1
EXHIBIT 10(b)
================================================================================
MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
D&N CAPITAL CORPORATION
PURCHASER
D&N BANK
SELLER
DATED AS OF [__________], 1997
CONVENTIONAL COMMERCIAL MORTGAGE LOANS
================================================================================
2
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. AGREEMENT TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
[SECTION 3. RESERVED.] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 4. PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5. EXAMINATION OF MORTGAGE FILES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Subsection 6.01. Conveyance of Mortgage Loans; Possession of Servicing Files . . . . . . . 9
Subsection 6.02. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Subsection 6.03. Delivery of Mortgage Loan Documents . . . . . . . . . . . . . . . . . . . 10
SECTION 7. SERVICING OF THE MORTGAGE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER; REMEDIES FOR BREACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Subsection 8.01. Representations and Warranties Regarding the Seller . . . . . . . . . . . 11
Subsection 8.02. Representations and Warranties Regarding Individual
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Subsection 8.03. Remedies for Breach of Representations and Warranties . . . . . . . . . . . 24
SECTION 9. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10. CLOSING DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 11. COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 12. MERGER OR CONSOLIDATION OF THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . 28
SECTION 14. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 15. SEVERABILITY CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 16. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3
SECTION 17. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 18. INTENTION OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 19. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF
PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 20. WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 21. EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 22. GENERAL INTERPRETIVE PRINCIPLES . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 23. REPRODUCTION OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 24. FURTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 25. RECORDATION OF ASSIGNMENTS OF MORTGAGE . . . . . . . . . . . . . . . . . . . . . . . . 31
EXHIBITS
EXHIBIT A CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B FORM OF SERVICING AGREEMENT
EXHIBIT C FORM OF SELLER'S/SERVICER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER/SERVICER
EXHIBIT E FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT F FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT G FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT H MORTGAGE LOAN SCHEDULE
EXHIBIT I THE UNDERWRITING GUIDELINES OF THE SELLER
iii
4
MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
This MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT (the
"Agreement"), dated as of [__________,] 1997, by and between D&N Capital
Corporation, a Delaware corporation, having an office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser") and D&N Bank, a federally chartered
savings bank, having an office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Seller").
W I T N E S S E T H:
WHEREAS, the Seller desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Seller, certain conventional commercial
mortgage loans (the "Mortgage Loans") on a servicing retained basis as
described herein, and which shall be delivered as whole loans on the Closing
Date, as defined below;
WHEREAS, each Mortgage Loan is secured by a mortgage, deed of trust or
other security instrument creating a first lien on a commercial property
located in the jurisdiction indicated on the Mortgage Loan Schedule; and
WHEREAS, the Purchaser and the Seller wish to prescribe the manner of
the conveyance, servicing and control of the Mortgage Loans.
NOW, THEREFORE, in consideration of the promises and mutual agreements
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Purchaser and the Seller
agree as follows:
SECTION 1. DEFINITIONS.
For purposes of this Agreement the following capitalized terms shall
have the respective meanings set forth below. Other capitalized terms used in
this Agreement and not defined herein shall have the respective meanings set
forth in the Servicing Agreement attached as Exhibit B hereto.
"Accepted Servicing Practices" means, with respect to any Mortgage
Loan, those mortgage servicing practices of prudent mortgage lending
institutions which service mortgage loans of the same type as such Mortgage
Loan in the jurisdiction where the related Mortgaged Property is located.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
5
"Agreement" means this Mortgage Loan Purchase and Warranties Agreement
and all amendments hereof and supplements hereto.
"ALTA" means The American Land Title Association or any successor
thereto.
"Ancillary Income" means all late charges, assumption fees, escrow
account benefits, reinstatement fees, and similar types of fees arising from or
in connection with any Mortgage, to the extent not otherwise payable to the
Mortgagor under applicable law or pursuant to the terms of the related Mortgage
Note.
"Appraised Value" means the value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
"Assignment and Assumption Agreement" has the meaning set forth in
Section 19.
"Assignment of Mortgage" means an assignment of the Mortgage delivered
in blank, notice of transfer or equivalent instrument in recordable form,
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect the sale of the Mortgage to the Purchaser.
"Business Day" means any day other than (i) a Saturday or Sunday, or
(ii) a day on which banking and savings and loan institutions, in the State of
Michigan, are authorized or obligated by law or executive order to be closed.
"Closing Date" means [_________,] 1997, or such other date as is
mutually agreed upon by the parties.
"Code" means Internal Revenue Code of 1986, as amended.
"Condemnation Proceeds" means all awards or settlements in respect of
a Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
"Conventional Loan" means a conventional commercial mortgage loan
which is a Mortgage Loan.
"Convertible Mortgage Loan" means any individual Mortgage Loan
purchased pursuant to this Agreement which contains a provision whereby the
Mortgagor is permitted to convert the Mortgage Loan to a fixed rate Mortgage
Loan in accordance with the terms of the related Mortgage Note.
"Custodial Account" means the separate trust account created and
maintained pursuant to Section 2.04 of the Servicing Agreement.
2
6
"Cut-off Date" means [__________, 1997.]
"Deleted Mortgage Loan" means a Mortgage Loan that is repurchased or
replaced with a Qualified Substitute Mortgage Loan by the Seller in accordance
with the terms of this Agreement.
"Determination Date" means the earlier of two (2) Business Days prior
to the related Remittance Date or the 15th day of the month in which the
related Remittance Date occurs.
"Due Date" means the day of the month on which the Monthly Payment is
due on a Mortgage Loan, exclusive of any days of grace.
"Escrow Account" means the separate account created and maintained
pursuant to Section 2.06 of the Servicing Agreement with respect to each
Mortgage Loan, as specified in the Servicing Agreement.
"Escrow Payments" means, with respect to any Mortgage Loan, any
payments required to be escrowed by the Mortgagor with the mortgagee pursuant
to the Mortgage or any other document, including without limitation the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums.
"Insurance Proceeds" means, with respect to each Mortgage Loan,
proceeds of insurance policies insuring the Mortgage Loan or the related
Mortgaged Property.
"Interest Rate Adjustment Date" means, with respect to each Variable
Rate Mortgage Loan, the date, specified in the related Mortgage Note and the
Mortgage Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Liquidation Proceeds" means cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale or
assignment of such Mortgage Loan, trustee's sale, foreclosure sale or
otherwise, or the sale of the related Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage Loan.
"Loan-to-Value Ratio" or "LTV" means, with respect to any Mortgage
Loan, the ratio (expressed as a percentage) of the original principal amount of
the Mortgage Loan to the lesser of (a) the Appraised Value of the Mortgaged
Property at origination and (b) if the Mortgage Loan was made to finance the
acquisition of the related Mortgaged Property, the purchase price of the
Mortgaged Property.
"Monthly Payment" means the scheduled monthly payment of principal and
interest on a Mortgage Loan.
"Mortgage" means the mortgage, deed of trust or other instrument
securing a Mortgage Note, which creates a first lien on an unsubordinated
estate in fee simple in real property securing the Mortgage Note; except that
with respect to real property located in jurisdictions in which the
3
7
use of leasehold estates for commercial properties is a widely accepted
practice, the mortgage, deed of trust or other instrument securing the Mortgage
Note may secure and create a first lien upon a leasehold estate of the
Mortgagor.
"Mortgage File" means the items pertaining to a particular Mortgage
Loan referred to in Exhibit A annexed hereto, and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Interest Rate" means the annual rate of interest borne on a
Mortgage Note, which, in the case of an Variable Rate Mortgage Loan, shall be
adjusted from time to time, with respect to each Mortgage Loan.
"Mortgage Loan" means an individual Mortgage Loan which is the subject
of this Agreement, each Mortgage Loan originally sold and subject to this
Agreement being identified on the applicable Mortgage Loan Schedule, which
Mortgage Loan includes without limitation the Mortgage File, the Monthly
Payments, Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds, and all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan, excluding replaced or
repurchased mortgage loans.
"Mortgage Loan Documents" means, with respect to each Mortgage Loan,
the following documents pertaining to such Mortgage Loan:
a. The original Mortgage Note bearing all intervening
endorsements, endorsed "Pay to the order of ______________
without recourse" and signed in the name of the Seller by an
authorized officer. To the extent that there is no room on the
face of the Mortgage Notes for endorsements, the endorsement
may be contained on an allonge, if state law so allows. If the
Mortgage Loan was acquired by the Seller in a merger, the
endorsement must be by "[Seller], successor by merger to [name
of predecessor]". If the Mortgage Loan was acquired or
originated by the Seller while doing business under another
name, the endorsement must be by "[Seller], formerly known as
[previous name]"; and
b. The original Assignment of Mortgage for each Mortgage Loan in
form and substance acceptable for recording endorsed "Pay to
the order of _____________" and signed in the name of the
Seller. If the Mortgage Loan was acquired by the Seller in a
merger, the Assignment of Mortgage must be made by "[Seller],
successor by merger to [name of predecessor]". If the Mortgage
Loan was acquired or originated by the Seller while doing
business under another name, the Assignment of Mortgage must
be by "[Seller], formerly known as [previous name]".
c. The original of any guarantee executed in connection with the
Mortgage Note.
4
8
d. The original Mortgage, with evidence of recording thereon. If
in connection with any Mortgage Loan, the Seller cannot
deliver or cause to be delivered the original Mortgage with
evidence of recording thereon on or prior to the Closing Date
because of a delay caused by the public recording office where
such Mortgage has been delivered for recordation, a photocopy
of such Mortgage certified by the Seller to be true and
correct will be delivered; if such Mortgage has been lost or
if such public recording office retains the original recorded
Mortgage, the Seller shall deliver or cause to be delivered to
the Purchaser, a photocopy of such Mortgage, certified by such
public recording office to be a true and complete copy of the
original recorded Mortgage.
e. The originals of all assumption, modification, consolidation
or extension agreements, if any, with evidence of recording
thereon or certified copies of such documents if the originals
are unavailable.
f. Originals of all intervening Assignments of the Mortgage with
evidence of recording thereon, or if any such intervening
assignment has not been returned from the applicable recording
office, a photocopy of each such assignment certified by the
Seller to be true and correct will be delivered, or if such
assignment has been lost or if such public recording office
retains the original recorded assignments of mortgage, the
Seller shall deliver or cause to be delivered to the
Purchaser, a photocopy of such intervening assignment,
certified by such public recording office to be a true and
complete copy of the original recorded intervening assignment.
g. The original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified
true copy of the related policy binder or commitment for title
certified to be true and complete by the title insurance
company; provided that the original mortgagee policy of title
insurance shall be delivered promptly after receipt by the
Seller thereof but in no event later than one hundred twenty
(120) days from and after the Closing Date.
h. Any security agreement, chattel mortgage or equivalent
executed in connection with the Mortgage.
"Mortgage Loan Schedule" means the schedule of Mortgage Loans attached
hereto as Exhibit J setting forth at least the following information with
respect to each Mortgage Loan: (1) the Seller's Mortgage Loan identifying
number; (2) the Mortgagor's name; (3) the street address of the Mortgaged
Property including the state; (4) a code indicating whether the Mortgaged
Property is owner-occupied; (5) the type of commercial property constituting
the Mortgaged Property; (6) the type of Mortgage Loan (i.e., whether the
Mortgage Loan bears interest at a fixed or variable rate); (7) the original
months to maturity or the remaining months to maturity from the Cut-off Date,
in any case based on the original amortization schedule and, if different, the
maturity expressed in the same manner but based on the actual amortization
schedule; (8) the Loan-to-Value Ratio at origination; (9) the Mortgage Interest
Rate as of the Cut-off Date; (10) the
5
9
stated maturity date; (11) the amount of the Monthly Payment as of the Cut-off
Date; (12) the original principal amount of the Mortgage Loan; (13) the
principal balance of the Mortgage Loan as of the close of business on the
Cut-off Date, after deduction of payments of principal due on or before the
Cut-off Date whether or not collected; (14) a code indicating the purpose of
the loan (i.e., purchase, rate and term refinance, equity take-out refinance);
(15) the Interest Rate Adjustment Date with respect to any Variable Rate
Mortgage Loan; (16) a code indicating whether the Mortgage Loan is a
Convertible Mortgage Loan; (17) the Servicing Fee Rate; (18) with respect to
any Variable Rate Mortgage Loan, the index pursuant to which the Mortgage
Interest Rate is determined and (19) the number of times during the 12 month
period preceding the Closing Date that any Monthly Payment has been received
thirty or more days after its Due Date. With respect to the Mortgage Loans in
the aggregate, the Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date: (1) the number of Mortgage Loans; and (2)
the current aggregate outstanding principal balance of the Mortgage Loans.
"Mortgage Note" means the note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
"Mortgaged Property" means the real property securing repayment of the
debt evidenced by a Mortgage Note.
"Mortgagor" means the obligor on a Mortgage Note.
"Officer's Certificate" means a certificate signed by the Chairman of
the Board or the Vice Chairman of the Board or a President or a Vice President
and by the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries of the Seller, and delivered to the Purchaser as required
by this Agreement.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Seller, reasonably acceptable to the Purchaser.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, limited liability company,
unincorporated organization, government or any agency or political subdivision
thereof.
"Prime Rate" means the prime rate announced to be in effect from time
to time, as published as the average rate in The Wall Street Journal (Chicago
edition).
"Principal Prepayment" means any payment or other recovery of
principal on a Mortgage Loan which is received in advance of its scheduled Due
Date, including any prepayment penalty or premium thereon and which is not
accompanied by an amount of interest representing scheduled interest due on any
date or dates in any month or months subsequent to the month of prepayment.
"Purchase Price" means the price paid on the Closing Date by the
Purchaser to the Seller in exchange for the Mortgage Loans purchased on the
Closing Date as set forth in Section 4 of this Agreement.
6
10
"Purchaser" means D&N Capital Corporation or its successor in interest
or assigns or any successor to the Purchaser under this Agreement as herein
provided.
"Qualified Appraiser" means an appraiser who had no interest, direct
or indirect in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or disapproval
of the Mortgage Loan, and such appraiser and the appraisal made by such
appraiser both satisfy the requirements of Title XI of the Federal Institutions
Reform, Recovery, and Enforcement Act of 1989 and the regulations promulgated
thereunder, all as in effect on the date the Mortgage Loan was originated.
"Qualified Insurer" means an insurance company duly qualified as such
under the laws of the states in which the Mortgaged Properties are located,
duly authorized and licensed in such states to transact the applicable
insurance business and to write the insurance provided, and in the two highest
rating categories by Best's with respect to hazard and flood insurance.
"Qualified Substitute Mortgage Loan" means a mortgage loan eligible to
be substituted by the Seller for a Deleted Mortgage Loan which must, on the
date of such substitution, (i) have an outstanding principal balance, after
deduction of all scheduled payments due in the month of substitution (or in the
case of a substitution of more than one mortgage loan for a Deleted Mortgage
Loan, an aggregate principal balance), not in excess of the outstanding
principal balance of the Deleted Mortgage Loan (the amount of any shortfall
will be deposited in the Custodial Account by the Seller in the month of
substitution); (ii) have a Mortgage Interest Rate not less than and not more
than 1.00% greater than the Mortgage Interest Rate of the Deleted Mortgage
Loan; (iii) have a remaining term to maturity not greater than and not more
than one year less than that of the Deleted Mortgage Loan (iv) be of the same
type as the Deleted Mortgage Loan; and (v) comply with each representation and
warranty (respecting individual Mortgage Loans) set forth in Section 8.02
hereof.
"Remittance Date" means the date specified in the Servicing Agreement
(with respect to each Mortgage Loan, as specified therein).
"Repurchase Price" means, with respect to any Mortgage Loan, a price
equal to (i) the unpaid principal balance of such Mortgage Loan plus (ii)
interest on such unpaid principal balance of such Mortgage Loan at the Mortgage
Interest Rate from the last date through which interest has been paid and
distributed to the Purchaser to the date of repurchase, less amounts received
or advanced, if any, by the Seller in respect of such repurchased Mortgage
Loan.
"RESPA" means Real Estate Settlement Procedures Act, as amended from
time to time.
"Seller" means D&N Bank, its successors in interest and assigns.
"Servicing Agreement" means the agreement, attached as Exhibit B
hereto, to be entered into by the Purchaser and the Seller, as servicer,
providing for the Seller to service the Mortgage Loans as specified by the
Servicing Agreement.
7
11
"Servicing Fee" means, with respect to each Mortgage Loan, subject to
the Servicing Agreement, the amount of the annual fee the Purchaser shall pay
to the Seller, which shall for a period of one full month be equal to
one-twelfth of the product of (a) the Servicing Fee Rate and (b) the
outstanding principal balance of such Mortgage Loan. Such fee shall be payable
monthly, and shall be pro-rated for any portion of a month during which the
Mortgage Loan is serviced by the Seller under the Servicing Agreement. The
obligation of the Purchaser to pay the Servicing Fee is limited to, and the
Servicing Fee is payable solely from, the interest portion (including
recoveries with respect to interest from Liquidation Proceeds, to the extent
permitted by this Agreement) of such Monthly Payment collected by the Seller,
or as otherwise provided under this Agreement. In addition to the Servicing
Fee, the Seller shall be entitled to retain Ancillary Income.
"Servicing Fee Rate" means, with respect to each Mortgage Loan, the
rate specified in the Mortgage Loan Schedule with respect to such Mortgage
Loan.
"Servicing File" means with respect to each Mortgage Loan, the file
retained by the Seller during the period in which the Seller is acting as
servicer pursuant to the Servicing Agreement consisting of originals of all
documents in the Mortgage File which are not delivered to the Purchaser or its
designee and copies of the Mortgage Loan Documents.
"Stated Principal Balance" means as to each Mortgage Loan, (i) the
principal balance of the Mortgage Loan at the Cut-off Date after giving effect
to payments of principal due on or before such date, whether or not received,
minus (ii) all amounts previously distributed to the Purchaser with respect to
the related Mortgage Loan representing payments or recoveries of principal or
advances in lieu thereof.
"Variable Rate Mortgage Loan" means any individual Mortgage Loan
purchased pursuant to this Agreement the interest rate of which adjusts
periodically based on the index identified in the Mortgage Loan Schedule.
SECTION 2. AGREEMENT TO PURCHASE.
The Seller agrees to sell and the Purchaser agrees to purchase
Mortgage Loans having an aggregate principal balance on the Cut-off Date in an
amount equal to $[__________,] or in such other amount as agreed by the
Purchaser and the Seller as evidenced by the actual aggregate principal balance
of the Mortgage Loans accepted by the Purchaser on the Closing Date.
[SECTION 3. RESERVED.]
SECTION 4. PURCHASE PRICE.
The Purchase Price for the Mortgage Loans listed on the Mortgage Loan
Schedule shall be $[__________,] or in such other amount as agreed by the
Purchaser and the Seller as evidenced by the actual aggregate principal
8
12
balance of the Mortgage Loans accepted by the Purchaser on the Closing Date.
The initial principal amount of the Mortgage Loans shall be the aggregate
principal balance of the Mortgage Loans, so computed as of the Cut-off Date,
after application of scheduled payments of principal due on or before the
Cut-off Date whether or not collected.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Seller, at closing, accrued interest on the initial principal
amount of the related Mortgage Loans at the weighted average Mortgage Interest
Rate of those Mortgage Loans, minus any amounts attributable to Servicing Fees
as provided in the Servicing Agreement from the Cut-off Date through the day
prior to the Closing Date, inclusive.
The Purchase Price plus accrued interest as set forth in the preceding
paragraph shall be paid on the Closing Date by wire transfer of immediately
available funds.
The Purchaser shall be entitled to (l) all scheduled principal due
after the Cut-off Date, (2) all other recoveries of principal collected on or
after the Cut-off Date (provided, however, that all scheduled payments of
principal due on or before the Cut-off Date and collected after the Cut-off
Date shall belong to the Seller), and (3) all payments of interest on the
Mortgage Loans net of applicable Servicing Fees collected on or after the
Cut-off Date (minus that portion of any such payment which is allocable to the
period prior to the Cut-off Date). The outstanding principal balance of each
Mortgage Loan as of the Cut-off Date is determined after application of
payments of principal due on or before the Cut-off Date whether or not
collected, together with any unscheduled principal prepayments collected prior
to the Cut-off Date; provided, however, that payments of scheduled principal
and interest prepaid for a Due Date beyond the Cut-off Date shall not be
applied to the principal balance as of the Cut-off Date. Such prepaid amounts
shall be the property of the Purchaser. Any such prepaid amounts shall be
deposited into the Custodial Account, which account is established for the
benefit of the Purchaser for subsequent remittance to the Purchaser.
SECTION 5. EXAMINATION OF MORTGAGE FILES.
Prior to the date hereof, the Seller has (a) delivered to the
Purchaser or its designee in escrow, for examination with respect to each
Mortgage Loan to be purchased, the related Mortgage File, including a copy of
the Assignment of Mortgage, pertaining to each Mortgage Loan, or (b) made the
related Mortgage File available to the Purchaser for examination at the
Seller's offices or such other location as shall otherwise be agreed upon by
the Purchaser and the Seller. The fact that the Purchaser or its designee has
conducted or has failed to conduct any partial or complete examination of the
Mortgage Files shall not affect the Purchaser's (or any of its successor's)
rights to demand repurchase, substitution or other relief as provided herein.
SECTION 6. CONVEYANCE FROM SELLER TO PURCHASER.
SUBSECTION 6.01. CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF
SERVICING FILES.
The Seller hereby agrees to sell, transfer, assign, set over and
convey to the Purchaser on the Closing Date, without recourse, but subject to
the terms of this Agreement, all right, title and interest of the Seller in and
to the Mortgage Loans and the Mortgage Files and all rights and
9
13
obligations arising under the documents contained therein. The Servicing File
shall be retained by the Seller in accordance with the terms of the Servicing
Agreement and, as provided therein, shall be appropriately identified in the
Seller's computer system and/or books and records, as appropriate, to clearly
reflect the sale of the related Mortgage Loan to the Purchaser.
SUBSECTION 6.02. BOOKS AND RECORDS.
Record title to each Mortgage Loan as of the Closing Date shall be in
the name of the Seller. Notwithstanding the foregoing, each Mortgage and
related Mortgage Note shall be possessed solely by the Purchaser or the
appropriate designee of the Purchaser, as the case may be. All rights arising
out of the Mortgage Loans including, but not limited to, all funds received by
the Seller after the Cut-off Date on or in connection with a Mortgage Loan
shall be vested in the Purchaser or one or more of its designees; provided,
however, that all funds received on or in connection with a Mortgage Loan shall
be received and held by the Seller in trust for the benefit of the Purchaser or
its designee, as the case may be, as the owner of the Mortgage Loans pursuant
to the terms of this Agreement.
The sale of each Mortgage Loan shall be reflected on the Seller's
balance sheet and other financial statements as a sale of assets by the Seller.
SUBSECTION 6.03. DELIVERY OF MORTGAGE LOAN DOCUMENTS.
The Seller shall deliver and release to the Purchaser or its designee
on the Closing Date the Mortgage Loan Documents with respect to each Mortgage
Loan set forth on the Mortgage Loan Schedule.
The Seller shall forward to the Purchaser or its designee original
documents evidencing an assumption, modification, consolidation, conversion or
extension of any Mortgage Loan entered into in accordance with this Agreement
within two (2) weeks of their execution, provided, however, that the Seller
shall provide the Purchaser or its designee with a certified true copy of any
such document submitted for recordation within two (2) weeks of its execution,
and shall promptly provide the original of any document submitted for
recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original within ninety
(90) days of its submission for recordation.
In the event that such original or copy of any document submitted for
recordation to the appropriate public recording office is not so delivered to
the Purchaser or its designee within 90 days following the Closing Date (other
than with respect to the Assignments of Mortgage which shall be delivered to
the Purchaser or its designee in blank), and in the event that the Seller does
not cure such failure within 30 days of discovery or receipt of written
notification of such failure from the Purchaser, the related Mortgage Loan
shall, upon the request of the Purchaser, be repurchased by the Seller at the
price and in the manner specified in Subsection 8.03. The foregoing repurchase
obligation shall not apply in the event that the Seller cannot deliver, or
cause to be delivered, such original or copy of any document submitted for
recordation to the appropriate public recording office within the specified
period due to a delay caused by the
10
14
recording office in the applicable jurisdiction; provided that the Seller shall
instead deliver, or cause to be delivered, a recording receipt of such
recording office or, if such recording receipt is not available, an officer's
certificate of a servicing officer of the Seller, confirming that such
documents have been accepted for recording; provided that, upon request of the
Purchaser and delivery by the Purchaser to the Seller of a schedule of the
related Mortgage Loans, the Seller shall reissue and deliver to the Purchaser
or its designee said officer's certificate relating to the related Mortgage
Loans.
The Seller shall pay all fees or costs in transferring all original
documents to the Purchaser or its designee. The Purchaser or its designee shall
be responsible for recording the Assignments of Mortgage and shall be
reimbursed by the Seller for the reasonable costs associated therewith pursuant
to the preceding sentence.
SECTION 7. SERVICING OF THE MORTGAGE LOANS.
The Mortgage Loans have been sold by the Seller to the Purchaser on a
servicing retained basis. The Purchaser shall retain the Seller as independent
contract servicer of the Mortgage Loans pursuant to and in accordance with the
terms and conditions contained in the Servicing Agreement. The Purchaser and
the Seller shall execute the Servicing Agreement on the Closing Date in the
form attached hereto as Exhibit B.
Pursuant to the Servicing Agreement, the Seller shall begin servicing
the Mortgage Loans on behalf of the Purchaser and shall be entitled to the
Servicing Fee and any Ancillary Income with respect to such Mortgage Loans from
the Closing Date until the termination of the Servicing Agreement with respect
to any of the Mortgage Loans as set forth in the Servicing Agreement. The
Seller shall conduct such servicing in accordance with the terms of the
Servicing Agreement.
SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLER; REMEDIES FOR BREACH.
SUBSECTION 8.01. REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER.
The Seller represents, warrants and covenants to the Purchaser that as
of the date hereof and as of the Closing Date:
(a) Due Organization and Authority; Enforceability. The Seller is
a federally chartered savings bank duly organized and validly
existing under the laws of the United States 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 wherein it owns or leases any material properties
or 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 Seller, and in any event
the Seller is in compliance with the laws of any such state to
the extent necessary to ensure the enforceability of the
related Mortgage Loan in accordance with the terms of this
Agreement; the Seller has the full corporate power, authority
and legal right to
11
15
hold, transfer and convey the Mortgage Loans and to execute
and deliver this Agreement and to perform its obligations
hereunder; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Seller and the
consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement and all agreements
contemplated hereby have been duly executed and delivered and
constitute the valid, legal, binding and enforceable
obligations of the Seller subject to bankruptcy laws and other
similar laws of general application affecting rights of
creditors and subject to the application of the rules of
equity, including those respecting the availability of
specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder,
regardless of whether such enforcement is sought in a
proceeding in equity or at law; and all requisite corporate
action has been taken by the Seller to make this Agreement and
all agreements contemplated hereby valid and binding upon the
Seller in accordance with their terms;
(b) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the
ordinary course of business of the Seller, and the transfer,
assignment and conveyance of the Mortgage Notes and the
Mortgages by the Seller pursuant to this Agreement are not
subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction;
(c) No Conflicts. Neither the execution and delivery of this
Agreement, the sale of the Mortgage Loans to the Purchaser,
the consummation of the transactions contemplated hereby, nor
the fulfillment of or compliance with the terms and conditions
of this Agreement, will conflict with or result in a breach of
any of the terms, conditions or provisions of the Seller's
charter or by-laws or any legal restriction or any agreement
or instrument to which the Seller is now a party or by which
it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the
violation of any law, rule, regulation, order, judgment or
decree to which the Seller or its property is subject, or
result in the creation or imposition of any lien, charge or
encumbrance that would have an adverse effect upon any of its
properties pursuant to the terms of any mortgage, contract,
deed of trust or other instrument, or impair the ability of
the Purchaser to realize on the Mortgage Loans, impair the
value of the Mortgage Loans, or impair the ability of the
Purchaser to realize the full amount of any mortgage insurance
benefits accruing pursuant to this Agreement;
(d) Ability to Perform: Solvency. The 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 Seller is solvent and the sale of the Mortgage
Loans will not cause the Seller to become insolvent. The sale
of the Mortgage Loans is not undertaken with the intent to
hinder, delay or defraud any of the Seller's creditors;
12
16
(e) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Seller, before
any court, administrative agency or other tribunal asserting
the invalidity of this Agreement, seeking to prevent the
consummation of any of the transactions contemplated by this
Agreement or which, either in any one instance or in the
aggregate, could result in any material adverse change in the
business, operations, financial condition, properties or
assets of the Seller, or in any material impairment of the
right or ability of the Seller to carry on its business
substantially as now conducted, or in any material liability
on the part of the Seller, or which would draw into question
the validity of this Agreement or the Mortgage Loans or of any
action taken or to be taken in connection with the obligations
of the Seller contemplated herein, or which would be likely to
impair materially the ability of the Seller to perform under
the terms of this Agreement;
(f) No Consent Required. No consent, approval, authorization or
order of, or registration or filing with, or notice to any
court or governmental agency or body is required for the
execution, delivery and performance by the Seller of or
compliance by the Seller with this Agreement or the Mortgage
Loans, the delivery of a portion of the Mortgage Files to the
Purchaser or its designee or the sale of the Mortgage Loans or
the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained
prior to the Closing Date;
(g) Selection Process. The Mortgage Loans were selected from among
the outstanding commercial loans in the Seller's portfolio at
the Closing Date as to which the representations and
warranties set forth in Subsection 8.02 could be made and such
selection was not made in a manner so as to affect adversely
the interests of the Purchaser;
(h) Initial Portfolio. The aggregate characteristics of the
Mortgage Loans are as set forth under the heading "Business
and Strategy--Description of Initial Portfolio" in the
Prospectus of the Purchaser dated [___________,] 1997;
(i) No Untrue Information. Neither this Agreement nor any
information, statement, tape, diskette, report, form, or other
document furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein
not misleading; and
(j) No Brokers. The Seller has not dealt with any broker,
investment banker, agent or other person that may be entitled
to any commission or compensation in connection with the sale
of the Mortgage Loans.
13
17
SUBSECTION 8.02. REPRESENTATIONS AND WARRANTIES REGARDING INDIVIDUAL
MORTGAGE LOANS.
The Seller hereby represents and warrants to the Purchaser that, as to
each Mortgage Loan, as of the Closing Date for such Mortgage Loan:
(a) Mortgage Loans as Described. The information set forth in the
Mortgage Loan Schedule is complete, true and correct in all
material respects;
(b) Payments Current; Status. All payments required to be made up
to, but not including, the Cut-off Date for the Mortgage Loan
under the terms of the Mortgage Note have been made and
credited. No payment required under the Mortgage Loan is
delinquent nor has any payment under the Mortgage Loan been 30
days or more delinquent more than once within the period
falling twelve (12) months prior to the Cut-off Date. The
Mortgage Loan is not, and has not been at any time in the
preceding twelve months, (i) classified, (ii) in nonaccrual
status or (iii) renegotiated due to the financial
deterioration of the Mortgagor;
(c) No Outstanding Charges. There are no defaults in complying
with the terms of the Mortgage, and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously
became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such
item which remains unpaid and which has been assessed but is
not yet due and payable. The Seller has not 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 under the Mortgage
Loan, except for interest accruing from the date of the
Mortgage Note or date of disbursement of the Mortgage Loan
proceeds, whichever is earlier, to the day which precedes by
one month the Due Date of the first installment of principal
and interest;
(d) Original Terms Unmodified. The terms of the Mortgage Note and
Mortgage have not been impaired, waived, altered or modified
in any respect, from the date of origination except by a
written instrument which has been recorded, if necessary to
protect the interests of the Purchaser, and which has been
delivered to the Purchaser or its designee and the terms of
which are reflected in the Mortgage Loan Schedule, if
applicable. The substance of any such waiver, alteration or
modification has been approved by the title insurer, if any,
to the extent required by the policy, and its terms are
reflected on the Mortgage Loan Schedule, if applicable. No
Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement, which assumption
agreement is part of the Mortgage Loan File delivered to the
Purchaser or its designee and the terms of which are reflected
in the Mortgage Loan Schedule;
14
18
(e) No Defenses. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including
without limitation the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the
Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable, in
whole or in part and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect
thereto, and no Mortgagor is now or was, at the time of
origination of the related Mortgage Loan, a debtor in any
state or Federal bankruptcy or insolvency proceeding;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
buildings or other improvements upon the Mortgaged Property
are insured by a generally acceptable insurer against loss by
fire, hazards of extended coverage. If required by the Flood
Disaster Protection Act of 1973, as amended, the Mortgage Loan
is covered by a flood insurance policy, meeting the
requirements of the Federal Insurance Administration, as well
as all additional requirements set forth in Section 2.10 of
the Servicing Agreement attached hereto as Exhibit B. All
individual insurance policies contain a standard mortgagee
clause naming the Seller and its successors and assigns as
mortgagee, and all premiums thereon have been paid. The
Mortgage obligates the Mortgagor thereunder to maintain the
hazard insurance policy at the Mortgagor's cost and expense,
and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at such
Mortgagor's cost and expense, and to seek reimbursement
therefor from the Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance. The
hazard 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 Purchaser
upon the consummation of the transactions contemplated by this
Agreement. The Seller has not engaged in, and has no knowledge
of the Mortgagor's having engaged in, any act or omission
which would impair the coverage of any such policy, the
benefits of the endorsement provided for herein, or the
validity and binding effect of either including, without
limitation, no unlawful fee, commission, kickback or other
unlawful compensation or value of any kind has been or will be
received, retained or realized by any attorney, firm or other
person or entity, and no such unlawful items have been
received, retained or realized by the Seller;
(g) Compliance with Applicable Laws. 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, fair housing, equal credit
opportunity and disclosure laws applicable to the Mortgage
Loan have been complied with, the consummation of the
transactions contemplated hereby will not involve the
violation of any such laws or regulations, and the Seller
shall maintain in its possession, available for the
Purchaser's inspection, and shall deliver to the Purchaser
upon demand, evidence of compliance with all such
requirements;
15
19
(h) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in
part, and the Mortgaged Property has not been released from
the lien of the Mortgage, in whole or in part, nor has any
instrument been executed that would effect any such release,
cancellation, subordination or rescission. The Seller has not
waived the performance by the Mortgagor of any action, if the
Mortgagor's failure to perform such action would cause the
Mortgage Loan to be in default, nor has the Seller waived any
default resulting from any action or in action by the
Mortgagor;
(i) Location and Type of Mortgaged Property. The Mortgaged
Property is located in the state identified in the Mortgage
Loan Schedule and consists of a single parcel of real property
improved by a commercial facility erected thereon.
(j) Valid First Lien. The Mortgage is a valid, subsisting,
enforceable and perfected first lien on the Mortgaged
Property, including all buildings and improvements on the
Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems
located in or annexed to such buildings, and all additions,
alterations and replacements made at any time with respect to
the foregoing. The lien of the Mortgage is subject only to:
(1) the lien of current real property taxes and
assessments not yet due and payable;
(2) covenants, conditions and restrictions, rights of
way, easements and other matters of the public record
as of the date of recording acceptable to prudent
mortgage lending institutions generally and
specifically referred to in the lender's title
insurance policy delivered to the originator of the
Mortgage Loan and (a) specifically referred to or
otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (b) which do not
adversely affect the Appraised Value of the Mortgaged
Property set forth in such appraisal; and
(3) other matters to which like properties are commonly
subject which do not materially interfere with the
benefits of the security intended to be provided by
the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
Any security agreement, chattel mortgage or equivalent document
related to and delivered in connection with the Mortgage Loan establishes and
creates a valid, subsisting, enforceable and perfected first lien and first
priority security interest on the property described therein and the Seller has
full right to sell and assign the same to the Purchaser. The Mortgaged Property
was not, as of the date of origination of the Mortgage Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security instrument
creating a lien subordinate to the lien of the Mortgage (except any such
subordinate loan which was created in connection with the origination of the
related Mortgage Loan details of which are contained in the related Mortgage
File);
16
20
(k) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a
Mortgagor in connection with a Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker
thereof enforceable in accordance with its terms. All parties
to the Mortgage Note, the Mortgage and any other such related
agreement had legal capacity to enter into the Mortgage Loan
and to execute and deliver the Mortgage Note, the Mortgage and
any such agreement, and the Mortgage Note, the Mortgage and
any other such related agreement have been duly and properly
executed by such parties. No fraud, error, omission,
misrepresentation, negligence 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. The Seller
has reviewed all of the documents constituting the Servicing
File and has made such inquiries as it deems necessary to make
and confirm the accuracy of the representations set forth
herein;
(l) Full Disbursement of Proceeds. The Mortgage Loan has been
closed and the proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances
thereunder, and any and all requirements as to completion of
any on-site or off-site improvement and as to disbursements of
any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing the Mortgage
Loan and the recording of the Mortgage were paid, and the
Mortgagor is not entitled to any refund of any amounts paid or
due under the Mortgage Note or Mortgage;
(m) Ownership. The Seller is the sole owner of record and holder
of the Mortgage Loan and the indebtedness evidenced by each
Mortgage Note, except for the assignments of mortgage which
have been sent for recording, and upon recordation the Seller
will be the owner of record of each Mortgage and the
indebtedness evidenced by each Mortgage Note, and upon the
sale of the Mortgage Loans to the Purchaser, the Seller will
retain the Mortgage Files or any part thereof with respect
thereto not delivered to the Purchaser or its designee in
trust only for the purpose of servicing and supervising the
servicing of each Mortgage Loan. The Mortgage Loan is not
assigned or pledged, and the Seller has good, indefeasible and
marketable title thereto, and has full right to transfer and
sell the Mortgage Loan to the Purchaser free and clear of any
encumbrance, equity, participation interest, lien, pledge,
charge, claim or security interest, and has full right and
authority subject to no interest or participation of, or
agreement with, any other party, to sell and assign each
Mortgage Loan pursuant to this Agreement and following the
sale of each Mortgage Loan, the Purchaser will own such
Mortgage Loan free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or
security interest. The Seller intends to relinquish all rights
to possess, control and monitor the Mortgage Loan, except
indirectly for purposes of servicing the Mortgage Loan as set
forth in the Servicing Agreement. After the Closing Date, the
Seller will have no right to modify or alter the terms of the
sale of the
17
21
Mortgage Loan and the Seller will have no obligation or right
to repurchase the Mortgage Loan or substitute another Mortgage
Loan, except as provided in this Agreement;
(n) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and
disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2)
either (i) organized under the laws of such state, or (ii)
qualified to do business in such state, or (iii) a federal
savings and loan association, a savings bank or a national
bank having a principal office in such state, or (3) not doing
business in such state;
(o) LTV. No Conventional Loan has an LTV greater than 95%. The
original LTV of each Conventional Loan was not more than 80%;
(p) Title Insurance. The Mortgage Loan is covered by an ALTA
lender's title insurance policy or other generally acceptable
form of policy or insurance and each such title insurance
policy is issued by a title insurer qualified to do business
in the jurisdiction where the Mortgaged Property is located,
insuring the Seller, its successors and assigns, as to the
first priority lien of the Mortgage in the original principal
amount of the Mortgage Loan, subject only to the exceptions
contained in clauses (1), (2) and (3) of paragraph (j) of this
Subsection 8.02, and against any loss by reason of the
invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment to the
Mortgage Interest Rate and Monthly Payment. Where required by
state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage
title insurance. Additionally, such lender's title insurance
policy affirmatively insures ingress and egress, and against
encroachments by or upon the Mortgaged Property or any
interest therein. The Seller, its successor and assigns, are
the sole insurers of such lender's title insurance policy, and
such lender's title insurance policy is valid and remains in
full force and effect and will be in force and effect upon the
consummation of the transactions contemplated by this
Agreement. No claims have been made under such lender's title
insurance policy, and no prior holder of the related Mortgage,
including the Seller, has done, by act or omission, anything
which would impair the coverage of such lender's title
insurance policy, including without limitation, no unlawful
fee, commission, kickback or other unlawful compensation or
value of any kind has been or will be received, retained or
realized by any attorney, firm or other person or entity, and
no such unlawful items have been received, retained or
realized by the Seller;
(q) No Defaults. There is no default, breach, violation or event
which would permit 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 a default, breach, violation or event which
would
18
22
permit acceleration, and neither the Seller nor its
predecessors have waived any default, breach, violation or
event which would permit acceleration;
(r) No Mechanics' Liens. There are no mechanics' or similar liens
or claims which have been filed for work, labor or material
(and no rights are outstanding that under law could give rise
to such liens) affecting the related Mortgaged Property which
are or may be liens prior to, or equal or coordinate with, the
lien of the related Mortgage;
(s) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of
the Mortgaged Property lay wholly within the boundaries and
building restriction lines of the Mortgaged Property, and no
improvements on adjoining properties encroach upon the
Mortgaged Property. No improvement located on or being part of
the Mortgaged Property is in violation of any applicable
zoning law or regulation;
(t) Origination; Payment Terms. The Mortgage Loan was originated
by a savings and loan association, a savings bank, a
commercial bank, credit union, insurance company or similar
institution which is supervised and examined by a federal or
state authority. The documents, instruments and agreements
submitted for loan underwriting were not falsified and contain
no untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to
make the information and statements therein not misleading.
Principal payments on the Mortgage Loan commenced no more than
sixty (60) days after funds were disbursed in connection with
the Mortgage Loan. The Mortgage Interest Rate for each
Mortgage Loan is as set forth on Exhibit J hereto. The
Mortgage Note is payable on the first day of each month in
equal monthly installments of principal and interest, which
installments of interest are subject to change if the Mortgage
Loan is an Variable Rate Mortgage Loan due to the adjustments
to the Mortgage Interest Rate on each Interest Rate Adjustment
Date, with interest calculated and payable in arrears,
sufficient to amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than thirty
years from commencement of amortization. There is no negative
amortization with respect to any Mortgage Loan. Each
Convertible Mortgage Loan contains a provision allowing the
Mortgagor to convert the Mortgage Note from an adjustable
interest rate Mortgage Note to a fixed interest rate Mortgage
Note in accordance with the terms of the Mortgage Note or a
rider to the related Mortgage Note;
(u) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization
against the Mortgaged Property of the benefits of the security
provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii)
otherwise by judicial foreclosure. Upon default by a Mortgagor
on a Mortgage Loan and foreclosure on, or trustee's sale of,
the Mortgaged Property pursuant to the proper procedures, the
holder of the Mortgage
19
23
Loan will be able to deliver good and merchantable title to
the Mortgaged Property. There is no homestead or other
exemption available to a Mortgagor which would interfere with
the right to sell the Mortgaged Property at a trustee's sale
or the right to foreclose the Mortgage, subject to applicable
federal and state laws and judicial precedent with respect to
bankruptcy and right of redemption or similar law;
(v) Conformance with Agency and Underwriting Standards. The
Mortgage Loan was underwritten in accordance with the
underwriting standards of the Seller (a copy of each of which
is attached hereto as Exhibit L), in effect at the time the
Mortgage Loan was originated. The Mortgage Note and Mortgage
are on forms acceptable to the Purchaser, in the Purchaser's
sole discretion, as evidenced by the Purchaser's purchase of
the related Mortgage Loans, and, the Seller has not made any
representations to a Mortgagor that are inconsistent with the
mortgage instruments used. All Mortgage Loans have full asset
verification;
(w) Occupancy of the Mortgaged Property. As of the Closing Date,
the Mortgaged Property is lawfully occupied under applicable
law. All inspections, licenses and certificates required to
be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy
of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made
or obtained from the appropriate authorities;
(x) No Additional Collateral. The Mortgage Note is not and has not
been secured by any collateral except the lien of the
corresponding Mortgage and the security interest of any
applicable security agreement or chattel mortgage referred to
in clause (j) above;
(y) Deeds of Trust. In the event the Mortgage constitutes a deed
of trust, a trustee, authorized and duly qualified under
applicable law to serve as such, has been properly designated
and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Purchaser
to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the Mortgagor;
(z) Acceptable Investment. There are no circumstances or
conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor, the Mortgage File or the Mortgagor's
credit standing that can reasonably be expected to cause the
Mortgage Loan to become delinquent, or adversely affect the
value or marketability of the Mortgage Loan;
(aa) Delivery of Mortgage Documents. The Mortgage Note, the
Mortgage, the Assignment of Mortgage and any other Mortgage
Loan Documents for each Mortgage Loan have been delivered to
the Purchaser or its designee. The Seller is in possession of
a complete, true and accurate Mortgage File in compliance with
20
24
Exhibit A hereto, except for such documents the originals of
which have been delivered to the Purchaser or its designee;
(bb) Transfer of Mortgage Loans. The Assignment of Mortgage with
respect to each Mortgage Loan is in recordable form and is
acceptable for recording under the laws of the jurisdiction in
which the Mortgaged Property is located;
(cc) Assumability. The Mortgage Loan Documents provide that a
related Mortgage Loan may only be assumed if the party
assuming such Mortgage Loan meets certain credit requirements
stated in the Mortgage Loan Documents.
(dd) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions
pursuant to which Monthly Payments are paid or partially paid
with funds deposited in any separate account established by
the Seller, the Mortgagor, or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor
does it contain any other similar provisions which may
constitute a "buydown" provision. The Mortgage Loan is not a
graduated payment mortgage loan and the Mortgage Loan does not
have a shared appreciation or other contingent interest
feature;
(ee) RESERVED
(ff) Mortgaged Property Undamaged; No Condemnation Proceedings.
There is no proceeding pending or threatened for the total or
partial condemnation of the Mortgaged Property. The Mortgaged
Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty so as to
affect adversely the value of the Mortgaged Property as
security for the Mortgage Loan or the use for which the
premises were intended and each Mortgaged Property is in good
repair. There have not been any condemnation proceedings with
respect to the Mortgaged Property and the Seller has no
knowledge of any such proceedings in the future;
(gg) Collection Practices; Escrow Deposits; Interest Rate
Adjustments. The origination and collection practices used by
the Seller with respect to the Mortgage Loan have been in all
respects in compliance with Accepted Servicing Practices,
applicable laws and regulations, and have been in all respects
legal and proper. With respect to escrow deposits and Escrow
Payments, all such payments are in the possession of, or under
the control of, the Seller or the Seller and there exist no
deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with
state and federal law and the provisions of the related
Mortgage Note and Mortgage. An escrow of funds is not
prohibited by applicable law and has been established in an
amount sufficient to pay for every item that remains unpaid
and has been assessed but is not yet due and payable. No
escrow deposits or Escrow
21
25
Payments or other charges or payments due the Seller have been
capitalized under the Mortgage or the Mortgage Note. All
Mortgage Interest Rate adjustments to the Monthly Payment, if
the Mortgage Loan is an Variable Rate Mortgage Loan, have been
made in strict compliance with state and federal law and the
terms of the related Mortgage and Mortgage Note on the related
Interest Rate Adjustment Date. With respect to each Variable
Rate Mortgage Loan, the Mortgage Interest Rate adjusts
annually as set forth herein. If, pursuant to the terms of the
Mortgage Note, another index was selected for determining the
Mortgage Interest Rate, the same index was used with respect
to each Mortgage Note which required a new index to be
selected, and such selection did not conflict with the terms
of the related Mortgage Note. The Seller executed and
delivered any and all notices required under applicable law
and the terms of the related Mortgage Note and Mortgage
regarding the Mortgage Interest Rate and the Monthly Payment
adjustments. Any interest required to be paid pursuant to
state, federal and local law has been properly paid and
credited;
(hh) Other Insurance Policies. No action, inaction or event has
occurred and no state of facts exists or has existed that has
resulted or could result in the exclusion from, denial of, or
defense to coverage under any hazard insurance policy. In
connection with the placement of any such insurance, no
commission, fee, or other compensation has been or will be
received by the Seller or by any officer, director, or
employee of the Seller or any designee of the Seller or any
corporation in which the Seller or any officer, director, or
employee had a financial interest at the time of placement of
such insurance; [CONFIRM]
(ii) No Violation of Environmental Laws. There is no pending action
or proceeding directly involving the Mortgaged Property in
which compliance with any environmental law, rule or
regulation is an issue; there is no violation of any
environmental law, rule or regulation with respect to the
Mortgaged Property; and nothing further remains to be done to
satisfy in full all requirements of each such law, rule or
regulation constituting a prerequisite to use and enjoyment of
said property;
(jj) Appraisal. The Mortgage File contains an appraisal of the
related Mortgaged Property signed prior to the approval of the
Mortgage Loan application by a Qualified Appraiser who had no
interest, direct or indirect in the Mortgaged Property or in
any loan made on the security thereof, and whose compensation
is not affected by the approval or disapproval of the Mortgage
Loan, and the appraisal and appraiser both satisfy the
requirements of Title XI of the Federal Institutions Reform,
Recovery, and Enforcement Act of 1989 and the regulations
promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated;
22
26
(kk) Disclosure Materials. The Mortgagor has received all
disclosure materials required by and the Seller complied with
all applicable law with respect to the making of the Mortgage
Loans;
(ll) Construction or Rehabilitation of Mortgaged Property. No
Mortgage Loan was made in connection with the construction or
rehabilitation of a Mortgaged Property or facilitating the
trade-in or exchange of a Mortgaged Property;
(mm) Value of Mortgaged Property. The Seller has no knowledge of
any circumstances existing that could reasonably be expected
to adversely affect the value or the marketability of any
Mortgaged Property or Mortgage Loan or to cause the Mortgage
Loan to prepay during any period materially faster or slower
than mortgage loans originated by the Seller generally;
(nn) No Defense to Insurance Coverage. No action has been taken or
failed to be taken, no event has occurred and no state of
facts exists or has existed on or prior to the Closing Date
(whether or not known to the Seller on or prior to such date)
which has resulted or will result in an exclusion from, denial
of, or defense to coverage under any primary mortgage
insurance policy (including, without limitation, any
exclusions, denials or defenses which would limit or reduce
the availability of the timely payment of the full amount of
the loss otherwise due thereunder to the insured) whether
arising out of actions, representations, errors, omissions,
negligence, or fraud of the Seller, the related Mortgagor or
any party involved in the application for such coverage,
including the appraisal, plans and specifications and other
exhibits or documents submitted therewith to the insurer under
such insurance policy, or for any other reason under such
coverage, but not including the failure of such insurer to pay
by reason of such insurer's breach of such insurance policy or
such insurer's financial inability to pay;
(oo) Escrow Analysis. With respect to each Mortgage, Seller has
within the last twelve months (unless such Mortgage was
originated within such twelve month period) analyzed the
required Escrow Payments for each Mortgage and adjusted the
amount of such payments so that, assuming all required
payments are timely made, any deficiency will be eliminated on
or before the first anniversary of such analysis, or any
overage will be refunded to the Mortgagor, in accordance with
RESPA and any other applicable law; and
(pp) Prior Servicing. Each Mortgage Loan has been serviced in all
material respects in compliance with Accepted Servicing
Practices; provided that, in the event of any breach of the
representation and warranty set forth in this Subsection (pp),
the Seller shall not be required to repurchase any such
Mortgage Loan unless such breach had, and continues to have, a
material and adverse effect on the value of the related
Mortgage Loan or the interest of the Purchaser therein.
23
27
SUBSECTION 8.03. REMEDIES FOR BREACH OF REPRESENTATIONS AND
WARRANTIES.
It is understood and agreed that the representations and warranties
set forth in Subsections 8.01 and 8.02 shall survive the sale of the Mortgage
Loans to the Purchaser and shall inure to the benefit of the Purchaser,
notwithstanding any restrictive or qualified endorsement on any Mortgage Note
or Assignment of Mortgage or the examination or failure to examine any Mortgage
File. Upon discovery by either the Seller or the Purchaser of a breach of any
of the foregoing representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Purchaser (or
which materially and adversely affects the interests of the Purchaser in the
related Mortgage Loan in the case of a representation and warranty relating to
a particular Mortgage Loan), the party discovering such breach shall give
prompt written notice to the other.
The Seller, promptly after discovery of a breach of any representation
or warranty, shall notify the Purchaser of such breach and the details thereof.
Within sixty (60) days of the earlier of (i) notice by the Seller pursuant to
the immediately preceding sentence or (ii) notice by the Purchaser to the
Seller of any breach of a representation or warranty with respect to a Mortgage
Loan, the Seller shall use its best efforts promptly to cure such breach in all
material respects and, if such breach cannot be cured, the Seller shall, at the
Purchaser's option and subject to Subsection 8.04, repurchase such Mortgage
Loan at the Repurchase Price, unless the Seller elects to substitute a
Qualified Substitute Mortgage Loan for such Mortgage Loan pursuant to this
Subsection. In the event that a breach shall involve any representation or
warranty set forth in Subsection 8.01, and such breach cannot be cured within
sixty (60) days of the earlier of either discovery by or notice to the Seller
of such breach, all of the Mortgage Loans shall, at the Purchaser's option and
subject to Subsection 8.04, be repurchased by the Seller at the Repurchase
Price. However, if the breach shall involve a representation or warranty set
forth in Subsection 8.02 and the Seller discovers or receives notice of any
such breach within two (2) years of the Closing Date, the Seller may, at the
Seller's option and provided that the Seller has a Qualified Substitute
Mortgage Loan, rather than repurchase the Mortgage Loan as provided above,
remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in its
place a Qualified Substitute Mortgage Loan or Loans, provided that any such
substitution shall be effected not later than two (2) years after the Closing
Date. If the Seller has no Qualified Substitute Mortgage Loan, it shall
repurchase the deficient Mortgage Loan. Any repurchase of a Mortgage Loan or
Loans pursuant to the foregoing provisions of this Subsection 8.03 shall be
accomplished by either (a) if the Servicing Agreement is in effect, deposit in
the Custodial Account of the amount of the Repurchase Price for distribution to
the Purchaser on the next scheduled Remittance Date, after deducting therefrom
any amount received in respect of such repurchased Mortgage Loan or Loans and
being held in the Custodial Account for future distribution or (b) if the
Servicing Agreement is no longer in effect, by direct remittance of the
Repurchase Price to the Purchaser or its designee in accordance with the
Purchaser's instructions.
At the time of repurchase or substitution, the Purchaser and the
Seller shall arrange for the reassignment of the Deleted Mortgage Loan to the
Seller and the delivery to the Seller of any documents held by the Purchaser or
its designee relating to the Deleted Mortgage Loan. In addition, upon any such
repurchase, all funds maintained in the Escrow Account with respect to
24
28
such Deleted Mortgage Loan shall be transferred to the Seller. In the event of
a repurchase or substitution, the Seller shall, simultaneously with such
reassignment, give written notice to the Purchaser that such repurchase or
substitution has taken place, amend the Mortgage Loan Schedule to reflect the
withdrawal of the Deleted Mortgage Loan from this Agreement, and, in the case
of substitution, identify a Qualified Substitute Mortgage Loan and amend the
Mortgage Loan Schedule to reflect the addition of such Qualified Substitute
Mortgage Loan to this Agreement. In connection with any such substitution, the
Seller shall be deemed to have made as to such Qualified Substitute Mortgage
Loan the representations and warranties set forth in this Agreement except that
all such representations and warranties set forth in this Agreement shall be
deemed made as of the date of such substitution. The Seller shall effect such
substitution by delivering to the Purchaser or its designee for such Qualified
Substitute Mortgage Loan the documents required by Subsection 6.03, with the
Mortgage Note endorsed as required by Subsection 6.03. No substitution will be
made in any calendar month after the Determination Date for such month. The
Seller shall deposit in the Custodial Account the Monthly Payment, or in the
event that the Servicing Agreement is no longer in effect remit directly to the
Purchaser or its designee in accordance with the Purchaser's instructions the
Monthly Payment less the Servicing Fee due, if any, on such Qualified
Substitute Mortgage Loan or Loans in the month following the date of such
substitution. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall be retained by the Seller.
For the month of substitution, payments to the Purchaser shall include the
Monthly Payment due on any Deleted Mortgage Loan in the month of substitution,
and the Seller shall thereafter be entitled to retain all amounts subsequently
received by the Seller in respect of such Deleted Mortgage Loan.
For any month in which the Seller substitutes a Qualified Substitute
Mortgage Loan for a Deleted Mortgage Loan, the Seller shall determine the
amount (if any) by which the aggregate principal balance of all Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all Deleted Mortgage Loans (after
application of scheduled principal payments due in the month of substitution).
The amount of such shortfall shall be distributed by the Seller directly to the
Purchaser or its designee in accordance with the Purchaser's instructions
within two (2) Business Days of such substitution.
In addition to such repurchase or substitution obligation, the Seller
shall indemnify the Purchaser and hold it harmless against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of the Seller representations and warranties contained in this
Agreement. It is understood and agreed that the obligations of the Seller set
forth in this Subsection 8.03 to cure, substitute for or repurchase a defective
Mortgage Loan and to indemnify the Purchaser as provided in this Subsection
8.03 constitute the sole remedies of the Purchaser respecting a breach of the
foregoing representations and warranties.
Any cause of action against the Seller relating to or arising out of
the breach of any representations and warranties made in Subsections 8.01 and
8.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by
the Purchaser or notice thereof by the Seller to the Purchaser, (ii) failure by
the Seller to cure such breach or repurchase such Mortgage Loan as
25
29
specified above, and (iii) demand upon the Seller by the Purchaser for
compliance with this Agreement.
SECTION 9. CLOSING.
The closing for the purchase and sale of the Mortgage Loans shall take
place on the Closing Date. At the Purchaser's option, the closing shall be
either: by telephone, confirmed by letter or wire as the parties shall agree,
or conducted in person, at such place as the parties shall agree.
The closing for the Mortgage Loans to be purchased on the Closing Date
shall be subject to each of the following conditions:
(a) all of the representations and warranties of the
Seller under this Agreement and under the Servicing
Agreement (with respect to each Mortgage Loan, as
specified therein) 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 or an Event
of Default under the Servicing Agreement;
(b) the Purchaser shall have received, or the Purchaser's
attorneys shall have received in escrow, all closing
documents as specified in Section 10 of this
Agreement, in such forms as are agreed upon and
acceptable to the Purchaser, duly executed by all
signatories other than the Purchaser as required
pursuant to the terms hereof;
(c) the Seller shall have delivered and released to the
Purchaser or its designee all Mortgage Loan Documents
with respect to each Mortgage Loan; and
(d) all other terms and conditions of this Agreement
shall have been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Seller on the Closing Date the Purchase Price, plus accrued interest pursuant
to Section 4 of this Agreement, by wire transfer of immediately available funds
to the account designated by the Seller.
SECTION 10. CLOSING DOCUMENTS.
The closing documents for the Mortgage Loans to be purchased on the
Closing Date shall consist of fully executed originals of the following
documents:
1. this Agreement;
26
30
2. the Servicing Agreement, dated as of the Cut-off Date, in the
form of Exhibit B hereto;
3. a Custodial Account Letter Agreement or a Custodial Account
Certification, as applicable, as required under the Servicing
Agreement;
4. an Escrow Account Letter Agreement or an Escrow Account
Certification, as applicable, as required under the Servicing
Agreement;
5. an Officer's Certificate, in the form of Exhibit C hereto,
including all attachments thereto;
6. an Opinion of Counsel of the Seller/Servicer (who may be an
employee of the Seller/Servicer), in the form of Exhibit D
hereto;
7. a Security Release Certification, in the form of Exhibit E or
Exhibit F, if applicable, hereto executed by any person, as
requested by the Purchaser, if any of the Mortgage Loans have
at any time been subject to any security interest, pledge or
hypothecation for the benefit of such person;
8. a certificate or other evidence of merger or change of name,
signed or stamped by the applicable regulatory authority, if
any, if the Mortgage Loans were acquired by the Seller by
merger or acquired or originated by the Seller while
conducting business under a name other than its present name,
if applicable; and
9. the underwriting guidelines of the Seller to be attached
hereto as Exhibit I.
The Seller shall bear the risk of loss of the closing documents until
such time as they are received by the Purchaser or its attorneys.
SECTION 11. COSTS.
The Purchaser shall pay the legal fees and expenses of its attorneys.
All other costs and expenses incurred in connection with the transfer and
delivery of the Mortgage Loans including recording fees, fees for recording
Assignments of Mortgage, fees for title policy endorsements and continuations,
if applicable, the Seller's attorney's fees, shall be paid by the Seller.
SECTION 12. MERGER OR CONSOLIDATION OF THE SELLER.
The Seller will keep in full effect its existence, rights and
franchises as a federally chartered savings bank, and will obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity
and enforceability of this Agreement, or any of the Mortgage Loans and to
perform its duties under this Agreement.
27
31
Any Person into which the Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Seller shall be a party, or any Person succeeding to the business of the
Seller, shall be the successor of the Seller hereunder, 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; provided, however,
that the successor or surviving Person shall have a tangible net worth of at
least $30,000,000.
SECTION 13. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST.
The sale and delivery on the Closing Date of the Mortgage Loans
described on the Mortgage Loan Schedule is mandatory from and after the date of
the execution of this Agreement, it being specifically understood and agreed
that each Mortgage Loan is unique and identifiable on the date hereof and that
an award of money damages would be insufficient to compensate the Purchaser for
the losses and damages incurred by the Purchaser (including damages to
prospective purchasers of the Mortgage Loans) in the event of the Seller's
failure to deliver (i) each of the Mortgage Loans or (ii) one or more Qualified
Substitute Mortgage Loans or (iii) one or more Mortgage Loans otherwise
acceptable to the Purchaser on or before the Closing Date. The Seller hereby
grants to the Purchaser a lien on and a continuing security interest in each
Mortgage Loan and each document and instrument evidencing each such Mortgage
Loan to secure the performance by the Seller of its obligations under this
Agreement, and the Seller agrees that it shall hold such Mortgage Loans in
custody for the Purchaser subject to the Purchaser's (i) right to reject any
Mortgage Loan (or Qualified Substitute Mortgage Loan) under the terms of this
Agreement and to require another Mortgage Loan (or Qualified Substitute
Mortgage Loan) to be substituted therefor, and (ii) obligation to pay the
Purchase Price plus accrued interest as set forth in Section 4 hereof for the
Mortgage Loans. All rights and remedies of the Purchaser under this Agreement
are distinct from, and cumulative with, any other rights or remedies under this
Agreement or afforded by law or equity and all such rights and remedies may be
exercised concurrently, independently or successively.
SECTION 14. NOTICES.
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if mailed, by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party at the address as follows:
(i) if to the Seller:
D&N Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
28
32
(ii) if to the Purchaser:
D&N Capital Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
or such other address as may hereafter be furnished to the other party by like
notice. Any such demand, notice or communication hereunder shall be deemed to
have been received on the date delivered to or received at the premises of the
addressee (as evidenced, in the case of registered or certified mail, by the
date noted on the return receipt).
SECTION 15. SEVERABILITY CLAUSE.
Any part, provision, representation or warranty of this Agreement
which is prohibited or unenforceable or is held to be void or unenforceable in
any jurisdiction shall be ineffective, as to such jurisdiction, to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which
prohibits or renders void or unenforceable any provision hereof. If the
invalidity of any part, provision, representation or warranty of this Agreement
shall deprive any party of the economic benefit intended to be conferred by
this Agreement, the parties shall negotiate, in good faith, to develop a
structure the economic effect of which is nearly as possible the same as the
economic effect of this Agreement without regard to such invalidity.
SECTION 16. COUNTERPARTS.
This Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument.
SECTION 17. GOVERNING LAW.
The Agreement shall be construed in accordance with the laws of the
State of Michigan and the obligations, rights and remedies of the parties
hereunder shall be determined-in accordance with the substantive laws of the
Michigan (without regard to conflicts of laws principles), except to the extent
preempted by Federal law.
SECTION 18. INTENTION OF THE PARTIES.
It is the intention of the parties that the Purchaser is purchasing,
and the Seller is selling the Mortgage Loans and not a debt instrument of the
Seller or another security. Accordingly, the parties hereto each intend to
treat the transaction for Federal income tax purposes as a sale by the Seller,
and a purchase by the Purchaser, of the Mortgage Loans.
29
33
SECTION 19. SUCCESSORS AND ASSIGNS; ASSIGNMENT OF
PURCHASE AGREEMENT.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller and the Purchaser and the respective permitted
successors and assigns of the Seller and the successors and assigns of the
Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the
Seller to a third party without the consent of the Purchaser. This Agreement
may be assigned, pledged or hypothecated by the Purchaser without the prior
consent of the Seller. If the Purchaser assigns all or any of its rights as
Purchaser hereunder, the assignee of the Purchaser will become the "Purchaser"
hereunder to the extent of such assignment, provided that at no time shall
there be more than fifteen (15) persons having the status of "Purchaser"
hereunder. Any assignment by the Purchaser shall be accompanied by the delivery
and execution of an Assignment and Assumption Agreement (the "Assignment and
Assumption Agreement") substantially in the form attached hereto as Exhibit G.
The Seller shall be required to remit all amounts required to be remitted to
the Purchaser hereunder to said assignee commencing with the first Remittance
Date falling after receipt of said copy of the related Assignment and
Assumption Agreement provided that the Seller receives said copy no later than
three (3) Business Days immediately prior to the first day of the month of the
related Remittance Date.
SECTION 20. WAIVERS.
No term or provision of this Agreement may be waived or modified
unless such waiver or modification is in writing and signed by the party
against whom such waiver or modification is sought to be enforced.
SECTION 21. EXHIBITS.
The exhibits to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.
SECTION 22. GENERAL INTERPRETIVE PRINCIPLES.
For purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as
the singular, and the use of any gender herein shall be deemed
to include the other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally
accepted accounting principles;
(c) references herein to "Articles," "Sections," "Subsections,"
"Paragraphs," and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
30
34
(d) reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the
same Section in which the reference appears, and this rule
shall also apply to Paragraphs and other subdivisions;
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to
any particular provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 23. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter
furnished, may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 24. FURTHER AGREEMENTS.
The Seller and the Purchaser each agree to execute and deliver to the
other such reasonable and appropriate additional documents, instruments or
agreements as may be necessary or appropriate to effectuate the purposes of
this Agreement.
SECTION 25. RECORDATION OF ASSIGNMENTS OF MORTGAGE.
To the extent permitted by applicable law, each of the Assignments of
Mortgage is subject to recordation in all appropriate public offices for real
property records in all the counties or their comparable jurisdictions in which
any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Seller's expense for a single recordation with respect to each
Assignment of Mortgage in the event recordation is either necessary under
applicable law or requested by the Purchaser at its sole option.
31
35
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the date and year first above written.
D&N CAPITAL CORPORATION
(the Purchaser)
By:_________________________________
Name:_______________________________
Title:______________________________
D&N BANK
(the Seller)
By:_________________________________
Name:_______________________________
Title:______________________________
32
36
EXHIBIT A
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following items, which shall be available for inspection by the
Purchaser and any prospective Purchaser, and which shall be delivered to the
Purchaser or its designee pursuant to Section 6.03 of the Mortgage Loan
Purchase and Warranties Agreement to which this Exhibit is attached (the
"Agreement"):
1. The original Mortgage Note (or, with respect to the Mortgage
Loan listed on Schedule I hereto, a lost note affidavit, executed by an officer
of the Seller, with a copy of the original note attached thereto) bearing all
intervening endorsements, endorsed "Pay to the order of _______, without
recourse" and signed in the name of the Seller by an authorized officer. To
the extent that there is no room on the face of the Mortgage Notes for
endorsements, the endorsement may be contained on an allonge, if state law so
allows. If the Mortgage Loan was acquired by the Seller in a merger, the
endorsement must be by "[Seller], successor by merger to [name of
predecessor]". If the Mortgage Loan was acquired or originated by the Seller
while doing business under another name, the endorsement must be by "[Seller],
formerly known as [previous name]".
2. The original of any guarantee executed in connection with the
Mortgage Note.
3. The original Mortgage, with evidence of recording thereon. If
in connection with any Mortgage Loan, the Seller cannot deliver or cause to be
delivered the original Mortgage with evidence of recording thereon on or prior
to the Closing Date because of a delay caused by the public recording office
where such Mortgage has been delivered for recordation, a photocopy of such
Mortgage certified by the Seller to be true and correct will be delivered; if
such Mortgage has been lost or if such public recording office retains the
original recorded Mortgage, the Seller shall deliver or cause to be delivered
to the Purchaser, a photocopy of such Mortgage, certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage.
4. The originals of all assumption, modification, consolidation
or extension agreements, if any, with evidence of recording thereon or
certified copies of such documents if the originals thereof are unavailable.
5. The original Assignment of Mortgage for each Mortgage Loan
endorsed "Pay to the order of ____________________" and signed in the name of
the Seller by an authorized officer. If the Mortgage Loan was acquired by the
Seller in a merger, the Assignment of Mortgage must be made by "[Seller],
successor by merger to [name of predecessor]". If the Mortgage Loan was
acquired or originated by the Seller while doing business under another name,
the Assignment of Mortgage must be by "[Seller], formerly known as [previous
name]".
6. Originals of all intervening assignments of the Mortgage with
evidence of recording thereon if such intervening assignment has been recorded.
37
7. The original mortgagee policy of title insurance or, in the
event such original title policy is unavailable, a certified true copy of the
related policy binder or commitment for title certified to be true and complete
by the title insurance company.
8. Any original security agreement executed in connection with
the Mortgage.
9. The original hazard insurance policy and, if required by law,
flood insurance policy, in accordance with Section 8.02(f) of the Agreement.
10. Mortgage Loan closing statement.
11. Credit report on the Mortgagor.
12. Appraisal report.
13. Photograph of the Mortgaged Property.
14. Survey of the Mortgaged Property, if any.
15. Copy of each instrument necessary to complete identification
of any exception set forth in the exception schedule in the title policy, i.e.,
map or plat, restrictions, easements, sewer agreements, etc.
16. All required disclosure statements.
17. If available, termite report, structural engineer's report,
water potability and septic certification.
18. Sales contract.
19. Tax receipts, insurance premium receipts, ledger sheets,
insurance claim files, correspondence, current and historical computerized data
files, and all other processing, underwriting and closing papers and records
which are customarily contained in a mortgage loan file and which are required
to document the Mortgage Loan or to service the Mortgage Loan.
In the event that such original or copy of any document submitted
for recordation to the appropriate public recording office is not so delivered
to the Purchaser or its designee within 90 days following the Closing Date
(other than with respect to the Assignments of Mortgage which shall be
delivered to the Purchaser or its designee in blank), and in the event that the
Seller does not cure such failure within 30 days of discovery or receipt of
written notification of such failure from the Purchaser, the related Mortgage
Loan shall, upon the request of the Purchaser, be repurchased by the Seller at
the price and in the manner specified in Subsection 8.03 of the Agreement. The
foregoing repurchase obligation shall not apply in the event that the Seller
cannot deliver such original or copy of any document submitted for recordation
to the appropriate public recording office within the specified period due to a
delay caused by the recording office in the
A-2
38
applicable jurisdiction; provided that the Seller shall instead deliver a
recording receipt of such recording office or, if such recording receipt is not
available, an officer's certificate of a servicing officer of the Seller,
confirming that all such documents have been accepted for recording; provided
that, upon request of the Purchaser and delivery by the Purchaser to the Seller
of a schedule of the related Mortgage Loans, the Seller shall reissue and
deliver to the Purchaser or its designee said officer's certificate relating to
the related Mortgage Loans.
A-3
39
EXHIBIT B
40
EXHIBIT C
FORM OF SELLER'S/SERVICER'S OFFICER'S CERTIFICATE
I, _____________, hereby certify that I am the duly elected [Vice]
President of D&N Bank, a federally chartered savings bank (the "Seller") and
further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete
copy of the restated charter of the Seller which is in full
force and effect on the date hereof and which has been in
effect without amendment, waiver, rescission or modification
since [_________.]
2. Attached hereto as Exhibit 2 is a true, correct and complete
copy of the bylaws of the Seller which are in effect on the
date hereof and which have been in effect without amendment,
waiver, rescission or modification since [_________.]
3. Attached hereto as Exhibit 3 is an original certificate of due
incorporation and valid existence of the Seller issued within
ten days of the date hereof, and no event has occurred since
the date thereof which would impair such standing.
4. Attached hereto as Exhibit 4 is a true, correct and complete
copy of the corporate resolutions of the Board of Directors of
the Seller authorizing the Seller to execute and deliver each
of the Mortgage Loan Purchase and Warranties Agreements, dated
as of [__________], 1997, by and between D&N Capital
Corporation (the "Purchaser") and the Seller (the "Purchase
Agreement"), to endorse the mortgage notes and execute the
assignments of mortgages by original [or facsimile] signature,
and to execute and deliver each of the Servicing Agreements
dated as of [______], 1997, by and between D&N Capital
Corporation (the "Purchaser") and the Seller as Servicer (the
"Servicing Agreement") and such resolutions are in effect on
the date hereof and have been in effect without amendment,
waiver, rescission or modification since [_________.]
5. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Seller of or
compliance by the Seller with the Purchase Agreement and the
Servicing Agreement, the sale of the mortgage loans or the
consummation of the transactions contemplated by the Purchase
Agreement and the Servicing Agreement; or (ii) any required
consent, approval, authorization or order has been obtained by
the Seller.
6. Neither the consummation of the transactions contemplated by,
nor the fulfillment of the terms of, the Purchase Agreement
and the Servicing Agreement conflicts or will conflict with or
results or will result in a breach of or constitutes or will
constitute a default under the charter or by-laws of the
Seller, the terms of any indenture or other agreement or
instrument to which the Seller is a party or by which it is
bound or to which it is subject, or any statute or order,
rule,
41
regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which the Seller
is subject or by which it is bound.
7. To the best of my knowledge, there is no action, suit,
proceeding or investigation pending or threatened against the
Seller which, in my judgment, 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 Seller or in any material impairment of the
right or ability of the Seller to carry on its business
substantially as now conducted or in any material liability on
the part of the Seller or which would draw into question the
validity of the Purchase Agreement and the Servicing Agreement
or the mortgage loans or of any action taken or to be taken in
connection with the transactions contemplated hereby, or which
would be likely to impair materially the ability of the Seller
to perform under the terms of the Purchase Agreement and the
Servicing Agreement.
8. Each person listed on Exhibit 5 attached hereto who, as an
officer or representative of the Seller, signed the Purchase
Agreement and any other document delivered prior to or on the
date hereof in connection with any purchase described in the
Purchase Agreement was, at the respective times of such
signing and delivery, and is now, a duly elected or appointed,
qualified and acting officer or representative of the Seller,
who holds the office set forth opposite his or her name on
Exhibit 5, and the signatures of such persons appearing on
such documents are their genuine signatures. The person who,
as an officer or representative of the Seller, signed the
Servicing Agreement and any other document delivered prior to
or on the date hereof in connection with any servicing duties
described in the Servicing Agreement was, at the respective
times of such signing and delivery, and is now, a duly elected
or appointed, qualified and acting officer or representative
of the Seller, who holds the office set forth beneath his or
her name on the Servicing Agreement and the signature of such
person appearing on such document is his or her genuine
signature.
9. The Seller is duly authorized to engage in the transactions
described and contemplated in the Purchase Agreement and
Servicing Agreement.
C-2
42
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Seller.
Dated:____________, 1997 By:__________________________
Name:________________________
Title: [VICE] President
[Seal]
I, _________________________, an [ASSISTANT] [VICE PRESIDENT] of D&N
Bank, hereby certify that _____________________ is the duly elected, qualified
and acting [Vice] President of the Seller and that the signature appearing
above is [HIS] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:______________, 1997 By:_____________________________
Name:___________________________
Title: [ASSISTANT] [VICE PRESIDENT]
C-3
43
EXHIBIT 5
to Seller's/Servicer's Officer's Certificate
NAME TITLE SIGNATURE
44
EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE SELLER/SERVICER
_________________, 1997
D&N Capital Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
You have requested my opinion, as General Counsel to D&N Bank (the
"Seller"), with respect to certain matters in connection with the sale by the
Seller of the Mortgage Loans pursuant to that certain Mortgage Loan Purchase
and Warranties Agreement by and between the Seller and D&N Capital Corporation
(the "Purchaser"), dated as of __________, 1997 (the "Purchase Agreement")
which sale is in the form of whole loans, delivered pursuant to a Purchase
Agreement and serviced pursuant to an Servicing Agreement, dated as of
__________, 1997, by and between the Purchaser and the Seller as Servicer (the
"Servicing Agreement"). Capitalized terms not otherwise defined herein have
the meanings set forth in the Purchase Agreement and the Servicing Agreement.
I have examined the following documents:
1. the Purchase Agreement;
2. the Servicing Agreement;
3. the form of Assignment of Mortgage;
4. the form of endorsement of the Mortgage Notes; and
5. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon
the representations and warranties of the Seller contained in the Purchase
Agreement and the Servicing Agreement. I have assumed the authenticity of all
documents submitted to me as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents.
Based upon the foregoing, it is my opinion that:
1. The Seller is a federally chartered savings bank duly
organized and validly existing under the laws of the United
States and is qualified to transact business in, and is in
good standing under, the laws of Michigan.
45
2. The Seller has the power to engage in the transactions
contemplated by the Purchase Agreement and the Servicing
Agreement and all requisite power, authority and legal right
to execute and deliver the Purchase Agreement and the
Servicing Agreement and to perform and observe the terms and
conditions of such agreements.
3. The Purchase Agreement and Servicing Agreement have been duly
authorized, executed and delivered by the Seller and are
legal, valid and binding agreements enforceable in accordance
with their respective terms against the Seller, subject to
bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application
of the rules of equity, including those respecting the
availability of specific performance, none of which will
materially interfere with the realization of the benefits
provided thereunder or with the Purchaser's ownership of the
Mortgage Loans.
4. The Seller has been duly authorized to allow any of its
officers to execute any and all documents by original
signature in order to complete the transactions contemplated
by the Purchase Agreement and the Servicing Agreement and by
original or facsimile signature in order to execute the
endorsements to the Mortgage Notes and the Assignments of
Mortgages, and the original or facsimile signature of the
officer at the Seller executing the endorsements to the
Mortgage Notes and the Assignments of Mortgages represents the
legal and valid signature of said officer of the Seller.
5. Either (i) no consent, approval, authorization or order of any
court or governmental agency or body is required for the
execution, delivery and performance by the Seller of or
compliance by the Seller with the Purchase Agreement and the
Servicing Agreement and the sale of the Mortgage Loans or the
consummation of the transactions contemplated by the Purchase
Agreement and the Servicing Agreement or (ii) any required
consent, approval, authorization or order has been obtained by
the Seller.
6. Neither the consummation of the transactions contemplated by,
nor the fulfillment of the terms of, the Purchase Agreement
and the Servicing Agreement conflicts or will conflict with or
results or will result in a breach of or constitutes or will
constitute a default under the charter or by-laws of the
Seller, the terms of any indenture or other agreement or
instrument to which the Seller is a party or by which it is
bound or to which it is subject, or violates any statute or
order, rule, regulations, writ, injunction or decree of any
court, governmental authority or regulatory body to which the
Seller is subject or by which it is bound.
7. There is no action, suit, proceeding or investigation pending
or, to the best of my knowledge, threatened against the Seller
which, in my judgment, 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 Seller or in any
D-2
46
material impairment of the right or ability of the Seller to
carry on its business substantially as now conducted or in any
material liability on the part of the Seller or which would
draw into question the validity of the Purchase Agreement and
the Servicing Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the transactions
contemplated thereby, or which would be likely to impair
materially the ability of the Seller to perform under the
terms of the Purchase Agreement and the Servicing Agreement.
8. The sale of each Mortgage Note and Mortgage as and in the
manner contemplated by the Purchase Agreement is sufficient to
fully transfer to the Purchaser all right, title and interest
of the Seller thereto as noteholder and mortgagee.
9. The Mortgages have been duly assigned and the Mortgage Notes
have been duly endorsed as provided in the Purchase Agreement.
The Assignments of Mortgage are in recordable form, except
for the insertion of the name of the assignee, and upon the
name of the assignee being inserted, and to the best of my
knowledge, with respect to all other states, the Assignments
of Mortgage are in recordable form, except for the insertion
of the name of the assignee, and upon the name of the assignee
being inserted, are acceptable for recording under the laws of
such other states. The endorsement of the Mortgage Notes, the
delivery to the Purchaser, or its designee, of the Assignments
of Mortgage, and the delivery of the original endorsed
Mortgage Notes to the Purchaser, or its designee, are
sufficient to permit the Purchaser to avail itself of all
protection available under applicable law against the claims
of any present or future creditors of the Seller, and are
sufficient to prevent any other sale, transfer, assignment,
pledge or hypothecation of the Mortgages and the Mortgage
Notes by the Seller from being enforceable.
This opinion is given to you for your sole benefit, and no other
person or entity is entitled to rely hereon except that the purchaser or
purchasers to which you initially and directly resell the Mortgage Loans may
rely on this opinion as if it were addressed to them as of its date.
Very truly yours,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
General Counsel
D-3
47
EXHIBIT E
______________________, 1997
Federal Home Loan Bank of ______(the "Association")
___________________________________________________
___________________________________________________
Attention: ___________________________________________________
___________________________________________________
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that D&N Bank, a federally chartered
savings bank (the "Bank") has committed to sell to D&N Capital Corporation
under a Mortgage Loan Purchase and Warranties Agreement, dated as of
__________, 1997, certain mortgage loans originated or owned by the Bank. The
Bank warrants that the mortgage loans to be sold to D&N Capital Corporation are
in addition to and beyond any collateral required to secure advances made by
the Association to the Bank.
The Bank acknowledges that the mortgage loans to be sold to D&N
Capital Corporation shall not be used as additional or substitute collateral
for advances made by the Association. D&N Capital Corporation understands that
the balance of the Bank's mortgage loan portfolio may be used as collateral or
additional collateral for advances made by the Association, and confirms that
it has no interest therein.
Execution of this letter by the Association shall constitute a full
and complete release of any security interest, claim, or lien which the
Association may have against the mortgage loans to be sold to D&N Capital
Corporation.
Very truly yours,
____________________________________________
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Date:_______________________________________
Acknowledge and approved:
FEDERAL HOME LOAN BANK OF
_____________________________________________
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Date:________________________________________
48
EXHIBIT F
FORM OF SECURITY RELEASE CERTIFICATION
I. RELEASE OF SECURITY INTEREST
The financial institution named below hereby relinquishes any and all
right, title and interest it may have in all Mortgage Loans to be purchased by
D&N Capital Corporation from D&N Bank pursuant to that certain Mortgage Loan
Purchase and Warranties Agreement, dated as of [__________, 1997,] and
certifies that all notes, mortgages, assignments and other documents in its
possession relating to such Mortgage Loans have been delivered and released to
D&N Bank or its designees, as of the date and time of the sale of such Mortgage
Loans to D&N Capital Corporation.
Name and Address of Financial Institution
________________________________
(name)
________________________________
(Address)
By:_____________________________
II. CERTIFICATION OF RELEASE
D&N Bank hereby certifies to D&N Capital Corporation that, as of the
date and time of the sale of the above-mentioned Mortgage Loans to D&N Capital
Corporation, the security interests in the Mortgage Loans released by the
above-named financial institution comprise all security interests relating to
or affecting any and all such Mortgage Loans. The Company warrants that, as of
such time, there are and will be no other security interests affecting any or
all of such Mortgage Loans.
_________________________________
By: _____________________________
Title: __________________________
Date:____________________________
49
EXHIBIT G
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated [__________________,]
between D&N Bank, a federally chartered savings bank ("Assignor") and D&N
Capital Corporation, a Delaware corporation ("Assignee"):
For good and valuable consideration the receipt and sufficiency of
which hereby are acknowledged, and in consideration of the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. The Assignor hereby grants, transfers and assigns to Assignee,
as Purchaser, all of the right, title and interest of Assignor
with respect to the mortgage loans listed on Exhibit A
attached hereto (the "Mortgage Loans"), and with respect to
such Mortgage Loans, in, to and under (a) that certain
Mortgage Loan Purchase and Warranties Agreement dated
[__________,] 1997 by and between D&N Bank (the "Seller") and
D&N Capital Corporation (the "Purchase Agreement"), and (b)
that certain Servicing Agreement dated as of [_______], by and
between the Purchaser and the Seller (the "Servicing
Agreement"; the Servicing Agreement and the Purchase Agreement
are collectively referred to as the "Agreements").
2. The Assignor warrants and represents to, and covenants with,
the Assignee that:
a. the Assignor is the lawful owner of the Mortgage
Loans with the full right to transfer the Mortgage
Loans free from any and all claims and encumbrances
whatsoever;
b. the Assignor has not received notice of, and has no
knowledge of, any offsets, counterclaims or other
defenses available to the Seller with respect to the
Agreements or the Mortgage Loans;
c. the Assignor has not waived or agreed to any waiver
under, or agreed to any amendment or other
modification of, the Agreements. The Assignor has no
knowledge of, and has not received notice of, any
waivers under or amendments or other modifications
of, or assignments of rights or obligations under,
the Agreements; and
d. Neither the Assignor nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise
disposed of the Mortgage Loans or any interest in the
Mortgage Loans, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the
Mortgage Loans, or any interest in the Mortgage Loans
or otherwise approached or negotiated with respect to
the Mortgage Loans, or any interest in the Mortgage
with any person in any manner, or made any general
solicitation by means of general advertising or in
any other manner, or taken any other action which
would
50
constitute a distribution of the Mortgage Loans under
the Securities Act of 1933, as amended (the "1933
Act") or which would render the disposition of the
Mortgage Loans a violation of Section 5 of the 1933
Act or require registration pursuant thereto.
3. The Assignee warrants and represents to, and covenants with,
the Assignor and the Seller pursuant to the Agreements that:
a. the Assignee is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation, and has all
requisite corporate power and authority to acquire,
own and purchase the Mortgage Loans;
b. the Assignee has full corporate power and authority
to execute, deliver and perform under this Assignment
and Assumption Agreement, and to consummate the
transactions set forth herein. The execution,
delivery and performance of the Assignee of this
Assignment and Assumption Agreement, and the
consummation by it of the transactions contemplated
hereby, have been duly authorized by all necessary
corporate action of the Assignee. This Assignment
and Assumption Agreement has been duly executed and
delivered by the Assignee and constitutes the valid
and legally binding obligation of the Assignee
enforceable against the Assignee in accordance with
its respective terms;
c. To the best of Assignee's knowledge, no material
consent, approval, order or authorization of, or
declaration, filing or registration with, any
governmental entity is required to be obtained or
made by the Assignee in connection with the
execution, delivery or performance by the Assignee of
this Assignment and Assumption Agreement, or the
consummation by it of the transactions contemplated
hereby;
d. The Assignee agrees to be bound, as Purchaser, by all
of the terms, covenants and conditions of the
Agreements, the Mortgage Loans, and from and after
the date hereof, the Assignee assumes for the benefit
of each of the Seller and the Assignor all of the
Assignor' s obligations as Purchaser thereunder,
including, without limitation, the limitation on
assignment set forth in Section __ of the Purchase
Agreement;
e. The Assignee understands that the Mortgage Loans have
not been registered under the 1933 Act or the
securities laws of any state;
f. The purchase price being paid by the Assignee for the
Mortgage Loans is in excess of $250,000 and will be
paid by cash remittance of the full purchase price
within sixty (60) days of the sale;
G-2
51
g. The Assignee is acquiring the Mortgage Loans for
investment for its own account only and not for any
other person;
h. The Assignee considers itself a sophisticated
institutional investor having such knowledge and
experience in financial and business matters that it
is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
i. The Assignee has been furnished with all information
regarding the Mortgage Loans that it has requested
from the Assignor or the Seller;
j. Neither the Assignee nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise
disposed of the Mortgage Loans or any interest in the
Mortgage Loans, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the
Mortgage Loans or any interest in the Mortgage Loans,
or otherwise approached or negotiated with respect to
the Mortgage Loans or any interest in the Mortgage
Loans with any person in any manner which would
constitute a distribution of the Mortgage Loans under
the 1933 Act or which would render the disposition of
the Mortgage Loans a violation of Section 5 of the
1933 Act or require registration pursuant thereto,
nor will it act, nor has it authorized or will it
authorize any person to act, in such manner with
respect to the Mortgage Loans; and
k. Either: (1) the Assignee is not an employee benefit
plan ("Plan") within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or a plan (also "Plan") within
the meaning of section 4975(e)(1) of the Internal
Revenue Code of 1986 ("Code"), and the Assignee is
not directly or indirectly purchasing the Mortgage
Loans on behalf of, investment manager of, as named
fiduciary of, as Trustee of, or with assets of, a
Plan; or (2) the Assignee's purchase of the Mortgage
Loans will not result in a prohibited transaction
under section 406 of ERISA or section 4975 of the
Code.
4. (a) The Assignee's address for purposes of all notices
and correspondence related to the Mortgage Loans and
the Agreements is: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
The Assignee's wire instructions for purposes of all remittances and
payments related to the Mortgage Loans are to be confirmed in writing.
(b) The Assignor's address for purposes for all notices
and correspondence related to the Mortgage Loans and
this Agreement is: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
G-3
52
5. This Agreement shall be construed in accordance with the
substantive laws of the State of Michigan (without regard to
conflicts of laws principles) and the obligations, rights and
remedies of the parties hereunder shall be determined in
accordance with such laws, except to the extent preempted by
federal law.
6. This Agreement shall inure to the benefit of the successors
and assigns of the parties hereto. This Agreement may not be
assigned by the Assignee without the express written consent
of the Assignor. Any entity into which the Assignor or
Assignee may be merged or consolidated shall, without the
requirement for any further writing, be deemed the Assignor or
Assignee, respectively, hereunder.
7. No term or provision of this Agreement may be waived or
modified unless such waiver or modification is in writing and
signed by the party against whom such waiver or modification
is sought to be enforced.
8. This Agreement shall survive the conveyance of the Mortgage
Loans and the assignment of the Agreements by the Assignor.
9. Notwithstanding the assignment of the Agreements by either the
Assignor or Assignee, this Agreement shall not be deemed
assigned by the Assignor or the Assignee unless assigned by
separate written instrument.
10. For the purpose for facilitating the execution of this
Agreement as herein provided and for other purposes, this
Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute and be one
and the same instrument.
G-4
53
IN WITNESS WHEREOF, the parties have caused this Assignment and
Assumption Agreement to be executed by their duly authorized officers as of the
date first above written.
_________________________ ___________________________
Assignor Assignee
By:______________________ By:________________________
Its:_____________________ Its:_______________________
Taxpayer Taxpayer
Identification No._______ Identification No._________
G-5