person other than Transferor or an affiliate thereof;
(u) Each Mortgage Loan assigned to Group I or Group II accrues
interest at a fixed rate;
(v) This Agreement constitutes a valid transfer and assignment to
Depositor of all right, title and interest of Transferor in and to the
outstanding principal balances with respect to the Mortgage Loans, all monies
due or to become due with respect thereto, all proceeds of such outstanding
principal balances, and all other property relating to such outstanding
principal balances; and
(w) To the best of Transferor's knowledge, no Mortgagor is insolvent
or bankrupt.
Section 3.03 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor hereby represents, warrants and covenants to the Transferor, as of the
date of execution of this Agreement and the Closing Date, that:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to purchase
each Mortgage Loan and to execute, deliver and perform, and to enter into and
consummate all the transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, and, assuming the due authorization, execution and
delivery hereof by the Transferor, constitutes the legal, valid and binding
agreement of the Depositor, enforceable against the Depositor in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except such as have been made on or prior to the Closing
Date; and
(e) None of the execution and delivery of this Agreement, the purchase
of the Mortgage Loans from the Transferor, the consummation of the other
transactions contemplated hereby, or the fulfillment of or compliance with the
terms and conditions of this Agreement, (i) conflicts or will conflict with the
charter or bylaws of the Depositor or conflicts or will conflict with or results
or will result in a breach of, or constitutes or will constitute a default or
results or will result in an acceleration under, any term, condition or
provision of any indenture, deed of trust, contract or other agreement or other
instrument to which the Depositor is a party or by which it is bound and which
is material to the Depositor, or (ii) results or will result in a violation of
any law, rule, regulation, order, judgment or decree of any court or
governmental authority having jurisdiction over the Depositor.
Section 3.04 REPURCHASE OBLIGATION FOR DEFECTIVE DOCUMENTATION AND FOR
BREACH OF A REPRESENTATION OR Warranty. Each of the representations and
warranties contained in Sections 3.01 and 3.02 shall survive the purchase by the
Depositor of the Mortgage Loans and the subsequent transfer thereof by the
Depositor to the Issuer and by the Issuer to the Indenture Trustee and the
delivery of the Notes to the Noteholders, and shall continue in full force and
effect, notwithstanding any restrictive or qualified endorsement on the Mortgage
Notes or Loan Agreements, as applicable and notwithstanding subsequent
termination of this Agreement, the Mortgage Loan Sale Agreement or the Sale and
Servicing Agreement.
(a) With respect to any representation or warranty contained in
Section 3.01 or 3.02 hereof that is made to the best of the Transferor's
knowledge, if it is discovered by the Depositor, the Master Servicer, any
subservicer, the Indenture Trustee, or any Noteholder that the substance of such
representation and warranty was inaccurate as of the Closing Date and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan, then notwithstanding the Transferor's lack of knowledge with respect to
the inaccuracy at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty. Upon discovery by the Transferor, the Depositor, the Master Servicer,
any subservicer, the Indenture Trustee, or any Noteholder of a breach of any of
such representations and warranties which materially and adversely affects the
value of Mortgage Loans or the interest of the Noteholders, or which materially
and adversely affects the interests of the Noteholders in the related Mortgage
Loan (including Subsequent Mortgage Loans) in the case of a representation and
warranty relating to a particular Mortgage Loan (notwithstanding that such
representation and warranty was made to the Transferor's best knowledge), the
Person discovering such breach shall, pursuant to Section 2.08 of the Sale and
Servicing Agreement, give prompt written notice to the others of such Persons.
Subject to the next to last paragraph of this Section 3.04, within 120 days of
the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Transferor shall (i) promptly cure such breach
in all material respects, or (ii) purchase such Mortgage Loan (including
Subsequent Mortgage Loans) at a purchase price equal to the Principal Balance of
such Mortgage Loan as of the date of purchase, plus the greater of (1) all
accrued and unpaid interest on such Principal Balance and (2) 30 days' interest
on such Principal Balance, computed at the Mortgage Interest Rate, or (iii)
cause the removal of such Mortgage Loan (or Subsequent Mortgage Loans) from the
Trust Estate (in which case it shall become a Deleted Loan) and substitute one
or more Eligible Substitute Mortgage Loans. Any such substitution shall be
accompanied by payment by the Transferor of the Substitution Adjustment Amount,
if any, to be deposited in the Collection Account pursuant to the Sale and
Servicing Agreement.
(b) As to any Deleted Loan for which the Transferor substitutes, or
has caused to be substituted therefor, a Eligible Substitute Mortgage Loan or
Loans, the Transferor shall effect, or shall cause to be effected, such
substitution by delivering, or by causing the delivery of, to the Indenture
Trustee a certification executed by a Servicing Officer of the Master Servicer
and the Mortgage Documents for such Eligible Substitute Mortgage Loan or Loans.
Pursuant to the Sale and Servicing Agreement, upon receipt by the Indenture
Trustee of a certification of a Servicing Officer of the Master Servicer of such
substitution or purchase and, in the case of a substitution, upon receipt of the
related Mortgage File, and the deposit of certain amounts in the Collection
Account pursuant to the Sale and Servicing Agreement, the Indenture Trustee
shall be required to release to the Master Servicer for release to the
Transferor the related Mortgage File and shall be required to execute, without
recourse, and deliver such instruments of transfer furnished by the Transferor
as may be necessary to transfer such Mortgage Loan to the Transferor.
(c) Pursuant to the Sale and Servicing Agreement, the Master Servicer
has agreed to deposit in the Collection Account all payments received in
connection with such Eligible Substitute Mortgage Loan or Loans after the date
of such substitution. Monthly Payments received with respect to Eligible
Substitute Mortgage Loans on or before the date of substitution will be retained
by the Transferor. The Trust Estate will own all payments received on the
Deleted Loan on or before the date of substitution, and the Transferor shall
thereafter be entitled to retain all amounts subsequently received in respect of
such Deleted Loan. Pursuant to the Sale and Servicing Agreement, the Master
Servicer shall be required to give written notice to the Indenture Trustee that
such substitution has taken place and shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Loan from the terms of the Sale and
Servicing Agreement and the substitution of the Eligible Substitute Mortgage
Loan. The parties hereto agree to amend the Mortgage Loan Schedule accordingly.
Upon such substitution, such Eligible Substitute Mortgage Loan or Loans shall be
subject to the terms of the Mortgage Loan Sale Agreement, the Sale and Servicing
Agreement and this Agreement in all respects, and the Transferor shall be deemed
to have made with respect to such Eligible Substitute Mortgage Loan or Loans, as
of the date of substitution, the representations and warranties set forth in
Sections 3.01 and 3.02 herein. On the date of such substitution, the Transferor
will remit, or will cause to be remitted, to the Master Servicer and pursuant to
the Sale and Servicing Agreement the Master Servicer will deposit into the
Collection Account the Substitution Adjustment Amount, if any.
(d) It is understood and agreed that the obligations of the Transferor
set forth in this Section 3.04 to cure, purchase or substitute for a defective
Mortgage Loan as provided in this Section 3.04 constitute the sole remedies of
the Depositor, the Indenture Trustee and the Noteholders respecting a breach of
the foregoing representations and warranties.
(e) Any cause of action against the Transferor relating to or arising
out of the breach of any representations and warranties or covenants made in
Section 3.01 or 3.02 or this Section 3.04 shall accrue as to any Mortgage Loan
upon (i) discovery of such breach by any party and notice thereof to the
Transferor, (ii) failure by the Transferor to cure such breach or purchase or
substitute such Mortgage Loan as specified above, and (iii) demand upon the
Transferor by the Depositor for all amounts payable in respect of such Mortgage
Loan.
ARTICLE IV.
THE TRANSFEROR
Section 4.01 Covenants of the Transferor. The Transferor covenants to
the Depositor as follows:
(a) The Transferor shall cooperate with the Depositor in making
available all information and taking all steps reasonably necessary to permit
accountants' letters to be delivered as necessary.
(b) The Transferor agrees to satisfy or cause to be satisfied on or
prior to the Closing Date, all of the conditions to the Depositor's obligations
set forth in Section 5.01 hereof that are within the Transferor's (or its
agents') control.
(c) The Transferor 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 Transferor as the Depositor or its counsel may
reasonably request in order to consummate the transfer of the Mortgage Loans to
the Depositor.
Section 4.02 MERGER OR CONSOLIDATION. The Transferor will keep in full
effect its existence, rights and franchises as a corporation and will obtain and
preserve its qualification to do business as a foreign corporation, in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement. The Transferor shall send notice of any merger or consolidation to
the Depositor and any recipients designated by the Depositor.
Section 4.03 INDEMNIFICATION. The Transferor 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
(i) the failure of the Transferor to perform its duties in compliance with the
terms of this Agreement or (ii) any material misstatement or omission in the
information contained in the Seller Information or elsewhere in the Prospectus
Supplement with respect to the subjects discussed under such captions. The
Depositor shall immediately notify the Transferor if a claim is made by a third
party with respect to this Agreement, and the Transferor shall have the right to
assume the defense of any such claim and will pay or cause to be paid all
expenses in connection therewith, including reasonable counsel fees, and will
promptly cause to be paid, discharged and satisfied, any judgment or decree
which may be entered against the Transferor or the Depositor in respect of such
claim. Pursuant to the Indenture, the Indenture Trustee shall reimburse the
Depositor in accordance with this Agreement for all amounts advanced by the
Depositor in accordance with the preceding sentence except when the claim
relates directly to the failure of the Transferor to perform its duties in
compliance with the terms of this Agreement.
ARTICLE V.
CONDITIONS OF CLOSING
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 and on each Subsequent Transfer Date of the following
conditions. Upon payment of the purchase price for the Mortgage Loans, such
conditions shall be deemed satisfied or waived.
(a) Each of the obligations of the Transferor 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 and all of the representations
and warranties of the Transferor under this Agreement shall be true and correct
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.
(b) The Mortgage Loans will be acceptable to the Depositor, in its
reasonable discretion and the parties shall have agreed to the information to be
disclosed in the Prospectus Supplement pursuant to Section 2.09.
(c) The Indenture Trustee shall have delivered a receipt for the
Mortgage Notes pursuant to the Sale and Servicing Agreement.
(d) The Depositor shall have received the Mortgage Loan Schedule and
an executed receipt acknowledging the delivery of consideration in exchange for
the Mortgage Loans.
(e) The Transferor shall have furnished the Depositor with such other
certificates of its officers or others and such other documents or opinions as
the Depositor or its counsel may reasonably request.
Section 5.02 CONDITIONS OF TRANSFEROR'S OBLIGATIONS. The obligations
of the Transferor 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 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 Transferor shall have received an executed receipt
acknowledging delivery of the Mortgage Loans and the Mortgage Loan Schedule to
the Indenture Trustee.
(c) The Depositor shall have furnished the Transferor 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 Transferor may
reasonably request.
Section 5.03 TERMINATION OF DEPOSITOR'S OBLIGATIONS. The Depositor may
terminate its obligations hereunder by notice to the Transferor at any time
before delivery of and payment of the purchase price for the Mortgage Loans if:
(a) any of the conditions set forth in Section 5.01 are not satisfied when and
as provided therein; (b) 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 Transferor, or for the winding up or
liquidation of the affairs of the Transferor; (c) there shall have been the
consent by the Transferor 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 Transferor or of or
relating to substantially all of the property of the Transferor; (d) any
purchase and assumption agreement with respect to the Transferor or the assets
and properties of the Transferor shall have been entered into; or (e) a
Termination Event shall have occurred. 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.
ARTICLE VI.
MISCELLANEOUS
Section 6.01 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 telex or telegraph and confirmed by a similar mailed writing, if
to the Depositor, addressed to the Depositor at 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or to such other address as the Depositor may designate in
writing to the Transferor and if to the Transferor, addressed to the Transferor
at IHE Funding Corp. II, 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx 00000,
Attention: Xxxxx Xxxxxx, Esq. and Xxxxxx Xxxxx (with a copy to Xxxxx Xxxxxx,
Xxxx Xxxxxxx and Xxxx Xxxxxxx, Esq., 00000 Xxxxxxx Xxxx., Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx 94583), or to such other address as the Transferor may designate in
writing to the Depositor.
Section 6.02 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 that prohibits
or renders void or unenforceable any provision hereof.
Section 6.03 AGREEMENT OF TRANSFEROR. The Transferor 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 6.04 SURVIVAL. The parties to this 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 6.05 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 6.06 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 without the consent of the Transferor.
Section 6.07 CONFIRMATION OF INTENT; GRANT OF SECURITY INTEREST. It is
the express intent of the parties hereto that the conveyance of the Mortgage
Loans by the Transferor to the Depositor as contemplated by this Agreement be,
and be treated for all purposes as, a sale by the Transferor 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 Transferor to the
Depositor to secure a debt or other obligation of the Transferor. However, in
the event that, notwithstanding the intent of the parties, the Mortgage Loans
are held to continue to be property of the Transferor 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 Transferor to the
Depositor of, and the Transferor hereby does grant, a security interest in all
of the Transferor'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 to secure a loan from the
Depositor in the amount equal to the purchase price described in Section 2.02
hereof; (c) the possession by the Depositor of Mortgage Notes, Loan Agreements
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
9-313 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 Transferor 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 or more junior priority under applicable law and will
be maintained as such throughout the term of this Agreement.
Section 6.08 COSTS. The Transferor shall pay all of its own expenses,
including out-of-pocket expenses and attorneys' fees. The Transferor shall pay
the fees of the Rating Agencies. In addition, in the event this Agreement is
terminated, the Transferor shall reimburse the Depositor, the Depositor's
reasonable out-of-pocket expenses, including attorneys' fees and costs related
to any examination by Depositor of the Mortgage Files.
Section 6.09 MISCELLANEOUS. This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof.
Section 6.10 AMENDMENTS. This Agreement may be amended from time to
time by the parties hereto (i) to cure any ambiguity, correct or supplement any
provision of this Agreement that may be inconsistent with any other provision of
this Agreement, add any provision that provides additional rights to the
Certificateholders or Noteholders or ensure that the Trust is not classified as
an association (or a publicly traded partnership) taxable as a corporation for
federal income tax purposes; provided, that (A) (i) such amendment will not, in
the good faith judgment of the parties thereto, materially and adversely affect
the interest of any Certificateholder or Noteholder and (ii) an Opinion of
Counsel is delivered to the effect that such amendment will not materially and
adversely affect the interest of any Certificateholder or Noteholder or (B) to
the extent affected thereby, with the consent of the Holders of Notes evidencing
not less than a majority of the Note Balance of the Notes and, to the extent
affected thereby, the consent of the Holders of Certificates evidencing not less
than a majority of the Percentage Interests 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
Noteholders or the Certificateholders; provided that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Mortgage Loans or distributions that shall
be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Note Balance of
the Notes and the Percentage Interests of the Certificates required to consent
to any such amendment, without the consent of the Holders of all the outstanding
Notes and Holders of all outstanding Certificates.
Promptly after the execution of any such amendment or consent, the
Depositor and Transferor shall furnish written notification of the substance of
such amendment or consent to each Certificateholder and the Indenture Trustee.
It shall not be necessary for the consent of the Certificateholder or Noteholder
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of the Certificateholder or Noteholders provided for in this Agreement
or in any other Basic Document) and of evidencing the authorization of the
execution thereof by the Certificateholder or Noteholders shall be subject to
such reasonable requirements as the Owner Trustee or Indenture Trustee may
prescribe from time to time.
Section 6.11 THIRD PARTY BENEFICIARIES. The Transferor intends that
the Indenture Trustee is a third party beneficiary of each of the Transferor's
representations and warranties and covenants stated herein.
Section 6.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
CONSIDERATION OF THE CHOICE OF LAW PRINCIPLES THEREOF, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 6.13 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.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties to this Purchase and Sale Agreement
have caused their names to be signed by their respective officers thereunto duly
authorized as of the date first above written.
BEAR XXXXXXX ASSET BACKED SECURITIES, INC.,
as Depositor
By ________________________
Name:
Title:
IHE FUNDING CORP. II,
as Transferor
Attest: _________________ By: _____________________
Name: Name:
Title: Title:
