EXHIBIT 4.2
EXECUTION COPY
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
Depositor,
ABFS 2001-3, INC.,
Unaffiliated Seller
and
AMERICAN BUSINESS CREDIT, INC.
HOMEAMERICAN CREDIT, INC., D/B/A UPLAND MORTGAGE, and
AMERICAN BUSINESS MORTGAGE SERVICES, INC.
Originators
---------------------------
UNAFFILIATED SELLER'S AGREEMENT
Dated as of September 1, 2001
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.....................................................................................1
ARTICLE II
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Agreement to Purchase the Mortgage Loans........................................................2
Section 2.02. [Reserved]......................................................................................3
Section 2.03. Purchase Price..................................................................................3
Section 2.04. Conveyance of Mortgage Loans; Possession of Mortgage Files......................................4
Section 2.05. Delivery of Mortgage Loan Documents.............................................................4
Section 2.06. Acceptance of Mortgage Loans....................................................................5
Section 2.07. Sale of Mortgage Loans; Assignment of Agreement.................................................7
Section 2.08. Examination of Mortgage Files...................................................................7
Section 2.09. Books and Records...............................................................................8
Section 2.10. Cost of Delivery and Recordation of Documents...................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the Originators............................................8
Section 3.02. Representations and Warranties as to the Unaffiliated Seller...................................10
Section 3.03. Representations and Warranties Relating to the Mortgage Loans..................................12
Section 3.04. Representations and Warranties of the Depositor................................................21
Section 3.05. Repurchase Obligation for Defective Documentation and for Breach of a Representation
or Warranty................................................................................22
Section 3.06. Limited Purpose and Corporate Separateness of the Unaffiliated Seller..........................25
ARTICLE IV
THE UNAFFILIATED SELLER
Section 4.01. Covenants of the Originators and the Unaffiliated Seller.......................................26
Section 4.02. Merger or Consolidation........................................................................27
Section 4.03. Costs..........................................................................................27
Section 4.04. Indemnification................................................................................28
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ARTICLE V
CONDITIONS OF CLOSING
Section 5.01. Conditions of Depositor's Obligations..........................................................28
Section 5.02. Conditions of Unaffiliated Seller's Obligations................................................30
Section 5.03. Termination of Depositor's Obligations.........................................................31
ARTICLE VI
MISCELLANEOUS
Section 6.01. Notices........................................................................................31
Section 6.02. Severability of Provisions.....................................................................31
Section 6.03. Agreement of Unaffiliated Seller...............................................................31
Section 6.04. Survival.......................................................................................32
Section 6.05. Effect of Headings and Table of Contents.......................................................32
Section 6.06. Successors and Assigns.........................................................................32
Section 6.07. Confirmation of Intent; Grant of Security Interest.............................................32
Section 6.08. Miscellaneous..................................................................................33
Section 6.09. Amendments.....................................................................................33
Section 6.10. Third-Party Beneficiaries......................................................................33
Section 6.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL...................................34
Section 6.12. Execution in Counterparts......................................................................34
Exhibit A - Mortgage Loan Schedule
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THIS UNAFFILIATED SELLER'S AGREEMENT, dated as of September 1,
2001, by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC., a Delaware corporation,
its successors and assigns (the "Depositor"), ABFS 2001-3, INC., a Delaware
corporation and its successors (the "Unaffiliated Seller"), AMERICAN BUSINESS
CREDIT, INC., a Pennsylvania corporation ("ABC"), HOMEAMERICAN CREDIT, INC.
D/B/A UPLAND MORTGAGE, a Pennsylvania corporation ("Upland") and AMERICAN
BUSINESS MORTGAGE SERVICES, INC., a New Jersey corporation ("ABMS", and together
with ABC and Upland, the "Originators").
WHEREAS, Exhibit A attached hereto and made a part hereof
lists certain fixed rate business purpose and consumer purpose first and second
lien mortgage loans (the "Mortgage Loans") owned by the Originators that the
Originators desire to sell to the Unaffiliated Seller and the Unaffiliated
Seller desires to sell to the Depositor and that the Depositor desires to
purchase; and
WHEREAS, it is the intention of the Originators, the
Unaffiliated Seller and the Depositor that simultaneously with the Originators'
conveyance of the Mortgage Loans to the Unaffiliated Seller and the Unaffiliated
Seller's conveyance of the Mortgage Loans to the Depositor on the Closing Date,
(a) the Depositor shall sell the Mortgage Loans to the ABFS Mortgage Loan Trust
2001-3, a Delaware statutory trust (the "Trust") pursuant to a Sale and
Servicing Agreement to be dated as of September 1, 2001 (the "Sale and Servicing
Agreement"), to be entered into by and among the Depositor, as depositor, the
Trust, American Business Credit, Inc., as servicer (in such capacity, the
"Servicer") and The Chase Manhattan Bank, as indenture trustee and collateral
agent (in each such capacity, as applicable, the "Indenture Trustee" and the
"Collateral Agent") and (b) the Trust shall issue its Mortgage Backed Notes (the
"Notes") pursuant to an Indenture, dated as of September 1, 2001 (the
"Indenture"), by and between the Trust and the Indenture Trustee, which Notes
will be secured by a pledge of the assets of the Trust;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used herein, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article I:
"Agreement" means this Unaffiliated Seller's Agreement, as
amended or supplemented in accordance with the provisions hereof.
"Offering Document" means both the Prospectus and the Offering
Memorandum relating to the offering of the Mortgage-Backed Notes.
"Prospectus" means the Prospectus, relating to the offering by
the Depositor from time to time of its Mortgage-Backed Notes (Issuable in
Series) in the form in which it was or will be filed with the Commission
pursuant to Rule 424(b) under the Securities Act with respect to the offer and
sale of the Notes.
"Prospectus Supplement" means the Prospectus Supplement to be
prepared, relating to the offering of the Notes in the form in which it was or
will be filed with the Commission pursuant to Rule 424(b) under the Securities
Act with respect to the offer and sale of the Notes.
"Registration Statement" means that certain registration
statement on Form S-3, as amended relating to the offering by the Depositor from
time to time of its Mortgage-Backed Notes (Issuable in Series) as heretofore
declared effective by the Commission.
"Termination Event" means the existence of any one or more of
the following conditions:
(a) a stop order suspending the effectiveness of the
Registration Statement shall have been issued or a proceeding for that
purpose shall have been initiated or threatened by the Commission; or
(b) subsequent to the execution and delivery of this
Agreement, a downgrading, or public notification of a possible change,
without indication of direction, shall have occurred in the rating
afforded any of the debt securities or claims paying ability of any
person providing any form of credit enhancement for any of the Notes,
by any "nationally recognized statistical rating organization," as that
term is defined by the Commission for purposes of Rule 436(g)(2) under
the Securities Act; or
(c) subsequent to the execution and delivery of this
Agreement, there shall have occurred an adverse change in the
condition, financial or otherwise, earnings, affairs, regulatory
situation or business prospects of the Note Insurer or the Unaffiliated
Seller reasonably determined by the Depositor to be material; or
(d) subsequent to the date of this Agreement there
shall have occurred any of the following: (i) a suspension or material
limitation in trading in securities substantially similar to the Notes;
(ii) a general moratorium on commercial banking activities in the State
of New York declared by either Federal or New York State authorities;
or (iii) the engagement by the United States in hostilities, or the
escalation of such hostilities, or any calamity or crisis, if the
effect of any such event specified in this clause (iii) in the judgment
of the Depositor makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Notes on the terms and in
the manner contemplated in the Prospectus Supplement.
"Unaffiliated Seller" means ABFS 2001-3, Inc., in its capacity
as Unaffiliated Seller of the Mortgage Loans under this Agreement.
Capitalized terms used herein that are not otherwise defined
shall have the respective meanings ascribed thereto in Appendix I to the
Indenture.
ARTICLE II
PURCHASE, SALE AND CONVEYANCE OF MORTGAGE LOANS
Section 2.01. Agreement to Purchase the Mortgage Loans.
(a) Subject to the terms and conditions of this Agreement, the
Originators agree to sell, and the Unaffiliated Seller agrees to purchase on the
Closing Date and immediately subsequent thereto, the Unaffiliated Seller agrees
to sell, and the Depositor agrees to purchase, the Mortgage Loans having the
Cut-Off Date Aggregate Principal Balance or, in accordance with Section 2.08
hereof, such other balance as is evidenced by the actual Cut-Off Date Aggregate
Principal Balance of the Mortgage Loans accepted by the Depositor on the Closing
Date and listed in the Mortgage Loan Schedule.
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(b) Subject to Section 2.08 hereof, the Depositor and the
Unaffiliated Seller have agreed upon which of the Unaffiliated Seller's Mortgage
Loans are to be purchased by the Depositor on the Closing Date pursuant to this
Agreement, and the Unaffiliated Seller has prepared a schedule describing the
Mortgage Loans (the "Mortgage Loan Schedule") setting forth all of the Mortgage
Loans to be purchased under this Agreement, which schedule is attached hereto as
Exhibit A. The Mortgage Loan Schedule shall conform to the requirements of the
Depositor and to the definition of "Mortgage Loan Schedule" in Appendix I to the
Indenture.
(c) The closing for the purchase and sale of the Mortgage
Loans shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, New York, New
York, at 10:00 a.m., New York time, on September 26, 2001 or such other place
and time as the parties shall agree (such time being herein referred to as the
"Closing Date").
Section 2.02. [Reserved].
Section 2.03. Purchase Price.
(a) On the Closing Date, as consideration for the Originators'
sale of the Mortgage Loans to the Unaffiliated Seller, the Unaffiliated Seller
will deliver to the Originators an amount in cash equal to the sum of (A)
99.72317% of the aggregate principal balance as of the Closing Date of the Class
A-1 Notes and (B) accrued interest on such principal balance at the rate of
5.63% per annum, on the Class A-1 Notes from (and including) September 1, 2001
to (but not including) September 26, 2001, payable by wire transfer of same day
funds.
On the Closing Date, as consideration for the Unaffiliated
Seller's sale of the Mortgage Loans to the Depositor, the Depositor will deliver
to the Unaffiliated Seller an amount in cash equal to the sum of (A) 99.72317%
of the aggregate principal balance as of the Closing Date of the Class A-1 Notes
and (B) accrued interest on such principal balance at the rate of 5.63%per
annum, on the Class A-1 Notes from (and including) September 1, 2001 to (but not
including) September 26, 2001, payable by wire transfer of same day funds
pursuant to the Sale and Servicing Agreement.
(b) On the Closing Date, as consideration for the Originators'
sale of the Mortgage Loans to the Unaffiliated Seller, the Unaffiliated Seller
will deliver to the Originators an amount in cash equal to the sum of (A)
101.21344% of the aggregate principal balance as of the Closing Date of the
Class A-2 Notes and (B) accrued interest on such principal balance at the rate
of 6.17% per annum, on the Class A-2 Notes from (and including) September 1,
2001 to (but not including) September 26, 2001, payable by wire transfer of same
day funds. payable by wire transfer of same day funds.
On the Closing Date, as consideration for the Unaffiliated
Seller's sale of the Mortgage Loans to the Depositor, the Depositor will deliver
to the Unaffiliated Seller an amount in cash equal to 101.21344% of the
aggregate principal balance as of the Closing Date of the Class A-2 Notes and
(B) accrued interest on such principal balance at the rate of 6.17% per annum,
on the Class A-2 Notes from (and including) September 1, 2001 to (but not
including) September 26, 2001, payable by wire transfer of same day funds
pursuant to the Sale and Servicing Agreement.
The consideration described in this Section 2.03 collectively
represents (i) full consideration for the Originators' sale of the Mortgage
Loans to the Unaffiliated Seller and (ii) full consideration for the
Unaffiliated Seller's sale of the Mortgage Loans to the Depositor. The
consideration received by the Originators will be allocated among them in
proportion to the outstanding principal balance of the Mortgage Loans sold by
each.
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Section 2.04. Conveyance of Mortgage Loans; Possession of
Mortgage Files.
(a) On the Closing Date the Originators shall sell, transfer,
assign, set over and convey, or cause to be assigned, set over or conveyed, to
the Unaffiliated Seller, without recourse but subject to the terms of this
Agreement, all right, title and interest in and to the applicable Mortgage
Loans, including all principal outstanding as of, and all interest due and
accruing after, the Cut-Off Date, the Insurance Policies relating to each such
Mortgage Loan and all right, title and interest in and to the proceeds of such
Insurance Policies from and after the Cut-Off Date and the Unaffiliated Seller
shall sell, transfer, assign, set over and convey or cause to be assigned, set
over or conveyed, to the Depositor, without recourse but subject to the terms of
this Agreement, all right, title and interest in and to the applicable Mortgage
Loans, including all principal outstanding as of, and all interest due after,
the Cut-Off Date, the Insurance Policies relating to each such Mortgage Loan,
all right, title and interest in and to the proceeds of such Insurance Policies
and all of its rights under this Agreement with respect to the Mortgage Loans
from and after the Cut-Off Date. Upon payment of the purchase price for such
Mortgage Loans as provided in Section 2.03 of this Agreement, the Originators
and the Unaffiliated Seller shall have hereby, and shall be deemed to have, or
caused to have sold, transferred, assigned, set over and conveyed such Mortgage
Loans, the Insurance Policies relating to each such Mortgage Loan, all right,
title and interest in and to the proceeds of such Insurance Policies and all of
their rights under this Agreement with respect to the Mortgage Loans from and
after the Cut-Off Date.
(b) Upon the sale of such Mortgage Loans, the ownership of
each related Mortgage Note, each related Mortgage and the contents of the
related Mortgage File shall immediately vest in the Depositor and the ownership
of all related records and documents with respect to each Mortgage Loan prepared
by or which come into the possession of the Originators or the Unaffiliated
Seller shall immediately vest in the Depositor. The contents of any Mortgage
File in the possession of the Originators or the Unaffiliated Seller at any time
after such sale, and any principal collected and interest due on the Mortgage
Loans after the Cut-Off Date and received by the Originators or the Unaffiliated
Seller, shall be held in trust by the Originators or the Unaffiliated Seller for
the benefit of the Depositor as the owner thereof, and shall be promptly
delivered by the Originators or the Unaffiliated Seller to or upon the order of
the Depositor.
(c) Pursuant to the Sale and Servicing Agreement, the
Depositor shall, on the Closing Date, assign all of its right, title and
interest in and to the applicable Mortgage Loans, the related Insurance Policies
and any proceeds thereof and all of its rights under this Agreement to the
Trust. Pursuant to the Indenture, the Trust shall, on the Closing Date, pledge
all of its rights, title and interest in and to the Mortgage Loans to the
Indenture Trustee for the benefit of the Noteholders and the Note Insurer.
Section 2.05. Delivery of Mortgage Loan Documents.
(a) On or prior to the Closing Date the related Originator
shall deliver or cause to be delivered to the Unaffiliated Seller, and the
Unaffiliated Seller shall deliver to the Collateral Agent, on behalf of the
Indenture Trustee (as pledgee of the Trust pursuant to the Indenture, the Trust
being the assignee of the Depositor pursuant to the Sale and Servicing
Agreement), each of the documents for each applicable Mortgage Loan in
accordance with the provisions of Section 2.05 of the Sale and Servicing
Agreement.
(b) Pursuant to the Sale and Servicing Agreement, the
Unaffiliated Seller shall be required to promptly submit, or cause to be
submitted by the related Originator, for recording in the appropriate public
office for real property records, each assignment referred to in Section 2.05(a)
of the Sale and Servicing Agreement. The Collateral Agent, on behalf of the
Indenture Trustee, shall be required to retain a copy of each assignment
submitted for recording. In the event that any such assignment is lost or
returned unrecorded because of a defect therein, the Unaffiliated Seller or such
Originator shall promptly prepare a substitute assignment or cure such defect,
as the case may be, and thereafter the Unaffiliated Seller or such Originator
shall be required to submit each such assignment for recording.
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(c) The Unaffiliated Seller or the related Originator shall,
within five (5) Business Days after the receipt thereof, deliver or cause to be
delivered to the Collateral Agent, on behalf of the Indenture Trustee (as
pledgee of the Trust pursuant to the Indenture, the Trust being the assignee of
the Depositor pursuant to the Sale and Servicing Agreement): (i) the original
recorded Mortgage and related power of attorney, if any, in those instances
where a copy thereof certified by the related Originator was delivered to the
Collateral Agent, on behalf of the Indenture Trustee (pursuant to the Sale and
Servicing Agreement); (ii) the original recorded assignment of Mortgage from the
related Originator to the Indenture Trustee (pursuant to the Sale and Servicing
Agreement), which, together with any intervening assignments of Mortgage,
evidences a complete chain of assignment from the originator of the Mortgage
Loan to the Indenture Trustee in those instances where copies of such
assignments certified by the related Originator were delivered to the Collateral
Agent, on behalf of the Indenture Trustee, (pursuant to Section 2.05 of the Sale
and Servicing Agreement); and (iii) the title insurance policy or title opinion
required in Section 2.05(a)(vi) of the Sale and Servicing Agreement.
Notwithstanding anything to the contrary contained in this
Section 2.05, in those instances where the public recording office retains the
original Mortgage, power of attorney, if any, assignment or assignment of
Mortgage after it has been recorded or such original has been lost, the
Unaffiliated Seller or the related Originator shall be deemed to have satisfied
its obligations hereunder upon delivery to the Collateral Agent, on behalf of
the Indenture Trustee (pursuant to the Sale and Servicing Agreement), of a copy
of such Mortgage, power of attorney, if any, assignment or assignment of
Mortgage certified by the public recording office to be a true copy of the
recorded original thereof.
From time to time the Unaffiliated Seller or the related
Originator may forward or cause to be forwarded to the Collateral Agent, on
behalf of the Indenture Trustee (pursuant to the Sale and Servicing Agreement),
additional original documents evidencing an assumption or modification of a
Mortgage Loan.
(d) All original documents relating to the Mortgage Loans that
are not delivered to the Collateral Agent, on behalf of the Indenture Trustee
(pursuant to the Sale and Servicing Agreement), as permitted by Section 2.05 (a)
hereof are and shall be held by the Servicer, the Unaffiliated Seller or the
related Originator in trust for the benefit of the Indenture Trustee on behalf
of the Noteholders and the Note Insurer. In the event that any such original
document is required pursuant to the terms of this Section 2.05 to be a part of
the Indenture Trustee's Mortgage File, such document shall be delivered promptly
to the Collateral Agent, on behalf of the Indenture Trustee (as assignee of the
Depositor pursuant to the Sale and Servicing Agreement). From and after the sale
of the Mortgage Loans to the Depositor pursuant hereto, to the extent that the
Unaffiliated Seller or the related Originator retains legal title of record to
any Mortgage Loans prior to the vesting of legal title in the Indenture Trustee
(as assignee of the Depositor pursuant to the Sale and Servicing Agreement),
such title shall be retained in trust for the Trust as the owner of the Mortgage
Loans and as the Depositor's assignee and the Indenture Trustee, as the Trust's
pledgee.
Section 2.06. Acceptance of Mortgage Loans.
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(a) To evidence the transfer of the Mortgage Loans and related
Mortgage Files to the Collateral Agent, on behalf of the Indenture Trustee, the
Collateral Agent shall deliver the acknowledgement of receipt, the Initial
Certification and the Final Certification required to be delivered pursuant to
Section 2.06(a) and (b) of the Sale and Servicing Agreement.
(b) Pursuant to the Sale and Servicing Agreement, the
Collateral Agent has agreed to execute and deliver on or prior to the Closing
Date an acknowledgment of receipt of each Mortgage Loan, the original Mortgage
Note with respect to each Mortgage Loan (with any exceptions noted), in the form
attached as Exhibit C to the Sale and Servicing Agreement and declares that it
will hold such documents and any amendments, replacements or supplements
thereto, as well as any other assets included in the definition of Trust Estate
in the Sale and Servicing Agreement and delivered to the Collateral Agent, on
behalf of the Indenture Trustee in trust upon and subject to the conditions set
forth in the Sale and Servicing Agreement for the benefit of the Noteholders and
the Note Insurer. Pursuant to the Sale and Servicing Agreement, the Collateral
Agent, on behalf of the Indenture Trustee has agreed, for the benefit of the
Noteholders and the Note Insurer, to review (or cause to be reviewed) each
Indenture Trustee's Mortgage File within thirty (30) days after the Closing Date
(or, with respect to any Qualified Substitute Mortgage Loan, within 30 days
after the receipt by the Collateral Agent, on behalf of the Indenture Trustee
thereof), and to deliver to the Unaffiliated Seller, the Servicer and the Note
Insurer a certification in the form attached to the Sale and Servicing Agreement
as Exhibit D to the effect that, as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to it pursuant to the
Sale and Servicing Agreement are in its possession, (ii) each such document has
been reviewed by it and has not been mutilated, damaged, torn or otherwise
physically altered (handwritten additions, changes or corrections shall not
constitute physical alteration if initiated by the Mortgagor), appears regular
on its face and relates to such Mortgage Loan, and (iii) based on its
examination and only as to the foregoing documents, the information set forth on
the Mortgage Loan Schedule accurately reflects the information set forth in the
Indenture Trustee's Mortgage File delivered on such date. Pursuant to the Sale
and Servicing Agreement, the Collateral Agent, on behalf of the Indenture
Trustee, shall be under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, or appropriate for the represented purpose or that
they are other than what they purport to be on their face. Pursuant to the Sale
and Servicing Agreement, within ninety (90) days of the Closing Date, with
respect to the Mortgage Loans, the Collateral Agent, on behalf of the Indenture
Trustee, shall be required to deliver (or cause to be delivered) to the
Servicer, the Unaffiliated Seller and the Note Insurer a final certification in
the form attached to the Sale and Servicing Agreement as Exhibit E to the effect
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
such certification as not covered by such certification), (i) all documents
required to be delivered to it pursuant to the Sale and Servicing Agreement are
in its possession, (ii) each such document has been reviewed by it and has not
been mutilated, damaged, torn or otherwise physically altered (handwritten
additions, changes or corrections shall not constitute physical alteration if
initialed by the Mortgagor), appears regular on its face and relates to such
Mortgage Loan, and (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Mortgage Loan Schedule accurately
reflects the information set forth in the Indenture Trustee's Mortgage File
delivered on such date.
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(c) The Sale and Servicing Agreement provides that, if the
Collateral Agent during the process of reviewing the Indenture Trustee's
Mortgage Files finds any document required to be delivered to it and
constituting a part of an Indenture Trustee's Mortgage File which is not
executed, has not been received, is unrelated to the Mortgage Loan identified in
the Mortgage Loan Schedule, or does not conform to the requirements of Section
2.05 or the description thereof as set forth in the Mortgage Loan Schedule, the
Collateral Agent shall promptly so notify the Servicer, the Indenture Trustee,
the Unaffiliated Seller, the related Originator and the Note Insurer. The
Unaffiliated Seller agrees that in performing any such review, the Collateral
Agent may conclusively rely on the Unaffiliated Seller as to the purported
genuineness of any such document and any signature thereon. Each of the
Originators and the Unaffiliated Seller agrees to use reasonable efforts to
remedy a material defect in a document constituting part of the Indenture
Trustee's Mortgage File when notified of such defect. If, however, within sixty
(60) days after such notice neither the Unaffiliated Seller nor any Originator
has remedied the defect and the defect materially and adversely affects the
interest of the Noteholders in the related Mortgage Loan or the interests of the
Note Insurer, then the Unaffiliated Seller and the Originators shall be
obligated to either substitute in lieu of such Mortgage Loan a Qualified
Substitute Mortgage Loan or purchase such Mortgage Loan in the manner and
subject to the conditions set forth in Section 3.05 hereof.
(d) The failure of the Collateral Agent, the Indenture Trustee
or the Note Insurer to give any notice contemplated herein within the time
periods specified above shall not affect or relieve the Unaffiliated Seller's or
the Originators' obligation to repurchase for any Mortgage Loan pursuant to this
Section 2.06 or Section 3.05 of this Agreement.
Section 2.07. Sale of Mortgage Loans; Assignment of Agreement.
The Originators and the Unaffiliated Seller each hereby acknowledges and agrees
that the Depositor may sell, assign and convey its interest under this Agreement
to the Indenture Trustee for the benefit of the Trust as may be required to
effect the purposes of the Sale and Servicing Agreement, without further notice
to, or consent of, the Unaffiliated Seller or the Originators, and the Indenture
Trustee shall succeed to such of the rights and obligations of the Depositor
hereunder as shall be so assigned. The Depositor shall, pursuant to the Sale and
Servicing Agreement, assign all of its right, title and interest in and to the
Mortgage Loans and its right to exercise the remedies created by this Agreement,
including, without limitation, its rights to exercise remedies created by
Sections 2.06 and 3.05 hereof for breaches of the representations, warranties,
agreements and covenants of the Unaffiliated Seller or the Originators contained
in Sections 2.05, 2.06, 3.01, 3.02 and 3.03 hereof to the Trust, and the Trust
shall, pursuant to the Indenture pledge such right, title and interest to the
Indenture Trustee for the benefit of the Noteholders and the Note Insurer. Each
of the Originators and the Unaffiliated Seller agrees that, upon such assignment
to the Trust and pledge to the Indenture Trustee, such representations,
warranties, agreements and covenants will run to and be for the benefit of the
Indenture Trustee and the Indenture Trustee may enforce, without joinder of the
Depositor or the Trust, the repurchase obligations of the Unaffiliated Seller
and the Originators set forth herein with respect to breaches of such
representations, warranties, agreements and covenants.
Section 2.08. Examination of Mortgage Files. Prior to the
Closing Date, the Unaffiliated Seller shall make the Mortgage Files available to
the Depositor or its designee for examination at the Unaffiliated Seller's
offices or at such other place as the Unaffiliated Seller shall reasonably
specify. Such examination may be made by the Depositor or its designee at any
time on or before the Closing Date. If the Depositor or its designee makes such
examination prior to the Closing Date and identifies any Mortgage Loans that do
not conform to the requirements of the Depositor as described in this Agreement,
such Mortgage Loans shall be deleted from the Mortgage Loan Schedule and may be
replaced, prior to the Closing Date, by substitute Mortgage Loans acceptable to
the Depositor. The Depositor may, at its option and without notice to the
Unaffiliated Seller, purchase all or part of the Mortgage Loans without
conducting any partial or complete examination. The fact that the Depositor, the
Collateral Agent or the Indenture Trustee has conducted or has failed to conduct
any partial or complete examination of the Mortgage Files shall not affect the
rights of the Depositor or the Indenture Trustee to demand repurchase or other
relief as provided in this Agreement.
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Section 2.09. Books and Records. The sale of each Mortgage
Loan shall be reflected on each of the Originators' and the Unaffiliated
Seller's accounting and other records, balance sheet and other financial
statements as a sale of assets by the Originators to the Unaffiliated Seller and
by the Unaffiliated Seller to the Depositor. Each of the Originators and the
Unaffiliated Seller shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be clearly
marked to reflect the ownership of each Mortgage Loan by the Indenture Trustee
for the benefit of the Noteholders and the Note Insurer.
Section 2.10. Cost of Delivery and Recordation of Documents.
The costs relating to the delivery and recordation of the documents specified in
this Article II in connection with the Mortgage Loans shall be borne by the
Unaffiliated Seller or the Originators.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the
Originators. Each of the Originators hereby represents and warrants to the
Unaffiliated Seller and the Depositor, as of the Closing Date, that:
(a) The Originator is a corporation duly organized, validly
existing and in good standing under the laws of (i) the Commonwealth of
Pennsylvania (with respect to ABC and Upland) or (ii) with respect to ABMS, the
State of New Jersey, and has all licenses necessary to carry on its business as
now being conducted and is licensed, qualified and in good standing in each
state where a Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type conducted by
the Originator and to perform its obligations as the Originator hereunder, and
in any event the Originator is in compliance with the laws of any such state to
the extent necessary to ensure the enforceability of the related Mortgage Loan;
the Originator has the full power and authority, corporate and otherwise, to
execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by the Originator or the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Originator; and all requisite corporate action has been taken
by the Originator to make this Agreement valid and binding upon the Originator
in accordance with its terms;
(b) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by the Originator of, or compliance by the Originator with, this
Agreement or the sale of the Mortgage Loans pursuant to the terms of this
Agreement or the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to the Closing
Date;
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(c) Neither the execution and delivery of this Agreement, the
acquisition nor origination of the Mortgage Loans by the Originator or the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, has or will conflict with or result in a
breach of any of the terms, conditions or provisions of the Originator's charter
or by-laws or any legal restriction or any agreement or instrument to which the
Originator is now a party or by which it is bound or to which its property is
subject, or constitute a default or result in an acceleration under any of the
foregoing, or result in the violation of any law, rule, regulation, order,
judgment or decree to which the Originator or its property is subject, or impair
the ability of the Indenture Trustee (or the Servicer as the agent of the
Indenture Trustee) to realize on the Mortgage Loans, or impair the value of the
Mortgage Loans;
(d) Neither this Agreement nor the information contained in
the Prospectus Supplement (other than information under the caption "Plan of
Distribution") nor the information contained in the Offering Memorandum nor any
statement, report or other document prepared by the Originator and furnished or
to be furnished pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement or alleged untrue
statement of any material fact or omits to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading;
(e) There is no action, suit, proceeding or investigation
pending or, to the knowledge of the Originator, threatened before a court,
administrative agency or government tribunal against the Originator which,
either in any one instance or in the aggregate, may result in any material
adverse change in the business, operations, financial condition, properties or
assets of the Originator, or in any material impairment of the right or ability
of the Originator to carry on its business substantially as now conducted, or in
any material liability on the part of the Originator, or which would draw into
question the validity of this Agreement, the Mortgage Loans, or of any action
taken or to be taken in connection with the obligations of the Originator
contemplated herein, or which would impair materially the ability of the
Originator to perform under the terms of this Agreement or that will prohibit
its entering into this Agreement or the consummation of any of the transactions
contemplated hereby;
(f) The Originator is not in violation of or in default with
respect to, and the execution and delivery of this Agreement by the Originator
and its performance of and compliance with the terms hereof will not constitute
a violation or default with respect to, any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or governmental
agency, which violation or default might have consequences that would materially
and adversely affect the condition (financial or other) or operations of the
Originator or its properties or might have consequences that would materially
and adversely affect its performance hereunder or under any subservicing
agreement;
(g) Upon the receipt of each Indenture Trustee's Mortgage File
by the Depositor (or its assignee) under this Agreement, the Depositor (or its
assignee) will have good title on behalf of the Trust Estate to each related
Mortgage Loan and such other items comprising the corpus of the Trust Estate
free and clear of any lien created by the Originator (other than liens which
will be simultaneously released);
(h) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Originator, and the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Originator pursuant to this Agreement are not subject to the bulk transfer
or any similar statutory provisions in effect in any applicable jurisdiction;
(i) With respect to any Mortgage Loan purchased by the
Originator, the Originator acquired title to the Mortgage Loan in good faith,
without notice of any adverse claim;
(j) The Originator does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement. The Originator is solvent and the sale of the
Mortgage Loans by the Originator pursuant to the terms of this Agreement will
not cause the Originator to become insolvent. The sale of the Mortgage Loans by
the Originator pursuant to the terms of this Agreement was not undertaken with
the intent to hinder, delay or defraud any of the Originator's creditors;
9
(k) The Mortgage Loans are not intentionally selected in a
manner so as to affect adversely the interests of the Depositor or of any
transferee of the Depositor (including the Trust and the Indenture Trustee);
(l) The Originator has determined that it will treat the
disposition of the Mortgage Loans pursuant to this Agreement as a sale for
accounting and tax purposes;
(m) The Originator has not dealt with any broker or agent or
anyone else that may be entitled to any commission or compensation in connection
with the sale of the Mortgage Loans to the Depositor other than to the Depositor
or an affiliate thereof;
(n) The consideration received by the Originator upon the sale
of the Mortgage Loans under this Agreement constitutes fair consideration and
reasonably equivalent value for the Mortgage Loans; and
(o) The Originators agree to comply with all reasonable
requests to assist in the preparation of the Offering Document, including
providing access to pertinent information and the Originators' personnel.
Section 3.02. Representations and Warranties as to the
Unaffiliated Seller. The Unaffiliated Seller hereby represents and warrants to
the Depositor, as of the Closing Date, that:
(a) The Unaffiliated Seller 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 on its business as now being conducted
and is licensed, qualified and in good standing in each state where a Mortgaged
Property is located if the laws of such state require licensing or qualification
in order to conduct business of the type conducted by the Unaffiliated Seller
and to perform its obligations as the Unaffiliated Seller hereunder, and in any
event the Unaffiliated Seller is in compliance with the laws of any such state
to the extent necessary to ensure the enforceability of the related Mortgage
Loan; the Unaffiliated Seller has the full power and authority, corporate and
otherwise, to execute and deliver this Agreement and to perform in accordance
herewith; the execution, delivery and performance of this Agreement (including
all instruments of transfer to be delivered pursuant to this Agreement) by the
Unaffiliated Seller and the consummation of the transactions contemplated hereby
have been duly and validly authorized; this Agreement evidences the valid,
binding and enforceable obligation of the Unaffiliated Seller; and all requisite
corporate action has been taken by the Unaffiliated Seller to make this
Agreement valid and binding upon the Unaffiliated Seller in accordance with its
terms;
(b) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance by the Unaffiliated Seller of or compliance by the Unaffiliated
Seller with this Agreement or the sale of the Mortgage Loans pursuant to the
terms of this Agreement or the consummation of the transactions contemplated by
this Agreement, or if required, such approval has been obtained prior to the
Closing Date;
10
(c) Neither the execution and delivery of this Agreement, the
acquisition nor origination of the Mortgage Loans by the Unaffiliated Seller nor
the transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement, has or will conflict with or result
in a breach of any of the terms, conditions or provisions of the Unaffiliated
Seller's charter or by-laws or any legal restriction or any agreement or
instrument to which the Unaffiliated Seller is now a party or by which it is
bound or to which its property is subject, or constitute a default or result in
an acceleration under any of the foregoing, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Unaffiliated
Seller or its property is subject, or impair the ability of the Indenture
Trustee (or the Servicer as the agent of the Indenture Trustee) to realize on
the Mortgage Loans, or impair the value of the Mortgage Loans;
(d) Neither this Agreement nor the information contained in
the Prospectus Supplement (other than information under the caption "Plan of
Distribution") nor any statement, report or other document prepared by the
Unaffiliated Seller and furnished or to be furnished pursuant to this Agreement
or in connection with the transactions contemplated hereby contains any untrue
statement or alleged untrue statement of any material fact or omits to state a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading;
(e) There is no action, suit, proceeding or investigation
pending nor, to the knowledge of the Unaffiliated Seller, threatened before a
court, administrative agency or government tribunal against the Unaffiliated
Seller which, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial condition,
properties or assets of the Unaffiliated Seller, or in any material impairment
of the right or ability of the Unaffiliated Seller to carry on its business
substantially as now conducted, or in any material liability on the part of the
Unaffiliated Seller, or which would draw into question the validity of this
Agreement, the Mortgage Loans, or of any action taken or to be taken in
connection with the obligations of the Unaffiliated Seller contemplated herein,
or which would impair materially the ability of the Unaffiliated Seller to
perform under the terms of this Agreement or that will prohibit its entering
into this Agreement or the consummation of any of the transactions contemplated
hereby or under any subservicing agreements;
(f) The Unaffiliated Seller is not in violation of or in
default with respect to, and the execution and delivery of this Agreement by the
Unaffiliated Seller and its performance of and compliance with the terms hereof
will not constitute a violation or default with respect to, any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which violation or default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Unaffiliated Seller or its properties or might have
consequences that would materially and adversely affect its performance
hereunder or under any subservicing agreement;
(g) Upon the receipt of each Indenture Trustee's Mortgage File
by the Depositor (or its assignee) under this Agreement, the Depositor (or its
assignee) will have good title on behalf of the Trust Estate to each related
Mortgage Loan and such other items comprising the corpus of the Trust Estate
free and clear of any lien created by the Unaffiliated Seller (other than liens
which will be simultaneously released);
(h) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Unaffiliated Seller, and
the transfer, assignment and conveyance of the Mortgage Notes and the Mortgages
by the Unaffiliated Seller pursuant to this Agreement are not subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction;
11
(i) With respect to any Mortgage Loan purchased by the
Unaffiliated Seller, the Unaffiliated Seller acquired title to the Mortgage Loan
in good faith, without notice of any adverse claim;
(j) The Unaffiliated Seller does not believe, nor does it have
any reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement. The Unaffiliated Seller is solvent and the sale of
the Mortgage Loans by the Unaffiliated Seller pursuant to the terms of this
Agreement will not cause the Unaffiliated Seller to become insolvent. The sale
of the Mortgage Loans by the Unaffiliated Seller pursuant to the terms of this
Agreement was not undertaken with the intent to hinder, delay or defraud any of
the Unaffiliated Seller's creditors;
(k) The Mortgage Loans are not intentionally selected in a
manner so as to affect adversely the interests of the Depositor or of any
transferee of the Depositor (including the Trust and the Indenture Trustee);
(l) The Unaffiliated Seller has determined that it will treat
the disposition of the Mortgage Loans pursuant to this Agreement as a sale for
accounting and tax purposes;
(m) The Unaffiliated Seller has not dealt with any broker or
agent or anyone else that may be entitled to any commission or compensation in
connection with the sale of the Mortgage Loans to the Depositor other than to
the Depositor or an affiliate thereof; and
(n) The consideration received by the Unaffiliated Seller upon
the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans.
Section 3.03. Representations and Warranties Relating to the
Mortgage Loans. The Originators represent and warrant to the Unaffiliated Seller
and the Unaffiliated Seller represents and warrants to the Depositor that, as of
the Closing Date, as to each Mortgage Loan, immediately prior to the sale and
transfer of such Mortgage Loan by the Unaffiliated Seller to the Depositor:
(a) The information set forth in the Mortgage Loan Schedule is
complete, true and correct;
(b) The information provided by the Originators or any
Affiliate to the Depositor, the Trust, the Collateral Agent, the Indenture
Trustee and the Note Insurer in connection with a Mortgage Loan will be true and
correct in all material respects on the date or dates when such information is
furnished;
(c) Each Mortgage is a valid first or second lien on a fee
simple (or its equivalent under applicable state law) estate in the real
property securing the amount owed by the Mortgagor under the Mortgage Note
subject only to (i) the lien of current real property taxes and assessments
which are not delinquent, (ii) with respect to any Mortgage Loan identified on
the Mortgage Loan Schedule as secured by a second lien, the related first
mortgage loan, (iii) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording of such
Mortgage, such exceptions appearing of record being acceptable to mortgage
lending institutions generally in the area wherein the property subject to the
Mortgage is located or specifically reflected in the appraisal obtained in
connection with the origination of the related Mortgage Loan obtained by the
Unaffiliated Seller and (iv) 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 such Mortgage;
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(d) Immediately prior to the sale, transfer and assignment by
the related Originator to the Unaffiliated Seller and by the Unaffiliated Seller
to the Depositor, the Unaffiliated Seller or such Originator, as applicable, had
good title to, and was the sole owner of each Mortgage Loan, free of any
interest of any other Person, and the Unaffiliated Seller or such Originator has
transferred all right, title and interest in each Mortgage Loan to the Depositor
or the Unaffiliated Seller, as applicable;
(e) As of the Cut-Off Date, no payment of principal or
interest on or in respect of any Mortgage Loan remains unpaid for thirty (30) or
more days past the date the same was due in accordance with the related Mortgage
Note without regard to applicable grace periods and without giving effect to any
Periodic Advances by the applicable Originator or any Affiliate thereof;
(f) As of the Cut-Off Date, no Mortgage Loan has a Mortgage
Interest Rate less than 8.32% per annum for Mortgage Loan Group I and 8.49% per
annum for Mortgage Loan Group II and the weighted average Mortgage Interest Rate
of the Mortgage Loans is 11.160% in Mortgage Loan Group I and 13.421% in
Mortgage Loan Group II;
(g) At origination, no Mortgage Loan had an original term to
stated maturity of greater than 360 months;
(h) As of the Cut-Off Date, the weighted average remaining
term to stated maturity of the Mortgage Loans is 259 months in Mortgage Loan
Group I and 213 months for Mortgage Loan Group II;
(i) To the best knowledge of the Unaffiliated Seller and each
of the Originators, there is no mechanics' lien or claim for work, labor or
material (and no rights are outstanding that under law could give rise to such
lien) affecting the premises subject to any Mortgage which is or may be a lien
prior to, or equal or coordinate with, the lien of such Mortgage, except those
which are insured against by the title insurance policy referred to in (ff)
below;
(j) To the best knowledge of the Unaffiliated Seller and each
of the Originators, there is no delinquent tax or assessment lien against any
Mortgaged Property;
(k) Such Mortgage Loan, the Mortgage, and the Mortgage Note,
including, without limitation, the obligation of the Mortgagor to pay the unpaid
principal of and interest on the Mortgage Note, are each not subject to any
right of rescission (or any such rescission right has expired in accordance with
applicable law), set-off, counterclaim, or defense, including 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 either the Mortgage
Note or the Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim, or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim, or defense has
been asserted with respect thereto;
(l) To the best knowledge of the Unaffiliated Seller and each
of the Originators, the Mortgaged Property is free of material damage and is in
good repair, and there is no pending or threatened proceeding for the total or
partial condemnation of the Mortgaged Property;
(m) Neither the Originators nor the Unaffiliated Seller has
received a notice of default of any first mortgage loan secured by the Mortgaged
Property which has not been cured by a party other than the Unaffiliated Seller;
(n) Each Mortgage Note and Mortgage are in substantially the
forms previously provided to the Indenture Trustee on behalf of the Unaffiliated
Seller;
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(o) No Mortgage Loan had, at the date of origination, a
Combined Loan-to-Value Ratio in excess of 101.58%, and the weighted average
original Combined Loan-to-Value ratio of all Mortgage Loans as of the Cut-Off
Date is approximately 77.30% for Mortgage Loan Group I and 69.40% for Mortgage
Loan Group II;
(p) The Mortgage Loan was not originated in a program in which
the amount of documentation in the underwriting process was limited in
comparison to an Originator's normal documentation requirements;
(q) No more than the following percentages of the Mortgage
Loans by Principal Balance as of the Cut-Off Date are secured by Mortgaged
Properties located in the following states:
Mortgage Loan Group I
-------------------------------------------------------------
Percent of
State Principal Balance
----------------------------- -------------------------
----------------------------- -------------------------
New York 25.44
New Jersey 10.42
Pennsylvania 9.52
Massachusetts 7.55
Florida 6.52
Ohio 5.94
Illinois 5.56
Michigan 5.36
Georgia 3.09
North Carolina 2.88
Indiana 2.61
Other 15.11
Total ------------------------
100%
========================
Mortgage Loan Group II
-------------------------------------------------------------
Percent of
State Principal Balance
----------------------------- -------------------------
New York 35.25
New Jersey 15.46
Pennsylvania 14.20
Ohio 4.61
Florida 4.47
Rhode Island 3.67
Illinois 3.60
Georgia 2.97
Virginia 2.56
Michigan 2.27
Massachusetts 2.26
Other 8.69
Total ------------------------
100%
========================
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(r) The Mortgage Loans were (i) originated by an Originator in
the normal course of its business, (ii) not selected by the Unaffiliated Seller
or the Originators for sale hereunder or inclusion in the Trust Estate on any
basis adverse to the Trust Estate relative to the portfolio of similar mortgage
loans of the Unaffiliated Seller or the Originators and (iii) prior to the
Closing Date, serviced by the Originator or an Affiliate thereof in accordance
with Accepted Servicing Practices;
(s) No more than 5% (by Principal Balance) of the Mortgage
Loans constitutes a lien on leasehold interests, and with respect to such
Mortgage Loan the cost of the leasehold expense has been factored into the
debt-to-income calculations with respect to the related Mortgagor and the
maturity date of the ground lease is later than the maturity date of the
Mortgage Loan;
(t) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the related Mortgaged Property of the benefits of
the security including (A) in the case of a Mortgage designated as a deed of
trust, by trustee's sale and (B) otherwise by judicial foreclosure. To the best
of the Unaffiliated Seller's and the Originators' knowledge, there is no
homestead or other exemption available to the related Mortgagor which would
materially interfere with the right to sell the related Mortgaged Property at a
trustee's sale or the right to foreclose the related Mortgage. The Mortgage
contains customary and enforceable provisions for the acceleration of the
payment of the Principal Balance of such Mortgage Loan in the event all or any
part of the related Mortgaged Property is sold or otherwise transferred without
the prior written consent of the holder thereof;
(u) The proceeds of such Mortgage Loan have been fully
disbursed, including reserves set aside by the Unaffiliated Seller or the
Originators, there is no requirement for, and neither the Unaffiliated Seller
nor the Originators shall make any, future advances thereunder. Any future
advances made prior to the Cut-Off Date have been consolidated with the
principal balance secured by the Mortgage, and such principal balance, as
consolidated, bears a single interest rate and single repayment term reflected
on the Mortgage Loan Schedule. The Principal Balance as of the Cut-Off Date does
not exceed the original principal amount of such Mortgage Loan. Except with
respect to no more than $150,000 of escrow funds in the aggregate with respect
to all Mortgage Loans, 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
recording such Mortgage Loan have been paid;
(v) All Mortgage Loans were originated in compliance with the
Originators' Underwriting Guidelines;
(w) The terms of the Mortgage and the Mortgage Note have not
been impaired, waived, altered, or modified in any respect, except by a written
instrument which has been recorded, if necessary, to protect the interest of the
Indenture Trustee and which has been delivered to the Collateral Agent, on
behalf of the Indenture Trustee. The substance of any such alteration or
modification will be reflected on the Mortgage Loan Schedule and, to the extent
necessary, has been or will be approved by (i) the insurer under the applicable
mortgage title insurance policy, and (ii) the insurer under any other insurance
policy required hereunder for such Mortgage Loan where such insurance policy
requires approval and the failure to procure approval would impair coverage
under such policy;
(x) No instrument of release, waiver, alteration, or
modification has been executed in connection with such Mortgage Loan, and no
Mortgagor has been released, in whole or in part, except in connection with an
assumption agreement which has been approved by the insurer under any insurance
policy required hereunder for such Mortgage Loan where such policy requires
approval and the failure to procure approval would impair coverage under such
policy, and which is part of the Mortgage File and has been delivered to the
Collateral Agent, on behalf of the Indenture Trustee, and the terms of which are
reflected in the Mortgage Loan Schedule;
15
(y) There is no default, breach, violation, or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute such a default, breach, violation or event of
acceleration, and neither the Originators nor the Unaffiliated Seller has waived
any such default, breach, violation or event of acceleration. All taxes,
governmental assessments (including assessments payable in future installments),
insurance premiums, water, sewer, and municipal charges, leaseholder payments,
or ground rents which previously became due and owing in respect of or affecting
the related Mortgaged Property have been paid. Neither the Originators nor the
Unaffiliated Seller has advanced funds, or induced, solicited, or knowingly
received any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage or the
Mortgage Note;
(z) All of the improvements which were included for the
purposes of determining the Appraised Value of the Mortgaged Property were
completed at the time that such Mortgage Loan was originated and lie wholly
within the boundaries and building restriction lines of such Mortgaged Property.
Except for de minimis encroachments, no improvements on adjoining properties
encroach upon the Mortgaged Property. To the best of the Unaffiliated Seller's
and the Originators' knowledge, no improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or regulation.
All inspections, licenses, and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property (including all such
improvements which were included for the purpose of determining such Appraised
Value) and, with respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriters certificates, have
been made or obtained from the appropriate authorities and the Mortgaged
Property is lawfully occupied under applicable law;
(aa) To the best of the Unaffiliated Seller's and the
Originators' knowledge, there do not exist any circumstances or conditions with
respect to the Mortgage, the Mortgaged Property, the Mortgagor, or the
Mortgagor's credit standing that can be reasonably expected to cause such
Mortgage Loan to become delinquent or adversely affect the value or
marketability of such Mortgage Loan, other than any such circumstances or
conditions permitted under the Originator's Underwriting Guidelines;
(bb) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (i) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
the Mortgaged Property is located and (ii) (A) organized under the laws of such
state, (B) qualified to do business in such state, (C) federal savings and loan
associations or national banks having principal offices in such state, (D) not
doing business in such state, or (E) not required to qualify to do business in
such state;
(cc) The Mortgage Note and the Mortgage are genuine, and each
is the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally and except that the
equitable remedy of specific performance and other equitable remedies are
subject to the discretion of the courts. All parties to the Mortgage Note and
the Mortgage had legal capacity to execute the Mortgage Note and the Mortgage
and convey the estate therein purported to be conveyed, and the Mortgage Note
and the Mortgage have been duly and properly executed by such parties or
pursuant to a valid power-of-attorney that has been recorded with the Mortgage;
16
(dd) The sale, transfer and conveyance of the Mortgage Note
and the Mortgage as and in the manner contemplated by Section 2.05 of this
Agreement is sufficient (i) to fully to transfer to the Depositor all right,
title, and interest of the Unaffiliated Seller and the Originators thereto as
note holder and mortgagee and (ii) to the extent an Originator or the
Unaffiliated Seller retains an interest in such Mortgage Note or Mortgage
despite such sale, transfer and conveyance, to grant to the Depositor the
security interest referred to in Section 6.07 hereof and thereafter (x) to
transfer the right, title and interest of the Depositor to the Trust and (y) to
pledge the interest of the Trust to the Indenture Trustee for the benefit of the
Noteholders and the Note Insurer. The Mortgage has been duly assigned by the
Originators to the Unaffiliated Seller and by the Unaffiliated Seller to the
Depositor and by the Depositor to the Trust and the Mortgage Note has been duly
endorsed. The Assignment of Mortgage delivered to the Collateral Agent, on
behalf of the Indenture Trustee, pursuant to Section 2.05(a)(iv) of the Sale and
Servicing Agreement is in recordable form and is acceptable for recording under
the laws of the applicable jurisdiction. The endorsement of the Mortgage Note,
the delivery to the Collateral Agent, on behalf of the Indenture Trustee, of the
endorsed Mortgage Note, and such Assignment of Mortgage, and the delivery of
such Assignment of Mortgage to the Collateral Agent, on behalf of the Indenture
Trustee, for recording are sufficient to permit the Indenture Trustee to avail
itself of all protection available under applicable law against the claims of
any present or future creditors of the Depositor, the Unaffiliated Seller or any
of the Originators, and are sufficient to prevent any other sale, transfer,
assignment, pledge, or hypothecation of the Mortgage Note and Mortgage by the
Depositor, the Unaffiliated Seller or any of the Originators from being
enforceable, even if the Servicer does not record such Assignment of Mortgage in
the applicable recording office. After the transfer pursuant to Section 2.05
hereof, the Indenture Trustee shall have a first priority perfected security
interest in the Mortgage Loans;
(ee) Any and all requirements of any federal, state, or local
law including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity, or
disclosure laws applicable to such Mortgage Loan have been complied with, and
the Servicer shall maintain in its possession, available for the Indenture
Trustee's inspection, and shall deliver to the Indenture Trustee or its designee
upon demand, evidence of compliance with all such requirements. The consummation
of the transactions contemplated by this Agreement will not cause the violation
of any such laws;
(ff) Such Mortgage Loan is covered by an ALTA mortgage title
insurance policy or such other generally used and acceptable form of policy,
issued by and the valid and binding obligation of a title insurer qualified to
do business in the jurisdiction where the Mortgaged Property is located,
insuring the Unaffiliated Seller, and its successors and assigns, as to the
first or second priority lien, as applicable, of the Mortgage in the original
principal amount of such Mortgage Loan. The assignment to the Indenture Trustee
of the Unaffiliated Seller's interest in such mortgage title insurance policy
does not require the consent of or notification to the insurer. Such mortgage
title insurance policy is in full force and effect and will be in full force and
effect and inure to the benefit of the Indenture Trustee upon the consummation
of the transactions contemplated by this Agreement. No claims have been made
under such mortgage title insurance policy and none of the Unaffiliated Seller,
the Originators nor any prior holder of the Mortgage has done, by act or
omission, anything which would impair the coverage of such mortgage title
insurance policy;
17
(gg) All improvements upon the Mortgaged Property are insured
against loss by fire, hazards of extended coverage, and such other hazards as
are customary in the area where the Mortgaged Property is located pursuant to
insurance policies conforming to the requirements of Section 3.05 hereof. If the
Mortgaged Property at origination was located in an area identified on a flood
hazard boundary map or flood insurance rate map issued by the Federal Emergency
Management Agency as having special flood hazards (and such flood insurance has
been made available), such Mortgaged Property was covered by flood insurance at
origination. Each individual insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be in full
force and effect and inure to the benefit of the Indenture Trustee upon the
consummation of the transactions contemplated by this Agreement, and contain a
standard mortgage clause naming the originator of such Mortgage Loan, and its
successors and assigns, as mortgagee and loss payee. All premiums thereon have
been paid. The Mortgage obligates the Mortgagor 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 obtain and maintain such insurance at
the Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor, and none of the Unaffiliated Seller, the related Originator or any
prior holder of the Mortgage has acted or failed to act so as to impair the
coverage of any such insurance policy or the validity, binding effect, and
enforceability thereof;
(hh) If the Mortgage constitutes a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Trust or the Indenture Trustee or the
Noteholders to trustee under the deed of trust, except in connection with a
trustee's sale after default by the Mortgagor;
(ii) The Mortgaged Property consists of one or more parcels of
real property separately assessed for tax purposes. To the extent there is
erected thereon a detached or an attached one-family residence or a detached
two-to-six-family dwelling, or an individual condominium unit in a low-rise
condominium, or an individual unit in a planned unit development, or a
commercial property, a manufactured dwelling, or a mixed use or multiple purpose
property, such residence, dwelling or unit is not: (i) a unit in a cooperative
apartment, (ii) a property constituting part of a syndication, (iii) a time
share unit, (iv) a property held in trust, (v) a mobile home, (vi) a
log-constructed home, or (vii) a recreational vehicle;
(jj) There exist no material deficiencies with respect to
escrow deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made or which the Unaffiliated
Seller or the related Originator expects not to be cured, and no escrow deposits
or payments of other charges or payments due the Unaffiliated Seller have been
capitalized under the Mortgage or the Mortgage Note;
(kk) Such Mortgage Loan was not originated at a below market
interest rate. Such Mortgage Loan does not have a shared appreciation feature,
or other contingent interest feature;
(ll) The origination and collection practices used by the
Unaffiliated Seller, the Originators or the Servicer with respect to such
Mortgage Loan have been in all respects legal, proper, prudent, and customary in
the mortgage origination and servicing business;
(mm) The Mortgagor has, to the extent required by applicable
law, executed a statement to the effect that the Mortgagor has received all
disclosure materials, if any, required by applicable law with respect to the
making of fixed-rate mortgage loans. The Servicer shall maintain or cause to be
maintained such statement in the Mortgage File;
(nn) All amounts received by the Unaffiliated Seller or the
Originators with respect to such Mortgage Loan after the Cut-Off Date and
required to be deposited in the related Distribution Account have been so
deposited in such Distribution Account and are, as of the Closing Date, in such
Distribution Account;
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(oo) The appraisal report with respect to the Mortgaged
Property contained in the Mortgage File was signed prior to the approval of the
application for such Mortgage Loan by a qualified appraiser, duly appointed by
the originator of such Mortgage Loan, 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 such application;
(pp) When measured by the Cut-Off Date Aggregate Principal
Balances of all Mortgage Loans as of the Cut-Off Date, the Mortgagors with
respect to at least 95.30% of the Mortgage Loans in Mortgage Loan Group I and
60.35% in Mortgage Loan Group II represented at the time of origination that the
Mortgagor would occupy the Mortgaged Property as the Mortgagor's primary
residence;
(qq) Each of the Originators and the Unaffiliated Seller has
no knowledge with respect to the Mortgaged Property of any governmental or
regulatory action or third party claim made, instituted or threatened in writing
relating to a violation of any applicable federal, state or local environmental
law, statute, ordinance, regulation, order, decree or standard;
(rr) Each Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code;
(ss) With respect to second lien Mortgage Loans:
(i) neither the Unaffiliated Seller nor the Originators
have any knowledge that the Mortgagor has received notice from the
holder of the prior mortgage that such prior mortgage is in default,
(ii) no consent from the holder of the prior mortgage is
needed for the creation of the second lien Mortgage or, if required,
has been obtained and is in the related Mortgage File,
(iii) if the prior mortgage has a negative amortization,
the Combined Loan-to-Value Ratio was determined using the maximum loan
amount of such prior mortgage,
(iv) the related first mortgage loan encumbering the
related Mortgaged Property does not have a mandatory future advance
provision,
(v) the Mortgage Loans conform in all material respects
to the description thereof in the Prospectus Supplement; and
(vi) No more than 9.79% (by Principal Balance) of the
Mortgage Loans in Mortgage Loan Group I and 40.08% in Mortgage Loan
Group II are secured by Mortgages that are second liens.
(tt) [Reserved]
(uu) To the best of the Unaffiliated Seller's and the
Originators' knowledge, no error, omission, misrepresentation, negligence, fraud
or similar occurrence with respect to a Mortgage Loan has taken place on the
part of any person, including without limitation the Mortgagor, any appraiser,
any builder or developer, or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;
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(vv) Each Mortgaged Property is in compliance with all
environmental laws, ordinances, rules, regulations and orders of federal, state
or governmental authorities relating thereto. No hazardous material has been or
is incorporated in, stored on or under (other than properly stored materials
used for reasonable residential purposes), released from, treated on,
transported to or from, or disposed of on or from, any Mortgaged Property such
that, under applicable law (A) any such hazardous material would be required to
be eliminated before the Mortgaged Property could be altered, renovated,
demolished or transferred, or (B) the owner of the Mortgaged Property, or the
holder of a security interest therein, could be subjected to liability for the
removal of such hazardous material or the elimination of the hazard created
thereby. Neither the Unaffiliated Seller nor any Mortgagor has received
notification from any federal, state or other governmental authority relating to
any hazardous materials on or affecting the Mortgaged Property or to any
potential or known liability under any environmental law arising from the
ownership or operation of the Mortgaged Property. For the purposes of this
subsection, the term "hazardous materials" shall include, without limitation,
gasoline, petroleum products, explosives, radioactive materials, polychlorinated
biphenyls or related or similar materials, asbestos or any material containing
asbestos, lead, lead-based paint and any other substance or material as may be
defined as a hazardous or toxic substance by any federal, state or local
environmental law, ordinance, rule, regulation or order, including, without
limitation, CERCLA, the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act and any
regulations promulgated pursuant thereto;
(ww) With respect to any business purpose loan, the related
Mortgage Note contains an acceleration clause, accelerating the maturity date
under the Mortgage Note to the date the individual guarantying such loan, if
any, becomes subject to any bankruptcy, insolvency, reorganization, moratorium,
or other similar laws affecting the enforcement of creditors' rights generally;
(xx) To the best of the Unaffiliated Seller's knowledge, none
of the Mortgage Loans are Section 32 loans subject to the Home Ownership and
Equity Protection Act;
(yy) Except for 0.00% (by Principal Balance) of the Mortgage
Loans in Mortgage Loan Group I and 0.00% in Mortgage Loan Group II, which may
have an initial LTV ratio range of up to 100.00%, no Mortgage Loans have initial
LTV ratios greater than 93.11% in Mortgage Loan Group I and 90.00% in Mortgage
Loan Group II;
(zz) No more than 0.00% (by Principal Balance) of the Mortgage
Loans in Mortgage Loan Group I and 55.90% in Mortgage Loan Group II are loans
the proceeds of which are to be used for business purposes;
(aaa) At least 95.30% (by Principal Balance) of the Mortgage
Loans in Mortgage Loan Group I and 60.35% in Mortgage Loan Group II are secured
exclusively by Owner Occupied Mortgaged Property;
(bbb) To the extent that a credit score was obtained, the
weighted average FICO or similar scoring scale result score (by Principal
Balance) for the Mortgage Loans is at least 585, not more than 8.61% (by
Principal Balance) of the Mortgage Loans in Mortgage Loan Group I and 10.31% in
Mortgage Loan Group II have FICO or similar scoring scale result scores that are
less than 500 and at least 99.61% (by Principal Balance) of the Mortgage Loans
in Mortgage Loan Group I and 98.58% in Mortgage Loan Group II have FICO or
similar scoring scale result scores;
20
(ccc) The Mortgage Loans have a weighted average CLTV (by
Principal Balance) of not more than 77.30% in Mortgage Loan Group I and 69.40%
in Mortgage Loan Group II and no more than 0.00% (by Principal Balance) of the
Mortgage Loans in Mortgage Loan Group I and 0.00% in Mortgage Loan Group II have
a CLTV greater than 100.00%;
(ddd) No more than 12.61% (by Principal Balance) of the
Mortgage Loans in Mortgage Loan Group I and 7.96% in Mortgage Loan Group II are
made to borrowers with limited or no documentation;
(eee) No more than 0.00% (by Principal Balance) of the
Mortgage Loans in Mortgage Loan Group I and 0.00% in Mortgage Loan Group II have
been originated by a party other than an Originator;
(fff) The Mortgage Interest Rate for each Mortgage Loan is
fixed;
(ggg) No more than 4.00% (by Principal Balance) of the
Mortgage Loans in Mortgage Loan Group I and 4.45% in Mortgage Loan Group II
consist of balloon Mortgage Loans that mature within 10 years of the date of
origination;
(hhh) No Mortgage Loan has a Principal Balance greater than
$315,844 in Mortgage Loan Group I and $650,000 in Mortgage Loan Group II;
(iii) At least 86.50% (by Principal Balance) of the Mortgage
Loans in Mortgage Loan Group I and 41.33% in Mortgage Loan Group II are secured
by a single-family detached home, an individual unit in a planned unit
development or a townhouse; and
(jjj) No more than 1.79% (by Principal Balance) of the
Mortgage Loans in Mortgage Loan Group I and 0.00% in Mortgage Loan Group II are
secured by manufactured homes.
Section 3.04. Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Unaffiliated
Seller, as of the date of execution of this Agreement and the Closing Date,
that:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to
purchase each Mortgage Loan and to execute, deliver and perform, and to enter
into and consummate all the transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, and, assuming the due authorization,
execution and delivery hereof by the Unaffiliated Seller and the Originators,
constitutes the legal, valid and binding agreement of the Depositor, enforceable
against the Depositor in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or court
is required for the execution, delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except such as have been made on or prior to
the Closing Date;
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(e) The Depositor has filed or will file the Prospectus and
Prospectus Supplement with the Commission in accordance with Rule 424(b) under
the Securities Act; and
(f) None of the execution and delivery of this Agreement, the
purchase of the Mortgage Loans from the Unaffiliated Seller, the consummation of
the other transactions contemplated hereby, or the fulfillment of or compliance
with the terms and conditions of this Agreement, (i) conflicts or will conflict
with the charter or bylaws of the Depositor or conflicts or will conflict with
or results or will result in a breach of, or constitutes or will constitute a
default or results or will result in an acceleration under, any term, condition
or provision of any indenture, deed of trust, contract or other agreement or
other instrument to which the Depositor is a party or by which it is bound and
which is material to the Depositor, or (ii) results or will result in a
violation of any law, rule, regulation, order, judgment or decree of any court
or governmental authority having jurisdiction over the Depositor.
Section 3.05. Repurchase Obligation for Defective
Documentation and for Breach of a Representation or Warranty.
(a)Each of the representations and warranties contained in
Sections 3.01, 3.02 and 3.03 shall survive the purchase by the Depositor of the
Mortgage Loans and the subsequent transfer thereof by the Depositor to the Trust
and the subsequent pledge thereof by the Trust to the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer, and shall continue in full
force and effect, notwithstanding any restrictive or qualified endorsement on
the Mortgage Notes and notwithstanding subsequent termination of this Agreement,
the Sale and Servicing Agreement or the Indenture.
(b) With respect to any representation or warranty contained
in Sections 3.01 or 3.03 hereof that is made to the best of the Originators'
knowledge or contained in Sections 3.02 or 3.03 hereof that is made to the best
of the Unaffiliated Seller's knowledge, if it is discovered by the Servicer, the
Collateral Agent, any Subservicer, the Indenture Trustee, the Note Insurer or
any Noteholder that the substance of such representation and warranty was
inaccurate as of the Closing Date and such inaccuracy materially and adversely
affects the value of the related Mortgage Loan, then notwithstanding the
Originators' or the Unaffiliated Seller's lack of knowledge with respect to the
inaccuracy at the time the representation or warranty was made, such inaccuracy
shall be deemed a breach of the applicable representation or warranty. Upon
discovery by the Originators, the Unaffiliated Seller, the Collateral Agent, the
Servicer, any Subservicer, the Indenture Trustee, the Note Insurer or any
Noteholder of a breach of any of such representations and warranties which
materially and adversely affects the value of Mortgage Loans or the interest of
the Noteholders, or which materially and adversely affects the interests of the
Note Insurer or the Noteholders in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan
(notwithstanding that such representation and warranty was made to the
Originators' or the Unaffiliated Seller's best knowledge), the party discovering
such breach shall give pursuant to this Section 3.05(b), and pursuant to Section
4.02 of the Sale and Servicing Agreement shall promptly (and in any event of
discovery, within five (5) Business Days) give written notice to the others.
Subject to the last paragraph of this Section 3.05(b), within sixty (60) days of
the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Unaffiliated Seller and the Originators shall
(a) promptly cure such breach in all material respects, or (b) purchase such
Mortgage Loan at a purchase price equal to the Principal Balance of such
Mortgage Loan as of the date of purchase, plus the greater of (i) all accrued
and unpaid interest on such Principal Balance and (ii) 30 days' interest on such
Principal Balance, computed at the Mortgage Interest Rate, net of the Servicing
Fee if the Unaffiliated Seller is the Servicer, plus the amount of any
unreimbursed Servicing Advances made by the Servicer with respect to such
Mortgage Loan, or (c) remove such Mortgage Loan from the Trust Estate (in which
case it shall become a Deleted Mortgage Loan) and substitute one or more
Qualified Substitute Mortgage Loans; provided, that, such substitution is
effected not later than the date which is 2 years after the Startup Day or at
such later date, if the Indenture Trustee and the Note Insurer receive an
Opinion of Counsel to the effect set forth below in this Section. Any such
substitution shall be accompanied by payment by the Unaffiliated Seller of the
Substitution Adjustment, if any, to be deposited in the Collection Account
pursuant to the Sale and Servicing Agreement.
22
The Originators shall cooperate with the Unaffiliated Seller
to cure any breach and shall reimburse the Unaffiliated Seller for the costs and
expenses related to any cure, substitution (including any Substitution
Adjustment) or repurchase incurred by the Unaffiliated Seller pursuant to this
Section 3.05.
(c) As to any Deleted Mortgage Loan for which the Unaffiliated
Seller or an Originator substitutes a Qualified Substitute Mortgage Loan or
Loans, the Unaffiliated Seller or such Originator shall effect such substitution
by delivering to the Indenture Trustee and the Note Insurer a certification in
the form attached to the Sale and Servicing Agreement as Exhibit F, executed by
a Servicing Officer and the documents described in Section 2.06(d) for such
Qualified Substitute Mortgage Loan or Loans. Pursuant to the Sale and Servicing
Agreement, upon receipt by the Indenture Trustee and the Collateral Agent of a
certification of a Servicing Officer of such substitution or purchase and, in
the case of a substitution, upon receipt by the Collateral Agent, on behalf of
the Indenture Trustee, of the related Indenture Trustee's Mortgage File, and the
deposit of certain amounts in the Distribution Account pursuant to Section
2.06(c) of the Sale and Servicing Agreement (which certification shall be in the
form of Exhibit F to the Sale and Servicing Agreement), the Collateral Agent, on
behalf of the Indenture Trustee shall be required to release to the Servicer for
release to the Unaffiliated Seller the related Indenture Trustee's Mortgage File
and shall be required to execute, without recourse, and deliver such instruments
of transfer furnished by the Unaffiliated Seller as may be necessary to transfer
such Mortgage Loan to the Unaffiliated Seller or such Originator.
(d) Pursuant to the Sale and Servicing Agreement, the Servicer
shall deposit in the Collection Account all payments received in connection with
such Qualified Substitute Mortgage Loan or Loans after the date of such
substitution. Monthly Payments received with respect to Qualified Substitute
Mortgage Loans on or before the date of substitution will be retained by the
Unaffiliated Seller. The Trust Estate will own all payments received on the
Deleted Mortgage Loan on or before the date of substitution, and the
Unaffiliated Seller or the Originator, as applicable, shall thereafter be
entitled to retain all amounts subsequently received in respect of such Deleted
Mortgage Loan. Pursuant to the Sale and Servicing Agreement, the Servicer shall
be required to give written notice to the Indenture Trustee, the Collateral
Agent and the Note Insurer that such substitution has taken place and shall
amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage
Loan from the terms of the Indenture and the Sale and Servicing Agreement and
the substitution of the Qualified Substitute Mortgage Loan. The parties hereto
agree to amend the Mortgage Loan Schedule accordingly. Upon such substitution,
such Qualified Substitute Mortgage Loan or Loans shall be subject to the terms
of the Sale and Servicing Agreement and this Agreement in all respects, and the
Unaffiliated Seller shall be deemed to have made with respect to such Qualified
Substitute Mortgage Loan or Loans, as of the date of substitution, the
representations and warranties set forth in Sections 3.02 and 3.03 herein. On
the date of such substitution, the Unaffiliated Seller will remit to the
Servicer and pursuant to the Sale and Servicing Agreement the Servicer will
deposit into the Distribution Account an amount equal to the Substitution
Adjustment, if any.
23
(e) With respect to any Mortgage Loan that has been converted
to an REO Mortgage Loan, all references in this Section 3.05 or Section 2.06 to
"Mortgage Loan" shall be deemed to refer to such REO Mortgage Loan. With respect
to any Mortgage Loan that the Originator or Unaffiliated Seller is required to
repurchase that is or becomes a Liquidated Mortgage Loan, in lieu of
repurchasing such Mortgage Loan, the Originator or Unaffiliated Seller shall
deposit into the related Distribution Account, pursuant to Section 8.01 of the
Indenture an amount equal to the amount of the Liquidated Loan Loss, if any,
incurred in connection with the liquidation of such Mortgage Loan within the
same time period in which the Originator or Unaffiliated Seller would have
otherwise been required to repurchase such Mortgage Loan.
(f) It is understood and agreed that the obligations of the
Unaffiliated Seller and the Originator set forth in Section 2.06 and this
Section 3.05 to cure, purchase or substitute for a defective Mortgage Loan as
provided in Section 2.06 and this Section 3.05 constitute the sole remedies of
the Depositor, the Indenture Trustee, the Note Insurer and the Noteholders
respecting a breach of the foregoing representations and warranties.
(g) Any cause of action against the Unaffiliated Seller or an
Originator relating to or arising out of the breach of any representations and
warranties or covenants made in Sections 2.06, 3.01, 3.02 or 3.03 shall accrue
as to any Mortgage Loan upon (i) discovery of such breach by any party and
notice thereof to the Unaffiliated Seller or such Originator, (ii) failure by
the Unaffiliated Seller or such Originator to cure such breach or purchase or
substitute such Mortgage Loan as specified above, and (iii) demand upon the
Unaffiliated Seller or such Originator by the Indenture Trustee for all amounts
payable in respect of such Mortgage Loan.
(h) Pursuant to the Sale and Servicing Agreement, upon
discovery by the Unaffiliated Seller, the Servicer, the Indenture Trustee, the
Note Insurer or any Noteholder that any Mortgage Loan does not constitute a
qualified Mortgage Loan, the party discovering such fact shall promptly (and in
any event within 5 days of the discovery) give written notice thereof to the
other parties. In connection therewith, the Unaffiliated Seller or the related
Originator shall repurchase or substitute a Qualified Substitute Mortgage Loan
for the affected Mortgage Loan within ninety (90) days of the earlier of such
discovery by any of the foregoing parties, or the Indenture Trustee's or the
Unaffiliated Seller's receipt of notice, in the same manner as it would a
Mortgage Loan for a breach of representation or warranty contained in Sections
3.01, 3.02 or 3.03. Pursuant to the Sale and Servicing Agreement the Indenture
Trustee shall reconvey to the Unaffiliated Seller or the related Originator the
Mortgage Loan to be released pursuant hereto in the same manner, and on the same
terms and conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty contained in Sections 3.01, 3.02 or 3.03.
(i) Notwithstanding anything in this Agreement or the Sale and
Servicing Agreement to the contrary, the Unaffiliated Seller's repurchase
obligations hereunder shall not include failure of the Indenture Trustee to
record assignments of the Mortgage Loans referenced in clause (a)(iii) in
Section 2.05 of the Sale and Servicing Agreement. All parties hereto acknowledge
and agree that the Indenture Trustee has the responsibility to record all such
assignments of the Mortgage Loans to the Indenture Trustee.
(j) Each of the Originators and the Unaffiliated Seller shall
be jointly and severally responsible for any repurchase, cure or substitution
obligation of any of the Originators or the Unaffiliated Seller under this
Agreement and the Sale and Servicing Agreement.
24
(k) The Unaffiliated Seller and the Originators hereby agree,
jointly and severally, to indemnify the Indenture Trustee, the Depositor, the
Noteholders and the Note Insurer and their successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable out of pocket costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against any Indemnified Party in any way relating to or arising out of
a breach by the Unaffiliated Seller or the related Originator of the
representations or warranties in Article III hereof. The indemnities contained
in this Section 3.05 shall survive the resignation or termination of the
Indenture Trustee or the termination of this Agreement.
Section 3.06. Limited Purpose and Corporate Separateness of
the Unaffiliated Seller.
(a) The Unaffiliated Seller covenants to the Indenture
Trustee, the Depositor, the Servicer, the Noteholders and the Note Insurer as
follows:
(i) The Unaffiliated Seller shall not engage in any
business or activity of any kind or enter into any transaction or
indenture, mortgage, instrument, agreement contract, lease or other
undertaking other than the transactions contemplated and authorized by
this Agreement. Without limiting the generality of the foregoing, the
Unaffiliated Seller shall not create, incur, guarantee, assume or
suffer to exist any indebtedness or other liabilities, whether direct
or contingent, other than (i) as a result of the endorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business, (ii) the incurrence of
obligations under this Agreement and the Insurance Agreement and (iii)
the incurrence of operating expenses in the ordinary course of business
permitted under this Agreement;
(ii) The Unaffiliated Seller shall not amend its
certificate of incorporation or by-laws in any respect without the
prior written consent of the Note Insurer;
(iii) The Unaffiliated Seller has been formed for, and
shall limit its activities to, the following purposes: (i) to purchase
the Mortgage Loans from the Originators and to sell such Mortgage Loans
to the Depositor, in each case pursuant to this Agreement; (ii) in the
event of the occurrence of a breach of certain representations and
warranties, to cause the substitution of repurchase of the related
Mortgage Loans by the Originators; (iii) to enter into and perform its
obligations under this Agreement and the Insurance Agreement and (iv)
to engage in those activities that are necessary, suitable of
convenient to accomplish the foregoing or are incidental thereto or
connected therewith;
(iv) The Unaffiliated Seller shall not incur, assume or
guarantee any indebtedness or other liabilities except under the
provisions of this Agreement and the Insurance Agreement;
(v) The Unaffiliated Seller shall maintain separate
corporate records and books of account from those of the Originators or
any of their Affiliates;
(vi) The Unaffiliated Seller shall not become involved in
the day to day management of any other Person, and it shall operate so
as not to be substantively consolidated with any other Person;
(vii) The Unaffiliated Seller shall maintain its assets
separate from those of the Originators or any of their Affiliates;
25
(viii) The Unaffiliated Seller shall conduct
correspondence in its own name on its own stationery;
(ix) The Unaffiliated Seller shall not act as an agent of
any other entity or Person except pursuant to contractual documents
indicating such capacity;
(x) The Unaffiliated Seller shall take all other actions
necessary on its part in order to ensure that all of the facts and
assumptions set forth in the opinion issued by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP in
connection with the closing or initial purchase under this Agreement
and relating to true sale and substantive consolidation issues, and in
the certificates accompanying such opinion, remain true and correct at
all times; and
(xi) The Unaffiliated Seller shall not undertake any
activity which is not a permitted activity for a qualified special
purpose entity under current accounting literature.
(b) The Originators will operate in such a manner that the
Unaffiliated Seller would not be substantively consolidated in the trust estate
of the Originators, ABFS or any of their respective Affiliates (each an "ABFS
Company") and the separate existence of Unaffiliated Seller would not be
disregarded in the event of a bankruptcy or insolvency of any ABFS Company.
Without limiting the generality of the foregoing and in addition to the other
covenants set forth herein, each Originator shall take, and shall cause each of
their Affiliates to take, all actions required on its part to ensure that:
(i) the Unaffiliated Seller shall conduct its business
solely in its own name and make all written and oral communications
solely in its name;
(ii) the Unaffiliated Seller shall provide for its
expenses and liabilities from its own funds;
(iii) the Unaffiliated Seller shall not be contractually
liable for the payment of any liability of any ABFS Company nor
generally hold its assets nor creditworthiness as being available for
the payment of any liability of any ABFS Company;
(iv) the Unaffiliated Seller shall maintain an
arm's-length relationship with each other ABFS Company;
(v) the Unaffiliated Seller shall not transfer any assets
between itself and any other ABFS Company without fair consideration or
with the intent to hinder, delay or defraud the creditors of any other
ABFS Company; and
(vi) any consolidated financial statements of any ABFS
Company that include the Unaffiliated Seller have notes clearly stating
that the Unaffiliated Seller is a corporation separate and distinct
from each of the other ABFS Companies and that the assets of the
Unaffiliated Seller will be available first and foremost to satisfy the
claims of the creditors of the Unaffiliated Seller.
ARTICLE IV
THE UNAFFILIATED SELLER
Section 4.01. Covenants of the Originators and the
Unaffiliated Seller. Each of the Originators and the Unaffiliated Seller
covenants to the Depositor as follows:
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(a) The Originators and the Unaffiliated Seller shall
cooperate with the Depositor and the firm of independent certified public
accountants retained with respect to the issuance of the Notes in making
available all information and taking all steps reasonably necessary to permit
the accountants' letters required hereunder to be delivered within the times set
for delivery herein.
(b) The Unaffiliated Seller agrees to satisfy or cause to be
satisfied on or prior to the Closing Date, all of the conditions to the
Depositor's obligations set forth in Section 5.01 hereof that are within the
Unaffiliated Seller's (or its agents') control.
(c) The Originators and the Unaffiliated Seller hereby agree
to do all acts, transactions, and things and to execute and deliver all
agreements, documents, instruments, and papers by and on behalf of the
Originators or the Unaffiliated Seller as the Depositor or its counsel may
reasonably request in order to consummate the transfer of the Mortgage Loans to
the Depositor and the subsequent transfer thereof to the Indenture Trustee, and
the rating, issuance and sale of the Notes.
Section 4.02. Merger or Consolidation. Each of the Originators
and the Unaffiliated Seller will keep in full effect its existence, rights and
franchises as a corporation and will obtain and preserve its qualification to do
business as a foreign corporation, in each jurisdiction necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement. Any Person into which any of the
Originators and the Unaffiliated Seller or the Unaffiliated Seller may be merged
or consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Originators and the Unaffiliated Seller shall be a
party, or any Person succeeding to the business of the Originators and the
Unaffiliated Seller, shall be approved by the Note Insurer which approval shall
not be unreasonably withheld. If the approval of the Note Insurer is not
required, the successor shall be an established mortgage loan servicing
institution that is a permitted transferee and in all events shall be the
successor of the Originators and the Unaffiliated Seller without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. The Originators and the
Unaffiliated Seller shall send notice of any such merger or consolidation to the
Indenture Trustee and the Note Insurer.
Section 4.03. Costs. In connection with the transactions
contemplated under this Agreement and the Sale and Servicing Agreement, the
Unaffiliated Seller shall promptly pay (or shall promptly reimburse the
Depositor to the extent that the Depositor shall have paid or otherwise
incurred): (a) the fees and disbursements of the Depositor's, the Unaffiliated
Seller's and the Originators' counsel; (b) the fees of S&P and ▇▇▇▇▇'▇; (c) any
of the fees of the Indenture Trustee and the fees and disbursements of the
Indenture Trustee's counsel; (d) expenses incurred in connection with printing
the Prospectus, the Prospectus Supplement, any amendment or supplement thereto,
any preliminary prospectus and the Notes; (e) fees and expenses relating to the
filing of documents with the Securities and Exchange Commission (including
without limitation periodic reports under the Exchange Act); (f) the shelf
registration amortization fee of 0.04% of the Class A Note Principal Balance on
the Closing Date, paid in connection with the issuance of Notes; (g) the fees
and disbursements for the accountants for the Originators; and (h) all of the
initial expenses of the Note Insurer including, without limitation, legal fees
and expenses, accountant fees and expenses and expenses in connection with due
diligence conducted on the Mortgage Files but not including the initial premium
paid to the Note Insurer. For the avoidance of doubt, the parties hereto
acknowledge that it is the intention of the parties that the Depositor shall not
pay any of the Indenture Trustee's fees and expenses in connection with the
transactions contemplated by the Sale and Servicing Agreement. All other costs
and expenses in connection with the transactions contemplated hereunder shall be
borne by the party incurring such expenses.
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Section 4.04. Indemnification. (a) The Originators, the
Servicer and the Unaffiliated Seller, jointly and severally, agree to indemnify
and to hold the Depositor harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Depositor may sustain in any way related
to the failure of any of the Originators or the Unaffiliated Seller to perform
its duties in compliance with the terms of this Agreement. The Originators or
the Unaffiliated Seller shall immediately notify the Depositor if a claim is
made by a third party with respect to this Agreement, and the Originators or the
Unaffiliated Seller shall assume the defense of any such claim and pay all
expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Depositor in respect of such claim. Pursuant to the Indenture, the
Indenture Trustee shall reimburse the Unaffiliated Seller in accordance with the
Indenture for all amounts advanced by the Unaffiliated Seller pursuant to the
preceding sentence except when the claim relates directly to the failure of the
Unaffiliated Seller to perform its duties in compliance with the terms of this
Agreement.
ARTICLE V
CONDITIONS OF CLOSING
Section 5.01. Conditions of Depositor's Obligations. The
obligations of the Depositor to purchase the Mortgage Loans will be subject to
the satisfaction on the Closing Date of the following conditions. Upon payment
of the purchase price for the Mortgage Loans, such conditions shall be deemed
satisfied or waived.
(a) Each of the obligations of the Unaffiliated Seller
required to be performed by it on or prior to the Closing Date pursuant to the
terms of this Agreement shall have been duly performed and complied with and all
of the representations and warranties of the Unaffiliated Seller and the
Originators under this Agreement shall be true and correct as of the Closing
Date and no event shall have occurred which, with notice or the passage of time,
would constitute a default under this Agreement, and the Depositor shall have
received a certificate to the effect of the foregoing signed by an authorized
officer of the Unaffiliated Seller and the Originators.
(b) The Depositor shall have received a letter dated the date
of this Agreement, in form and substance acceptable to the Depositor and its
counsel, prepared by Deloitte & Touche LLP, independent certified public
accountants, regarding the numerical information contained in the Prospectus
Supplement including, but not limited to the information under the captions
"Prepayment and Yield Considerations" and "The Mortgage Loan Pool" regarding any
numerical information in any marketing materials relating to the Notes and
regarding any other information as reasonably requested by the Depositor.
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(c) The Mortgage Loans will be acceptable to the Depositor, in
its sole reasonable discretion.
(d) The Depositor shall have received the following additional
closing documents, in form and substance reasonably satisfactory to the
Depositor and its counsel:
(i) the Mortgage Loan Schedule;
(ii) this Agreement, the Sale and Servicing Agreement, the
Indenture, the Trust Agreement and the Note Purchase Agreement dated as
of September 26, 2001 between the Depositor and the Representative and
all documents required thereunder, duly executed and delivered by each
of the parties thereto other than the Depositor;
(iii) officer's certificates of an officer of each of the
Originators and the Unaffiliated Seller, dated as of the Closing Date,
and attached thereto resolutions of the board of directors and a copy
of the charter and by-laws;
(iv) copy of each of the Originators and the Unaffiliated
Seller's charter and all amendments, revisions, and supplements
thereof, certified by a secretary of each entity;
(v) an opinion of the counsel for the Originators and the
Unaffiliated Seller as to various corporate matters in a form
acceptable to the Depositor, its counsel, the Note Insurer, S&P and
▇▇▇▇▇'▇ (it being agreed that the opinion shall expressly provide that
the Indenture Trustee shall be entitled to rely on the opinion);
(vi) opinions of counsel for the Unaffiliated Seller, in
forms acceptable to the Depositor, its counsel, the Note Insurer, S&P
and ▇▇▇▇▇'▇ as to such matters as shall be required for the assignment
of a rating to the Class A Notes of "AAA" by S&P, and "Aaa" by ▇▇▇▇▇'▇
(it being agreed that such opinions shall expressly provide that the
Indenture Trustee shall be entitled to rely on such opinions);
(vii) a letter from ▇▇▇▇▇'▇ to the effect that it has
assigned a rating of Aaa to the Class A Notes;
(viii) a letter from S&P to the effect that it has
assigned a rating of "AAA" to the Class A Notes;
(ix) an opinion of counsel for the Indenture Trustee in
form and substance acceptable to the Depositor, its counsel, ▇▇▇▇▇'▇,
the Note Insurer and S&P (it being agreed that the opinion shall
expressly provide that the Unaffiliated Seller shall be entitled to
rely on the opinion);
(x) an opinion of counsel for the Owner Trustee in form
and substance acceptable to the Depositor, its counsel, ▇▇▇▇▇'▇, the
Note Insurer and S&P (it being agreed that the opinion shall expressly
provide that the Unaffiliated Seller shall be entitled to rely on the
opinion);
(xi) an opinion or opinions of counsel for the Servicer,
in form and substance acceptable to the Depositor, its counsel, the
Note Insurer, ▇▇▇▇▇'▇ and S&P (it being agreed that the opinion shall
expressly provide that the Unaffiliated Seller shall be entitled to
rely on the opinion); and
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(xii) an opinion or opinions of counsel for the Note
Insurer, in each case in form and substance acceptable to the
Depositor, its counsel, ▇▇▇▇▇'▇ and S&P (it being agreed that the
opinion shall expressly provide that the Unaffiliated Seller shall be
entitled to rely on the opinion).
(e) The Note Insurance Policy shall have been duly executed,
delivered and issued with respect to the Class A Notes.
(f) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall be
satisfactory in form and substance to the Depositor and its counsel.
(g) The Unaffiliated Seller shall have furnished the Depositor
with such other certificates of its officers or others and such other documents
or opinions as the Depositor or its counsel may reasonably request.
Section 5.02. Conditions of Unaffiliated Seller's Obligations.
The obligations of the Unaffiliated Seller under this Agreement shall be subject
to the satisfaction, on the Closing Date, of the following conditions:
(a) Each of the obligations of the Depositor required to be
performed by it at or prior to the Closing Date pursuant to the terms of this
Agreement shall have been duly performed and complied with and all of the
representations and warranties of the Depositor contained in this Agreement
shall be true and correct as of the Closing Date and the Unaffiliated Seller
shall have received a certificate to that effect signed by an authorized officer
of the Depositor.
(b) The Unaffiliated Seller shall have received the following
additional documents:
(i) the Sale and Servicing Agreement, and all documents
required thereunder, in each case executed by the Depositor as
applicable; and
(ii) a copy of a letter from ▇▇▇▇▇'▇ to the Depositor to
the effect that it has assigned a rating of "Aaa" to the Class A Notes
and a copy of a letter from S&P to the Depositor to the effect that it
has assigned a rating of "AAA" to the Class A Notes.
(iii) an opinion of counsel for the Indenture Trustee in
form and substance acceptable to the Unaffiliated Seller and its
counsel;
(iv) an opinion or opinions of counsel for the Note
Insurer, in each case in form and substance acceptable to the
Unaffiliated Seller and its counsel.
(v) an opinion of the counsel for the Depositor as to
securities and tax matters in form and substance acceptable to the Note
Insurer and its counsel; and
(vi) an opinion of the counsel for the Depositor as to
true sale matters in form and substance acceptable to the Note Insurer
and its counsel.
(c) The Depositor shall have furnished the Unaffiliated Seller
with such other certificates of its officers or others and such other documents
to evidence fulfillment of the conditions set forth in this Agreement as the
Unaffiliated Seller may reasonably request.
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Section 5.03. Termination of Depositor's Obligations. The
Depositor may terminate its obligations hereunder by notice to the Unaffiliated
Seller at any time before delivery of and payment of the purchase price for the
Mortgage Loans if: (a) any of the conditions set forth in Section 5.01 are not
satisfied when and as provided therein; (b) there shall have been the entry of a
decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Unaffiliated Seller, or
for the winding up or liquidation of the affairs of the Unaffiliated Seller; (c)
there shall have been the consent by the Unaffiliated Seller to the appointment
of a conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Unaffiliated Seller or of or relating to substantially all of
the property of the Unaffiliated Seller; (d) any purchase and assumption
agreement with respect to the Unaffiliated Seller or the assets and properties
of the Unaffiliated Seller shall have been entered into; or (e) a Termination
Event shall have occurred. The termination of the Depositor's obligations
hereunder shall not terminate the Depositor's rights hereunder or its right to
exercise any remedy available to it at law or in equity.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by telex or telegraph and confirmed by a similar mailed writing, if
to the Depositor, addressed to the Depositor at ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS Capital I
Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Managing Director -
Asset Backed Finance Group, or to such other address as the Depositor may
designate in writing to the Unaffiliated Seller and if to the Unaffiliated
Seller, addressed to the Unaffiliated Seller at ABFS 2001-3, Inc., ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, or to such other address as the
Unaffiliated Seller may designate in writing to the Depositor.
Section 6.02. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
Section 6.03. Agreement of Unaffiliated Seller. The
Unaffiliated Seller agrees to execute and deliver such instruments and take such
actions as the Depositor may, from time to time, reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement.
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Section 6.04. Survival. The parties to this Agreement agree
that the representations, warranties and agreements made by each of them herein
and in any certificate or other instrument delivered pursuant hereto shall be
deemed to be relied upon by the other party hereto, notwithstanding any
investigation heretofore or hereafter made by such other party or on such other
party's behalf, and that the representations, warranties and agreements made by
the parties hereto in this Agreement or in any such certificate or other
instrument shall survive the delivery of and payment for the Mortgage Loans.
Section 6.05. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 6.06. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as expressly permitted by
the terms hereof, this Agreement may not be assigned, pledged or hypothecated by
any party hereto to a third party without the written consent of the other party
to this Agreement and the Note Insurer; provided, however, that the Depositor
may assign its rights hereunder without the consent of the Unaffiliated Seller.
Section 6.07. Confirmation of Intent; Grant of Security
Interest. It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Originators to the Unaffiliated Seller and by the
Unaffiliated Seller to the Depositor as contemplated by this Unaffiliated
Seller's Agreement be, and be treated for all purposes as, a sale of the
Mortgage Loans and that the conveyance of the Mortgage Loans by the Unaffiliated
Seller to the Depositor as contemplated by this Unaffiliated Seller's Agreement
be, and be treated for accounting purposes as, a sale of the Mortgage Loans. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge of the Mortgage Loans by the Originators to the Unaffiliated Seller or by
the Unaffiliated Seller to the Depositor to secure a debt or other obligation of
the Originators or the Unaffiliated Seller, as the case may be. However, in the
event that, notwithstanding the intent of the parties, the Mortgage Loans are
held to continue to be property of the Originators or the Unaffiliated Seller
then (a) this Unaffiliated Seller's Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code; (b) the transfer of the Mortgage Loans provided for herein
shall be deemed to be a grant by the Originators to the Unaffiliated Seller and
by the Unaffiliated Seller to the Depositor of a security interest in all of
such parties' right, title and interest in and to the Mortgage Loans and all
amounts payable on the Mortgage Loans in accordance with the terms thereof and
all proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property; (c) the possession by the
Depositor of Mortgage Notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the Uniform Commercial Code; and (d)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from persons holding such property, shall be deemed notifications
to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Depositor for the
purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Depositor pursuant to any provision hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Originators, the Unaffiliated Seller and the Depositor shall, to the
extent consistent with this Unaffiliated Seller's Agreement, take such actions
as may be necessary to ensure that, if this Unaffiliated Seller's Agreement were
deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement.
32
Section 6.08. Miscellaneous. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.
Section 6.09. Amendments.
(a) This Agreement may be amended from time to time by the
Originators, the Unaffiliated Seller and the Depositor by written agreement,
upon the prior written consent of the Note Insurer, without notice to or consent
of the Noteholders, and with prior written notice to the Owner Trustee, to cure
any ambiguity, to correct or supplement any provisions herein, to comply with
any changes in the Code, or to make any other provisions with respect to matters
or questions arising under this Agreement which shall not be inconsistent with
the provisions of this Agreement; provided, however, that such action shall not,
as evidenced by (i) an Opinion of Counsel, at the expense of the party
requesting the change, delivered to the Indenture Trustee or (ii) a letter from
each Rating Agency confirming that such amendment will not result in the
reduction, qualification or withdrawal of the current rating of the Class A
Notes, adversely affect in any material respect the interests of any Noteholder;
and provided, further, that no such amendment shall (x) reduce in any manner the
amount of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Note without the consent of the Holder of such
Note, or (y) change the rights or obligations of any other party hereto without
the consent of such party, or (z) cause the Unaffiliated Seller to conduct any
activity not permitted for qualified special purpose entities under the current
accounting literature.
(b) It shall not be necessary for the consent of Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
Section 6.10. Third-Party Beneficiaries. The parties agree
that each of the Note Insurer, the Collateral Agent, the Owner Trustee, the
Trust, and the Indenture Trustee is an intended third-party beneficiary of this
Agreement to the extent necessary to enforce the rights and to obtain the
benefit of the remedies of the Depositor under this Agreement which are assigned
to the Trust and then to the Indenture Trustee for the benefit of the
Noteholders and the Note Insurer pursuant to the Sale and Servicing Agreement
and the Indenture respectively, and to the extent necessary to obtain the
benefit of the enforcement of the obligations and covenants of the Unaffiliated
Seller under Section 4.01 and 4.04(a)(ii) of this Agreement. The parties further
agree that the Underwriters and their directors and each person or entity who
controls the Underwriters or any such person, within the meaning of Section 15
of the Securities Act (each, an "Underwriter Entity") is an intended third-party
beneficiary of this Agreement to the extent necessary to obtain the benefit of
the enforcement of the obligations and covenants of the Unaffiliated Seller with
respect to each Underwriter Entity under Section 4.04(a)(i) of this Agreement.
33
Section 6.11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(b) THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER
EACH HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF
MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 6.01 OF THIS
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER
THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAIL, POSTAGE PREPAID. THE
ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER EACH HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED
SELLER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY
SUCH PARTIES' RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER
JURISDICTION.
(c) THE ORIGINATORS, THE DEPOSITOR AND THE UNAFFILIATED SELLER
EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED
IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 6.12. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
34
IN WITNESS WHEREOF, the parties, to this Unaffiliated Seller's
Agreement have caused their names to be signed by their respective officers
thereunto duly authorized as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ABS CAPITAL I INC.
By:
-----------------------------------------------
Name:
Title:
ABFS 2001-3, INC.
By:
-----------------------------------------------
Name:
Title:
AMERICAN BUSINESS CREDIT, INC.
By:
-----------------------------------------------
Name:
Title:
HOMEAMERICAN CREDIT, INC.,
D/B/A UPLAND MORTGAGE
By:
-----------------------------------------------
Name:
Title:
AMERICAN BUSINESS MORTGAGE
SERVICES, INC.
By:
-----------------------------------------------
Name:
Title:
[Signature Page to the Unaffiliated Seller's Agreement]
EXHIBIT A
MORTGAGE LOAN SCHEDULE