Exhibit 2.1
================================================================================
BANK ONE, N.A.
Seller,
and
Franklin Credit Management Corporation
Purchaser
MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
Dated as of June 30, 2004
================================================================================
TABLE OF CONTENTS
-----------------
Page
ARTICLE I DEFINITIONS........................................................2
Section 1.01 Defined Terms...........................................2
ARTICLE II PURCHASE AND SALE OF MORTGAGE LOANS; INTERIM SERVICING;
TRANSFER OF SERVICING; CLOSING...............................................7
Section 2.01 Agreement to Purchase...................................7
Section 2.02 Purchase Price..........................................7
Section 2.03 Servicing of Mortgage Loans.............................7
Section 2.04 Possession of Mortgage Files; Maintenance of
Servicing Files.........................................7
Section 2.05 Books and Records.......................................8
Section 2.06 Delivery of Mortgage Loan Documents.....................9
Section 2.07 Transfer of Servicing...................................9
Section 2.08 Closing...............................................130
ARTICLE III REPRESENTATIONS AND WARRANTIES; REPURCHASE AND INDEMNIFICATION..12
Section 3.01 Representations and Warranties of the Seller...........12
Section 3.02 Representations and Warranties as to Individual
Mortgage Loans.........................................13
Section 3.03 Repurchase; Substitution...............................20
Section 3.04 Representations and Warranties of the Purchaser........21
Section 3.05 Indemnification........................................22
Section 3.06 Limitation on Liability of the Seller and Others.......23
ARTICLE IV MISCELLANEOUS PROVISIONS.........................................25
Section 4.01 Waiver, Amendment or Modification......................25
Section 4.02 Governing Law; Waiver of Jury Trial....................25
Section 4.03 Notices................................................25
Section 4.04 Severability of Provisions.............................26
Section 4.05 Exhibits...............................................27
Section 4.06 General Interpretive Principles........................27
Section 4.07 Reproduction of Documents..............................27
Section 4.08 Confidentiality of Information.........................28
Section 4.09 Recordation of Assignments of Mortgage.................29
Section 4.11 Execution; Successors and Assigns......................29
Section 4.12 Entire Agreement.......................................30
Section 4.13 No Solicitation........................................30
Section 4.14 Costs .................................................31
Section 4.15 Survival...............................................31
Section 4.16 Media Releases.........................................31
i
EXHIBITS
--------
A Contents of Mortgage File
B Form of Interim Servicing Agreement
C Mortgage Loan Schedule
D Purchase Price Schedule
E Underwriting Standards
F Form of Limited Power of Attorney
ii
This Mortgage Loan Purchase and Sale Agreement, dated as of June 30,
2004, and is made and entered into between Bank One, N.A., a national banking
association, as seller (the "Seller"), and Franklin Credit Management
Corporation, a Delaware corporation as purchaser (the "Purchaser").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Purchaser has heretofore agreed to purchase from the
Seller and the Seller has heretofore agreed to sell to the Purchaser certain
Mortgage Loans, as hereinafter defined, on a servicing released basis;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of
trust or other security instrument creating a first or second lien on a
residential dwelling located in the jurisdiction indicated on the Mortgage Loan
Schedule, as hereinafter defined;
WHEREAS, the Mortgage Loans as described herein shall be delivered on
the closing date which shall be June 30, 2004 or such other date as mutually
agreed upon by the Seller and Purchaser in writing (the "Closing Date"); and
WHEREAS, the Purchaser and the Seller desire to prescribe the
representations and warranties of the Seller and the Purchaser with respect to
themselves and the Mortgage Loans and the agreement of the parties with regard
to the Mortgage Loans;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Purchaser and the Seller agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings
specified in this Article:
Accepted Servicing Practices: With respect to any Mortgage Loan, the
customary and usual standards of practice of prudent mortgage servicers utilized
with respect to loans comparable to the Mortgage Loan in the jurisdiction where
the related Mortgaged Property is located.
Accrued Interest Allocation Amount: With respect to any Mortgage Loan
in ▇▇▇▇ ▇▇ ▇▇▇ as identified on the Mortgage Loan Schedule, 1.050% multiplied by
the Stated Principal Balance. With respect to any Mortgage Loan in ▇▇▇▇ ▇▇ ▇▇▇
as identified on the Mortgage Loan Schedule, 0.4037% multiplied by the Stated
Principal Balance.
Agreement: This Mortgage Loan Purchase and Sale Agreement including all
exhibits hereto, amendments hereof and supplements hereto, and the Mortgage Loan
Schedule.
ALTA: The American Land Title Association or any successor thereto.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(a) the value thereof as determined at the time of origination of the Mortgage
Loan by (i) an appraisal made for the originator of the Mortgage Loan by an
appraiser who met the underwriting requirements of the originator or (ii) an
alternative evaluation (including an AVM, tax assessment or broker's price
opinion) made for the originator of the Mortgage Loan by an alternative
evaluation model, vendor or real estate professional that met the Underwriting
Standards, and (b) the purchase price paid for the related Mortgaged Property by
the Mortgagor with the proceeds of the Mortgage Loan; provided, however, in the
case of a Refinanced Mortgage Loan, such value of the Mortgaged Property is
based solely upon the value determined in accordance with clause (a).
Assignment: An assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
transfer of the Mortgage.
AVM: An evaluation of collateral value using multiple regression
analysis of comparable sales data within a Mortgage Property's applicable market
area as permitted under the Underwriting Standards. This analysis provides a
measurable probability range of value and predicts where a specific Mortgage
Property falls into its market segment.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banks in the States of New York, Ohio or Illinois are authorized or
obligated by law or executive order to be closed.
Closing Date: Shall have the meaning set forth in the Recitals.
2
Condemnation Proceeds: All awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
Cut-off Date: Shall be June 18, 2004 after the close of business.
Due Date: The day of the month on which the Monthly Payment is due on a
Mortgage Loan, exclusive of any days of grace.
▇▇▇▇▇▇ ▇▇▇: The entity formerly known as the Federal National Mortgage
Association, or any successor thereto.
▇▇▇▇▇▇ Mae Guides: The ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇' Guide and the ▇▇▇▇▇▇ Mae
Servicers' Guide and all amendments or additions thereto, including, but not
limited to, future updates thereof.
First Lien: With respect to any second lien Mortgage Loan, the mortgage
loan relating to the corresponding Mortgaged Property having a first priority
lien.
GAAP: Generally accepted accounting principles, consistently applied in
the United States of America.
Interim Servicing Agreement: The agreement, attached as Exhibit B
hereto, pursuant to which the Seller will service the Mortgage Loans on an
interim basis from the Closing Date until the Transfer Date.
Interim Servicing Period: The period from the Closing Date to the
Transfer Date.
Limited Power of Attorney: A duly executed Limited Power of Attorney in
substantially the same form as annexed hereto as Exhibit F.
Liquidation Proceeds: Amounts received in connection with the partial
or complete liquidation of a defaulted Mortgage Loan, whether through the sale
or Assignment of such Mortgage Loan, trustee's sale, foreclosure sale or
otherwise or the sale of related Mortgaged Property if the Mortgaged Property is
acquired in satisfaction of the Mortgage Loan.
Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the
ratio of the original outstanding principal amount of the Mortgage Loan and,
with respect to any second lien Mortgage Loan, the outstanding principal amount
of any related First Lien as of the date of origination of such Mortgage Loan,
to the Appraised Value.
Lost Note Affidavit: An affidavit of the Seller, sworn to before a
notary public, averring that an original Mortgage Note owned by the Seller or
Prior Interest Holder has been lost, misplaced or destroyed and attaching
thereto a copy thereof which affiant avers is a faithful reproduction of the
original Mortgage Note.
3
Monthly Payment: The monthly payment on a Mortgage Loan due on any Due
Date allocable to principal and/or interest on such Mortgage Loan pursuant to
the terms of the related Mortgage Note.
Mortgage: The mortgage, deed of trust or other instrument securing a
Mortgage Note which creates a first or second lien on an unsubordinated estate
in fee simple in real property securing the Mortgage Note; except that with
respect to real property located in jurisdictions in which the use of leasehold
estates for residential properties is a widely-accepted practice, the mortgage,
deed of trust or other instrument securing the Mortgage Note may secure and
create a first or second lien upon a leasehold estate of the Mortgagor.
Mortgage File: With respect to each Mortgage Loan, the documents
pertaining thereto specified in Exhibit A.
Mortgage Interest Rate: The annual rate at which interest accrues on
any Mortgage Loan in accordance with the provisions of the related Mortgage
Note.
Mortgage Loan: Each loan secured by a Mortgage as set forth and
identified on the Mortgage Loan Schedule, together with all rights and interests
associated therewith, including, but not limited to the Servicing Rights,
Mortgage File, the Monthly Payments, Principal Prepayments, Liquidation
Proceeds, Condemnation Proceeds, proceeds of insurance policies insuring such
mortgage loan or the related Mortgaged Property, proceeds of a final foreclosure
sale, any escrow accounts related to such mortgage loan, and all other rights,
benefits, proceeds and obligations arising from or in connection therewith,
excluding replaced or repurchased Mortgage Loans.
Mortgage Loan Documents: The documents contained in a Mortgage File.
Mortgage Loan Schedule: The listing on a loan-level basis of
information with respect to the Mortgage Loans provided to the Purchaser
pursuant to Section 2.09(b)(i) which shall include the data fields set forth on
Exhibit C hereto.
Mortgage Note: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
Mortgaged Property: The underlying real property securing repayment of
a Mortgage Note, consisting of a fee simple parcel of real estate or a leasehold
estate, the term of which is equal to or longer than the term of the related
Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
OCC: Office of the Comptroller of the Currency, its successors and
assigns.
Person: Any individual, corporation, general or limited partnership,
joint venture, association, limited liability company, joint-stock company,
firm, trust, estate, unincorporated organization or government or any agency or
political subdivision thereof.
4
Pool A Mortgage Loan: Any sub-performing and/or non-performing home
equity Mortgage Loan identified on the Mortgage Loan Schedule as "Pool A".
Pool B Mortgage Loan: Any sub-performing and/or non-performing home
equity Mortgage Loan identified on the Mortgage Loan Schedule as "Pool B".
Pool Repurchase Price: With respect to any Mortgage Loan in ▇▇▇▇ ▇▇ ▇▇▇
as identified on the Mortgage Loan Schedule, 92.935%. With respect to any
Mortgage Loan in ▇▇▇▇ ▇▇ ▇▇▇ as identified on the Mortgage Loan Schedule,
84.3487%.
Prepayment Penalty: With respect to each Mortgage Loan, the penalty
imposed pursuant to the terms of the related Mortgage Note or Mortgage if the
Mortgagor prepays such Mortgage Loan as therein provided.
Principal Prepayment: Any full or partial payment or other recovery of
principal on a Mortgage Loan which is received in advance of its Due Date,
including any Prepayment Penalty or premium thereon and which is not accompanied
by an amount of interest representing interest due on any date or dates in any
month or months subsequent to the month of prepayment.
Prior Interest Holder: Any Person or entity who had any prior interest
in a Mortgage Loan including but not limited to as a mortgagee, note holder,
servicer or subservicer.
Purchase Price: Shall have the meaning set forth in Section 2.02.
Purchaser: Shall have the meaning set forth in the preamble.
Qualified Appraiser: An appraiser, duly appointed by the Seller or the
originator, who had no interest, direct or indirect in the Mortgaged Property or
in any loan made on the security thereof, and whose compensation is not affected
by the approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.
Refinanced Mortgage Loan: A Mortgage Loan that was made to a Mortgagor
who owned the Mortgaged Property prior to the origination of such Mortgage Loan
and the proceeds of which were used in whole or part to satisfy a previous
mortgage on such Mortgaged Property.
Repurchase Price: With respect to any Mortgage Loan to be repurchased
pursuant to this Agreement, a price equal to the sum of (a) the Pool Repurchase
Price multiplied by the outstanding principal balance of the Mortgage Loan to be
repurchased as of the date of repurchase, plus (b) accrued interest thereon at
the Mortgage Interest Rate from the date of the last payment through and
including the date of repurchase less the Accrued Interest Allocation Amount.
Seller: Bank One, N.A., with its principal office in Columbus, Ohio, a
national banking association, its successors in interest and assigns.
5
Seller's Officer's Certificate: A certificate signed by a duly
authorized officer of Seller stating the date by which Seller expects to receive
any missing documents sent for recording from the applicable recording office.
Servicing File: With respect to each Mortgage Loan, the documents
pertaining thereto held by the Seller or Wendover Financial Services Corporation
in its capacity as subservicer of the Mortgage Loans.
Servicing Rights: Any and all of the following: (a) any and all rights
to service the Mortgage Loans; (b) any payments to or monies received by the
Seller for servicing the Mortgage Loans; (c) any late fees, penalties or similar
payments with respect to the Mortgage Loans; (d) all agreements or documents
creating, defining or evidencing any such servicing rights to the extent they
relate to such servicing rights and all rights of the Seller thereunder; (e)
escrow payments or other similar payments with respect to the Mortgage Loans and
any amounts actually collected by the Seller with respect thereto; (f) all
accounts and other rights to payment related to any of the property described in
this paragraph; and (g) any and all documents, files, records, servicing files,
servicing documents, servicing records, data tapes, computer records, or other
information pertaining to the Mortgage Loans or pertaining to the past, present
or prospective servicing of the Mortgage Loans.
Stated Principal Balance: As to each Mortgage Loan, the principal
balance of such Mortgage Loan at the Cut-off Date.
Transfer Date: The date on which the Purchaser, or its designee, shall
assume the servicing responsibilities and begin to perform the servicing of the
Mortgage Loans, and the Seller shall cease all servicing responsibilities. Such
date shall occur on the day mutually agreed in writing by the Seller and
Purchaser pursuant to the Interim Servicing Agreement.
Underwriting Standards: As to each Mortgage Loan, the Seller's or Prior
Interest Holder's written underwriting guidelines in effect as of the
origination date of such Mortgage Loan attached hereto as Exhibit E.
6
ARTICLE II
PURCHASE AND SALE OF MORTGAGE LOANS;
INTERIM SERVICING; TRANSFER OF SERVICING; CLOSING
Section 2.01 Agreement to Purchase.
Subject to the provisions of this Agreement, on the Closing Date, the
Seller shall sell, transfer, assign, set over and convey to the Purchaser, and
the Purchaser shall purchase and acquire from the Seller, without recourse, all
of the rights, title and interest of the Seller in and to the Mortgage Loans.
Section 2.02 Purchase Price.
The Purchase Price for the Mortgage Loans shall be equal to the sum of
(i) in the case of Pool A Mortgage Loans, 92.935% multiplied by the aggregate
Stated Principal Balance of such Mortgage Loans listed on the Mortgage Loan
Schedule plus (ii) in the case of Pool B Mortgage Loans, 84.3487 multiplied by
the aggregate Stated Principal Balance of such Mortgage Loans listed on the
Mortgage Loan Schedule plus (iii) one hundred percent (100%) of any senior lien
amounts purchased by Seller (the "Purchase Price") all as set forth on Exhibit
D.
The Purchase Price as set forth in the preceding paragraph for the
Mortgage Loans shall be paid by Purchaser to Seller on the Closing Date by wire
transfer of immediately available funds.
With respect to each Mortgage Loan, the Purchaser shall be entitled to
all payments of principal and interest received after the Cut-off Date.
Section 2.03 Servicing of Mortgage Loans.
On the Closing Date, the Mortgage Loans shall be sold by the Seller to
the Purchaser on a servicing-released basis, such that the Purchaser shall
acquire all of the Seller's rights, title and interest in and to the Servicing
Rights, subject to the Interim Servicing Agreement. On the Closing Date, the
Seller and the Purchaser shall execute and deliver the Interim Servicing
Agreement, pursuant to the provisions of which the Seller shall service the
Mortgage Loans on an interim basis, from the Closing Date until the Transfer
Date, for the compensation set forth therein.
Section 2.04 Possession of Mortgage Files; Maintenance of Servicing
Files.
As of the Closing Date, the Seller will have sold, transferred,
assigned, set over and conveyed to the Purchaser, without recourse, and the
Seller hereby acknowledges that the Purchaser will have, all the right, title
and interest of the Seller in and to the Mortgage Loans. In accordance with
Section 2.06, the Seller shall deliver the Mortgage Files for the related
Mortgage Loans to the Purchaser or its designee. On the Closing Date the related
Mortgage Loans shall be the property of the Purchaser, but the Servicing Files
for the related Mortgage
7
Loans may be retained by Seller or its delegate until the Transfer Date for the
sole purpose of servicing the Mortgage Loans on an interim basis until the
Transfer Date. The possession of each Servicing File by the Seller or its
delegate is for the sole purpose of Seller's interim servicing of the related
Mortgage Loan, and such retention and possession by the Seller or its delegate
is in a custodial capacity only. From the Closing Date, the ownership of each
related Mortgage Loan including the Mortgage Note, the Mortgage, the contents of
the related Mortgage File, Servicing Rights and all rights, benefits, proceeds
and obligations arising therefrom or in connection therewith, will be vested in
the Purchaser. All rights arising out of the Mortgage Loans including, but not
limited to, all funds received on or in connection with the Mortgage Loans and
all records or documents with respect to the Mortgage Loans prepared by or which
come into the possession of the Seller shall be received and held by the Seller
in trust for the benefit of the Purchaser as the owner of the Mortgage Loans.
Any portion of the Mortgage Files or Servicing Files retained by the Seller
during the Interim Servicing Period shall be appropriately identified in the
Seller's computer system to clearly reflect the ownership of the Mortgage Loans
by the Purchaser. The Seller shall release its custody of the contents of the
Servicing Files only in accordance with written instructions of the Purchaser,
except that such written instructions shall not be required when such release is
required as incidental to the Seller's servicing of the Mortgage Loans pursuant
to the Interim Servicing Agreement or is in connection with a repurchase of any
Mortgage Loan or Loans with respect thereto pursuant to this Agreement.
Servicing Files for the Mortgage Loans shall be delivered to the Purchaser or
its designee on or before the Transfer Date or as otherwise agreed by Purchaser
and Seller in writing.
Section 2.05 Books and Records.
Each Servicing File in the possession of the Seller shall be segregated
from the other books and records of the Seller and shall otherwise be treated in
accordance with the Interim Servicing Agreement. The sale of each Mortgage Loan
and related Servicing Rights will be reflected on the Seller's balance sheet and
other financial statements as a sale of assets by the Seller. To the extent that
original documents are not required for purposes of realization of Liquidation
Proceeds or proceeds of insurance policies insuring the Mortgage Loan or the
related Mortgaged Property, documents maintained by the Seller may be in the
form of microfilm or microfiche or such other reliable means of recreating
original documents, including but not limited to, optical imagery techniques so
long as the Seller complies with the requirements of the ▇▇▇▇▇▇ ▇▇▇ Guides.
In addition to the foregoing, the Seller shall provide to any
supervisory agents or examiners that regulate the Purchaser, including, but not
limited to, the OCC, the Federal Deposit Insurance Corporation and other similar
entities, access, during normal business hours, upon reasonable advance written
notice to the Seller and without charge to the Seller or such supervisory agents
or examiners, to any documentation regarding the Mortgage Loans that may be
required by any applicable regulator, provided that the Purchaser shall promptly
pay to the Seller all reasonable costs, fees and expenses incurred by the Seller
in connection with any special reports or facilities requested in connection
with such access.
8
Section 2.06 Delivery of Mortgage Loan Documents.
Subject to Section 2.04 and Seller's retention of documents related to
its interim servicing of the Mortgage Loans, the Seller shall deliver and
release to the Purchaser or its designee the Mortgage Loan Documents no later
than ten (10) Business Days prior to the Closing Date pursuant to a bailee
letter agreement. If the Seller cannot deliver the original recorded Mortgage
Loan Documents on the Closing Date, the Seller shall, promptly upon receipt
thereof and in any case not later than 180 days from the Closing Date, deliver
such original recorded documents to the Purchaser or its designee (unless the
Seller is delayed in making such delivery by reason of the fact that such
documents shall not have been returned by the appropriate recording office). If
delivery is not completed within 180 days of the Closing Date solely because
such documents have not been returned by the appropriate recording office,
Seller shall deliver such document to Purchaser, or its designee, within such
time period as specified in a Seller's Officer's Certificate. In the event that
documents have not been received by the date specified in the Seller's Officer's
Certificate, a subsequent Seller's Officer's Certificate shall be delivered by
such date specified in the prior Seller's Officer's Certificate, stating a
revised date for receipt of documentation. The procedure shall be repeated until
the documents have been received and delivered. The Seller shall effect delivery
of all delayed recorded documents no later than 240 days from the Closing Date.
In the event Seller is unable to deliver such Mortgage Loan Document or
Documents in this time period, it shall notify Purchaser and the loan shall be
repurchased, as set forth in Section 3.03.
The Purchaser shall be responsible for recording Assignments of
Mortgage with respect to the Mortgage Loans from the Seller to the Purchaser no
later than 120 days from the date of receipt by the Purchaser. The Purchaser
shall pay all initial recording fees, for the Assignments of Mortgage and any
other fees in connection with the transfer of the Mortgage Loan Documents to the
Purchaser or its designee.
Section 2.07 Transfer of Servicing.
(a) Prior to the Transfer Date, the Seller shall service the Mortgage
Loans in accordance with the Interim Servicing Agreement. On the Transfer Date,
the Purchaser, or its designee, shall assume all servicing responsibilities
related to the Mortgage Loans, and the Seller shall cease all servicing
responsibilities related to the Mortgage Loans.
(b) No later than five (5) Business Days after the Transfer Date, the
Seller or its delegate shall remit to the Purchaser by wire all amounts received
with respect to the related Mortgage Loans by or on behalf of the Seller from
and including the Closing Date to and including the Transfer Date (net of any
unpaid interim servicing fee) due Seller and any other fees, charges, expenses
and advances permitted the Seller under the Interim Servicing Agreement),
together with the items scheduled (i) through (iv) noted below.
(i) A summary of remittances (including the account numbers,
amounts of payments, and account reserves, if any);
(ii) A trial balance of the Mortgage Loans;
(iii) A monthly collection report; and
9
(iv) As appropriate, arrears reports, prepaid reports, reports of
Loans added or removed, and reports of prepaid monthly
payments and of principal repayments.
For a period of sixty (60) days following the Transfer Date, within ten (10)
days of Seller's receipt, the Seller or its delegate shall forward to the
Purchaser all other sums received with respect to the Mortgage Loans after the
Transfer Date. After sixty (60) days, the Seller can return any funds so
received to the sender.
(c) During the Interim Servicing Period, the Seller or its delegate
shall take no action to compromise, renew, modify, or alter the terms of a
Mortgage Loan or to commence any judicial or non-judicial action to collect a
Mortgage Loan without the prior written consent of the Purchaser. The Purchaser
shall hold the Seller harmless with respect to any action taken or not taken at
the instruction of the Purchaser including delivery of the Servicing File on or
prior to the Transfer Date.
(d) During the Interim Servicing Period, the Purchaser shall compensate
the Seller or its delegate for servicing the Mortgage Loans as agreed to by the
parties in the Interim Servicing Agreement.
Section 2.08 Closing.
(a) The closing for the purchase and sale of the Mortgage Loans shall
take place on the Closing Date. The closing shall be either: by telephone or
facsimile, confirmed by letter or wire as the parties shall agree, or conducted
in person, at such place as the parties shall agree.
(b) The closing for the Mortgage Loans to be purchased on the Closing
Date shall be subject to each of the following conditions:
(i) at least two (2) Business Days prior to the Closing Date, the
Seller shall deliver to the Purchaser a magnetic diskette, or transmit
in electronic format, the Mortgage Loan Schedule as of the Cut-off
Date;
(ii) all of the representations and warranties of the Seller under
this Agreement shall be materially true and correct as of the Closing
Date or, with respect to representations and warranties made as of a
specified date other than the Closing Date, as of such specified date,
and no event shall have occurred which, with notice or the passage of
time, would constitute a material default under this Agreement;
(iii) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all closing documents, in
such forms as are agreed upon and reasonably acceptable to the
Purchaser, duly executed by all signatories other than the Purchaser
as required pursuant to the terms hereof;
(iv) the Seller shall have delivered and released to the Purchaser
(or its designee) on or prior to the Closing Date all documents
required pursuant to the terms of this Agreement; and
10
(v) all of the representations and warranties of the Purchaser
under this Agreement shall be materially true and correct as of the
Closing Date or, with respect to representations and warranties made
as of a specified date other than the Closing Date, as of such
specified date, and no event shall have occurred which, with notice or
the passage of time, would constitute a material default under this
Agreement.
(c) Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the Closing Date the Purchase Price pursuant to Section 2.02 of this
Agreement, by wire transfer of immediately available funds to the account
designated by the Seller.
11
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REPURCHASE AND INDEMNIFICATION
--------------------------------------------------------------
Section 3.01 Representations and Warranties of the Seller.
Seller represents, warrants and covenants to the Purchaser that as of
the Closing Date or as of such date specifically provided herein:
(a) The Seller is a national banking association duly organized,
validly existing and in good standing under the laws of the United States. The
Seller has all licenses necessary to carry out its business as now being
conducted, and is licensed and qualified to transact business in and is in good
standing under the laws of each state in which any Mortgaged Property is located
or is otherwise exempt under applicable law from such licensing or qualification
or is otherwise not required under applicable law to effect such licensing or
qualification and no demand for such licensing or qualification has been made
upon the Seller by any such state, and in any event the Seller is in compliance
with the laws of any such state to the extent necessary to ensure the
enforceability of each Mortgage Loan;
(b) The Seller has the full power and authority and legal right to
hold, transfer and convey each Mortgage Loan, to sell each Mortgage Loan and to
execute, deliver and perform, and to enter into and consummate all transactions
contemplated by this Agreement and to conduct its business as presently
conducted. The Seller has duly authorized the execution, delivery and
performance of this Agreement, the Interim Servicing Agreement, and any
agreements contemplated hereby, has duly executed and delivered this Agreement,
and any agreements contemplated hereby, and this Agreement and each Assignment
of Mortgage to the Purchaser and any agreements contemplated hereby, will
constitute the legal, valid and binding obligations of the Seller, enforceable
against it in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and similar laws, and by equitable principles affecting the
enforceability of the rights of creditors. All requisite corporate action has
been taken by the Seller to make this Agreement, the Interim Servicing Agreement
and all agreements contemplated hereby valid and binding upon the Seller in
accordance with their terms;
(c) Neither the execution and delivery of this Agreement, the sale of
the Mortgage Loans to the Purchaser, the consummation of the transactions
contemplated hereby, nor the fulfillment of or compliance with the terms and
conditions of this Agreement will conflict with any of the terms, conditions or
provisions of the Seller's articles of association or by-laws or materially
conflict with or result in a material breach of any of the terms, conditions or
provisions of any legal restriction or any agreement or instrument to which the
Seller is now a party or by which it is bound, or constitute a default or result
in an acceleration under any of the foregoing, or result in the material
violation of any law, rule, regulation, order, judgment or decree to which the
Seller or its property is subject;
(d) There is no litigation, suit, proceeding or investigation pending
or, to the Seller's knowledge, threatened, or any order or decree outstanding,
which is reasonably likely to have a
12
material adverse effect on the sale of the Mortgage Loans, the execution,
delivery, performance or enforceability of this Agreement or the Interim
Servicing Agreement, or which is reasonably likely to have a material adverse
effect on the financial condition of the Seller;
(e) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this Agreement and
the Interim Servicing Agreement except for consents, approvals, authorizations
and orders which have been obtained;
(f) The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of the Seller, and the transfer,
assignment and conveyance of the Mortgage Notes and the Mortgages by the Seller
pursuant to this Agreement are not subject to bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction;
g) The origination and servicing practices of the Seller with respect
to each Mortgage Note and Mortgage have been legal and in accordance with
applicable laws and regulations in all material respects. The Seller further
represents and warrants that: with respect to payments that the Seller is
entitled to collect, all such payments made by the Mortgagor are in the
possession of, or under the control of, the Seller or its delegate, and there
exist no material deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made; all Mortgage Interest
Rate adjustments have been made in material compliance with state and federal
law and the terms of the related Mortgage Note; and any interest required to be
paid pursuant to applicable law has been properly paid and credited;
(h) The Seller will treat the sale of the Mortgage Loans to the
Purchaser as a sale for reporting and accounting purposes and, to the extent
appropriate, for federal income tax purposes;
(i) The Seller is duly qualified, licensed, registered and otherwise
authorized under all applicable federal, state and local laws, and regulations,
and meets the minimum capital requirements, if applicable, set forth by the OCC;
(j) The Seller is solvent and the sale of the Mortgage Loans will not
cause the Seller to become insolvent. The sale of the Mortgage Loans by Seller
is not undertaken with the intent to hinder, delay or defraud any creditors of
the Seller.
Section 3.02 Representations and Warranties as to Individual Mortgage
Loans.
The Seller hereby represents and warrants to the Purchaser, as to each
Mortgage Loan, as of the Closing Date or as of such date specifically provided
herein as follows:
(a) The information designated in the Mortgage Loan Schedule sent to
the Purchaser, is complete and correct in all material respects as of the
Cut-off Date;
(b) With respect to a first lien Mortgage Loan, the Mortgage creates a
first lien or a first priority ownership interest in an estate in fee simple in
real property securing the related Mortgage Note;
13
(c) With respect to a second lien Mortgage Loan, the Mortgage creates a
second lien or a second priority ownership interest in an estate in fee simple
in real property securing the related Mortgage Note;
(d) Except as set forth on the Mortgage Loan Schedule, there are no
material defaults under the terms of the Mortgage Loan; the Seller has not
advanced funds, or induced or solicited any advance of funds from a party other
than the owner of the Mortgaged Property subject to the Mortgage, directly or
indirectly, for the payment of any principal and interest required by the
Mortgage Loan;
(e) [Intentionally omitted];
(f) The Mortgage Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including, without limitation, the
defense of usury, nor will the operation of any of the terms of the Mortgage
Note or the Mortgage, or the exercise of any right thereunder, render the
Mortgage Note or Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or defense has
been asserted with respect thereto; and the Mortgagor was not a debtor in any
state or federal bankruptcy or insolvency proceeding at the time the Mortgage
Loan was originated;
(g) As of the date of origination of the Mortgage Loan, if required by
the Flood Disaster Protection Act of 1973, as amended, the Mortgaged Property
was covered by a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration insurance carrier, in an
amount representing coverage not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the maximum insurable value of the
improvements securing such Mortgage Loan and (iii) the maximum amount of
insurance which is available under the Flood Disaster Protection Act of 1973, as
amended. The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and upon the Mortgagor's failure
to do so, authorizes the holder of the Mortgage to maintain such insurance at
the Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(h) Any and all material requirements of any federal, state or local
law including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity,
transfer of servicing or disclosure laws applicable to the Mortgage Loan have
been complied with in all material respects;
(i) The Mortgage has not been satisfied, canceled or subordinated
(except as identified on the Mortgage Loan Schedule), in whole or in part, or
rescinded, and the Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part nor has any instrument been executed that would
effect any such release, cancellation, subordination or rescission;
(j) With respect to any first lien Mortgage Loan, the related Mortgage
is a valid, subsisting, enforceable and perfected first lien on the Mortgaged
Property and, with respect to any second lien Mortgage Loan, the related
Mortgage is a valid, subsisting, enforceable and
14
perfected second lien on the Mortgaged Property. The Mortgage and the Mortgage
Note do not contain any evidence of any security interest or other interest or
right thereto with respect to any other party and such lien is free and clear of
all adverse claims, liens and encumbrances having priority over the first or
second lien, as applicable, of the Mortgage subject only to (1) with respect to
any second lien Mortgage Loan, the related First Lien, (2) the lien of
non-delinquent current real property taxes and assessments not yet due and
payable, (3) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording which are
acceptable to mortgage lending institutions generally and (4) other matters to
which like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage or the
use, enjoyment, value or marketability of the related Mortgaged Property. Any
security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates (1) with
respect to any first lien Mortgage Loan, a valid, subsisting, enforceable and
perfected first lien and first priority security interest and (2) with respect
to any second lien Mortgage Loan, a valid, subsisting, enforceable and perfected
second lien and second priority security interest, in each case, on the property
described therein, and the Seller has the full right to sell and assign the same
to the Purchaser;
(k) The Mortgage Note and the related Mortgage are original and genuine
(or a Lost Note Affidavit has been provided by Seller) and each is the legal,
valid and binding obligation of the maker thereof, enforceable in all respects
in accordance with its terms subject to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application affecting the rights of
creditors and by general equitable principles and the Seller has taken all
action necessary to transfer such rights of enforceability to the Purchaser.
With respect to any Mortgage Loan as to which a Lost Note Affidavit has been
delivered to the Purchaser certifying that the original Mortgage Note has been
lost or destroyed and not been replaced, if such Mortgage Loan is subsequently
in default, the enforcement of such Mortgage Loan will not be materially
adversely affected by the absence of the original Mortgage Note. All parties to
the Mortgage Note and the Mortgage had the legal capacity to enter into the
Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage. The
Mortgage Note and the Mortgage have been duly and properly executed by such
parties. No fraud with respect to a Mortgage Loan has taken place on the part of
the Seller or to the Seller's knowledge, the Mortgagor, or, on the part of any
other party involved in the origination of the Mortgage Loan except to the
extent such fraud would not have a material adverse effect on such Mortgage
Loan. The proceeds of the Mortgage Loan have been fully disbursed and there is
no requirement for future advances thereunder, and any and all requirements as
to completion of any on-site or off-site improvements and as to disbursements of
any escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Mortgage Loan and the recording of the
Mortgage were paid or are in the process of being paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due under the Mortgage Note or
Mortgage;
(l) The Seller or its affiliate is the sole owner of record and holder
of the Mortgage Loan and the indebtedness evidenced by the Mortgage Note, and
upon recordation of the related mortgage assignment, the Purchaser or its
designee will be the owner of record of the Mortgage and the indebtedness
evidenced by the Mortgage Note, and upon the sale of the Mortgage Loan to the
Purchaser, the Seller or its delegate will retain the Servicing File in trust
for the Purchaser only for the purpose of servicing of the Mortgage Loans during
the Interim Servicing Period
15
pursuant to the Interim Servicing Agreement. Immediately prior to the transfer
and assignment to the Purchaser on the Closing Date, the Mortgage Loan,
including the Mortgage Note and the Mortgage, were not subject to an assignment
or pledge, and the Seller had good and marketable title to and was the sole
owner thereof and had full right to transfer and sell the Mortgage Loan to the
Purchaser free and clear of any encumbrance, equity, lien, pledge, charge, claim
or security interest and has the full right and authority subject to no interest
or participation of, or agreement with, any other party, to sell and assign the
Mortgage Loan pursuant to this Agreement and following the sale of the Mortgage
Loan, the Purchaser will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest created by, through or under the Seller. The Seller intends to
relinquish all rights to possess, control and monitor the Mortgage Loan, except
for the purposes of servicing the Mortgage Loan during the Interim Servicing
Period pursuant to the Interim Servicing Agreement;
(m) If required by the Underwriting Standards at the time of
origination, each Mortgage Loan is covered by a form of policy or insurance
acceptable under the Underwriting Standards and each such title insurance policy
is issued by a title insurer acceptable under the Underwriting Standards and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring (subject to the exceptions contained in (j)(1), (2), (3) and
(4) above) the Seller, its successors and assigns, as to the first or second, as
applicable, priority lien of the Mortgage in the original principal amount of
the Mortgage Loan. Where required by applicable state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of the required
mortgage title insurance. The Seller, its successors and assigns, are the sole
insureds of such lender's title insurance policy, such title insurance policy
has been duly and validly endorsed to the Purchaser or the assignment to the
Purchaser of the Seller's interest therein does not require the consent of or
notification to the insurer and such lender's title insurance policy is in full
force and effect and will be in full force and effect upon the consummation of
the transactions contemplated by this Agreement. No claims have been made under
such lender's title insurance policy, and no Prior Interest Holder of the
related Mortgage, including the Seller, has done, by act or omission, anything
which would impair the coverage of such lender's title insurance policy, except
as otherwise noted in the Mortgage Loan Schedule;
(n) To Seller's knowledge, except as set forth on the Mortgage Loan
Schedule, there is no material default, breach, violation or event of
acceleration existing under the Mortgage or the related Mortgage Note and no
material event has occurred which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default, breach,
violation or event permitting acceleration; and neither the Seller nor any prior
mortgagee has waived any default, breach, violation or event permitting
acceleration, provided delinquency of payment shall not constitute an event of
default for purposes of the foregoing. To Seller's knowledge, except as set
forth on the Mortgage Loan Schedule, with respect to each second lien Mortgage
Loan, (i) there is no default, breach, violation or event of acceleration
existing under the First Lien, (ii) no event has occurred which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute a default, breach, violation or event of acceleration
thereunder, and either (A) the prior mortgage contains a provision which allows
or (B) applicable law requires, the mortgagee under the second lien Mortgage
Loan to receive notice of, and affords such mortgagee an opportunity to cure any
default by payment in full
16
or otherwise under the prior mortgage, provided delinquency of payment shall not
constitute an event of default for purposes of the foregoing;
(o) The Mortgage Loan complies with all the material terms, conditions
and requirements of the Underwriting Standards in effect at the time of
origination of such Mortgage Loan. The Mortgage Loan bears interest at the
Mortgage Interest Rate set forth in the Mortgage Loan Schedule. The Mortgage
contains the usual and enforceable provisions of the originator at the time of
origination for the acceleration of the payment of the unpaid principal amount
of the Mortgage Loan if the related Mortgaged Property is sold without the prior
consent of the mortgagee thereunder;
(p) At origination of the Mortgage Loan there was, and to Seller's
knowledge, there currently is, no proceeding pending for the total or partial
condemnation of the Mortgaged Property. There have not been any condemnation
proceedings with respect to the Mortgaged Property and, to the Seller's
knowledge, there are no such proceedings scheduled to commence at a future date.
The Mortgaged Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty so as to affect adversely
the value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended and each Mortgaged Property is in good
repair;
(q) The related Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby. To Seller's knowledge, there is no homestead or other
exemption available to the Mortgagor which would interfere with the right to
sell the Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
(r) If the Mortgage constitutes a deed of trust, a trustee, authorized
and duly qualified if required under applicable law to act as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses, except as may be required by local law, are or will become
payable by the Purchaser to the trustee under the deed of trust, except in
connection with a trustee's sale or attempted sale after default by the
Mortgagor;
(s) The Servicing File contains an appraisal by a Qualified Appraiser
(including an AVM, tax assessment or a broker's price opinion) of the related
Mortgaged Property in accordance with the Underwriting Standards;
(t) The related Mortgage Note is not and has not been secured by any
collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security agreement or chattel mortgage and such
collateral does not serve as security for any other obligation;
(u) The Mortgage Loan does not contain "graduated payment" features; to
the extent any Mortgage Loan contains any buydown provision, such buydown funds
have been maintained and administered in accordance with, and such Mortgage Loan
otherwise complies with, the Accepted Servicing Practices relating to buydown
loans;
(v) To the Seller's knowledge, the Mortgagor is not insolvent or in
bankruptcy except as otherwise provided in the Mortgage Loan Schedule;
17
(w) As to Mortgage Loans that are not secured by an interest in a
leasehold estate, the Mortgaged Property is located in the state identified in
the Mortgage Loan Schedule and consists of a single parcel of real property with
a detached single family residence erected thereon, or a townhouse, or a two-to
four-family dwelling, or an individual condominium unit in a condominium
project, or an individual unit in a planned unit development or a de minimis
planned unit development; provided, however, that no residence or dwelling is a
single parcel of real property with a cooperative housing corporation erected
thereon. As of the date of origination, no portion of the Mortgaged Property was
used for commercial purposes, and, to Seller's knowledge, since the date of
origination no portion of the Mortgaged Property has been used for commercial
purposes;
(x) Principal payments on the Mortgage Loan commenced no more than
sixty (60) days after funds were disbursed in connection with the Mortgage Loan.
The Mortgage Note is payable on the same day of each month in equal monthly
installments of principal and interest sufficient to amortize the Mortgage Loan
fully by the stated maturity date, over an original term of not more than thirty
(30) years, except in the case of a Mortgage Loan which, by its terms, requires
a balloon payment of the outstanding principal balance prior to full
amortization;
(y) As of the date of origination, and to the Seller's knowledge, on
the Closing Date, the Mortgaged Property was expected to be lawfully occupied
under applicable law, and all inspections, licenses and certificates required to
be made or issued with respect to all occupied portions of the Mortgaged
Property and, with respect to the use and occupancy of the same, including but
not limited to certificates of occupancy and fire underwriting certificates, had
been made or obtained from the appropriate authorities;
(z) If the Mortgaged Property is a condominium unit or a planned unit
development (other than a de minimis planned unit development), or stock in a
cooperative housing corporation, such condominium, cooperative or planned unit
development project meets the Seller's eligibility requirements as set forth in
the Underwriting Standards;
(aa) To Seller's knowledge, there is no pending action or proceeding
directly involving the Mortgaged Property in which compliance with any
environmental law, rule or regulation is an issue, there is no violation of any
environmental law, rule or regulation with respect to the Mortgaged Property;
and nothing further remains to be done to satisfy in full all requirements of
each such law, rule or regulation constituting a prerequisite to use and
enjoyment of the Mortgaged Property; there does not exist on the related
Mortgaged Property any hazardous substances, hazardous wastes or solid wastes,
as such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation;
(bb) No Mortgage Loan was made in connection with the rehabilitation of
a Mortgaged Property or facilitating the trade-in or exchange of a Mortgaged
Property;
(cc) Each Mortgage Loan has been serviced in all material respects in
compliance with Accepted Servicing Practices and the all applicable law and the
related Servicing File is sufficient to service such Mortgage Loan in accordance
with Accepted Servicing Practices.
18
(dd) With respect to any ground lease to which a Mortgaged Property may
be subject: (i) the Mortgagor is the owner of a valid and subsisting leasehold
interest under such ground lease; (ii) such ground lease is in full force and
effect, unmodified and not supplemented by any writing or otherwise except as
contained in the Mortgage File; (iii) all rent, additional rent and other
charges reserved therein have been fully paid to the extent payable as of the
Closing Date; (iv) the Mortgagor enjoys the quiet and peaceful possession of the
leasehold estate, subject to any sublease; (v) the Mortgagor is not in default
under any of the terms of such ground lease, and there are no circumstances
which, with the passage of time or the giving of notice, or both, would result
in a default under such ground lease; (vi) the lessor under such ground lease is
not in default under any of the terms or provisions of such ground lease on the
part of the lessor to be observed or performed; (vii) the lessor under such
ground lease has satisfied any repair or construction obligations due as of the
Closing Date pursuant to the terms of such ground lease; (viii) the execution,
delivery and performance of the Mortgage do not require the consent (other than
those consents which have been obtained and are in full force and effect) under,
and will not contravene any provision of or cause a default under, such ground
lease; (ix) the ground lease term extends, or is automatically renewable, for at
least five years beyond the maturity date of the related Mortgage Loan; and (x)
the Purchaser has the right to cure defaults on the ground lease.
(ee) With respect to any broker fees collected and paid on any of the
Mortgage Loans, all broker fees have been properly assessed to the borrower and
no claims will arise as to broker fees that are double charged and for which the
borrower would be entitled to reimbursement;
(ff) Except as otherwise provided in this Agreement, the Mortgage Note,
the Mortgage, the Assignment of Mortgage and the other documents set forth in
Exhibit A and required to be delivered on the Closing Date have been delivered
to the Purchaser or its designee;
(gg) Either (a) no consent for the second lien Mortgage Loan is
required by the holder of the related First Lien or (b) such consent has been
obtained and is contained in the Mortgage File;
(hh) Except as set forth on the Mortgage Loan Schedule, with respect to
any second lien Mortgage Loan, the Seller has not received notice of: (i) any
proceeding for the total or partial condemnation of any Mortgaged Property, (ii)
any subsequent, intervening mortgage, lien, attachment, lis pendens or other
encumbrance affecting any Mortgaged Property or (iii) any default under any
mortgage, lien or other encumbrance senior to the Mortgage related thereto;
(ii) No Mortgage Loan is a "home equity line of credit", except as
otherwise noted in the Mortgage Loan Schedule;
(jj) Except as set forth on the Mortgage Loan Schedule, no Mortgage
Loan meets the definition of mortgage set forth in Section 1602 (aa) of the
Truth-in-Lending Act.
Section 3.03 Repurchase; Substitution.
(a) It is understood and agreed that the representations and warranties
set forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans
and delivery of the Mortgage Files and Servicing Files to the Purchaser, or its
designee until the date which is one (1) year
19
after the Closing Date, and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note or
Assignment or the examination, or lack of examination, of any Mortgage Loan
Document. Upon discovery by the Seller or the Purchaser of a breach of any of
the foregoing representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser in any
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other.
Further, it is understood as set forth in Section 2.06 that
Seller is to provide all required Mortgage Loan Documents within 240 days
following the Closing Date. If within the 240-day period following the Closing
Date, Purchaser notifies Seller that any Mortgage Loan Document Seller is
required to deliver pursuant to 2.06 is still undelivered, it shall provide
Seller a list of all such missing documents. If Seller is unable to provide the
missing documents within thirty (30) days from notice, Seller shall be required
to repurchase such Mortgage Loan(s) for the Repurchase Price. The agreement to
repurchase for document defects shall survive for one (1) year from the Closing
Date.
(b) The Seller shall have a period of sixty (60) days from the earlier
of its discovery or its receipt of written notice from Purchaser of any such
breach within which to correct or cure such breach. The Seller hereby covenants
and agrees that if any such breach is not corrected or cured within such sixty
(60) day period, the Seller shall, not later than thirty (30) days following the
end of the sixty (60) day cure period either, at the Seller's option repurchase
such Mortgage Loan at the Repurchase Price or substitute a mortgage loan for the
defective Mortgage Loan as provided below.
At the time of repurchase, the Purchaser and the Seller shall
arrange for the reassignment of the removed Mortgage Loan, servicing released,
to the Seller and the delivery to the Seller of any documents relating to the
removed Mortgage Loan. In the event of a repurchase, the Seller shall,
simultaneously with such reassignment, give written notice to the Purchaser and
any servicer of the Mortgage Loans that such repurchase has taken place, amend
the Mortgage Loan Schedule to reflect the withdrawal of the removed Mortgage
Loan from this Agreement.
(c) If the Seller is required to repurchase any Mortgage Loan pursuant
to this Section 3.03 as a result of a breach of any of the representations and
warranties set forth in Section 3.02, the Seller may, with the Purchaser's prior
consent, which consent shall not be unreasonably withheld, within two (2) years
from the Closing Date, remove such defective Mortgage Loan from the terms of
this Agreement and substitute another mortgage loan for such defective Mortgage
Loan, in lieu of repurchasing such defective Mortgage Loan. Any substitute
Mortgage Loan shall:
(i) have a principal balance at the time of substitution not
in excess of the principal balance of the defective Mortgage Loan
(the amount of any difference, plus one month's interest thereon at
the Mortgage Interest Rate borne by the defective Mortgage Loan,
being paid by the Seller by wire transfer of immediately available
funds),
(ii) have a Mortgage Interest Rate not less than, and not more
than, one percentage point than, the Mortgage Interest rate of the
removed Mortgage Loan,
20
(iii) have a remaining term to stated maturity not later than,
and not more than one year less than, the remaining term to stated
maturity of the removed Mortgage Loan,
(iv) be, in the reasonable determination of the Purchaser, of
the same type, quality and character (including location of the
Mortgaged Property) as the removed Mortgage Loan as if the breach
had not occurred,
(v) have a Loan to value Ratio at origination no greater than
that of the removed Mortgage Loan,
(vi) have the same lien priority as that of the removed
Mortgage Loan, and
(vii) be, in the reasonable determination of the Purchaser, in
material compliance with the representations and warranties
contained in this Agreement and described in Section 3.02 as of the
date of substitution.
(d) At the time of repurchase or substation, the Purchaser and the
Seller shall arrange for the reassignment of the removed Mortgage Loan,
servicing released, to the Seller and the delivery to the Seller of any
documents relating to the removed Mortgage Loan. In the event of a repurchase or
substitution, the Seller shall, simultaneously with such reassignment, give
written notice to the Purchaser and any servicer of the Mortgage Loans that such
repurchase or substitution has taken place, amend the Mortgage Loan Schedule to
reflect the withdrawal of the removed Mortgage Loan from this Agreement and, in
the case of substitution, identify a substitute Mortgage Loan therefore. In
connection with any such substitution, the Seller shall be deemed to have made
as to such substitute Mortgage Loan the representations and warranties set forth
in this Agreement except that all such representations and warranties set forth
in this Agreement shall be deemed made as of the date of such substitution. The
Seller shall effect such substitution by delivering to the Purchaser for such
substitute Mortgage Loan the documents required by Section 2.06. The Seller
shall remit directly to the Purchaser, or in accordance with the Purchaser's
instructions, the Monthly Payment with regard to such substitute Mortgage Loan.
The Monthly Payment on a substitute Mortgage Loan due on the Due Date in the
month of substitution shall be the property of the Seller and the Monthly
Payment on the Mortgage Loan for which the substitution is made due on such date
shall be the property of the Purchaser.
(e) It is understood and agreed that the obligation of the Seller set
forth in this Section 3.03 to cure, repurchase or substitute for a defective
Mortgage Loan, and to indemnify Purchaser pursuant to Section 3.05, constitutes
the sole remedy of the Purchaser respecting a breach of the foregoing
representations and warranties.
Sectin 3.04 Representations and Warranties of the Purchaser.
Purchaser, represents, warrants and covenants to the Seller that as of
the Closing Date or as of such date specifically provided herein:
(a) Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all licenses
necessary to carry out its business as now being conducted, and is licensed and
qualified to transact business in and is in good standing under the laws of each
state in which any Mortgaged Property is located or is otherwise
21
exempt under applicable law from such licensing or qualification or is otherwise
not required under applicable law to effect such licensing or qualification and
no demand for such licensing or qualification has been made upon the Purchaser
by any such state, and in any event the Purchaser is in compliance with the laws
of any such state to the extent necessary to ensure the enforceability of each
Mortgage Loan and the servicing of the Mortgage Loans in accordance with the
terms of this Agreement;
(b) The Purchaser has the full power and authority and legal right to
hold, service, transfer, convey and sell each Mortgage Loan and to execute,
deliver and perform, and to enter into and consummate all transactions
contemplated by this Agreement and the Interim Servicing Agreement and to
conduct its business as presently conducted; the Purchaser has duly authorized
the execution, delivery and performance of this Agreement, the Interim Servicing
Agreement and any agreements contemplated hereby, has duly executed and
delivered this Agreement, the Interim Servicing Agreement, and any agreements
contemplated hereby, and this Agreement, the Interim Servicing Agreement, and
any agreements contemplated hereby, will constitute the legal, valid and binding
obligations of the Purchaser, enforceable against it in accordance with their
respective terms , except as such enforceability may be limited by bankruptcy,
insolvency, moratorium, reorganization and similar laws, and by equitable
principles affecting the enforceability of the rights of creditors; and all
requisite corporate action has been taken by the Purchaser to make this
Agreement, the Interim Servicing Agreement, and all agreements contemplated
hereby valid and binding upon the Purchaser all in accordance with their terms;
(c) Neither the execution and delivery of this Agreement, the Interim
Servicing Agreement, the purchase of the Mortgage Loans by the Purchaser, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement and the Interim
Servicing Agreement will conflict with any of the terms, conditions or
provisions of the Purchaser's charter or by-laws or materially conflict with or
result in a material breach of any of the terms, conditions or provisions of any
legal restriction or any agreement or instrument to which the Purchaser is now a
party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the material violation of
any law, rule, regulation, order, judgment or decree to which the Purchaser or
its property is subject;
(d) There is no litigation, suit, proceeding or investigation pending
or, to the knowledge of the Purchaser, threatened, or any order or decree
outstanding, which is reasonably likely to have a material adverse effect on the
purchase of the Mortgage Loans, the execution, delivery, performance or
enforceability of this Agreement or the Interim Servicing Agreement, or which is
reasonably likely to have a material adverse effect on the financial condition
of the Purchaser;
(e) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Purchaser of or compliance by the Purchaser with this
Agreement and the Interim Servicing Agreement, except for consents, approvals,
authorizations and orders which have been obtained;
(f) The consummation of the transactions contemplated by this Agreement
and the Interim Servicing Agreement are in the ordinary course of business of
the Purchaser;
22
(g) The Purchaser is solvent and the purchase of the Mortgage Loans
will not cause the Purchaser to become insolvent; and
(h) The Purchaser has not dealt with any broker, investment banker,
agent or other person that may be entitled to any commission or compensation in
connection with the purchase of the Mortgage Loans.
(i) The Purchaser has on hand or access to sufficient funds available
to pay the Purchase Price hereunder and all fees and expenses required to be
paid by the Purchaser related to the transactions contemplated hereunder and the
Interim Servicing Agreement.
Section 3.05 Indemnification.
(a) The Seller hereby agrees, for a period of one (1) year from the
Closing Date, to indemnify and hold harmless, the Purchaser, its affiliates,
officers, directors, employees and agents from any actual direct out of pocket
damages, losses (exclusive of overhead), demands, offsets, defenses,
counterclaims, actions or proceedings, and costs of defense, including
reasonable attorney's fees and court costs, arising from or in any way relating
to (i) any breach of the Seller's representations, warranties or covenants
contained in this Agreement, or (ii) any claim brought by any third party
against the Purchaser based upon any allegation which, if true, would constitute
a breach of the Seller's representations, warranties or covenants contained in
this Agreement.
(b) The Purchaser hereby agrees, for a period of one (1) year from the
Closing Date to indemnify and hold harmless, the Seller from any actual direct
out of pocket damages, losses (exclusive of overhead), demands, offsets,
defenses, counterclaims, actions or proceedings, and costs of defense, including
reasonable attorney's fees and court costs, arising from or in any way relating
to (i) any breach of the Purchaser's representations, warranties or covenants
contained in this Agreement, (ii) any claim brought by any third party against
the Seller based upon any allegation which, if true, would constitute a breach
of the Purchaser's representations, warranties or covenants contained in this
Agreement or (iii) the Purchaser's servicing of any Mortgage Loan after the
Transfer Date.
(c) Any party seeking indemnification under Section 3.05 shall promptly
notify the party hereto obligated to provide indemnification hereunder of any
claim with respect to which the indemnified party claims indemnification
hereunder, provided that failure of the indemnified party to give such notice
shall not relieve the indemnifying party of its obligations under Section 3.05
except to the extent, if at all, that such indemnifying party shall have been
materially prejudiced thereby. The indemnifying party shall be entitled to
assume the defense of such third party claim, and in the case of such an
assumption, the indemnifying party shall have the authority to negotiate,
compromise and settle such third party claim. The indemnified party shall retain
the right to employ its own counsel and to participate in the defense of any
third party claim, the defense of which has been assumed by the indemnifying
party pursuant hereto, but the indemnified party shall bear and shall be solely
responsible for its own costs and expenses in connection with such
participation. The indemnifying party shall not, without the prior written
consent of the indemnified party, settle or compromise any claim or consent to
the entry of any
23
judgment that does not include as an unconditional term thereof, the giving by
the claimant or the plaintiff to the indemnified party a release from all
liability in respect of such claim.
Section 3.06 Limitation on Liability of the Seller and Others.
Neither the Seller nor any of the officers, employees or agents of the
Seller shall be liable to the Purchaser for any action taken or for refraining
from the taking of any action in good faith pursuant to this Agreement, or for
errors in judgment made in good faith; provided, however, that this provision
shall not protect the Seller or any such person against any breach of warranties
or representations made herein, or failure to perform its obligations in
compliance with any standard of care set forth in this Agreement, or any
liability which would otherwise be imposed by reason of negligence, bad faith or
willful misconduct, or any breach of the terms and conditions of this Agreement.
The Seller and any officer, employee or agent of the Seller may rely in good
faith on any document of any kind prima facie properly executed and submitted by
the Purchaser respecting any matters arising hereunder.
24
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01Waiver, Amendment or Modification.
Any waiver, amendment or modification of any provision of this
Agreement and/or any schedule or exhibit hereto or any right, power or remedy
hereunder or thereunder shall not be effective unless made in writing and signed
by the party against whom enforcement of such waiver, amendment or modification
is sought. No failure or delay by either party in exercising any right, power or
remedy with respect to any of its rights hereunder shall operate as a waiver
thereof in the future.
Section 4.02 Governing Law; Waiver of Jury Trial.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois without regard to its conflict of law
provisions, except to the extent preempted by federal law. The obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws. Further, the parties consent to the jurisdiction and venue of
the state and federal courts located in ▇▇▇▇ County, Illinois. Further, the
parties agree to submit to the applicable procedural rules, including those
delineating the methods for service and process, of the state and federal Courts
located in ▇▇▇▇ County, Illinois, as applicable. THE SELLER AND THE PURCHASER
(EACH FOR ITSELF) COVENANT: (I) NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY
ISSUE ARISING HEREUNDER, UNDER THE INTERIM SERVICING AGREEMENT OR RELATED
DOCUMENTS TRIABLE BY A JURY AND (II) WAIVE ANY RIGHT TO TRIAL BY JURY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO
TRIAL BY JURY IS SEPARATELY GIVEN KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL BY THE PURCHASER AND THE SELLER AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
JURY TRIAL WOULD OTHERWISE ACCRUE.
Section 4.03 Notices.
Any demands, notices or other communications permitted or required
hereunder shall be in writing and shall be deemed conclusively to have been
given if personally delivered at or mailed by registered mail, postage prepaid,
and return receipt requested or certified mail, return receipt requested, or
transmitted by telex, telegraph or telecopier and confirmed by a similar mailed
writing, as follows:
(i) if to the Seller:
Bank One, N.A.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
25
with copy to:
Bank One Corporation
Mail Code IL1-0292
1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(ii) if to the Purchaser:
Franklin Credit Management Corporation
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
Franklin Credit Management Corporation
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
Section 4.04 Severability of Provisions.
Any part, provision, covenant, representation or warranty 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, covenant,
representation or warranty of this Agreement which is prohibited or
unenforceable or is held to be void or unenforceable in any jurisdiction shall
be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereto
waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, covenant,
representation or warranty of this Agreement shall deprive any party of the
economic benefit intended to be conferred by this Agreement, the parties shall
negotiate, in good faith, to develop a structure the economic effect of which is
nearly as possible the same as the economic effect of this Agreement without
regard to such invalidity.
Section 4.04 Exhibits.
The exhibits to this Agreement and the Mortgage Loan Schedule are
hereby incorporated and made a part hereof and are an integral part of this
Agreement.
26
Section 4.06 General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;
(e) the words "herein," "hereof," "hereunder," and other words of
similar import refer to this Agreement as a whole and not to any particular
provision;
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration; and
(g) headings of the Articles and Sections in this Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
Section 4.07 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by any party at the closing, and (iii)
financial statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 4.08 Confidentiality of Information.
Both the Seller and the Purchaser have made and will continue
throughout the term of this Agreement to make available to the other party
confidential and proprietary materials and information ("Proprietary
Information"). Prospectively, each party shall advise the other of material and
information that is confidential and/or proprietary. All material and
information
27
provided by either party to the other relating to the business, policies,
procedures, customs, forms, customers and strategies of such party or any of its
affiliates, including information previously divulged or delivered to the other
party by such party regarding the aforementioned subject matter is hereby
designated as confidential and proprietary and shall be considered to be
Proprietary Information. It is understood that the obligations set forth in this
Section do not apply to materials or information that: (i) are already, or
otherwise become, generally known by third parties as a result of no act or
omission of the receiving party; (ii) subsequent to disclosure hereunder are
lawfully received from a third party having the right to disseminate the
information without restriction on disclosure; (iii) are generally furnished to
others by the disclosing party without restriction on disclosure; (iv) were
already known by the receiving party prior to receiving them from the disclosing
party and were not received from a third party in breach of that third party's
obligations of confidentiality; or (v) are independently developed by the
receiving party without the use of Proprietary Information of the disclosing
party.
Each party shall maintain the confidentiality of the other party's
Proprietary Information and comply with the federal "Privacy of Consumer
Financial Information" Regulation (12 CFR Part 40), as amended from time to time
and issued pursuant to Section 504 of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (15 U.S.C. 6801
et seq.) (the "Privacy Regulation"), and will not use or disclose such
Proprietary Information or Non Public Personal Information (as defined below)
without the prior written consent of the other party. Notwithstanding the
foregoing, each party may disclose the other party's Proprietary Information to
its affiliates, agents, and other third parties on a need-to-know basis,
provided that such parties are under a similar obligation to maintain the
confidentiality of such party's Proprietary Information. The term "Non Public
Personal Information" will have the same meaning as that term is used in the
Privacy Regulation.
Further, the parties may disclose the other's Proprietary Information
in a judicial or quasi-judicial proceeding when required to do so by law when
responding to a subpoena, deposition notice or similar judicial or governmental
demand; in such situations, however, the party being requested to disclose the
other's Proprietary Information shall endeavor to provide notice to the other
party whereby the other party may intervene in the proceeding, if it wishes, and
endeavor to prevent such disclosure. Additionally, the parties may disclose the
other's Proprietary Information to a regulatory authority with supervisory power
over such party, provided such information is identified as confidential
non-public information.
Notwithstanding anything to the contrary, nothing in this Agreement
shall prohibit the disclosure by either Purchaser or Seller of the tax treatment
and tax structure, each as defined in Treasury Regulations Section 1.6011-4, of
the transactions contemplated by this Agreement (the "Transactions") (but no
other details about the matters covered by this Agreement) and all materials of
any kind (including opinions or other tax analyses) relating to such tax
treatment or tax structure; provided, however, that such disclosure may not be
made (a) until the earlier of (i) the date of the public announcement of
discussions relating to the Transactions, (ii) the date of the public
announcement of the Transactions, or (iii) the date of the execution of the
Agreement; (b) to the extent required to be kept confidential to comply with any
applicable securities laws; or (c) that identifies the parties to the
Transactions or confidential commercial information regarding the Transactions.
Each party shall have the unlimited ability to consult with any tax advisor
(including a tax advisor independent from all other entities involved in the
Transactions) regarding the tax treatment of tax structure of the Transactions.
This Section 4.08, although not
28
intended to authorize any waiver of the attorney-client privilege, is intended
to cause the Transactions to be treated as not having been offered under
conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or any
successor provision) of the Treasury Regulations promulgated under Section 6011
of the Code and shall be construed in a manner consistent with such purpose.
Section 4.09 Recordation of Assignments of Mortgage.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Purchaser's expense in the event recordation is necessary under
applicable law.
Section 4.10 Relationship of Parties
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto.
Section 4.11 Execution; Successors and Assigns.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement. This Agreement shall inure to the benefit
of and be binding upon the Seller and the Purchaser and their respective
successors and assigns.
The Purchaser shall have the right, without the consent of the Seller,
to assign, in whole or in part, its interest under this Agreement with respect
to some or all of the Mortgage Loans, and designate any person to exercise any
rights of the Purchaser hereunder, by executing a mutually agreed upon form of
Assignment, Assumption and Recognition Agreement and the assignee or designee
shall accede to the rights and obligations hereunder of the Purchaser with
respect to such Mortgage Loans; provided, however in n o event shall Purchaser
assign its interest hereunder to more than six (6) different Persons. In no
event shall the Purchaser sell a partial interest in any Mortgage Loan without
the written consent of the Seller, which consent shall not be unreasonably
denied. All references to the Purchaser in this Agreement shall be deemed to
include its assignee or designee. The Seller may assign this Agreement to one of
its affiliates without the consent of the Purchaser.
Section 4.12 Entire Agreement.
This Agreement (including the Interim Servicing Agreement, any
additional agreements contemplated hereby and the exhibits and schedules hereto)
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, written or oral, and
understandings relating to the subject matter hereof, other than the letter
agreement dated April 14, 2004, 2004 between Purchaser and Seller related to
confidentiality (the "Confidentiality Agreement"), which Confidentiality
Agreement shall survive and remain in full force and effect according to its
terms. Each of the parties to this Agreement acknowledges
29
that no representations, agreements or promises were made to the other party to
this Agreement or to any of its employees other than those representations,
agreements or promises specifically contained herein, in the Interim Servicing
Agreement or in the Confidentiality Agreement. This Agreement and the Interim
Servicing Agreement set forth the entire understanding between the parties
hereto with respect to the matters contemplated herein and shall be binding upon
all successors and assigns of the parties.
This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Each of the parties to this Agreement
acknowledges that no representations, agreements or promises were made to the
other party to this Agreement or any of its employees other than those
representations, agreements or promises specifically contained herein. This
Agreement and the Interim Servicing Agreement set forth the entire understanding
between the parties hereto and shall be binding upon all successors and assigns
of all of the parties.
Section 4.13 No Solicitation.
For a period of one (1) year from and after the Closing Date, the
Seller agrees that it will not take any action or permit or cause any action to
be taken by any of its agents or affiliates, or by any independent contractors
on the Seller's behalf, use the Mortgage Loan Schedule to solicit, by any means,
including, but not limited to personally, by telephone, by mail, or
electronically by e-mail or through the internet or otherwise, the borrower or
obligor under any Mortgage Loan to refinance the Mortgage Loan, in whole or in
part, without the prior written consent of the Purchaser. This Section 4.13
shall not be deemed to preclude the Seller or any of its affiliates from
soliciting any mortgagor for any other financial, banking, brokerage or
insurance product or service.
For a period of one (1) year from and after the Closing Date, the
Purchaser agrees that it will not take any action or permit or cause any action
to be taken by any of its agents or affiliates, or by any independent
contractors on the Purchaser's behalf, to utilize the names or other information
with respect to the borrowers or obligators under any Mortgage Loan for the
purpose of soliciting or attempting to sell any such person any financial,
banking, brokerage or insurance product or service, except for those related to
the Mortgage Loan or a refinancing of the Mortgage Loan. It is understood and
agreed that all rights and benefits relating to the solicitation of any
Mortgagors to refinance any Mortgage Loans and the attendant rights, title and
interest in and to the list of such Mortgagors and data relating to their
Mortgages (including insurance renewal dates) shall be transferred to the
Purchaser pursuant hereto on the Closing Date and the Seller shall take no
action to undermine those rights and benefits. This Section 4.13 shall not,
however, be deemed to preclude the Seller or any of its affiliates from
soliciting any Mortgagor for any other financial products or services.
Notwithstanding the foregoing, it is understood and agreed that (A)
promotions, including, without limitation, mass mailings based on commercially
acquired mailing lists and newspaper, radio and television advertising, and (B)
promotions and solicitations of persons already being provided other banking,
financial, brokerage or insurance products or services by (i) Seller and its
affiliates, on the one hand, or (ii) Purchaser and its affiliates, on the other
hand, shall not constitute a prohibited solicitation under this Section 4.13 by
such party, provided that
30
no segment of the population contacted with respect to any such promotions or
solicitations shall consist primarily of the borrowers or obligors under the
Mortgage Loans.
Section 4.14 Costs
The Purchaser shall pay any commissions due its salesmen and the legal
fees and expenses of its attorneys and all other costs and expenses incurred in
connection with the transfer and delivery of the Mortgage Loans, including but
not limited to, recording fees for the Assignments of Mortgages, and fees for
title policy endorsements and continuations. Each party shall pay its own
attorney's fees and expenses.
Section 4.15 Survival
The representations, warranties, indemnities, covenants and agreements
of the parties provided in this Agreement and the parties' obligations hereunder
shall survive the execution and delivery and the termination or expiration of
this Agreement for a period of one (1) year from the Closing Date. In addition,
any provisions relating to the enforcement of any of the surviving provisions
and any remedies available under this Agreement shall also survive.
Section 4.16 Media Releases
The Purchaser shall not use any trade name, trademark, service ▇▇▇▇, or
any other information which identifies the Seller in the Purchaser's sales,
marketing, or publicity activities, including, but not limited to, press
releases, interviews with representatives of any written publication, television
station or network, or radio station or network, without the prior written
consent of the Seller.
The Seller shall not use any trade name, trademark, service ▇▇▇▇, or
any other information which identifies the Purchaser in the Seller's sales,
marketing, or publicity activities, including, but not limited to, press
releases, interviews with representatives of any written publication, television
station or network, or radio station or network, without the prior written
consent of the Purchaser.
[Signature Page Follows]
31
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly authorized
as of the day and year first above written.
FRANKLIN CREDIT MANAGEMENT CORPORATION
Purchaser
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
BANK ONE, N.A.
Seller
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
32
Exhibit A
Contents of Mortgage File
[omitted]
[The registrant shall furnish supplementally a copy of any omitted schedule to
the Commission upon request.]
A-1
Exhibit B
Form of Interim Servicing Agreement
[omitted]
[The registrant shall furnish supplementally a copy of any omitted schedule to
the Commission upon request.]
B-1
Exhibit C
Mortgage Loan Schedule
[omitted]
[The registrant shall furnish supplementally a copy of any omitted schedule to
the Commission upon request.]
C-1
Exhibit D
Purchase Price Schedule
[omitted]
[The registrant shall furnish supplementally a copy of any omitted schedule to
the Commission upon request.]
D-1
Exhibit E
Underwriting Standards
[omitted]
[The registrant shall furnish supplementally a copy of any omitted schedule to
the Commission upon request.]
E-1
EXHIBIT F
Form Limited Power of Attorney
[omitted]
[The registrant shall furnish supplementally a copy of any omitted schedule to
the Commission upon request.]
F-1