AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 26, 1996
REGISTRATION NO. 333-08001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 1
TO
FORM S-11
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES
-------------------
CHASE PREFERRED CAPITAL CORPORATION
(Exact name of Registrant as specified in its governing instruments)
-------------------
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 270-6000
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
-------------------
NEILA B. RADIN, ESQ.
CHASE PREFERRED CAPITAL CORPORATION
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(212) 270-6000
(NAME AND ADDRESS OF AGENT FOR SERVICE)
-------------------
WITH COPIES TO:
<TABLE>
<S> <C>
CELIA A. FELSHER, ESQ. MARK J. WELSHIMER, ESQ.
MILBANK, TWEED, HADLEY & MCCLOY SULLIVAN & CROMWELL
ONE CHASE MANHATTAN PLAZA 125 BROAD STREET
NEW YORK, NEW YORK 10005 NEW YORK, NEW YORK 10004
TEL: (212) 530-5000 TEL: (212) 558-4000
FAX: (212) 530-5219 FAX: (212) 558-3588
</TABLE>
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / / ____________
-------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 35. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
1** --Form of Underwriting Agreement between the Company, the Bank and the
Underwriters
3(a)(i)* --Certificate of Incorporation of the Company
3(a)(ii) --Form of Certificate of Designation establishing the Series A Preferred
Shares
3(a)(iii) --Form of Amended and Restated Certificate of Incorporation of the Company
3(b)(i)* --By-laws of the Company
3(b)(ii) --Form of Amended and Restated By-laws of the Company
4** --Specimen of certificate representing Series A Preferred Shares
5** --Opinion of Milbank, Tweed, Hadley & McCloy, counsel to the Company,
relating to Series A Preferred Shares
8** --Opinion of Milbank, Tweed, Hadley & McCloy, counsel to the Company,
relating to certain tax matters
10(a) --Form of Residential Mortgage Loan Purchase and Warranties Agreement between
the Company and the Bank
10(b) --Form of Commercial Mortgage Loan Purchase and Warranties Agreement between
the Company and the Bank
10(c) --Form of Residential Mortgage Loan Servicing Agreement between the Company
and Chase Mortgage Services, Inc.
10(d) --Form of Commercial Mortgage Loan Servicing Agreement between the Company
and the Bank
10(e) --Form of Advisory Agreement between the Company and the Bank
23(a)* --Consent of Price Waterhouse LLP
23(b)** --Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5)
24* --Powers of Attorney
</TABLE>
- ------------
* Previously filed
** To be filed by amendment
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-11 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in New York, New York, on the 26th day of July, 1996.
CHASE PREFERRED CAPITAL CORPORATION
By /s/ NEILA B. RADIN
...................................
Neila B. Radin
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman and Director July 26, 1996
..................................... (Principal Executive Officer)
Robert S. Strong
* President and Director July 26, 1996
.....................................
Deborah L. Duncan
* Treasurer and Director July 26, 1996
..................................... (Principal financial and accounting
Don B. Taggart officer)
* Director July 26, 1996
.....................................
Richard J. Boyle
* Director July 26, 1996
.....................................
Thomas Jacob
* Director July 26, 1996
.....................................
William C. Langley
* Director July 26, 1996
.....................................
Peter J. Tobin
*By: /s/ NEILA B. RADIN
.................................
Neila B. Radin
(as attorney-in-fact)
</TABLE>
II-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<S> <C>
1** --Form of Underwriting Agreement between the Company, the Bank and the
Underwriters
3(a)(i)* --Certificate of Incorporation of the Company
3(a)(ii) --Form of Certificate of Designation establishing the Series A Preferred Shares
3(a)(iii) --Form of Amended and Restated Certificate of Incorporation of the Company
3(b)(i)* --By-laws of the Company
3(b)(ii) --Form of Amended and Restated By-laws of the Company
4** --Specimen of certificate representing Series A Preferred Shares
5** --Opinion of Milbank, Tweed, Hadley & McCloy, counsel to the Company, relating to
Series A Preferred Shares
8** --Opinion of Milbank, Tweed, Hadley & McCloy, counsel to the Company, relating to
certain tax matters
10(a) --Form of Residential Mortgage Loan Purchase and Warranties Agreement between the
Company and the Bank
10(b) --Form of Commercial Mortgage Loan Purchase and Warranties Agreement between the
Company and the Bank
10(c) --Form of Residential Mortgage Loan Servicing Agreement between the Company and
Chase Mortgage Services, Inc.
10(d) --Form of Commercial Mortgage Loan Servicing Agreement between the Company and the
Bank
10(e) --Form of Advisory Agreement between the Company and the Bank
23(a)* --Consent of Price Waterhouse LLP
23(b)** --Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5)
24* --Powers of Attorney
</TABLE>
- ------------
* Previously filed.
** To be filed by amendment.
CERTIFICATE OF DESIGNATION
OF
___% CUMULATIVE PREFERRED STOCK, SERIES A
OF
CHASE PREFERRED CAPITAL CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
CHASE PREFERRED CAPITAL CORPORATION, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES
that the following resolution was duly adopted by the Board of Directors of the
Corporation on September __, 1996, pursuant to authority conferred upon the
Board of Directors by the provisions of the Restated Certificate of
Incorporation of the Corporation which authorizes the issuance of up to
50,000,000 shares of preferred stock, $25.00 par value per share (the "Preferred
Stock"):
RESOLVED that the issue of 22,000,000 shares of ___% Cumulative
Preferred Stock, Series A, $25.00 par value, of the Corporation is hereby
authorized and the designation, preferences, relative, participating,
optional and other special rights, and qualifications, or restrictions of
all 22,000,000 shares of this Series, in addition to those set forth in the
Restated Certificate of Incorporation of the Corporation are hereby fixed
as follows:
1. Designation. The designation of this Series shall be ___%
Cumulative Preferred Stock, Series A (hereinafter referred to as this
"Series"), and the number of shares constituting this Series shall be
22,000,000. Shares of this Series shall have a liquidation preference of
$25.00 per share. The number of authorized shares of this Series may be
reduced by further resolution duly adopted by the Board of Directors of the
Corporation or a duly authorized committee thereof and by the filing of a
certificate pursuant to the provisions of the General Corporation Law of
the State of Delaware stating that such reduction has been so authorized,
but the number of authorized shares of this Series shall not be increased.
2. Dividends. (a) For each quarterly dividend period (a "Dividend
Period") dividends payable on each share of this Series shall be payable at
a rate of ___% per annum of the liquidation preference per share divided by
four. Each Dividend Period
<PAGE>
shall commence on the January 1, April 1, July 1 and October 1 following
the last day of the preceding Dividend Period and shall end on and include
the day next preceding the first day of the next Dividend Period. Dividends
shall be cumulative from the date of original issue and shall be payable,
when and as declared by the Board of Directors or by a duly authorized
committee thereof, on March 31, June 30, September 30 and December 31 of
each year, commencing on ____________ __, 1996. Each such dividend shall be
paid to the holders of record of shares of this Series as they appear on
the stock register of the Corporation on such record date, not exceeding 45
days preceding the payment date thereof, as shall be fixed by the Board of
Directors of the Corporation or by a duly authorized committee thereof.
Dividends on account of arrears for any past Dividend Periods may be
declared and paid at any time, without reference to any regular dividend
payment date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board of
Directors of the Corporation or by a duly authorized committee thereof.
(b) Dividends payable on this Series for any period greater or less
than a full Dividend Period, shall be computed on the basis of a 360-day
year consisting of twelve 30-day months and the actual number of days
elapsed in the period.
(c) No full dividends shall be declared or paid or set apart for
payment on the Preferred Stock of any series ranking, as to dividends, on a
parity with or junior to this Series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on
this Series for all Dividend Periods terminating on or prior to the date of
payment of such full cumulative dividends. When dividends are not paid in
full, as aforesaid, upon the shares of this Series and any other series of
Preferred Stock ranking on a parity as to dividends with this Series, all
dividends declared upon shares of this Series and any other series of
Preferred Stock ranking on a parity as to dividends with this Series shall
be declared pro rata so that the amount of dividends declared per share on
this Series and such other Preferred Stock shall in all cases bear to each
other the same ratio that accrued and unpaid dividends per share on the
shares of this Series and such other Preferred Stock bear to each other.
Holders of shares of this Series shall not be entitled to any dividend,
whether payable in cash, property or stock, in excess of full cumulative
dividends, as herein provided, on this Series. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend payment or
payments on this Series which may be in arrears.
(d) So long as any shares of this Series are outstanding, no dividend
(other than a dividend in common stock, par value $300 per share, of the
Corporation (the "Common Stock") or in any other stock ranking junior to
this Series as to dividends and upon liquidation and other than as provided
in paragraph (c) of this Section 2) shall be declared or paid or set aside
for payment or other distribution declared or made upon the Common Stock or
upon any other stock ranking junior to or on a
2
<PAGE>
parity with this Series as to dividends or upon liquidation, nor shall any
Common Stock or any other stock of the Corporation ranking junior to or on
a parity with this Series as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be
paid to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation (except by conversion into or
exchange for stock of the Corporation ranking junior to this Series as to
dividends and upon liquidation) unless, in each case, the full cumulative
dividends on all outstanding shares of this Series shall have been paid or
declared and set aside for payment for all past Dividend Periods.
3. Redemption. (a) The shares of this Series are not redeemable prior
to ________, 2001, except upon the occurrence of a Tax Event (as defined in
paragraph (b) below). The Corporation, at its option, may redeem shares of
this Series, as a whole or in part, at any time or from time to time, on or
after _______, 2001, at a redemption price of $25.00 per share, plus
accrued and unpaid dividends thereon to the date fixed for redemption.
(b) The Corporation will have the right, at any time upon the
occurrence of a Tax Event, to redeem the shares of this Series, in whole,
but not in part, at a redemption price of $25.00 per share, plus accrued
and unpaid dividends to the date fixed for redemption. "Tax Event" means
the receipt by the Corporation of an opinion of a nationally recognized law
firm experienced in such matters to the effect that, as a result of (i) any
amendment to, clarification of, or change (including any announced
prospective change) in the laws or treaties (or any regulations thereunder)
of the United States or any political subdivision or taxing authority
thereof or therein affecting taxation, (ii) any judicial decision, official
administrative pronouncement, published or private ruling, regulatory
procedure, notice or announcement (including any notice or announcement of
intent to adopt such procedures or regulations) ("Administrative Action")
or (iii) any amendment to, clarification of, or change in the official
position or the interpretation of such Administrative Action or any
interpretation or pronouncement that provides for a position with respect
to such Administrative Action that differs from the theretofore generally
accepted position, in each case, by any legislative body, court,
governmental authority or regulatory body, irrespective of the manner in
which such amendment, clarification or change is made known, which
amendment, clarification, or change is effective or such pronouncement or
decision is announced on or after the date of issuance of the shares of
this Series, there is more than an insubstantial risk that (a) dividends
paid or to be paid by the Corporation with respect to the Common Stock and
Preferred Stock of the Corporation are not, or will not be, fully
deductible by the Corporation for United States federal income tax purposes
or (b) the Corporation is, or will be, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
(c) In the event that fewer than all the outstanding shares of this
Series are to be redeemed, the number of shares to be redeemed shall be
determined by the
3
<PAGE>
Board of Directors of the Corporation or a duly authorized committee
thereof and the shares to be redeemed shall be determined by lot or pro
rata as may be determined by the Board of Directors of the Corporation or
such duly authorized committee thereof or by any other method as may be
determined by the Board of Directors of the Corporation or such duly
authorized committee thereof in its sole discretion to be equitable,
provided that such method satisfies any applicable requirements of any
securities exchange on which this Series is listed.
(d) In the event the Corporation shall redeem shares of this Series,
notice of such redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 or more than 60 days prior to the
redemption date, to each holder of record of the shares to be redeemed, at
such holder's address as the same appears on the stock register of the
Corporation. Each such notice shall state: (i) the redemption date; (ii)
the number of shares of this Series to be redeemed and, if fewer than all
the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (iii) the redemption price; (iv)
the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on
the shares to be redeemed will cease to accrue on the redemption date.
(e) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price) dividends on the
shares of this Series so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding, and all rights of
the holders thereof as stockholders of the Corporation (except the right to
receive from the Corporation the redemption price) shall cease. Upon
surrender in accordance with said notice of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors of the Corporation or a duly authorized committee thereof shall
so require and the notice shall so state), such shares shall be redeemed by
the Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
(f) Any shares of this Series which shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued shares of Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the
Board of Directors of the Corporation or a duly authorized committee
thereof.
(g) Notwithstanding the foregoing provisions of this Section 3, if any
dividends on this Series are in arrears, no shares of this Series shall be
redeemed unless all outstanding shares of this Series are simultaneously
redeemed, and the Corporation shall not purchase or otherwise acquire any
shares of this Series; provided, however, that the foregoing shall not
prevent the purchase or acquisition of shares of
4
<PAGE>
this Series pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of this Series.
4. Conversion. The holders of shares of this Series shall not have any
rights to convert such shares into shares of any other class or series of
capital stock of the Corporation.
5. Liquidation Rights. (a) Upon the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, the holders of
the shares of this Series shall be entitled to receive and to be paid out
of the assets of the Corporation available for distribution to its
stockholders, before any payment or distribution shall be made on the
Common Stock or on any other class of stock ranking junior to this Series
upon liquidation, the amount of $25.00 per share, plus accrued and unpaid
dividends thereon.
(b) After the payment to the holders of the shares of this Series of
the full preferential amounts provided for in this Section 5, the holders
of this Series as such shall have no right or claim to any of the remaining
assets of the Corporation.
(c) If, upon any voluntary or involuntary dissolution, liquidation, or
winding up of the Corporation, the amounts payable with respect to the
stated value of the shares of this Series and any other shares of stock of
the Corporation ranking as to any such distribution on a parity with the
shares of this Series are not paid in full, the holders of the shares of
this Series and of such other shares will share ratably in any such
distribution of assets of the Corporation in proportion to the full
respective liquidating distributions to which they are entitled.
(d) Neither the sale of all or substantially all the property or
business of the Corporation, nor the merger or consolidation of the
Corporation into or with any other corporation or the merger or
consolidation of any other corporation into or with the Corporation, shall
be deemed to be a dissolution, liquidation or winding up, voluntary or
involuntary, for the purposes of this Section 5.
(e) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of this Series then outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders all amounts to which such holders are
entitled pursuant to paragraph (a) of this Section 5 before any payment
shall be made to the holder of any class of capital stock of the
Corporation ranking junior to this Series upon liquidation.
5
<PAGE>
6. Ranking. For purposes of this resolution, any stock of any class or
classes of the Corporation shall be deemed to rank:
(a) prior to the shares of this Series, either as to dividends or upon
liquidation, if the holders of such class or classes shall be entitled to
the receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be, in
preference or priority to the holders of shares of this Series;
(b) on a parity with shares of this Series, either as to dividends or
upon liquidation, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or sinking fund provisions,
if any, be different from those of this Series, if the holders of such
stock shall be entitled to the receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, without preference or priority, one over
the other, as between the holders of such stock and the holders of shares
of this Series; and
(c) junior to shares of this Series, either as to dividends or upon
liquidation, if such class shall be Common Stock or if the holders of
shares of this Series shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such class or classes.
8. Voting Rights. The shares of this Series shall not have any voting
powers either general or special, except that:
(a) If at the time of any annual meeting of the Corporation's
stockholders for the election of directors there is a default in preference
dividends on the Preferred Stock, the number of directors constituting the
Board of Directors of the Corporation shall be increased by two (if not
already increased by two due to a default in preference dividends), and the
holders of the Preferred Stock of all series (whether or not the holders of
such series of Preferred Stock would be entitled to vote for the election
of directors if such default in preference dividends did not exist), shall
have the right at such meeting, voting together as a single class without
regard to series, to the exclusion of the holders of Common Stock, to elect
two additional directors of the Corporation to fill such newly created
directorships. Such right shall continue until there are no dividends in
arrears upon the Preferred Stock. Each director elected by the holders of
shares of the Preferred Stock (a "Preferred Director") shall continue to
serve as such director for the full term for which he shall have been
elected, notwithstanding that prior to the end of such term a default in
preference dividends shall cease to exist. Any Preferred Director may be
removed by, and shall not be removed except by, the vote of the holders of
record of all the outstanding shares of Preferred Stock, voting together as
a single class without regard to series, at a meeting of the Corporation's
stockholders, or
6
<PAGE>
of the holders of shares of Preferred Stock, called for the purpose. So
long as a default in any preference dividends on the Preferred Stock shall
exist, (i) any vacancy in the office of a Preferred Director may be filled
(except as provided in the following clause (ii)) by an instrument in
writing signed by the remaining Preferred Director and filed with the
Corporation and (ii) in the case of the removal of any Preferred Director,
the vacancy may be filled by the vote of the holders of all the outstanding
shares of Preferred Stock, voting together as a single class without regard
to series, at the same meeting at which such removal shall be voted. Each
director appointed as aforesaid by the remaining Preferred Director shall
be deemed, for all purposes hereof, to be a Preferred Director. Whenever
the term of office of the Preferred Directors shall end and a default in
preference dividends shall no longer exist, the number of directors
constituting the Board of Directors shall be reduced by two. For the
purposes hereof, a "default in preference dividends" on the Preferred Stock
shall be deemed to have occurred whenever the amount of accrued dividends
upon any series of Preferred Stock shall be equivalent to four full
quarterly dividends or more, and, having so occurred, such default shall be
deemed to exist thereafter until, but only until, all accrued dividends on
all shares of Preferred Stock of any series then outstanding shall have
been paid to the end of the last preceding dividend period; and
(b) Without the consent of the holders of shares entitled to cast at
least 66- 2/3% of the votes entitled to be cast by the holders of the total
number of shares of Preferred Stock then outstanding, voting together as a
single class without regard to series, the holders of shares of this series
being entitled to cast one vote per share thereon, the Corporation may not:
(i) create any class or series of stock which shall have preference as to
dividends or distribution of assets over any outstanding series of
Preferred Stock other than a series which shall not have any right to
object to such creation or (ii) alter or change the provisions of the
Corporation's Restated Certificate of Incorporation so as to adversely
affect the voting power, preferences or special rights of the holders of
Preferred Stock; provided, however, that if such creation or such
alteration or change would adversely affect the voting power, preferences
or special rights of one or more, but not all, series of Preferred Stock at
the time outstanding, consent of the holders of shares entitled to cast at
least 66-2/3% of the votes entitled to be cast by the holders of all of the
shares of all such series so affected, voting together as a single class,
shall be required in lieu of the consent of the holders of shares entitled
to cast at least 66-2/3% of the votes entitled to be cast by the holders of
the total number of shares of Preferred Stock at the time outstanding.
9. Approval of Independent Directors.
(a) For so long as any shares of this Series are outstanding, the
Corporation may not take the following actions without first obtaining the
approval of a majority of the Independent Directors. "Independent Director"
means any director of the Corporation who is either (i) not a current
officer or employee of the Corporation, The Chase Manhattan Corporation,
The Chase Manhattan Bank (the "Bank") or any
7
<PAGE>
affiliate of the Bank or (ii) a Preferred Director. The actions which
require the prior approval of a majority of the Independent Directors
include: (i) the issuance of a series of Preferred Stock on a parity with
the shares of this Series, (ii) the incurrence of debt for borrowed money
in excess of 20% of the aggregate amount of net proceeds received in
connection with the issuance of any Preferred Stock and Common Stock, (iii)
the modification of the general distribution policy or the declaration of
any distribution in respect of Common Stock for any year if, after taking
into account any such proposed distribution, total distributions on the
shares of this Series and on the Common Stock would exceed an amount equal
to the sum of 105% of the Corporation's "REIT taxable income" (excluding
capital gains) for such year plus net capital gains of the Corporation for
that year, (iv) the acquisition of real estate assets other than mortgage
loans or mortgage securities representing interests in or obligations
backed by pools of mortgage loans, (v) the redemption of any shares of
Common Stock, (vi) the termination or material modification of, or election
not to renew, the Advisory Agreement, dated _______, 1996, between the
Corporation and the Bank or any servicing agreement entered into in
connection with the purchase of mortgage loans, (vii) the subcontracting of
any duties under the Advisory Agreement or any servicing agreement to
persons who are not affiliates of the Bank and (viii) the determination to
revoke the Corporation's status as a real estate investment trust ("REIT").
(b) In assessing the benefits to the Corporation of any proposed
action requiring their consent, the Independent Directors shall take into
account the interests of holders of both the Common Stock and the Preferred
Stock, including, without limitation, the holders of shares of this Series.
In considering the interests of the holders of the Preferred Stock,
including without limitation holders of shares of this Series, the
Independent Directors shall owe the same duties which the Independent
Directors owe to holders of Common Stock.
10. Maintenance of Status as Reporting Company. For so long as any
shares of this Series are outstanding, the Corporation shall maintain its
status as a reporting company under the Securities Exchange Act of 1934, as
amended.
8
FORM OF
RESTATED CERTIFICATE OF INCORPORATION
of
CHASE PREFERRED CAPITAL CORPORATION
Under Section 245
of the
General Corporation Law of the State of Delaware
1.
NAME
The name of the Corporation is CHASE PREFERRED CAPITAL CORPORATION.
2.
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
3.
PURPOSE
The nature of the business or purpose to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware. The Corporation
shall possess and may exercise all powers and privileges necessary or convenient
to effect the foregoing purpose.
4.
CAPITAL STOCK
The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is FIFTY-FIVE MILLION, of which FIFTY
MILLION shares shall be shares of preferred stock of the par value of $25.00 per
share (hereinafter called "Preferred Stock") and FIVE MILLION shares shall be
shares of common stock of the par value of $300.00 per share (hereinafter called
"Common Stock").
<PAGE>
2
Any amendment to this Certificate of Incorporation which shall increase or
decrease the authorized capital stock of the Corporation may be adopted by the
affirmative vote of the holders of capital stock representing not less than a
majority of the voting power represented by the outstanding shares of capital
stock of the Corporation entitled to vote.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, of the Preferred Stock
shall be as follows:
(1) The Board of Directors is expressly authorized at any time, and from
time to time, to provide for the issuance of shares of Preferred Stock in one or
more class or series, with such voting powers, full or limited but not to exceed
one vote per share, or without voting powers and with such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions providing for the issue thereof adopted by the Board
of Directors, and as are not stated and expressed in this Certificate of
Incorporation, or any amendment thereto, including (but without limiting the
generality of the foregoing) the following:
(a) the designation of such class or series;
(b) the dividend rate or rates of such class or series and/or the methods
of determining dividends, the conditions and dates upon which such dividends
shall be payable, the preference or relation which such dividends shall bear to
the dividends payable on any other class or classes or on any other series of
any class or classes of capital stock, and whether such dividends shall be
cumulative or non-cumulative;
(c) whether the shares of such class or series shall be subject to
redemption by the Corporation, and, if made subject to such redemption, the
times, prices and other terms and conditions of such redemption;
(d) the terms and amount of any sinking fund provided for the purchase or
redemption of the shares of such class or series;
(e) whether or not the shares of such class or series shall be convertible
into or exchangeable for shares of any other class or classes or of any other
series of any class or classes of capital stock of the Corporation or affiliate
of the Corporation, and, if provision be made for conversion or exchange, the
times, prices, rates, adjustments and other terms and conditions of such
conversion or exchange;
(f) the extent, if any, to which the holders of the shares of such class or
series shall be entitled to vote as a class or otherwise with respect to the
election of the directors or otherwise; provided, however, that in no event
shall any holder of any class or
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3
series of Preferred Stock be entitled to more than one vote for each share of
such Preferred Stock held by it;
(g) the restrictions, if any, on the issue or reissue of any additional
Preferred Stock;
(h) the liquidation preference of such class or series and other rights of
the holders of the shares of such class or series upon the dissolution of, or
upon the distribution of assets of, the Corporation;
(i) whether or not (a) warrants for such class or series or (b) depositary
shares evidenced by depositary receipts, each representing a fraction (as
determined by the Board of Directors) of a share of such class or series, shares
of which class or series will be issued and deposited with a depositary, shall
be issued, in each case, in lieu of offering full shares of such class of
series; and
(j) whether or not warrants for Preferred Stock, depositary shares or
Common Stock shall be issued, whether alone or in connection with any other
class or series, and the terms and conditions of any such warrants.
(2) Except as otherwise required by law and except for such voting powers
with respect to the election of directors or other matters as may be stated in
the resolutions of the Board of Directors, or duly authorized committee thereof,
creating any class or series of Preferred Stock, the holders of any such class
or series shall have no voting power whatsoever.
5.
BY-LAWS
The Board of Directors is authorized to make, alter, amend or repeal the
by-laws of the Corporation. The books of the Corporation (subject to the
provisions of the laws of the State of Delaware) may be kept outside of the
State of Delaware at such places as from time to time may be designated by the
Board of Directors. Election of directors need not be by written ballot.
6.
LIABILITY OF DIRECTORS
(1) To the fullest extent that the General Corporation Law of the State of
Delaware as it exists on the date hereof or as it may hereafter be amended
permits the limitation or elimination of the liability of directors, no director
of the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
<PAGE>
4
(2) The Corporation shall have the power to indemnify any director,
officer, employee or agent of the Corporation or any other person who is serving
at the request of the Corporation in any such capacity with another corporation,
partnership, joint venture, trust or other enterprise (including, without
limitation, any employee benefit plan) to the fullest extent permitted by the
General Corporation Law of the State of Delaware as it exists on the date hereof
or as it may hereafter be amended, and any such indemnification may continue as
to any person who has ceased to be a director, officer, employee or agent and
may inure to the benefit of the heirs, executors and administrators of such a
person.
(3) By action of its Board of Directors, notwithstanding any interest of
the directors in such action, the Corporation may purchase and maintain
insurance, in such amounts as the Board of Directors deems appropriate, to
protect any director, officer, employee or agent of the Corporation or any other
person who is serving at the request of the Corporation in any such capacity
with another corporation, partnership, joint venture, trust or other enterprise
(including, without limitation, any employee benefit plan) against any liability
asserted against such person or incurred by such person in any such capacity or
arising out of such person's status as such (including, without limitation,
expenses, judgments, fines and amounts paid in settlement) to the fullest extent
permitted by the General Corporation Law of the State of Delaware as it exists
on the date hereof or as it may hereafter be amended, and whether or not the
Corporation would have the power or would be required to indemnify any such
person under the terms of any agreement or by-law or the General Corporation Law
of the State of Delaware. For purposes of this paragraph (3), "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan.
7.
RESTRICTION OF TRANSFER,
ACQUISITION AND REDEMPTION OF SHARES
7.1. Definitions.
The following terms shall have the following meanings for purposes of this
Certificate of Incorporation:
"Beneficial Ownership" means ownership of shares of any class or
series of Common Stock or Preferred Stock by a Person who would be treated as an
owner of such shares under Section 542(a)(2) of the Code either directly or
constructively through the application of Section 544 of the Code as modified by
Section 856(h)(1)(B) of the Code. The terms "Beneficial Owner," "Beneficially
Own" and "Own Beneficially" shall have correlative meanings.
"Beneficiary" means, with respect to the Trust, one or more
organizations named by the Corporation as beneficiary or beneficiaries of the
Trust in accordance with Section 7.12(a). Each such Beneficiary shall be an
organization described in
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5
Section 501(c)(3) of the Code, that is not an "individual" within the meaning of
Section 542 of the Code, contributions to which must be eligible for deduction
under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
"Board of Directors" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute thereto. Reference to any provision of the
Code shall mean such provision as in effect from time to time, as the same may
be amended, and any successor thereto, as interpreted by any applicable
regulations or other administrative pronouncements as in effect from time to
time.
"Excess Shares" has the meaning set forth in Section 7.3.
"Initial Public Offering" means the sale of shares of Preferred Stock
to the public pursuant to the Corporation's first effective registration
statement for such Preferred Stock filed under the Securities Act of 1933, as
amended.
"Market Price", with respect to any class or series of Preferred
Stock, on any date means the Closing Price on the Trading Day immediately
preceding such date of such class or series of Preferred Stock. The "Closing
Price", with respect to any class or series of Preferred Stock, on any date
shall mean the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the NYSE or,
if such class or series of Preferred Stock is not then listed or admitted to
trading on the NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such class or series of Preferred Stock is listed
or admitted to trading or, if such class or series of Preferred Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use or, if such class or series of Preferred Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such class or series of Preferred
Stock selected by the Board of Directors of the Corporation. "Trading Day" means
a day on which the principal national securities exchange on which the relevant
class or series of Preferred Stock is listed or admitted to trading is open for
the transaction of business or, if the relevant class or series of Preferred
Stock is not listed or admitted to trading on any national securities exchange,
shall mean any day other than a Saturday, a Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.
<PAGE>
6
"Non-Transfer Event" means any event other than a purported Transfer
that would cause (i) any Person to Own Beneficially shares of Preferred Stock in
excess of the Ownership Limit, (ii) the Corporation to become "closely held"
within the meaning of Section 856(h) of the Code, and/or (iii) the Corporation
to otherwise fail to qualify as a REIT (other than as a result of a violation of
the "100-shareholder" requirement of Section 856(a)(5) of the Code), in each
case including, but not limited to, the granting of any option or entering into
any agreement for the sale, transfer or other disposition of shares of Preferred
Stock or the sale, transfer, assignment or other disposition of any securities
or rights convertible into or exchangeable for shares of Preferred Stock.
"NYSE" means the New York Stock Exchange, Inc.
"Ownership Limit" means, for any Person, the Beneficial Ownership of
nine and nine-tenths percent (9.9%), in number of shares or value, of the
outstanding shares of any class or series of Preferred Stock of the Corporation.
The value of the outstanding shares of any class or series of Preferred Stock of
the Corporation shall be determined by the Board of Directors in good faith,
which determination shall be conclusive for all purposes hereof.
"Permitted Transferee" means any Person designated as a Permitted
Transferee in accordance with the provisions of Section 7.12(e) hereof.
"Person" means (a) an individual, corporation, partnership, estate,
trust (including a trust qualified under Section 401(a) or 501(c)(17) of the
Code), a portion of a trust permanently set aside for or to be used exclusively
for the purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock
company, limited liability company or other entity and (b) also includes a group
as that term is used for purposes of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended.
"Prohibited Owner" means, with respect to any purported Transfer or
Non-Transfer Event, any Person who, except for the provisions of Section 7.3,
would Beneficially Own shares of Preferred Stock.
"REIT" means a Real Estate Investment Trust defined in Section 856 of
the Code.
"Restriction Termination Date" means the first day after the date of
the Initial Public Offering on which the Board of Directors determine that it is
no longer in the best interests of the Corporation to attempt to, or continue
to, qualify as a REIT.
"Transfer" means any sale, transfer, gift, assignment, devise or other
disposition of any shares of Common Stock or Preferred Stock (including (i) the
granting of
<PAGE>
7
any option (including, but not limited to, an option to acquire an option or any
series of such options) or entering into any agreement for the sale, transfer or
other disposition of Common Stock or Preferred Stock or (ii) the sale, transfer,
assignment or other disposition of any securities or rights convertible into or
exchangeable for Common Stock or Preferred Stock or the exercise of such
rights), whether voluntary or involuntary, whether of record or beneficially,
and whether by operation of law or otherwise (including, but not limited to, any
transfer of an interest in other entities which results in a change in the
Beneficial Ownership of shares of Common Stock or Preferred Stock). The terms
"Transfers" and "Transferred" shall have correlative meanings.
"Trust" means the trust created pursuant to Section 7.12.
"Trustee" means any Person or entity unaffiliated with both the
Corporation and any Prohibited Owner who is designated by the Corporation to act
as trustee of the Trust, and any successor trustee appointed by the Corporation.
7.2. Restriction on Ownership and Transfers.
(a) Except as provided in Section 7.9, from and after the date of the
Initial Public Offering and prior to the Restriction Termination Date, no Person
shall Beneficially Own shares of any class or series of Preferred Stock in
excess of the Ownership Limit.
(b) Except as provided in Section 7.9, and subject to the provisions of
Section 7.13, from and after the date of the Initial Public Offering and prior
to the Restriction Termination Date, any Transfer or other event that, if
effective, would result in any Person Beneficially Owning shares of any class or
series of Preferred Stock in excess of the Ownership Limit shall be void ab
initio as to the Transfer of such shares of Preferred Stock which would be
otherwise Beneficially Owned by such Person in excess of the Ownership Limit,
and the intended transferee shall acquire no rights in such shares of Preferred
Stock.
(c) Subject to the provisions of Section 7.13, from and after the date of
the Initial Public Offering and prior to the Restriction Termination Date, any
Transfer that, if effective, would result in the outstanding Common Stock and
Preferred Stock being Beneficially Owned by less than 100 Persons (determined
without reference to any rules of attribution) shall be void ab initio, and the
intended transferee shall acquire no rights in such shares of Common Stock or
Preferred Stock.
(d) Notwithstanding any other provision herein, subject to the provisions
of Section 7.13, from and after the date of the Initial Public Offering and
prior to the Restriction Termination Date, any Transfer that, if effective,
would result in the Corporation being "closely held" within the meaning of
Section 856(h) of the Code shall be void ab initio as to the Transfer of that
number of shares of Common Stock or Preferred Stock, as the case may
<PAGE>
8
be, that would cause the Corporation to be "closely held" within the meaning of
Section 856(h) of the Code; and the intended transferee shall acquire no rights
in such shares of Common Stock or Preferred Stock, as the case may be.
(e) Notwithstanding any other provision herein, subject to the provisions
of Section 7.13, from and after the date of the Initial Public Offering and
prior to the Restriction Termination Date, any Transfer that, if effective,
would cause the Corporation to fail to qualify as a REIT shall be void ab initio
as to the Transfer of that number of shares of Common Stock or Preferred Stock,
as the case may be, in excess of the number that could have been Transferred
without such result; and the intended transferee shall acquire no rights in such
shares of Common Stock or Preferred Stock, as the case may be.
(f) A Transfer of a share of Common Stock or Preferred Stock which is null
and void under paragraphs (b), (c), (d) or (e) of this Section 7.2 shall not
adversely affect the validity of the Transfer of any other share of Common Stock
or Preferred Stock in the same or any other related transaction.
7.3. Transfer in Trust.
(a) If, notwithstanding the other provisions contained in this Article 7,
at any time from and after the date of the Initial Public Offering and prior to
the Restriction Termination Date, there is a purported Transfer or Non-Transfer
Event such that any Person would Own Beneficially shares of any class or series
of Preferred Stock in excess of the Ownership Limit, then (i) except as
otherwise provided in Section 7.9, the Prohibited Owner shall acquire no right
or interest (or, in the case of a Non-Transfer Event, shall cease to own any
right or interest) in such number of shares of such class or series of Preferred
Stock that would cause such Beneficial Owner to Beneficially Own shares of such
class or series of Preferred Stock in excess of the Ownership Limit and (ii)
such number of shares of such class or series of Preferred Stock in excess of
the Ownership Limit (rounded up to the nearest whole share) shall be designated
as Excess Shares and, in accordance with Section 7.12, be transferred
automatically and by operation of law to the Trust for the benefit of the
Beneficiary. Such transfer to a Trust and the designation of the shares as
Excess Shares shall be effective as of the close of business on the business day
prior to the date of the purported Transfer or Non-Transfer Event, as the case
may be.
(b) If, notwithstanding the other provisions contained in this Article 7,
at any time from and after the date of the Initial Public Offering and prior to
the Restriction Termination Date, there is a purported Transfer or Non-Transfer
Event that, if effective, would cause the Corporation to become "closely held"
within the meaning of Section 856(h) of the Code or to otherwise fail to qualify
as a REIT (other than as a result of a violation of the 100-shareholder
requirement of Section 856(a)(5)), then (i) except as otherwise provided in
Section 7.9, the Prohibited Owner shall acquire no right or interest (or, in the
case of a Non-Transfer Event, shall cease to own any right or interest) in such
number of shares of
<PAGE>
9
Preferred Stock, the ownership of which by such purported transferee or record
holder would cause the Corporation to be "closely held" within the meaning of
Section 856(h) of the Code or to otherwise fail to qualify as a REIT (other than
as a result of a violation of the 100- shareholder requirement of Section
856(a)(5)) and (ii) such number of shares of Preferred Stock (rounded up to the
nearest whole share) shall be designated as Excess Shares and, in accordance
with the provisions of Section 7.12, be transferred automatically and by
operation of law to the Trust for the benefit of the Beneficiary. Such transfer
to a Trust and the designation of shares as Excess Shares shall be effective as
of the close of business on the business day prior to the date of the Transfer
or Non-Transfer Event, as the case may be.
7.4. Remedies for Breach. If the Board of Directors or a committee thereof
shall at any time determine in good faith that a Non-Transfer Event has
occurred, a Transfer has taken place in violation of Section 7.2 or that a
Person intends to acquire or has attempted to acquire or may acquire Beneficial
Ownership of any shares of Common Stock or Preferred Stock in violation of
Section 7.2 (whether or not such violation is intended), the Board of Directors
shall be empowered to take any action it deems advisable to refuse to give
effect to or to prevent such Transfer or Non-Transfer Event, including, but not
limited to, refusing to give effect to such Transfer or Non-Transfer Event on
the books of the Corporation or instituting proceedings to enjoin or rescind
such Transfer or acquisition.
7.5. Notice of Restricted Transfer. Any Person who acquires or attempts to
acquire shares of Common Stock or Preferred Stock in violation of Section 7.2,
or any Person who owned shares of Preferred Stock that were transferred to a
Trust pursuant to the provisions of Section 7.3, shall immediately give written
notice to the Corporation of such event and shall provide to the Corporation
such other information as the Corporation may request in order to determine the
effect, if any, of such Transfer or Non-Transfer Event, as the case may be, on
the Corporation's status as a REIT. Failure to give such notice shall not in any
way limit the rights and remedies of the Board of Directors provided herein.
7.6. Owners Required to Provide Information. From and after the date of the
Initial Public Offering and prior to the Restriction Termination Date:
(a) Every Beneficial Owner of more than 1% (or such lower percentage as
required in the applicable regulations adopted under the Code) of any class or
series of Preferred Stock of the Corporation outstanding shall, within 30 days
after June 30 and December 31 of each year, give written notice to the
Corporation stating the name and address of such Beneficial Owner, the number of
shares of such class or series of Preferred Stock Beneficially Owned by such
Beneficial Owner, a full description of how shares are held and a statement
identifying the actual or constructive owners of such shares. Each such
Beneficial Owner shall, upon demand by the Corporation, disclose to the
Corporation in writing such additional information with respect to its
Beneficial Ownership of such class or series of Preferred Stock as the
Corporation, in its sole discretion, deems appropriate or
<PAGE>
10
necessary, (i) to comply with the provisions of the Code regarding the
qualification of the Corporation as a REIT and (ii) to ensure compliance with
the Ownership Limit.
(b) At the request of the Corporation, any Person who is a Beneficial Owner
of Common Stock or Preferred Stock and any Person (including the shareholder of
record) who is holding Common Stock or Preferred Stock for a Beneficial Owner,
and any proposed transferee of shares, shall provide (i) such information as the
Corporation, in its sole discretion, may request from time to time in order (A)
to determine the Corporation's status as a REIT, (B) to ensure compliance with
the requirements of any taxing authority or other governmental agency or (C) to
ensure compliance with the Ownership Limit and (ii) a statement or affidavit to
the Corporation setting forth the number of shares of each class or series of
Common Stock or Preferred Stock Beneficially Owned by such shareholder or
proposed transferee and any related Persons specified, which statement or
affidavit shall be in the form prescribed by the Corporation for that purpose.
7.7. Remedies Not Limited. Nothing contained in this Article 7 shall limit
the authority of the Board of Directors to take such other action as it deems
necessary or advisable (subject to the provisions of Section 7.13) to protect
the Corporation and the interests of its shareholders in the preservation of the
Corporation's status as a REIT, and to insure compliance with the Ownership
Limit.
7.8. Ambiguity. In the case of an ambiguity in the application of any of
the provisions of Article 7, including any definition contained in Section 7.1,
the Board of Directors shall have the power to determine the application of such
provisions with respect to any situation based on its reasonable belief,
understanding or knowledge of the circumstances.
7.9. Exceptions.
(a) The Board of Directors, upon receipt of a ruling from the Internal
Revenue Service or an opinion of tax counsel satisfactory to it, may waive the
application of the Ownership Limit, in whole or in part, to any Person, if such
Person is not an individual for purpose of Section 542(a) of the Code and is a
corporation, partnership, estate or trust; provided, however, in no event may
the Board of Directors grant any such exception if it would, in the Board of
Director's judgment, jeopardize the Corporation's status as a REIT. In
connection with any such exemption, the Board of Directors may require such
representations and undertakings from such Person and may impose such other
conditions as the Board of Directors deems necessary, in its sole discretion to
determine the effect, if any, of the proposed Transfer on the Corporation's
status as a REIT.
(b) For a period of 90 days following the acquisition of Preferred Stock by
an underwriter that (i) is a corporation or a partnership and (ii) participates
in an offering of the Preferred Stock, such underwriter shall not be subject to
the Ownership Limit with respect to the Preferred Stock purchased by it as a
part of such offering.
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11
7.10. Legend. Each certificate for Preferred Stock shall bear the following
legend:
"The shares of Preferred Stock represented by this certificate are
subject to restrictions on transfer for the purpose of the Corporation's
maintenance of its status as a Real Estate Investment Trust under the
Internal Revenue Code of 1986, as amended. No Person may (1) Beneficially
Own shares of any class or series of Preferred Stock in excess of the
Ownership Limit, except as set forth in the Corporation's Restated
Certificate of Incorporation, as the same may be amended from time to time
(the "Certificate of Incorporation"), or (2) Beneficially Own shares of
Preferred Stock that would result in the Corporation being "closely held"
under 856(h) of the Code or otherwise to fail as a REIT. Any Person who
attempts to Own Beneficially shares of Preferred Stock in excess of the
applicable limitation must immediately notify the Corporation in writing.
No Person may transfer shares of Preferred Stock if such transfer would
result in the outstanding Common Stock and Preferred Stock being
Beneficially Owned by less than 100 Persons (determined without reference
to any rules of attribution). If the restrictions on transfer are violated,
the shares of Preferred Stock represented hereby will be transferred
automatically and by operation of law to a Trust and shall be designated
Excess Shares. All capitalized terms in this legend have the meanings
ascribed to such terms in the Certificate of Incorporation, a copy of
which, including the restrictions on transfer, will be sent without charge
to each stockholder who so requests."
7.11. Severability. If any provision of this Article 7 or any application
of any such provision is determined to be void, invalid or unenforceable by any
Federal or state court having jurisdiction over the issues, the validity and
enforceability of the remaining provisions of this Restated Certificate of
Incorporation (including without limitation this Article 7) shall not be
affected and other applications of such provision shall be affected only to the
extent necessary to comply with the determination of such court.
7.12. Excess Shares.
(a) Ownership in Trust. Upon any purported Transfer, Non-Transfer Event or
purported change in Beneficial Ownership that results in shares of Preferred
Stock being designated Excess Shares pursuant to Section 7.3, such Excess Shares
shall be transferred to a Trust for the exclusive benefit of the Beneficiary.
The Corporation shall name a Beneficiary that is an organization described in
Section 501(c)(3) of the Code, that is not an "individual" within the meaning of
Section 542 of the Code, if one does not already exist, within five (5) days
after the discovery of any Transfer to the Trust. Excess Shares shall remain
issued and outstanding stock of the Corporation and shall be entitled to the
same rights and privileges on identical terms and conditions as all other issued
and outstanding shares of the same class and series. When transferred to the
Permitted Transferee in accordance with the provisions of Section 7.12(e), such
Excess Shares shall cease to be designated as Excess Shares.
<PAGE>
12
(b) Dividend Rights. The Trustee, as record holder of the Excess Shares,
shall be entitled to receive all dividends and distributions as may be declared
by the Board of Directors of the Corporation on such shares of Preferred Stock
designated Excess Shares and shall hold such dividends or distributions in trust
for the benefit of the Beneficiary. The Prohibited Owner with respect to Excess
Shares shall repay to the Trustee the amount of any dividends or distributions
received by it that (i) are attributable to any shares of Preferred Stock
designated Excess Shares and (ii) the record date of which is on or after the
date that such shares became Excess Shares. The Corporation shall take all
measures that it determines reasonably necessary to recover the amount of any
such dividend or distribution paid to a Prohibited Owner, including, if
necessary, withholding any portion of future dividends or distributions payable
on shares of Preferred Stock Beneficially Owned by the Person who, but for the
provisions of Section 7.3 of this Article 7, would Beneficially Own the Excess
Shares; and, as soon as reasonably practicable following the Corporation's
receipt or withholding thereof, shall pay over to the Trustee for the benefit of
the Beneficiary the dividends so received or withheld, as the case may be.
(c) Rights Upon Liquidation. Subject to the preferential rights of any
class or series of Preferred Stock, if any, as may be determined by the Board of
Directors pursuant to Section 4.2, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of, or any distribution of the assets of,
the Corporation, the Trustee of Excess Shares shall be entitled to receive,
ratably with each other holder of Preferred Stock of the same class or series,
that portion of the assets of the Corporation available for distribution to the
holders of such class and series. The Trustee shall distribute to the Prohibited
Owner the amounts received upon such liquidation, dissolution, or winding up, or
distribution; provided, however, that no Prohibited Owner shall be entitled to
receive any amounts in excess of the price per share such Prohibited Owner paid
for Preferred Stock in any purported Transfer that resulted in the Excess Shares
or, in the case of a Non-Transfer Event or a Transfer in which the Prohibited
Owner did not give value for such shares (e.g., through a gift or devise), a
price per share equal to the Market Price on the date of any purported Transfer
or Non-Transfer Event that resulted in the Excess Shares. Any remaining amount
in the Trust shall be distributed ratably to the Beneficiary of the Trust.
(d) Voting Rights. The Trustee shall be entitled to vote all Excess Shares.
Any vote by a Prohibited Owner as a holder of shares of Preferred Stock prior to
the discovery by the Corporation that such shares of Preferred Stock are Excess
Shares shall, subject to applicable law and only to the extent that no Person
other than the Prohibited Owner is materially and adversely affected, be
rescinded and shall be void ab initio with respect to such Excess Shares and the
Prohibited Owner shall be deemed to have given, as of the close of business on
the business day prior to the date of the purported Transfer or Non- Transfer
Event that results in the transfer to the Trust of the shares of Preferred Stock
under Section 7.3 of this Article 7, an irrevocable proxy to the Trustee to vote
the Excess Shares in the manner in which the Trustee, in its sole and absolute
discretion, desires.
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(e) Designation of Permitted Transferee. The Trustee shall have the
exclusive and absolute right to designate a Permitted Transferee of any and all
Excess Shares. As soon as reasonably practicable, in an orderly fashion so as
not to materially adversely affect the Market Price of the Excess Shares, the
Trustee shall designate any Person as Permitted Transferee; provided, however,
that (i) the Permitted Transferee so designated purchases for valuable
consideration (whether in a public or private sale) the Excess Shares and (ii)
the Permitted Transferee so designated may acquire such Excess Shares without
such acquisition resulting in a transfer to a Trust and the redesignation of
such shares of Preferred Stock so acquired as Excess Shares under Section 7.3.
Upon the designation by the Trustee of a Permitted Transferee in accordance with
the provisions of this paragraph, the Trustee of a Trust shall (i) cause to be
transferred to the Permitted Transferee that number of Excess Shares acquired by
the Permitted Transferee; (ii) cause to be recorded on the books of the
Corporation that the Permitted Transferee is the holder of record of such number
of shares of Preferred Stock; and (iii) distribute to the Beneficiary any and
all amounts held with respect to the Excess Shares after making that payment to
the Prohibited Owner pursuant to Section 7.12(f).
(f) Compensation to Record Holder of Shares that Become Excess Shares. Any
Prohibited Owner shall be entitled (following discovery of the Excess Shares and
subsequent designation of the Permitted Transferee in accordance with Section
7.12(e)) to receive from the Trustee the lesser of (i) in the case of (a) a
purported Transfer in which the Prohibited Owner gave value for shares of
Preferred Stock and which Transfer resulted in the transfer of the shares to the
Trust, the price per share, if any, such Prohibited Owner paid for such shares,
or in the case of (b) a Non-Transfer Event or Transfer in which the Prohibited
Owner did not give value for such shares (e.g., if the shares were received
through a gift or devise) and which Non-Transfer Event or Transfer, as the case
may be, resulted in the transfer of shares to the Trust, the price per share
equal to the Market Price on the date of such Non- Transfer Event or Transfer,
and (ii) the price per share received by the Trustee of the Trust from the sale
or other disposition of such Excess Shares in accordance with Section 7.12(e).
Any amounts received by the Trustee in respect of such Excess Shares in excess
of such amounts to be paid the Prohibited Owner pursuant to this Section 7.12(f)
shall be distributed to the Beneficiary in accordance with the provisions of
Section 7.12(e). Each Beneficiary and Prohibited Owner waives any and all claims
that they may have against the Trustee and the Corporation arising out of the
disposition of Excess Shares, except for claims arising out of the gross
negligence or willful misconduct of, or any failure to make payments in
accordance with this Section 7.12 by, such Trustee or the Corporation.
(g) Purchase Right in Excess Shares. Excess Shares shall be deemed to have
been offered for sale to the Corporation, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that created
such Excess Shares (or, in the case of a devise or gift, the Market Price on the
date of such devise or gift) and (ii) the Market Price on the date the
Corporation, or its designee, accepts such offer. The Corporation shall have the
right to accept such offer for a period of ninety days after the later
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14
of (i) the date of the Transfer which resulted in such Excess Shares and (ii)
the date the Board of Directors determines in good faith that a Transfer
resulting in Excess Shares has occurred.
7.13. Settlement. Notwithstanding any provision contained herein to the
contrary, nothing in this Certificate of Incorporation shall preclude the
settlement of any transaction with respect to any class or series of Preferred
Stock entered into through facilities of the NYSE.
8.
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
<PAGE>
15
IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which
restates, integrates and amends the provisions of the Corporation's Certificate
of Incorporation, originally filed on June 28, 1996 in the office of the
Secretary of State of Delaware, having been duly adopted by the Board of
Directors and the Stockholders of the Corporation in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of Delaware,
has been executed this ____ day of ____________, 1996.
Chase Preferred Capital Corporation
By: ______________________________
Name:
Title:
[Corporate Seal]
Attest_________________
Name:
Title:
CHASE PREFERRED CAPITAL CORPORATION
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in the City of Wilmington, State of Delaware, at such place as may
be fixed from time to time by the board of directors and stated in the notice of
the meeting. Meetings of stockholders for any other purpose may be held at such
time and place within or without the State of Delaware as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year 1997,
shall be held on the last business day of March if not a legal holiday, and if a
legal holiday, then on the next secular day following, at 11:00 A.M., or at such
other date and time as shall be designated from time to time by the board of
directors and stated in the notice of
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2
the meetings, at which they shall elect by a plurality vote a board of
directors, and transact such other business as may properly be brought before
the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than one nor more than thirty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or the secretary at the request in writing of a majority of the board
of directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and
<PAGE>
3
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than one nor more than thirty days before the date of
the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 8. The holders of fifty percent of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
<PAGE>
4
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any questions brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required, in which case such
express provisions shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation,
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
<PAGE>
5
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be not less than one nor more than ten. The first board shall consist of
three (3) directors. Thereafter, within the limits above specified, the number
of directors shall be determined by resolution of the board of directors or by
the stockholders at the annual meeting. The directors shall be elected at the
annual meeting of the stockholders, except as provided in Section 2 of this
Article, and each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by the sole
remaining director, and the directors so chosen shall hold office until the next
annual election or until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, than an election
of directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
<PAGE>
6
Section 3. The business of the corporation shall be managed by or under the
direction of its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors shall
be held at such time and place as shall be fixed by the vote of the stockholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected board of directors,
or in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the president on
two day's notice to each director, either personally or by mail or by telegram;
special
<PAGE>
7
meetings shall be called by the president or secretary in like manner and on
like notice on the written request of two directors unless the board consists of
only one director; in which case special meetings shall be called by the
president or secretary in like manner and on like notice on the written request
of the sole director.
Section 8. At all meetings of the board, a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be
represented at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or any committee thereof may be taken without a meeting,
if all members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
Section 10. Unless otherwise restricted by the certificate of incorporation
or these by-laws, members of the board of directors, or any committee designated
by the board of directors, may participate in a meeting of the board of
directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all
<PAGE>
8
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member.
Any such committee, to the extent provided in the resolution of the board
of directors, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation
<PAGE>
9
expressly so provide, no such committee shall have the power or authority to
declare a dividend; or to authorize the issuance of stock. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of incorporation
or these by-laws, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, for
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of incorporation
or by law, any director or the entire board of directors may be removed, with or
without cause, by the holders of a majority of shares entitled to vote at an
election of directors.
<PAGE>
10
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a treasurer and a secretary. The board of
directors may also choose a Chairman, one or more vice-presidents, one or more
assistant secretaries, and one or more assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these by-laws otherwise provide.
<PAGE>
11
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a treasurer and a secretary.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualified. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE CHAIRMAN
Section 6. The chairman of the board of directors, if one is elected, shall
participate in the formulation of policy and strategic planning of the
corporation and shall preside at all meetings of the stockholders and the board
of directors.
THE PRESIDENT
Section 7. The president shall have general and active management of the
business of the corporation and shall see that all orders and resolutions of the
board of directors are carried into effect.
<PAGE>
12
Section 8. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 9. The executive vice president, if any, or, if there shall be more
than one, the executive vice presidents in the order determined by the board of
directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe. The senior vice president, if any, or, if there shall be more
than one, the senior vice presidents in the order determined by the board of
directors, shall, in the absence or disability of the president and all
executive vice presidents, perform the duties and exercise the powers of the
president and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe. The vice president, if any,
or if there shall be more than one, the vice presidents in the order determined
by the board of directors, shall, in the absence or disability of the president
and all executive vice presidents and senior vice presidents, perform the duties
and exercise the powers of the president and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
<PAGE>
13
THE SECRETARY AND ASSISTANT SECRETARIES
Section 10. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 11. The assistant secretary, or, if there be more than one, the
assistant secretaries in the order determined by the board of directors, or, if
there be no such determination, then in the order of their election, shall, in
the absence of the secretary of in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
<PAGE>
14
THE TREASURER AND ASSISTANT TREASURERS
Section 12. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 13. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 14. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in the case of his death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 15. The assistant treasurer, or, if there shall be more than one,
the assistant treasurers in the order determined by the board of directors, or,
if there be no such determination, then in the order of their election, shall,
in the absence of the treasurer or in
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15
the event of his inability or refusal to act, perform the duties and exercise
the powers of the treasurer and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman of the board of directors, or the president or a vice president, or the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of the corporation, certifying the number of shares owned by him in the
corporation.
Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there
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16
may be set forth on the face or back of the certificate which the corporation
shall issue to represent such class or series of stock, a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences or rights, or both.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
or give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed, or both.
<PAGE>
17
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the persons entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as
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18
such owners, and to hold liable for calls and assessments a person registered on
its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserves in the
manner in which it was created.
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19
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, and the words, "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
INDEMNIFICATION
Section 6. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law of
Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new by-laws
may be adopted by the stockholders or by the board of directors, when such power
is conferred upon the board of directors by the certificate of incorporation at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors, if notice of
such alteration, amendment, repeal or
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20
adoption of new by-laws be contained in the notice of such special meeting. If
the power to adopt, amend or repeal by-laws is conferred upon the board of
directors by the certificate of incorporation, it shall not divest or limit the
power of the stockholders to adopt, amend or repeal by-laws. 76225
- --------------------------------------------------------------------------------
MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
CHASE PREFERRED CAPITAL CORPORATION
Purchaser
THE CHASE MANHATTAN BANK
Seller
------------------------
Dated as of __________, 1996
Conventional Residential Mortgage Loans
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions.................................................... 1
SECTION 2. Agreement to Purchase.......................................... 11
[SECTION 3. RESERVED.]..................................................... 11
SECTION 4. Purchase Price................................................. 11
SECTION 5. Examination of Mortgage Files.................................. 12
SECTION 6. Conveyance from Seller to Purchaser............................ 12
Subsection 6.01. Conveyance of Mortgage Loans; Possession of
Servicing Files.................................... 12
Subsection 6.02. Books and Records.................................. 12
Subsection 6.03. Delivery of Mortgage Loan Documents................ 13
SECTION 7. Servicing of the Mortgage Loans................................ 14
SECTION 8. Representations, Warranties and Covenants of the Seller
Remedies for Breach............................................ 14
Subsection 8.01. Representations and Warranties Regarding the Seller 14
Subsection 8.02. Representations and Warranties Regarding Individual
Mortgage Loans..................................... 16
Subsection 8.03. Remedies for Breach of Representations and
Warranties ........................................ 26
SECTION 9. Closing........................................................ 28
SECTION 10. Closing Documents.............................................. 29
SECTION 11. Costs.......................................................... 30
SECTION 12. Merger or Consolidation of the Seller.......................... 30
SECTION 13. Mandatory Delivery; Grant of Security Interest................. 31
SECTION 14. Notices........................................................ 31
SECTION 15. Severability Clause............................................ 32
SECTION 16. Counterparts................................................... 32
SECTION 17. Governing Law.................................................. 32
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SECTION 18. Intention of the Parties....................................... 32
SECTION 19. Successors and Assigns; Assignment of Purchase Agreement....... 32
SECTION 20. Waivers........................................................ 33
SECTION 21. Exhibits....................................................... 33
SECTION 22. General Interpretive Principles................................ 33
SECTION 23. Reproduction of Documents...................................... 34
SECTION 24. Further Agreements............................................. 34
SECTION 25. Recordation of Assignments of Mortgage......................... 34
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EXHIBITS
EXHIBIT A CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B FORM OF SERVICING AGREEMENT
EXHIBIT C FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT E FORM OF SERVICER'S OFFICER'S CERTIFICATE
EXHIBIT F FORM OF OPINION OF COUNSEL TO THE SERVICER
EXHIBIT G FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT H FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT I FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT J MORTGAGE LOAN SCHEDULE
EXHIBIT K FORM OF REPRESENTATIONS AND WARRANTIES WITH
RESPECT TO THE POOL CHARACTERISTICS OF THE
MORTGAGE LOANS
EXHIBIT L THE UNDERWRITING GUIDELINES OF CMSI AND CMPFSI
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MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
This MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT (the "Agreement"),
dated as of __________, 1996, by and between Chase Preferred Capital
Corporation, a Delaware corporation, having an office at 270 Park Avenue, New
York, New York 10017 (the "Purchaser") and The Chase Manhattan Bank, a banking
corporation organized under the laws of the State of New York, having an office
at 270 Park Avenue, New York, New York 10017 (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 residential first
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 residential dwelling
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.
"Act" means The National Housing Act, as amended from time to time.
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"Adjustable Rate Mortgage Loan" means any individual Mortgage Loan
purchased pursuant to this Agreement the interest rate of which adjusts
periodically.
"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.
"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 New York
or the state in which the Seller's servicing operations are located, are
authorized or obligated by law or executive order to be closed.
"CMPFSI" means Chase Manhattan Personal Financial Services Inc., or any
successor thereto.
"CMSI" means Chase Mortgage Services, Inc. (formerly known as Chase
Manhattan Mortgage Corporation, or any successor thereto).
"Closing Date" means _________, 1996, or such other date as is mutually
agreed upon by the parties.
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"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 residential first lien 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.
"Co-op Lease" means, with respect to a Co-op Loan, the lease with respect
to the dwelling unit occupied by the Mortgagor and relating to the stock
allocated to the related dwelling unit.
"Co-op Loan" means a Mortgage Loan secured by the pledge of stock allocated
to a dwelling unit in a residential cooperative housing corporation and a
collateral assignment of the related Co-op Lease.
"Co-op Project" means the real property owned by the residential
cooperative housing association upon which the cooperative unit which is the
subject of the Co-op Lease is situated, including the common areas associated
therewith.
"Custodial Account" means the separate trust account created and maintained
pursuant to Section 2.04 of the Servicing Agreement.
"Cut-off Date" means __________, 1996.
"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.
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"Escrow Payments" means, with respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
"FHA" means the Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto and
including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any successor
thereto.
"FNMA" means the Federal National Mortgage Association, or any successor
thereto.
"Gross Margin" means, with respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note which amount
is added to the Index in accordance with the terms of the related Mortgage Note
to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate
for such Mortgage Loan.
"HUD" means the Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA mortgage insurance. The term "HUD," for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and Government National Mortgage Association.
"Index" means, with respect to each Interest Rate Adjustment Date of a Six-
Month Prime Rate Adjustable Rate Mortgage Loan the Prime Rate on such Interest
Rate Adjustment Date; with respect to each Interest Rate Adjustment Date of a
Six-Month Treasury Rate Adjustable Rate Mortgage Loan, the weekly average
investment yield of auction rates on six-month U.S. Treasury securities as made
available by the Federal Reserve Board; and, with respect to each Interest Rate
Adjustment Date of any other Adjustable Rate Mortgage Loan sold pursuant to this
Agreement, the weekly average yield on United States Treasury securities
adjusted to a constant maturity of one year, as made available by the Federal
Reserve Board.
"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 Adjustable Rate
Mortgage Loan, the date, specified in the related Mortgage Note and the Mortgage
Loan Schedule, on which the Mortgage Interest Rate is adjusted.
"Lifetime Rate Cap" means the provision of each Mortgage Note related to an
Adjustable Rate Mortgage Loan which provides for an absolute maximum Mortgage
Interest
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Rate thereunder. The Mortgage Interest Rate during the terms of each Adjustable
Rate Mortgage Loan shall not at any time exceed the amount per annum set forth
on Exhibit J hereto.
"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 (i) with respect to a Mortgage Loan that is not a Co-op
Loan, 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 use of leasehold estates for residential
properties is a widely accepted practice, the mortgage, deed of trust or other
instrument securing the Mortgage Note may secure and create a first lien upon a
leasehold estate of the Mortgagor and (ii) with respect to a Co-op Loan, the
security agreement creating a security interest in the stock allocated to a
dwelling unit in a residential cooperative housing corporation that was pledged
to secure such Co-op Loan and the related Co-op Lease.
"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 Adjustable Rate Mortgage Loan, shall be
adjusted from time to time, with respect to each Mortgage Loan.
"Mortgage Interest Rate Cap" means, with respect to each Adjustable Rate
Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth
in the related Mortgage Note.
"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
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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 (or, with respect to the Mortgage Loan
listed on Schedule I to Exhibit A 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]"; 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]".
With respect to Co-op Loans, the Assignment of Mortgage shall include
an assignment of Security Instruments.
c. The original of any guarantee executed in connection with the Mortgage
Note.
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 thereof are
unavailable.
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f. Originals of all intervening assignments of the Mortgage with evidence
of recording thereon, if such intervening assignment has been
recorded.
g. Original Form UCC-1 with evidence of filing thereon entered into by
the Mortgagor with respect to such Mortgage Loan, which should
indicate the unit number or other identification of the Mortgaged
Property subject to the Co-op Lease, the name of the debtor and the
address of the cooperative building. Original Form UCC-3 in blank by
the applicable Seller assigning the security interest covered by the
Form UCC-1 referred to above and any intervening UCC-3's.
h. With respect to a Co-op Loan that is not a refinance transaction, a
document executed by the cooperative association consenting to the
sale of the cooperative shares and assignment of the Co-op Lease to
Mortgagor and certifying that all maintenance charges relating to the
cooperative unit that is the subject of the Co-op Lease have been
paid.
i. Stock certificate(s) representing the stock allocated to the
cooperative unit in the cooperative pledged with respect to such
Mortgage Loan with a stock power in blank.
j. The original Co-op Lease and the Collateral Assignment of Lease.
k. The original recognition agreement of the interests of the applicable
Seller with respect to the Mortgage Loan by the cooperative, the stock
of which was pledged in respect of such Mortgage Loan, in the standard
"AZTECH" form or a form containing provisions not less favorable to
the lender than are contained in such a standard AZTECH form.
l. For Mortgage Loans that are not Co-op Loans, 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. For Co-op Loans, a cooperative lien search which
has searched for (a) federal tax liens, mechanics' liens, lis pendens,
judgments of record or otherwise against the cooperative association,
the seller of the cooperative shares and the Mortgagor (if the Co-op
Loan is a refinance transaction); (b) filings of financing statements
against the cooperative shares; and (c) the deed of the Co-op Project
to the residential cooperative housing corporation.
m. Any security agreement, chattel mortgage or equivalent executed in
connection with the Mortgage.
n. For Mortgage Loans with original LTV's greater than 85%, evidence of a
Primary Insurance Policy.
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"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 city, state and zip code; (4) a code indicating whether
the Mortgaged Property is owner-occupied, second home or investor owned; (5) the
type of residential units constituting the Mortgaged Property; (6) the original
months to maturity; (7) the remaining months to maturity from the Cut-off Date,
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 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) a code indicating the documentation style (i.e. full,
alternative or reduced); (16) a code indicating whether the Mortgage Loan is a
Convertible Mortgage Loan; (17) 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; (18) the type of Mortgage Loan product, if any;
(19) the first payment Due Date; (19) the initial Mortgage Interest Rate; (20)
the amount of the first Monthly Payment; (21) the name of any Qualified Insurer
with respect to a PMI Policy; and (22) the Servicing Fee Rate. With respect to
any Adjustable Rate Mortgage Loan, (1) the Interest Rate Adjustment Dates; (2)
the Gross Margin; (3) the Lifetime Rate Cap; (4) any Periodic Rate Caps; (5)
any minimum interest rate, if other than the Gross Margin; (6) the first Rate
Adjustment Date after the Cut-off Date; and (8) the name of the applicable
Index, in each case, under the terms of the Mortgage Note. 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;
(2) the current aggregate outstanding principal balance of the Mortgage Loans;
(3) the weighted average Mortgage Interest Rate of the Mortgage Loans; and (4)
the weighted average maturity 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 (i) with respect to a Mortgage Loan that is not
a Co-op Loan, the real property (or leasehold estate, if applicable) securing
repayment of the debt evidenced by a Mortgage Note and (ii) with respect to a
Co-op Loan, the dwelling unit that is the subject of the Co-op Lease.
"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 or CMSI, as the case may be, and delivered
to the Purchaser as required by this Agreement.
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"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Seller, reasonably acceptable to the Purchaser.
"Periodic Rate Cap" means the provision of each Mortgage Note related to
each Adjustable Rate Mortgage Loan which provides for an absolute maximum amount
by which the Mortgage Interest Rate therein may increase or decrease on an
Interest Rate Adjustment Date above or below the Mortgage Interest Rate
previously in effect. The Periodic Rate Cap for each Adjustable Rate Mortgage
Loan is the rate set forth on Exhibit K hereto.
"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.
"PMI Policy" or "Primary Insurance Policy" means a policy of primary
mortgage guaranty insurance issued by a Qualified Insurer.
"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 (Northeast
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.
"Purchaser" means Chase Preferred 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, approved as an insurer by FNMA and
FHLMC with respect to primary mortgage insurance and, in addition, in the two
highest rating categories by Best's with respect to hazard and flood insurance .
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"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
(i.e., Mortgage Loan with the same Mortgage Interest Rate Caps or fixed rate);
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.
"Security Instruments" means, with respect to a Co-op Loan, the Mortgage,
the stock certificates representing the stock allocated to the cooperative unit
that is the subject of the Co-op Lease, the stock power associated with such
stock certificates, the Co-op Lease, the collateral assignment of the Co-op
Lease and the recognition agreement.
"Seller" means The Chase Manhattan 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 CMSI, as servicer, providing for CMSI to
service the Mortgage Loans as specified by the Servicing Agreement.
"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
CMSI, 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 CMSI
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,
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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 CMSI, or as otherwise provided under this Agreement. In
addition to the Servicing Fee, CMSI 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 CMSI during the period in which CMSI 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 received by the Purchaser with respect to the
related Mortgage Loan representing payments or recoveries of principal or
advances in lieu thereof.
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 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.
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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 obligations arising
under the documents contained therein. The Servicing File shall be retained by
CMSI in accordance with the terms of the Servicing Agreement and, as provided
therein, shall be appropriately identified in CMSI'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, CMSI or one of their affiliates, the Purchaser or one or
more of its designees, as the Purchaser shall select. 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
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funds received by the Seller or CMSI 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 or CMSI 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, or shall cause CMSI to 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, or shall cause CMSI to
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 recorded subsequently by the Purchaser or
its designee), 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
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 or CMSI, 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 initial recording fees, if any, for the
Assignments of Mortgage and any other fees or costs in transferring all original
documents to the Purchaser or
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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 CMSI 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 CMSI shall execute the
Servicing Agreement on the Closing Date in the form attached hereto as Exhibit
B.
Pursuant to the Servicing Agreement, CMSI 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. CMSI 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 banking
corporation duly organized, validly existing and in good standing under the laws
of the state of New York 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 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
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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;
(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 including HUD is required for the execution, delivery and performance by
the Seller of or compliance by the
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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 one- to four-family mortgage 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 ___________, 1996;
(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.
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;
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(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;
(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. As to Mortgage Loans that are not Co-op Loans,
pursuant to the terms of the Mortgage, all buildings or other improvements upon
the Mortgaged Property are, and as to Co-op Loans, the Co-op Project is, insured
by a generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are set forth in Section 2.10 of the
Servicing Agreement attached hereto as Exhibit B. 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 current guidelines of the
Federal Insurance Administration which policy conforms to FNMA and FHLMC, as
well as all additional requirements set forth in Section 2.10 of the Servicing
Agreement attached hereto as Exhibit B. With respect to Mortgage Loans that are
not Co-op Loans, 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 for each Mortgage Loan that is not
a Co-op Loan 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
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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, provided the policy is not a "master" or "blanket" hazard
insurance policy covering a condominium, or any hazard insurance policy covering
the common facilities of a planned unit development. 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;
(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 inaction by the
Mortgagor;
(i) Location and Type of Mortgaged Property. With respect to each Mortgage
Loan that is not a Co-op Loan the Mortgaged Property is located in the state
identified in the Mortgage Loan Schedule and consists of a single parcel of real
property with a detached single family residence erected thereon, or a
townhouse, or a two- to four-family dwelling, or an individual condominium unit
in a condominium project, or an individual unit in a planned unit development,
provided, however, that any condominium unit or planned unit development shall
conform with requirements acceptable to FNMA or FHLMC regarding such dwellings
and that no residence or dwelling is a single parcel of real property with a
cooperative housing corporation erected thereon, a mobile home or a manufactured
dwelling. As of the date of origination, no portion of the Mortgaged Property is
used for commercial purposes, and since the date of origination no portion of
the Mortgaged Property is used for commercial purposes;
(j) Valid First Lien. With respect to each Mortgage Loan that is not a
Co-op Loan, the Mortgage is a valid, subsisting, enforceable and perfected first
lien on the Mortgaged
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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.
With respect to Co-op Loans, the Mortgage is a valid, subsisting enforceable and
perfected first security interest in the stock of the residential cooperative
housing corporation and the Co-op Lease pledged to secure the Co-op Loan,
subject only to (a) the lien of the related residential cooperative housing
corporation for unpaid assessments representing the Mortgagor's pro rata share
of the corporation's payments for its blanket mortgage, current and future real
property taxes, insurance premiums, maintenance fees and other assessments to
which like collateral is commonly subject; and (b) other matters to which like
collateral is commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage. Also with
respect to a Co-op Loan, a cooperative lien search has been made by a company
competent to make same, which company is acceptable to FNMA or FHLMC and is
qualified to do business in the jurisdiction where the Co-op Project is located.
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);
(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
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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 or its Affiliate 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 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;
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(o) LTV, PMI Policy. No Conventional Loan has an LTV greater than 95%. The
original LTV of each Conventional Loan either was not more than 85% or the
excess over 75% is and will be insured as to payment defaults by a PMI Policy
until the LTV of such Conventional Loan is reduced to 85%. All provisions of
such PMI Policy have been and are being complied with, such policy is valid and
remains in full force and effect, and all premiums due thereunder have been
paid. No action, inaction, or event has occurred and no state of facts exists
that has, or will result in the exclusion from, denial of, or defense to
coverage by the PMI Policy. Any Conventional Loan subject to a PMI Policy
obligates the Mortgagor thereunder to maintain the PMI Policy and to pay all
premiums and charges in connection therewith. The Mortgage Interest Rate for
each Conventional Loan as set forth on the Mortgage Loan Schedule is net of any
such insurance premium;
(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
acceptable to FNMA or FHLMC and each such title insurance policy is issued by a
title insurer acceptable to FNMA or FHLMC and 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 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
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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
mortgagee approved by the Secretary of Housing and Urban Development pursuant to
Sections 203 and 211 of the Act, 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, as well as the Lifetime Rate
Cap and the Periodic Rate Cap if the Mortgage Loan is an Adjustable Rate
Mortgage Loan, are as set forth on Exhibit J and/or Exhibit K 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 Adjustable 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 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. The Mortgage contains
due-on-sale provisions providing for the acceleration of the payment of the
unpaid principal balance of such Mortgage Loan in the event that all or any part
of the Mortgaged Property is sold or transferred without the prior written
consent of the Mortgagee. With respect to a Co-op Loan, (i) there is no
provision in any Co-op Lease which requires that Mortgagor, before the shares
owned by such
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Mortgagor are offered to a third party, to offer for sale such shares to the
residential cooperative housing corporation at a price that is below the fair
market price for such shares, as such fair market price is determined at time of
such offer, and (ii) there is no prohibition in any Co-op Lease against pledging
the shares or assigning the Co-op Lease;
(v) Conformance with Agency and Underwriting Standards. The Mortgage Loan
was underwritten in accordance with the underwriting standards of CMSI or
CMPFSI, as applicable (a copy of each of which is attached hereto as Exhibit L),
or FNMA's underwriting standards (except that the principal balance of certain
Mortgage Loans may have exceeded the limits of FNMA), in each case in effect at
the time the Mortgage Loan was originated. The Mortgage Note and Mortgage are on
forms acceptable to FHLMC or FNMA, except with respect to Mortgage Loans
underwritten in accordance with the underwriting guidelines of CMPFSI, which 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, in
either case, 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. Unless otherwise specified on the description of
characteristics for the Mortgage Loans delivered pursuant to Section 10 on the
Closing Date in the form attached as Exhibit K hereto and the Mortgage Loan
Schedule attached as Exhibit J hereto, the Mortgagor represented at the time of
origination of the Mortgage Loan that the Mortgagor would occupy the Mortgaged
Property as the Mortgagor's primary residence;
(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
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and accurate Mortgage File in compliance with Exhibit A hereto, except for such
documents the originals of which have been delivered to the Purchaser or its
designee;
(bb) Condominiums/Planned Unit Developments. If the Mortgaged Property is a
condominium unit or a planned unit development such condominium or planned unit
development project is acceptable to FNMA or FHLMC or is located in a
condominium or planned unit development project which has received project
approval from FNMA or FHLMC;
(cc) 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;
(dd) 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, except that
with respect to Mortgage Loans underwritten in accordance with the underwriting
guidelines of CMPFSI, the Mortgage Loan Documents relating to such Mortgage
Loans do not preclude assumability;
(ee) 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;
(ff) RESERVED
(gg) 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;
(hh) 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 CMSI
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
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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 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 Adjustable 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 Adjustable 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;
(ii) 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 or PMI 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;
(jj) 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;
(kk) Soldiers' and Sailors' Civil Relief Act. The Mortgagor has not
notified the Seller and the Seller has no knowledge of any relief requested or
allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief Act of
1940;
(ll) 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 FNMA or
FHLMC and 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;
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(mm) 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;
(nn) 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;
(oo) 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;
(pp) 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 (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;
(qq) 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
(rr) 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 (rr), 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.
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
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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 payment 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 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
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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 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
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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 of CMSI 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;
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;
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5. an Officer's Certificate, in the form of Exhibit C hereto, including
all attachments thereto;
6. an Opinion of Counsel of the Seller (who may be an employee of the
Seller), in the form of Exhibit D hereto;
7. a Security Release Certification, in the form of Exhibit G or Exhibit
H, 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 of 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;
9. the underwriting guidelines of CMSI and CMPFSI to be attached hereto
as Exhibit L; and
10. Exhibit K to this Agreement.
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 any commissions due its salesmen and 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 corporation under the laws of the state of its incorporation except as
permitted herein, 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.
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
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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:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention:
(ii) if to the Purchaser:
Chase Preferred Capital Corporation
270 Park Avenue
New York, New York 10017
Attention:
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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.
This Agreement shall be deemed in effect when a fully executed counterpart
thereof is received by the Purchaser in the State of New York and shall be
deemed to have been made in the State of New York. The Agreement shall be
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined-in
accordance with the substantive laws of the State of New York (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.
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
32
<PAGE>
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 I. The Servicer 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;
(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
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<PAGE>
(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.
[Signatures Commence on Following Page]
34
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date and year first above written.
CHASE PREFERRED CAPITAL CORPORATION
(the Purchaser)
By:_________________________________
Name:_______________________________
Title:______________________________
THE CHASE MANHATTAN BANK
(the Seller)
By:_________________________________
Name:_______________________________
Title:______________________________
<PAGE>
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
<PAGE>
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]". With respect to Co-op
Loans, the Assignment of Mortgage shall include an assignment of
Security Instruments.
6. Originals of all intervening assignments of the Mortgage with evidence
of recording thereon if such intervening assignment has been recorded.
7. Original Form UCC-1 with evidence of filing thereon entered into by
the Mortgagor with respect to such Mortgage Loan, which should
indicate the unit number or other identification of the Mortgaged
Property subject to the Co-op Lease, the name of the debtor and the
address of the cooperative building. Original Form UCC-3 in blank by
the applicable Seller assigning the security interest covered by the
Form UCC-1 referred to above and any intervening UCC-3's.
8. With respect to a Co-op Loan that is not a refinance transaction, a
document executed by the cooperative association consenting to the
sale of the cooperative shares and assignment of the Co-op Lease to
Mortgagor and certifying that all maintenance charges relating to the
cooperative unit that is the subject of the Co-op Lease have been
paid.
9. Stock certificate(s) representing the stock allocated to the
cooperative unit in the cooperative pledged with respect to such
Mortgage Loan with a stock power in blank.
10. The original Co-op Lease and the Collateral Assignment of Lease.
11. The original Recognition Agreement of the interests of the applicable
Seller with respect to the Mortgage Loan by the Cooperative, the stock
of which was pledged in respect of such Mortgage Loan, in the standard
"AZTECH" form or a form containing provisions not less favorable to
the lender than are contained in such a standard AZTECH form.
12. For Mortgage Loans that are not Co-op Loans, 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. For Co-op Loans, a cooperative lien search which
has searched for (a) federal tax liens, mechanics' liens, lis pendens,
judgments or record or otherwise against the cooperative association,
the seller of the cooperative shares and the Mortgagor (if the Co-op
Loan is a refinance transaction); (b) filings of financing statements
against the cooperative
2
<PAGE>
shares; and (c) the deed of the Co-op Project to the residential
cooperative housing corporation.
13. Any original security agreement, chattel mortgage or equivalent
executed in connection with the Mortgage.
14. For Mortgage Loans that are not Co-op Loans, the original hazard
insurance policy and, if required by law, flood insurance policy, in
accordance with Section 8.02(f) of the Agreement.
15. Residential loan application.
16. Mortgage Loan closing statement.
17. Verification of employment and income.
18. Verification of acceptable evidence of source and amount of down
payment.
19. Credit report on the Mortgagor.
20. Residential appraisal report.
21. Photograph of the Mortgaged Property.
22. Survey of the Mortgaged Property, if any.
23. 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, home
association declarations, etc.
24. All required disclosure statements.
25. If available, termite report, structural engineer's report, water
portability and septic certification.
26. Sales contract.
27. 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.
3
<PAGE>
28. For Mortgage Loans with original LTV's greater than 85%, evidence of a
Primary Insurance Policy.
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 recorded subsequently by the Purchaser or
its designee), 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 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.
4
<PAGE>
EXHIBIT B
<PAGE>
EXHIBIT C
FORM OF SELLER'S OFFICER'S CERTIFICATE
I, _____________, hereby certify that I am the duly elected [Vice]
President of The Chase Manhattan Bank, a banking corporation organized under the
laws of the state of New York (the "Seller") and further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete copy of the
restated certificate of incorporation 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 good standing
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
Agreement, dated as of __________, 1996, by and between Chase Preferred Capital
Corporation (the "Purchaser") and the Seller (the "Purchase Agreement"), and to
endorse the mortgage notes and execute the assignments of mortgages by original
[or facsimile] signature, 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, the sale of the mortgage loans or the consummation of the
transactions contemplated by the Purchase 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 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, 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
<PAGE>
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 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.
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.
9. The Seller is duly authorized to engage in the transactions described
and contemplated in the Purchase Agreement.
2
<PAGE>
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of
the Seller.
Dated:____________, 1995 By:__________________________
Name:________________________
[Seal] Title: Vice President
I, _________________________, an [Assistant] Vice President of The Chase
Manhattan Bank, hereby certify that _____________________ is the duly elected,
qualified and acting Vice President of the Seller and that the signature
appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:______________, 1995 By:_____________________________
Name:___________________________
Title: [Assistant] Vice President
3
<PAGE>
EXHIBIT 5
to Seller's Officer's Certificate
NAME TITLE SIGNATURE
- ---- ----- ---------
<PAGE>
EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE SELLER
_________________, 1995
Chase Preferred Capital Corporation
270 Park Avenue
New York, New York 10017
Dear Sirs:
You have requested [our] [my] opinion, as [Assistant] General Counsel to
The Chase Manhattan 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 Chase Preferred Capital Corporation (the "Purchaser"), dated as of
__________, 1996 (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 __________, 1996, by and between Chase Mortgage
Services Inc. and the Purchaser (the "Servicing Agreement"). Capitalized terms
not otherwise defined herein have the meanings set forth in the Purchase
Agreement and the Servicing Agreement.
[We] [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 [we] [I] have deemed necessary and proper, [we] [I] have
relied upon the representations and warranties of the Seller contained in the
Purchase Agreement. [We] [I] have assumed the authenticity of all documents
submitted to [us] [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 [our] [my] opinion that:
1. The Seller is a [type of entity] duly organized, validly existing and
in good standing under the laws of the [United States] and is
qualified to transact
<PAGE>
business in, and is in good standing under, the laws of [the state of
incorporation] .
2. The Seller has the power to engage in the transactions contemplated by
the Purchase Agreement and all requisite power, authority and legal
right to execute and deliver the Purchase Agreement and to perform and
observe the terms and conditions of such agreements.
3. The Purchase Agreement has been duly authorized, executed and
delivered by the Seller and is a legal, valid and binding agreement
enforceable in accordance with its 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
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 sale of the Mortgage Loans or the
consummation of the transactions contemplated by the Purchase
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 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 [our] [my] knowledge, threatened against the Seller which,
in [our] [my] judgment, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition,
2
<PAGE>
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 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.
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,
-------------------------------------
[Name]
[Assistant] General Counsel
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<PAGE>
EXHIBIT G
______________________, 1995
Federal Home Loan Bank of
___________(the "Association")
______________________________
______________________________
Attention: _________________________
_________________________
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that The Chase Manhattan Bank, a banking
corporation, organized pursuant to the laws of New York (the "Bank") has
committed to sell to Chase Preferred Capital Corporation under a Mortgage Loan
Purchase and Warranties Agreement, dated as of __________, 1996, certain
mortgage loans originated by the Association. The Bank warrants that the
mortgage loans to be sold to Chase Preferred 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 Chase Preferred
Capital Corporation shall not be used as additional or substitute collateral for
advances made by the Association. Chase Preferred 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.
<PAGE>
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 Chase Preferred Capital
Corporation.
Very truly yours,
____________________________________
By: ________________________________
Name: ______________________________
Title: _____________________________
Date:_______________________________
Acknowledged and approved:
FEDERAL HOME LOAN BANK OF
_________________________
By: _____________________
Name: ___________________
Title: __________________
Date:____________________
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<PAGE>
EXHIBIT H
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
Chase Preferred Capital Corporation from The Chase Manhattan Bank pursuant to
that certain Mortgage Loan Purchase and Warranties Agreement, dated as of
__________, 1996, and certifies that all notes, mortgages, assignments and other
documents in its possession relating to such Mortgage Loans have been delivered
and released to The Chase Manhattan Bank or its designees, as of the date and
time of the sale of such Mortgage Loans to Chase Preferred Capital Corporation.
Name and Address of Financial Institution
________________________________
(name)
________________________________
(Address)
By:_____________________________
II. Certification of Release
The Chase Manhattan Bank hereby certifies to Chase Preferred Capital
Corporation that, as of the date and time of the sale of the above-mentioned
Mortgage Loans to Chase Preferred 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:___________________________
<PAGE>
EXHIBIT I
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated __________________, between
_______________________, a _________________ corporation ("Assignor") and
______________________, a _______________________ corporation ("Assignee"):
For good and valuable consideration the receipt and sufficiency of which
hereby are acknowledged, and 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 __________, 1996 by and between The
Chase Manhattan Bank (the "Seller") and Chase Preferred Capital Corporation (the
"Purchase Agreement"), and (b) that certain Servicing Agreement dated as of June
1, 1995, by and between the Purchaser and Chase Mortgage Services, Inc. (the
"Servicer") (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 constitute a distribution of the
Mortgage Loans under the Securities Act of 1933, as amended (the "1933 Act") or
which
<PAGE>
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. 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;
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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:
(b) The Assignor's address for purposes for all notices and
correspondence related to the Mortgage Loans and this Agreement is:
5. This Agreement shall be construed in accordance with the substantive
laws of the State of New York (without regard to conflicts of laws principles)
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws, 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
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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.
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.___________
4
- --------------------------------------------------------------------------------
MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
CHASE PREFERRED CAPITAL CORPORATION
Purchaser
THE CHASE MANHATTAN BANK
Seller
------------------------
Dated as of __________, 1996
Conventional Commercial Mortgage Loans
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Definitions.................................................... 1
SECTION 2. Agreement to Purchase.......................................... 9
[SECTION 3. RESERVED.].................................................... 9
SECTION 4. Purchase Price................................................. 9
SECTION 5. Examination of Mortgage Files.................................. 10
SECTION 6. Conveyance from Seller to Purchaser............................ 10
Subsection 6.01. Conveyance of Mortgage Loans; Possession of
Servicing Files.................................... 10
Subsection 6.02. Books and Records.................................. 10
Subsection 6.03. Delivery of Mortgage Loan Documents................ 11
SECTION 7. Servicing of the Mortgage Loans................................ 12
SECTION 8. Representations, Warranties and Covenants of the Seller
Remedies for Breach............................................ 12
Subsection 8.01. Representations and Warranties Regarding the Seller 12
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.......................... 28
SECTION 13. Mandatory Delivery; Grant of Security Interest................. 28
SECTION 14. Notices........................................................ 29
SECTION 15. Severability Clause............................................ 29
SECTION 16. Counterparts................................................... 30
SECTION 17. Governing Law.................................................. 30
<PAGE>
SECTION 18. Intention of the Parties....................................... 30
SECTION 19. Successors and Assigns; Assignment of Purchase Agreement....... 30
SECTION 20. Waivers........................................................ 31
SECTION 21. Exhibits....................................................... 31
SECTION 22. General Interpretive Principles................................ 31
SECTION 23. Reproduction of Documents...................................... 31
SECTION 24. Further Agreements............................................. 32
SECTION 25. Recordation of Assignments of Mortgage......................... 32
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EXHIBITS
EXHIBIT A CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B FORM OF SERVICING AGREEMENT
EXHIBIT C FORM OF SELLER'S OFFICER'S CERTIFICATE
EXHIBIT D FORM OF OPINION OF COUNSEL TO THE SELLER
EXHIBIT F FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT G FORM OF SECURITY RELEASE CERTIFICATION
EXHIBIT H FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT I MORTGAGE LOAN SCHEDULE
EXHIBIT J FORM OF REPRESENTATIONS AND WARRANTIES WITH
RESPECT TO THE CHARACTERISTICS OF THE MORTGAGE
LOANS
EXHIBIT L THE UNDERWRITING GUIDELINES OF THE SELLER
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MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT
This MORTGAGE LOAN PURCHASE AND WARRANTIES AGREEMENT (the "Agreement"),
dated as of __________, 1996, by and between Chase Preferred Capital
Corporation, a Delaware corporation, having an office at 270 Park Avenue, New
York, New York 10017 (the "Purchaser") and The Chase Manhattan Bank, a banking
corporation organized under the laws of the State of New York, having an office
at 270 Park Avenue, New York, New York 10017 (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.
<PAGE>
"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.
"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 New York
or the state in which the Seller's servicing operations are located, are
authorized or obligated by law or executive order to be closed.
"Closing Date" means _________, 1996, 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
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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.
"Cut-off Date" means __________, 1996.
"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.
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<PAGE>
"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 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 (or, with respect to Mortgage Loan numbers
__________, __________ and ____________, 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
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<PAGE>
______________ 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.
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.
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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 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 (or leasehold estate, if
applicable) securing repayment of the debt evidenced by a Mortgage Note.
"Mortgagor" means the obligor on a Mortgage Note.
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"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 (Northeast
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.
"Purchaser" means Chase Preferred 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
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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 The Chase Manhattan 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.
"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.
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"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 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.
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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 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.
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Record title to each Mortgage Loan as of the Closing Date shall be in the
name of the Seller or the Purchaser or one or more of its designees, as the
Purchaser shall select. 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 recorded subsequently by the Purchaser or
its designee), 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
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
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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 initial recording fees, if any, for the
Assignments of Mortgage and any other 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 banking
corporation duly organized, validly existing and in good standing under the laws
of the state of New York 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 hold, transfer and convey the
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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;
(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
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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 one- to four-family mortgage 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 ___________, 1996;
(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.
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:
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(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;
(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
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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;
(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 inaction 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
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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);
(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;
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(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 or its Affiliate 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 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
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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 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
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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 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 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
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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
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
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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 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;
(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;
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(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 (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.
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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.
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In addition, upon any such repurchase, all funds maintained in the Escrow
Account with respect to 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.
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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 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.
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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;
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 (who may be an employee of the
Seller), in the form of Exhibit D hereto;
7. a Security Release Certification, in the form of Exhibit G or Exhibit
H, 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 of 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;
9. the underwriting guidelines of the Seller to be attached hereto as
Exhibit L; and
14. Exhibit K to this Agreement.
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 any commissions due its salesmen and the legal fees
and expenses of its attorneys. All other costs and expenses incurred in
connection with the transfer
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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 corporation under the laws of the state of its incorporation except as
permitted herein, 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.
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.
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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:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention:
(ii) if to the Purchaser:
Chase Preferred Capital Corporation
270 Park Avenue
New York, New York 10017
Attention:
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.
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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.
This Agreement shall be deemed in effect when a fully executed counterpart
thereof is received by the Purchaser in the State of New York and shall be
deemed to have been made in the State of New York. The Agreement shall be
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined-in
accordance with the substantive laws of the State of New York (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.
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 I. 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.
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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;
(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
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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.
[Signatures Commence on Following Page]
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date and year first above written.
CHASE PREFERRED CAPITAL CORPORATION
(the Purchaser)
By:_________________________________
Name:_______________________________
Title:______________________________
THE CHASE MANHATTAN BANK
(the Seller)
By:_________________________________
Name:_______________________________
Title:______________________________
<PAGE>
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 Mortgage Loan numbers
_______, _______ and _______, 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.
<PAGE>
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, 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.
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; 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.
8. Any original security agreement, chattel mortgage or equivalent
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. Verification of employment and income.
12. Verification of acceptable evidence of source and amount of down
payment.
13. Credit report on the Mortgagor.
14. Photograph of the Mortgaged Property.
2
<PAGE>
15. Survey of the Mortgaged Property, if any.
16. 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, home association declarations, etc.
17. All required disclosure statements.
18. If available, termite report, structural engineer's report, water
portability and septic certification.
19. Sales contract.
20. 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 recorded subsequently by the Purchaser or
its designee), 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 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.
3
<PAGE>
EXHIBIT B
<PAGE>
EXHIBIT C
FORM OF SELLER'S OFFICER'S CERTIFICATE
I, __________, hereby certify that I am the duly elected [Vice] President
of The Chase Manhattan Bank, a banking corporation organized under the laws of
the state of New York (the "Seller") and further as follows:
1. Attached hereto as Exhibit 1 is a true, correct and complete copy of
the restated certificate of incorporation 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 good
standing 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 Agreement, dated as of __________, 1996, by and between Chase
Preferred Capital Corporation (the "Purchaser") and the Seller (the "Purchase
Agreement"), and to endorse the mortgage notes and execute the assignments of
mortgages by original [or facsimile] signature, 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, the sale of the mortgage loans or the consummation of the
transactions contemplated by the Purchase 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 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, 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.
<PAGE>
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 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.
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.
9. The Seller is duly authorized to engage in the transactions described
and contemplated in the Purchase Agreement.
2
<PAGE>
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of
the Seller.
Dated:____________, 1995 By:__________________________
Name:________________________
[Seal] Title: Vice President
I, _________________________, an [Assistant] Vice President of The Chase
Manhattan Bank, hereby certify that _____________________ is the duly elected,
qualified and acting Vice President of the Seller and that the signature
appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:______________, 1995 By:_____________________________
Name:___________________________
Title: [Assistant] Vice President
3
<PAGE>
EXHIBIT 5
to Seller's Officer's Certificate
NAME TITLE SIGNATURE
- ---- ----- ---------
<PAGE>
EXHIBIT D
FORM OF OPINION OF COUNSEL TO THE SELLER
____________, 1995
Chase Preferred Capital Corporation
270 Park Avenue
New York, New York 10017
Dear Sirs:
You have requested [our] [my] opinion, as [Assistant] General Counsel to
The Chase Manhattan 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 Chase Preferred Capital Corporation (the "Purchaser"), dated as of
__________, 1996 (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 __________, 1996, by and between the Seller and
the Purchaser (the "Servicing Agreement"). Capitalized terms not otherwise
defined herein have the meanings set forth in the Purchase Agreement and the
Servicing Agreement.
[We] [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 [we] [I] have deemed necessary and proper, [we] [I] have
relied upon the representations and warranties of the Seller contained in the
Purchase Agreement. [We] [I] have assumed the authenticity of all documents
submitted to [us] [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 [our] [my] opinion that:
<PAGE>
1. The Seller is a [type of entity] duly organized, validly existing and
in good standing under the laws of the [United States] and is
qualified to transact business in, and is in good standing under, the
laws of [the state of incorporation] .
2. The Seller has the power to engage in the transactions contemplated by
the Purchase Agreement and all requisite power, authority and legal
right to execute and deliver the Purchase Agreement and to perform and
observe the terms and conditions of such agreements.
3. The Purchase Agreement has been duly authorized, executed and
delivered by the Seller and is a legal, valid and binding agreement
enforceable in accordance with its 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
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 sale of the Mortgage Loans or the
consummation of the transactions contemplated by the Purchase
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 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.
2
<PAGE>
7. There is no action, suit, proceeding or investigation pending or, to
the best of [our] [my] knowledge, threatened against the Seller which,
in [our] [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 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.
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,
_______________________________
[Name]
[Assistant] General Counsel
3
<PAGE>
EXHIBIT G
______________________, 1995
Federal Home Loan Bank of
___________(the "Association")
______________________________
______________________________
______________________________
Attention: _________________________
_________________________
Re: Notice of Sale and Release of Collateral
Dear Sirs:
This letter serves as notice that The Chase Manhattan Bank, a banking
corporation, organized pursuant to the laws of New York (the "Bank") has
committed to sell to Chase Preferred Capital Corporation under a Mortgage Loan
Purchase and Warranties Agreement, dated as of __________, 1996, certain
mortgage loans originated by the Association. The Bank warrants that the
mortgage loans to be sold to Chase Preferred 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 Chase Preferred
Capital Corporation shall not be used as additional or substitute collateral for
advances made by the Association. Chase Preferred 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.
<PAGE>
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 Chase Preferred Capital
Corporation.
Very truly yours,
____________________________________
By: ________________________________
Name: ______________________________
Title: _____________________________
Date:_______________________________
Acknowledged and approved:
FEDERAL HOME LOAN BANK OF
_________________________
By: _____________________
Name: ___________________
Title: __________________
Date:____________________
2
<PAGE>
EXHIBIT H
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
Chase Preferred Capital Corporation from The Chase Manhattan Bank pursuant to
that certain Mortgage Loan Purchase and Warranties Agreement, dated as of
__________, 1996, and certifies that all notes, mortgages, assignments and other
documents in its possession relating to such Mortgage Loans have been delivered
and released to The Chase Manhattan Bank or its designees, as of the date and
time of the sale of such Mortgage Loans to Chase Preferred Capital Corporation.
Name and Address of Financial Institution
________________________________
(name)
________________________________
(Address)
By:_____________________________
II. Certification of Release
The Chase Manhattan Bank hereby certifies to Chase Preferred Capital
Corporation that, as of the date and time of the sale of the above-mentioned
Mortgage Loans to Chase Preferred 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:___________________________
<PAGE>
EXHIBIT I
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated __________________, between
_______________________, a _________________ corporation ("Assignor") and
______________________, a _______________________ corporation ("Assignee"):
For good and valuable consideration the receipt and sufficiency of which
hereby are acknowledged, and 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 __________, 1996 by and between The
Chase Manhattan Bank (the "Seller") and Chase Preferred Capital Corporation (the
"Purchase Agreement"), and (b) that certain Servicing Agreement dated as of
__________, 1996, 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 constitute a distribution of the
<PAGE>
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. 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;
2
<PAGE>
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:
(b) The Assignor's address for purposes for all notices and
correspondence related to the Mortgage Loans and this Agreement is:
5. This Agreement shall be construed in accordance with the substantive
laws of the State of New York (without regard to conflicts of laws principles)
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws, 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
3
<PAGE>
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.
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.___________
4
================================================================================
SERVICING
AGREEMENT
between
CHASE PREFERRED CAPITAL CORPORATION
Purchaser
CHASE MORTGAGE SERVICES, INC.
Servicer
Dated as of _____, 1996
CONVENTIONAL RESIDENTIAL MORTGAGE LOANS
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.............................. 1
SECTION 1. Definitions.............................................. 1
ARTICLE II
SERVICING............................... 5
SECTION 2.01 CMSI to Act as Servicer................................ 5
SECTION 2.02 Liquidation of Mortgage Loans.......................... 7
SECTION 2.03 Collection of Mortgage Loan Payments................... 8
SECTION 2.04 Establishment of and Deposits to Custodial Account..... 8
SECTION 2.05 Permitted Withdrawals From Custodial Account........... 10
SECTION 2.06 Establishment of and Deposits to Escrow Account........ 11
SECTION 2.07 Permitted Withdrawals From Escrow Account.............. 12
SECTION 2.08 Payment of Taxes, Insurance and Other Charges, Tax
Contracts.......................................... 12
SECTION 2.09 Protection of Accounts................................. 13
SECTION 2.10 Maintenance of Hazard Insurance........................ 13
SECTION 2.11 Maintenance of Mortgage Impairment Insurance........... 15
SECTION 2.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance.......................................... 15
SECTION 2.13 Inspections............................................ 16
SECTION 2.14 Restoration of Mortgaged Property...................... 16
SECTION 2.15 Maintenance of PMI Policy, Claims...................... 16
SECTION 2.16 Deteriorating Mortgage Loans........................... 17
SECTION 2.17 Title, Management and Disposition of REO Property...... 17
SECTION 2.18 Permitted Withdrawals with respect to REO Property..... 19
SECTION 2.19 Real Estate Owned Reports.............................. 19
SECTION 2.20 Liquidation Reports.................................... 19
SECTION 2.21 Reports Of Foreclosures and Abandonments............... 19
SECTION 2.22 Notification of Adjustments............................ 19
SECTION 2.23 Notification of Maturity Date.......................... 20
ARTICLE III
PAYMENTS TO PURCHASER......................... 20
SECTION 3.01 Remittances............................................ 20
<PAGE>
SECTION 3.02 Statements to Purchaser................................ 21
ARTICLE IV
GENERAL SERVICING PROCEDURES...................... 22
SECTION 4.01 Transfers of Mortgaged Property........................ 22
SECTION 4.02 Satisfaction of Mortgages and Release of Mortgage Files 23
SECTION 4.03 Servicing Compensation................................. 23
SECTION 4.04 Annual Statement as to Compliance...................... 24
SECTION 4.05 Annual Independent Public Accountants' Servicing Report 24
SECTION 4.06 Right to Examine Servicer Records...................... 24
ARTICLE V
SERVICER TO COOPERATE......................... 24
SECTION 5.01 Provision of Information............................... 24
SECTION 5.02 Financial Statements; Servicing Facilities............. 25
ARTICLE VI
TERMINATION.............................. 25
SECTION 6.01 Agency Suspension...................................... 25
SECTION 6.02 Damages................................................ 25
SECTION 6.03 Termination............................................ 25
SECTION 6.04 Termination Without Cause.............................. 26
ARTICLE VII
BOOKS AND RECORDS........................... 26
SECTION 7.01 Possession of Servicing Files.......................... 26
ARTICLE VIII
INDEMNIFICATION AND ASSIGNMENT..................... 27
SECTION 8.01 Indemnification........................................ 27
SECTION 8.02 Limitation on Liability of Servicer and Others......... 27
SECTION 8.03 Limitation on Registration and Assignment by Servicer.. 28
SECTION 8.04 Assignment by Purchaser................................ 29
SECTION 8.05 Merger or Consolidation of the Servicer................ 29
SECTION 8.06 Successor to the Servicer.............................. 29
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER......... 30
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SECTION 9.01 Due Organization and Authority......................... 30
SECTION 9.02 No Conflicts........................................... 31
SECTION 9.03 Ability to Perform..................................... 31
SECTION 9.04 No Litigation Pending.................................. 31
SECTION 9.05 No Consent Required.................................... 31
SECTION 9.06 Assistance............................................. 31
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SERVICER............... 32
SECTION 10.01 Due Organization and Authority........................ 32
SECTION 10.02 Ordinary Course of Business........................... 32
SECTION 10.03 No Conflicts.......................................... 32
SECTION 10.04 Ability to Service.................................... 32
SECTION 10.05 Ability to Perform.................................... 33
SECTION 10.06 No Litigation Pending................................. 33
SECTION 10.07 No Consent Required................................... 33
SECTION 10.08 No Untrue Information................................. 33
SECTION 10.09 Reasonable Servicing Fee.............................. 33
SECTION 10.10 Financial Statements.................................. 34
SECTION 10.11 Conflict of Interest.................................. 34
ARTICLE XI
DEFAULT................................ 34
SECTION 11.01 Events of Default..................................... 34
SECTION 11.02 Waiver of Defaults.................................... 36
ARTICLE XII
MISCELLANEOUS PROVISIONS........................ 36
SECTION 12.01 Notices............................................... 36
SECTION 12.02 Waivers............................................... 36
SECTION 12.03 Entire Agreement; Amendment........................... 37
SECTION 12.04 Execution; Binding Effect............................. 37
SECTION 12.05 Headings.............................................. 37
SECTION 12.06 Applicable Law........................................ 37
SECTION 12.07 Relationship of Parties............................... 37
SECTION 12.08 Severability of Provisions............................ 37
SECTION 12.09 Recordation of Assignments of Mortgage................ 37
SECTION 12.10 Exhibits.............................................. 38
<PAGE>
EXHIBITS
EXHIBIT 1 FORM OF MONTHLY REMITTANCE ADVICE
EXHIBIT 2 FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 3 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 4 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT 5 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 6 FORM OF CONFIDENTIALITY AGREEMENT
<PAGE>
SERVICING AGREEMENT
This Servicing Agreement (the "Servicing Agreement" or the "Agreement") is
entered into as of __________, 1996, by and between CHASE MORTGAGE SERVICES,
INC. (the "Servicer"), a Delaware corporation, and CHASE PREFERRED CAPITAL
CORPORATION, a Delaware corporation (the "Purchaser").
WHEREAS, the Purchaser and The Chase Manhattan Bank (the "Seller") entered
into a Mortgage Loan Purchase and Warranties Agreement dated as of ________,
1996 (the "Purchase Agreement") pursuant to which the Purchaser agreed to
purchase from the Seller certain conventional, residential, adjustable rate
first mortgage loans (the "Mortgage Loans") to be delivered as whole loans, with
the Servicer retaining servicing rights in connection with the purchase of such
Mortgage Loans; and
WHEREAS, the Purchaser desires to have the Servicer service the Mortgage
Loans, the Servicer desires to service and administer the Mortgage Loans on
behalf of the Purchaser, and the parties desire to provide the terms and
conditions of such servicing by the Servicer.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein and for other good and valuable consideration, the receipt and the
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1. Definitions. All capitalized terms not otherwise defined herein
have the respective meanings set forth in the Purchase Agreement. The following
terms are defined as follows:
"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.
"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 Loan to the extent not otherwise payable to the
Mortgagor under applicable law or pursuant to the terms of the related Mortgage
Note.
"Best's" means Best's Key Rating Guide.
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"BIF" means The Bank Insurance Fund, or any successor thereto.
"Chase" means The Chase Manhattan Bank.
"Closing Date" means _______, 1996, or such other date as is mutually
agreed upon by the parties hereto.
"Custodial Account" means the separate account or accounts created and
maintained pursuant to Section 2.04.
"Cut-off Date" means __________, 1996.
"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.
"Due Period" means with respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of the Remittance
Date and ending on the first day of the month of the Remittance Date.
"Errors and Omissions Insurance Policy" means an errors and omissions
insurance policy to be maintained by the Servicer pursuant to Section 2.12.
"Escrow Account" means the separate account or accounts created and
maintained pursuant to Section 2.06.
"Escrow Payment" means, with respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.
"Event of Default" means any one of the conditions or circumstances
enumerated in Section 11.01.
"FDIC" means The Federal Deposit Insurance Corporation, or any successor
thereto.
"FHLMC Guide" means the FHLMC Sellers' and Servicers' Guide and all
amendments or additions thereto.
"Fidelity Bond" means a fidelity bond to be maintained by the Servicer
pursuant to Section 2.12.
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"FNMA Guides" means the FNMA Sellers' Guide and the FNMA Servicers' Guide
and all amendments or additions thereto.
"Insurance Proceeds" means, with respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
"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.
"Monthly Remittance Advice" means the monthly remittance advice, in the
form of Exhibit A annexed hereto, to be provided to the Purchaser pursuant to
Section 3.02.
"Mortgage Impairment Insurance Policy" means a mortgage impairment or
blanket hazard insurance policy as described in Section 2.11.
"Nonrecoverable Advance" means any advance of principal and interest
previously made or proposed to be made in respect of a Mortgage Loan which, in
the good faith judgment of the Servicer, will not or, in the case of a proposed
advance of principal and interest, would not, be ultimately recoverable from
related Insurance Proceeds, Liquidation Proceeds or otherwise. The determination
by the Servicer that it has made a Nonrecoverable Advance or that any proposed
advance of principal and interest, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by an Officers' Certificate delivered to the
Purchaser.
"OCC" means Office of the Comptroller of the Currency, or any successor
thereto.
"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 Servicer, and delivered to the Purchaser as
required by this Agreement.
"PMI Policy" means a policy of primary mortgage guaranty insurance issued
by a Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
"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 (Northeast
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
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interest representing scheduled interest due on any date or dates in any month
or months subsequent to the month of prepayment.
"Purchase Agreement" means the Mortgage Loan Purchase and Warranties
Agreement between the Purchaser and the Seller related to the purchase of the
Mortgage Loans dated as of __________, 1996.
"Qualified Depository" means a depository the accounts of which are insured
by the FDIC through the BIF or the SAIF.
"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, approved as an insurer by FNMA and
FHLMC with respect to primary mortgage insurance and, in addition, in the two
highest rating categories by Best's with respect to hazard and flood insurance.
"Remittance Date" means the 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any month, beginning with
the first Remittance Date on _____ 18, 1996.
"REO Property" means a Mortgaged Property acquired by the Servicer on
behalf of the Purchaser through foreclosure or by deed in lieu of foreclosure,
as described in Section 2.17.
"SAIF" means The Savings Association Insurance Fund, or any successor
thereto.
"Servicer Employees" has the meaning set forth in Section 2.12.
"Servicing Advances" means all customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and liquidation
of the Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage and (d) compliance with the obligations under Section 2.08
(except with respect to any expenses incurred in connection with procuring or
transferring Tax Service Contracts, as provided therein).
"Servicing Agreement" means this agreement between the Purchaser and the
Servicer for the servicing and administration of the Mortgage Loans.
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"Servicing Fee" means, with respect to each Mortgage Loan, the amount of
the annual fee the Purchaser shall pay to the Servicer, which shall, for a
period of one (1) full month, be equal to one-twelfth of the product of the
Servicing Fee Rate and (2) the Stated Principal Balance of such Mortgage Loan.
Such fee shall be payable monthly, computed on the basis of the same principal
amount and period in respect of which any related interest payment on a Mortgage
Loan is computed and shall be pro rated for any portion of a month during which
the Mortgage Loan is serviced by the Servicer under this 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
Section 4.03) of such Monthly Payment collected by the Servicer, or as otherwise
provided under Section 4.03.
"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 Servicer 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 listed on Exhibit A to the Purchase
Agreement.
"Tax Service Contract" means a paid-in-full, life-of-loan tax service
contract with TransAmerica Real Estate Tax Service, Inc., as described in
Section 2.08 hereof.
"Termination Fee" means the amount paid by the Purchaser to the Servicer in
the event of the Servicer's termination, without cause, as servicer. Such fee
shall equal the percentage amount set forth in Section 6.04 hereof of the then
current aggregate unpaid principal balance of the related Mortgage Loans.
ARTICLE II
SERVICING
SECTION 2.01 CMSI to Act as Servicer. From and after the Closing Date,
the Servicer, as an independent contractor, shall service and administer the
Mortgage Loans and shall have full power and authority, acting alone, to do any
and all things in connection with such servicing and administration which the
Servicer may deem necessary or desirable, consistent with the terms of this
Agreement and with Accepted Servicing Practices. Except as set forth in this
Agreement, the Servicer shall service the Mortgage Loans in strict compliance
with the servicing provisions related to the FNMA MBS Program (Special Servicing
Option) of the FNMA Guides. In the event of any conflict, inconsistency or
discrepancy between any of the servicing provisions of this Agreement and any of
the servicing provisions of the FNMA Guides, the provisions of this Agreement
shall control and be binding upon the Purchaser and the Servicer.
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Consistent with the terms of this Agreement, the Servicer may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Servicer's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, that unless the Servicer has obtained the prior
written consent of the Purchaser, the Servicer shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
defer or forgive the payment of principal or interest, reduce or increase the
outstanding principal balance (except for actual payments of principal) or
change the final maturity date on such Mortgage Loan. In the event of any such
modification which permits the deferral of interest or principal payments on any
Mortgage Loan, the Servicer shall, on the Business Day immediately preceding the
Remittance Date in any month in which any such principal or interest payment has
been deferred, deposit in the Custodial Account from its own funds, in
accordance with Section 2.04, the difference between (a) such month's principal
and one (1) month's interest at the Mortgage Interest Rate on the unpaid
principal balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor. The Servicer shall be entitled to reimbursement for such advances to
the same extent as for all other advances made pursuant to Section 2.05. Without
limiting the generality of the foregoing, the Servicer shall continue, and is
hereby authorized and empowered, to execute and deliver on behalf of itself and
the Purchaser, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the Mortgaged Properties. If reasonably
required by the Servicer, the Purchaser shall furnish the Servicer with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties under this
Agreement.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices where such practices do not conflict with the requirements
of this Agreement, the FNMA Guides and the Purchaser's reliance on the Servicer.
The Servicer shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Servicer shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Servicer shall be under no obligation to deal with any
Person with respect to this Agreement or the Mortgage Loans unless the Servicer
has been notified of such transfers as provided in this Section 2.01. The
Purchaser may sell and transfer, in whole or in part, the Mortgage Loans,
provided that no such sale and transfer shall be binding upon the Servicer
unless such transferee shall agree in writing in the form of the Assignment and
Assumption Agreement attached to the Purchase Agreement as Exhibit G, to be
bound by the terms of this Agreement and the Purchase Agreement, and an executed
copy of the same shall have been delivered to the Servicer. Upon receipt
thereof, the Servicer shall mark its books and records to reflect the ownership
of
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<PAGE>
the Mortgage Loans by such assignee, and the previous Purchaser shall be
released from its obligations hereunder. The Servicer shall be required to remit
all amounts required to be remitted to the Purchaser hereunder to said
transferee commencing with the first Remittance Date falling after receipt of
said copy of the related Assignment and Assumption Agreement provided that the
Servicer receives said copy no later than three (3) Business Days immediately
prior to the first day of the month of the related Remittance Date. This
Agreement shall be binding upon and inure to the benefit of the Purchaser and
the Servicer and their permitted successors, assignees and designees.
The Servicing File retained by the Servicer pursuant to this Agreement
shall be appropriately marked and identified in the Servicer's computer system
to clearly reflect the sale of the related Mortgage Loan to the Purchaser. The
Servicer shall release from its custody the contents of any Servicing File
retained by it only in accordance with this Agreement, except when such release
is required in connection with a repurchase of any such Mortgage Loan pursuant
to Section 8.03 of the Purchase Agreement.
The Servicer must have an internal quality control program that verifies,
on a regular basis, the existence and accuracy of the legal documents, credit
documents, property appraisals, and underwriting decisions. The program must be
capable of evaluating and monitoring the overall quality of its loan production
and servicing activities. The program is to ensure that the Mortgage Loans are
serviced in accordance with prudent mortgage banking practices and accounting
principles; guard against dishonest, fraudulent, or negligent acts; and guard
against errors and omissions by officers, employees, or other authorized
persons.
SECTION 2.02 Liquidation of Mortgage Loans. In the event that any payment
due under any Mortgage Loan and not postponed pursuant to Section 2.01 is not
paid when the same becomes due and payable, or in the event the Mortgagor fails
to perform any other covenant or obligation under the Mortgage Loan and such
failure continues beyond any applicable grace period, the Servicer shall take
such action as (1) the Servicer would take under similar circumstances with
respect to a similar mortgage loan held for its own account for investment, (2)
shall be consistent with Accepted Servicing Practices, (3) the Servicer shall
determine prudently to be in the best interest of Purchaser, and (4) is
consistent with any related PMI Policy. In the event that any payment due under
any Mortgage Loan is not postponed pursuant to Section 2.01 and remains
delinquent for a period of ninety (90) days or any other default continues for a
period of ninety (90) days beyond the expiration of any grace or cure period (or
such other period as is required by law in the jurisdiction where the related
Mortgaged Property is located), the Servicer shall commence foreclosure
proceedings in accordance with the FNMA Guides, provided that, prior to
commencing foreclosure proceedings, the Servicer shall notify the Purchaser in
writing of the Servicer's intention to do so, and the Servicer shall not
commence foreclosure proceedings if the Purchaser objects to such action within
ten (10) Business Days of receiving such notice or, if the provisions of the
next two paragraphs apply, in any event without the prior written consent of
Purchaser. In such connection, the Servicer shall from its own funds make all
necessary and proper Servicing Advances, provided, however, that the Servicer
shall not be required to expend its
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own funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine (a) that such
preservation, restoration and/or foreclosure will increase the proceeds of
liquidation of the Mortgage Loan to Purchaser after reimbursement to itself for
such expenses and (b) that such expenses will be recoverable by it either
through Liquidation Proceeds (in respect of which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 2.05) or
through Insurance Proceeds (in respect of which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure, in the event the Servicer has reasonable cause to believe
that a Mortgaged Property is contaminated by hazardous or toxic substances or
wastes, or if the Purchaser otherwise requests an environmental inspection or
review of such Mortgaged Property to be conducted by a qualified inspector, the
Servicer shall cause the Mortgaged Property to be so inspected at the expense of
the Purchaser. Upon completion of the inspection, the Servicer shall promptly
provide the Purchaser with a written report of the environmental inspection.
After reviewing the environmental inspection report, the Purchaser shall
determine how the Servicer shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Purchaser directs the Servicer to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Servicer shall be reimbursed
for all reasonable costs associated with such foreclosure or acceptance of a
deed in lieu of foreclosure and any related environmental clean up costs, as
applicable, from the related Liquidation Proceeds, or if the Liquidation
Proceeds are insufficient to fully reimburse the Servicer, the Servicer shall be
entitled to be reimbursed from amounts in the Custodial Account pursuant to
Section 2.05 hereof and to the extent amounts in the Custodial Account are
insufficient to fully reimburse the Servicer,the Servicer shall be entitled to
be reimbursed by the Purchaser for such deficiencies (upon presentation of
evidence of such deficiency). In the event the Purchaser directs the Servicer
not to proceed with foreclosure or acceptance of a deed in lieu of foreclosure,
the Servicer shall be reimbursed for all Servicing Advances made with respect to
the related Mortgaged Property from the Custodial Account pursuant to Section
2.05 hereof.
SECTION 2.03 Collection of Mortgage Loan Payments. Continuously from the
Closing Date, the Servicer shall proceed diligently to collect all payments
due under each of the Mortgage Loans when the same shall become due and payable
and shall take special care in ascertaining and estimating Escrow Payments and
all other charges that will become due and payable with respect to the Mortgage
Loans and each related Mortgaged Property, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
SECTION 2.04 Establishment of and Deposits to Custodial Account. The
Servicer shall segregate and hold all funds collected and received pursuant to
the Mortgage Loans separate and apart from any of its own funds and general
assets and shall establish and
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maintain one or more Custodial Accounts, in the form of time deposit or demand
accounts, titled "Chase Mortgage Services, Inc. in trust for Purchaser of
Conventional Residential Mortgage Loans, and various Mortgagors". The Custodial
Account shall be established with a Qualified Depository acceptable to the
Purchaser. Any funds deposited in the Custodial Account shall at all times be
fully insured to the full extent permitted under applicable law; provided,
however, that to the extent the Custodial Account is established with the
Corporate Trust Department of Chase, the Servicer may maintain the Custodial
Account as a single account. Funds deposited in the Custodial Account may be
drawn on by the Servicer in accordance with Section 2.05. The creation of any
Custodial Account shall be evidenced by a certification in the form of Exhibit 2
hereto, in the case of an account established with the Servicer, or by a letter
agreement in the form of Exhibit 3 hereto, in the case of an account held by a
depository other than the Servicer. A copy of such certification or letter
agreement shall be furnished to the Purchaser and, upon request, to any
subsequent Purchaser.
The Servicer shall deposit in the Custodial Account within one Business Day
of receipt, and retain therein, the following collections received by the
Servicer and payments made by the Servicer after the Cut-off Date, other than
payments of principal and interest due on or before the Cut-off Date, or
received by the Servicer prior to the Cut-off Date but allocable to a period
subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage;
(iii) all Liquidation Proceeds and any amount received with respect to
REO Property;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 2.10 (other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property
or released to the Mortgagor in accordance with Section 2.14), and Section
2.11;
(v) all Condemnation Proceeds which are not applied to the restoration
or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 2.14;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 2.01, 2.09, 2.15, 2.17, 3.01, 3.03 or 4.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 8.03 of the Purchase Agreement; and
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(viii) any amounts required to be deposited by the Servicer pursuant
to Section 2.11 in connection with the deductible clause in any blanket
hazard insurance policy.
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, Ancillary Income need not be deposited by the Servicer into
the Custodial Account. Any interest paid on funds deposited in the Custodial
Account by the depository institution shall accrue to the benefit of the
Servicer and the Servicer shall be entitled to retain and withdraw such interest
from the Custodial Account pursuant to Section 2.05.
SECTION 2.05 Permitted Withdrawals From Custodial Account. Subject to
Section 2.17 hereof, the Servicer shall, from time to time, withdraw funds from
the Custodial Account for the following purposes:
(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 3.01;
(ii) to pay to itself the Servicing Fee;
(iii) to reimburse itself for advances of the Servicer's funds made
pursuant to Section 3.03, the Servicer's right to reimburse itself pursuant
to this subclause (iii) being limited to amounts received on the related
Mortgage Loan which represent late payments of principal and/or interest in
respect of which any such advance was made, it being understood that, in
the case of any such reimbursement, the Servicer's right thereto shall be
prior to the rights of Purchaser, except that, where the Seller or the
Servicer is required to repurchase a Mortgage Loan pursuant to Section 8.03
of the Purchase Agreement or Section 4.02 of this Agreement, respectively,
the Servicer's right to such reimbursement shall be subsequent to the
payment to the Purchaser of the Repurchase Price pursuant to such sections
and all other amounts required to be paid to the Purchaser with respect to
such Mortgage Loan;
(iv) to reimburse itself for unreimbursed Servicing Advances (except
to the extent reimbursed pursuant to Section 2.07), any accrued but unpaid
Servicing Fees and for unreimbursed advances of Servicer funds made
pursuant to Sections 2.15, 2.17 or 3.03, the Servicer's right to reimburse
itself pursuant to this subclause (iv) with respect to any Mortgage Loan
being limited to related Liquidation Proceeds, Condemnation Proceeds,
Insurance Proceeds and such other amounts as may be collected by the
Servicer from the Mortgagor or otherwise relating to the Mortgage Loan, it
being understood that, in the case of any such reimbursement, the
Servicer's right thereto shall be prior to the rights of the Purchaser
except that, where the Seller or the Servicer is required to repurchase a
Mortgage Loan pursuant to Section 8.03 of the Purchase Agreement or Section
4.02 of this Agreement, respectively, the Servicer's
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right to such reimbursement shall be subsequent to the payment to the
Purchaser of the Repurchase Price pursuant to such sections and all other
amounts required to be paid to the Purchaser with respect to such Mortgage
Loan;
(v) to pay itself any interest earned on funds deposited in the
Custodial Account (all such interest to be withdrawn monthly not later than
each Remittance Date); and
(vi) to clear and terminate the Custodial Account upon the termination
of this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Servicer shall withdraw all funds from the Custodial
Account except for those amounts which, pursuant to Section 3.01, the Servicer
is not obligated to remit on such Remittance Date. The Servicer may use such
withdrawn funds only for the purposes described in this Section 2.05.
SECTION 2.06 Establishment of and Deposits to Escrow Account. The Servicer
shall segregate and hold all funds collected and received pursuant to a Mortgage
Loan constituting Escrow Payments separate and apart from any of its own funds
and general assets and shall establish and maintain one or more Escrow Accounts,
in the form of time deposit or demand accounts. The Escrow Account or Accounts
shall be established with a Qualified Depositary, in a manner which shall
provide maximum available insurance thereunder. Funds deposited in the Escrow
Accounts may be drawn on by the Servicer in accordance with Section 2.07. The
creation of any Escrow Account shall be evidenced by a certification in the form
of Exhibit 2 hereto, in the case of an account established with the Servicer, or
by a letter agreement in the form of Exhibit 5 hereto, in the case of an account
held by a depository other than the Servicer. A copy of such certification shall
be furnished to the Purchaser and, upon request, to any subsequent Purchaser.
The Servicer shall deposit in the Escrow Account or Accounts within one
Business Day of receipt, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans,
for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any
Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
2.07. The Servicer shall be entitled to retain any interest paid on funds
deposited in the Escrow Account
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by the depository institution, other than interest on escrowed funds required by
law to be paid to the Mortgagor. To the extent required by law, the Servicer
shall pay from its own funds interest on escrowed funds to the Mortgagor
notwithstanding that the Escrow Account may be noninterest bearing or that
interest paid thereon is insufficient for such purposes.
SECTION 2.07 Permitted Withdrawals From Escrow Account. Withdrawals from
each Escrow Account may be made by the Servicer only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
(ii) to reimburse the Servicer for any Servicing Advance made by the
Servicer pursuant to Section 2.08 (except with respect to any expenses
incurred in procuring or transferring Tax Service Contracts) with respect
to a related Mortgage Loan, but only from amounts received on the related
Mortgage Loan which represent late collections of Escrow Payments
thereunder;
(iii) to refund to the related Mortgagor any funds found to be in
excess of the amounts required under the terms of the related Mortgage Loan
or applicable federal or state law or judicial or administrative ruling;
(iv) for transfer to the Custodial Account and application to reduce
the principal balance of the Mortgage Loan in accordance with the terms of
the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the related Mortgaged
Property in accordance with the procedures outlined in Section 2.14;
(vi) to pay to the Servicer, or any Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow Account; and
(vii) to clear and terminate the Escrow Account on the termination of
this Agreement.
SECTION 2.08 Payment of Taxes, Insurance and Other Charges, Tax Contracts.
With respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates, sewer
rents, and other charges, as applicable, which are or may become a lien upon the
Mortgaged Property and the status of PMI Policy premiums and fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date, employing for such
purpose deposits of the Mortgagor in the Escrow Account which shall have been
estimated and accumulated by the Servicer in amounts sufficient for such
purposes, as allowed under the
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terms of the Mortgage. To the extent that a Mortgage does not provide for Escrow
Payments, the Servicer shall determine that any such payments relating to taxes
or maintaining insurance policies are made by the Mortgagor at the time they
first become due. The Servicer assumes full responsibility for the timely
payment of all such bills to the extent it has or should have notice of such
bills and shall effect timely payment of all such charges irrespective of each
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments, and the Servicer shall make advances from its own funds to
effect such payments, such advances to be reimbursable to the same extent as
Servicing Advances.
The Servicer shall ensure that each of the Mortgage Loans shall be covered
by a Tax Service Contract which shall be assigned to the Purchaser or the
Purchaser's designee at the Servicer's expense in the event that the Servicer is
terminated as servicer of the related Mortgage Loan(s) hereunder. To the extent
that a Mortgage Loan does not have a Tax Service Contract, the Purchaser shall
procure a Tax Service Contract for such Mortgage Loan and the Servicer shall
reimburse the Purchaser upon request for reasonable expenses incurred in
connection therewith.
SECTION 2.09 Protection of Accounts. The Servicer may transfer the
Custodial Account or the Escrow Account to a different Qualified Depository from
time to time. Such transfer shall be made only upon obtaining the consent of the
Purchaser, which consent shall not be withheld unreasonably.
The Servicer shall bear any expenses, losses or damages sustained by the
Purchaser because the Custodial Account and/or the Escrow Account are not demand
deposit accounts.
SECTION 2.10 Maintenance of Hazard Insurance. The Servicer shall cause to
be maintained for each Mortgage Loan, hazard insurance such that all buildings
upon the Mortgaged Property are insured by a generally acceptable insurer rated
A:VI or better in the current Best's against loss by fire, hazards of extended
coverage and such other hazards as are required to be insured pursuant to the
FNMA Guides or the FHLMC Guide, in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan and (ii) the greater of (a) the outstanding principal balance of
the Mortgage Loan and (b) an amount such that the proceeds thereof shall be
sufficient to prevent the Mortgagor or the loss payee from becoming a
co-insurer.
If required by the Flood Disaster Protection Act of 1973, as amended, each
Mortgage Loan is covered by a flood insurance policy meeting the requirements of
the current guidelines of the Federal Insurance Administration in effect with a
generally acceptable insurance carrier rated A:VI or better in Best's in an
amount representing coverage not less than the lesser of (i) the outstanding
principal balance of the related Mortgage Loan and (ii) the maximum amount of
insurance which is available under the Flood Disaster Protection Act of 1973, as
amended. If at any time during the term of the Mortgage Loan, the Servicer
determines in accordance with applicable law and pursuant to the FNMA Guides
that a
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Mortgaged Property is located in a special flood hazard area and is not covered
by flood insurance or is covered in an amount less than the amount required by
the Flood Disaster Protection Act of 1973, as amended, the Servicer shall notify
the related Mortgagor that the Mortgagor must obtain such flood insurance
coverage, and if said Mortgagor fails to obtain the required flood insurance
coverage within forty five (45) days after such notification, the Servicer shall
immediately purchase the required flood insurance on the Mortgagor's behalf.
If a Mortgage is secured by a unit in a condominium project, the Servicer
shall verify that the coverage required of the owner's association, including
hazard, flood, liability, and fidelity coverage, is being maintained in
accordance with then current FNMA requirements, and secure from the owner's
association its agreement to notify the Servicer promptly of any change in the
insurance coverage or of any condemnation or casualty loss that may have a
material effect on the value of the Mortgaged Property as security.
The Servicer shall cause to be maintained on each Mortgaged Property such
other or additional insurance as may be required pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance, or pursuant to the requirements of any primary mortgage
guaranty insurer.
All policies required hereunder shall name the Servicer and its successors
and assigns as mortgagee and shall be endorsed with non-contributory standard
New York mortgagee clauses which shall provide for at least thirty (30) days'
prior written notice of any cancellation, reduction in amount or material change
in coverage.
The Servicer shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent, provided, however, that the
Servicer shall not accept any such insurance policies from insurance companies
unless such companies are rated A:VI or better in Best's and are licensed to do
business in the jurisdiction in which the Mortgaged Property is located. The
Servicer shall determine that such policies provide sufficient risk coverage and
amounts as required pursuant to the FNMA Guides or the FHLMC Guide, that they
insure the property owner, and that they properly describe the property address.
To the extent reasonably possible the Servicer shall furnish to the Mortgagor a
formal notice of expiration of any such insurance in sufficient time for the
Mortgagor to arrange for renewal coverage by the expiration date; provided,
however, that in the event that no such notice is furnished by the Servicer, the
Servicer shall ensure that replacement insurance policies are in place in the
required coverages and the Servicer shall be solely liable for any losses in the
event such coverage is not provided.
Pursuant to Section 2.04, any amounts collected by the Servicer under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Servicer's normal servicing procedures as
specified in Section 2.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 2.05.
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SECTION 2.11 Maintenance of Mortgage Impairment Insurance. In the event
that the Servicer shall obtain and maintain a blanket policy insuring against
losses arising from fire and hazards covered under extended coverage on all of
the Mortgage Loans, then, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Section 2.10 and otherwise
complies with all other requirements of Section 2.10, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 2.10. Any
amounts collected by the Servicer under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 2.05. Such policy may contain a deductible clause, in which case, in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 2.10, and there shall have been a loss
which would have been covered by such policy, the Servicer shall deposit in the
Custodial Account at the time of such loss the amount not otherwise payable
under the blanket policy because of such deductible clause, such amount to be
deposited from the Servicer's funds, without reimbursement therefor. Upon
request of the Purchaser, the Servicer shall cause to be delivered to the
Purchaser a certified true copy of such policy and a statement from the insurer
thereunder that such policy shall in no event be terminated or materially
modified without thirty (30) days' prior written notice to the Purchaser.
SECTION 2.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance. The Servicer shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
with broad coverage on all officers, employees or other persons acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the Mortgage Loans ("Servicer Employees"). Any such Fidelity Bond
and Errors and Omissions Insurance Policy shall be in the form of the Mortgage
Banker's Blanket Bond and shall protect and insure the Servicer against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such Servicer Employees. Such Fidelity Bond and Errors and
Omissions Insurance Policy also shall protect and insure the Servicer against
losses in connection with the release or satisfaction of a Mortgage Loan without
having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 2.12 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such Fidelity Bond and Errors and Omissions Insurance Policy shall be
at least equal to the corresponding amounts required by FNMA in the FNMA
Mortgage-Backed Securities Selling and Servicing Guide or by FHLMC in the FHLMC
Guide. Upon the request of the Purchaser, the Servicer shall cause to be
delivered to the Purchaser a certified true copy of such Fidelity Bond and
Errors and Omissions Insurance Policy and a statement from the surety and the
insurer that such Fidelity Bond and Errors and Omissions Insurance Policy shall
in no event be terminated or materially modified without thirty (30) days' prior
written notice to the Purchaser. In the event that the surety or insurer charges
the Servicer a fee for providing such evidence, the Purchaser shall reimburse
the Servicer for the reasonable expense incurred by the Servicer in furnishing
such evidence.
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SECTION 2.13 Inspections. The Servicer shall inspect the Mortgaged Property
as often as deemed necessary by the Servicer to assure itself that the value of
the Mortgaged Property is being preserved. In addition, if any Mortgage Loan is
more than sixty (60) days delinquent, the Servicer immediately shall inspect the
Mortgaged Property and shall conduct subsequent inspections in accordance with
Accepted Servicing Practices or as may be required by the primary mortgage
guaranty insurer. The Servicer shall keep a written report of each such
inspection.
SECTION 2.14 Restoration of Mortgaged Property. The Servicer need not
obtain the approval of the Purchaser prior to releasing any Insurance Proceeds
or Condemnation Proceeds to the Mortgagor to be applied to the restoration or
repair of the Mortgaged Property if such release is in accordance with Accepted
Servicing Practices and the terms of this Agreement. At a minimum, the Servicer
shall comply with the following conditions in connection with any such release
of Insurance Proceeds or Condemnation Proceeds:
(i) the Servicer shall receive satisfactory independent verification
of completion of repairs and issuance of any required approvals with
respect thereto;
(ii) the Servicer shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(iii) the Servicer shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Servicer shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional mortgagee, the Servicer is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the Purchaser.
SECTION 2.15 Maintenance of PMI Policy, Claims. With respect to each
Mortgage Loan with an LTV in excess of 85%, the Servicer shall, without any cost
to the Purchaser, maintain or cause the Mortgagor to maintain in full force and
effect a PMI Policy insuring that portion of the Mortgage Loan in excess of 75%
of value, and shall pay or shall cause the Mortgagor to pay the premium thereon
on a timely basis, until the LTV of such Mortgage Loan is reduced to 85%. In the
event that such PMI Policy shall be terminated, the Servicer shall obtain from
another Qualified Insurer a comparable replacement policy, with a total coverage
equal to the remaining coverage of such terminated PMI Policy. If the insurer
shall cease to be a Qualified Insurer, the Servicer shall determine whether
recoveries under the PMI Policy are jeopardized for reasons related to the
financial condition of such insurer, it being understood that the Servicer shall
in no event have any responsibility or liability for any
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failure to recover under the PMI Policy for such reason. If the Servicer
determines that recoveries are so jeopardized, it shall notify the Purchaser and
the Mortgagor, if required, and obtain from another Qualified Insurer a
replacement insurance policy. The Servicer shall not take any action which would
result in noncoverage under any applicable PMI Policy of any loss which, but for
the actions of the Servicer, would have been covered thereunder. In connection
with any assumption or substitution agreement entered into or to be entered into
pursuant to Section 4.01, the Servicer shall promptly notify the insurer under
the related PMI Policy, if any, of such assumption or substitution of liability
in accordance with the terms of such PMI Policy and shall take all actions which
may be required by such insurer as a condition to the continuation of coverage
under such PMI Policy. If such PMI Policy is terminated as a result of such
assumption or substitution of liability, the Servicer shall obtain a replacement
PMI Policy as provided above.
In connection with its activities as servicer, the Servicer agrees to
prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy in a timely fashion in accordance with the terms of
such PMI Policy and, in this regard, to take such action as shall be necessary
to permit recovery under any PMI Policy with respect to a defaulted Mortgage
Loan. Pursuant to Section 2.04, any amounts collected by the Servicer under any
PMI Policy shall be deposited in the Custodial Account, subject to withdrawal
pursuant to Section 2.05.
SECTION 2.16 Deteriorating Mortgage Loans. If, in the course of carrying
out its obligations under this Agreement, the Servicer discovers that a Mortgage
Loan (or an interest therein) (i) is or has been, at any time during the
preceding twelve months, (a) classified, (b) in nonaccrual status or (c)
renegotiated due to the financial deterioration of the Mortgagor or (ii) has
been, more than once during the preceding twelve months, more than 30 days past
due in the payment of principal and interest, the Servicer shall notify the
Purchaser as soon as possible and cooperate with the Purchaser in the
disposition of any such Mortgage Loan as soon as possible.
SECTION 2.17 Title, Management and Disposition of REO Property. In the
event that title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be taken in the
name of the Purchaser, or in the event the Purchaser is not authorized or
permitted to hold title to real property in the state where the REO Property is
located, or would be adversely affected under the "doing business" or tax laws
of such state by so holding title, the deed or certificate of sale shall be
taken in the name of such Person or Persons as shall be consistent with an
Opinion of Counsel obtained by the Servicer from any attorney duly licensed to
practice law in the state where the REO Property is located. The Person or
Persons holding such title other than the Purchaser shall acknowledge in writing
that such title is being held as nominee for the Purchaser.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Purchaser solely for the purpose of its prompt disposition and sale. The
Servicer, either itself or through an agent selected by the Servicer and
reasonably acceptable to the
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Purchaser, shall manage, conserve, protect and operate the REO Property in the
same manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property in
the same locality as the REO Property is managed. The Servicer shall attempt to
sell the same (and may temporarily rent the same for a period not greater than
one (1) year, except as otherwise provided below) on such terms and conditions
as the Servicer deems to be in the best interest of the Purchaser.
The Servicer shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless the Servicer determines,
and gives an appropriate notice to the Purchaser to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property. If a
period longer than one (1) year is permitted under the foregoing sentence and is
necessary to sell any REO Property, the Servicer shall report monthly to the
Purchaser as to the progress being made in selling such REO Property.
The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage in an amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available under the Flood
Disaster Protection Act of 1973, as amended, flood insurance in the amount
required above.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interests of the Purchaser. The proceeds of sale of the REO Property
shall be promptly deposited in the Custodial Account. As soon as practical
thereafter the expenses of such sale shall be paid and the Servicer shall
reimburse itself pursuant to Section 2.05(iii) or 2.05(iv) hereof, as
applicable, for any related unreimbursed Servicing Advances, unpaid Servicing
Fees and unreimbursed advances made pursuant to this Section, and on the
Remittance Date immediately following the Due Period in which such sale proceeds
are received the net cash proceeds of such sale remaining in the Custodial
Account shall be distributed to the Purchaser; provided that such distribution
shall, in any event, be made within ninety (90) days from and after the closing
of the sale of such REO Property.
In addition to the Servicer's obligations set forth in this Section 2.17,
the Servicer shall deliver written notice to the Purchaser whenever title to any
Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure
together with a copy of the drive-by appraisal of the related Mortgaged Property
obtained by the Servicer on or prior to the date of such acquisition.
Notwithstanding anything to the contrary contained herein, the Purchaser may, at
the Purchaser's sole option, terminate the Servicer as servicer of any such REO
Property without payment of any Termination Fee with respect thereto, provided
that (i) the Purchaser gives the Servicer notice of such termination within ten
(10) Business Days of receipt of said written notice from the Servicer which
termination shall be effective no more than fifteen (15) Business Days from and
after the date of said notice from the Purchaser and (ii) the Servicer shall on
the date said termination takes effect be reimbursed by
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Purchaser for any unreimbursed advances of the Servicer's funds made pursuant to
Section 3.02 and any unreimbursed Servicing Advances in each case relating to
the Mortgage Loan underlying such REO Property. In the event of any such
termination, the provisions of Section 8.06 hereof shall apply to said
termination and the transfer of servicing responsibilities with respect to such
REO Property to the Purchaser or its designee.
With respect to each REO Property, the Servicer shall deposit all funds
collected and received in connection with the operation of the REO Property in
the Custodial Account. The Servicer shall cause to be deposited on a daily basis
upon the receipt thereof in the Custodial Account all revenues received with
respect to the conservation and disposition of the related REO Property.
SECTION 2.18 Permitted Withdrawals with respect to REO Property. For so
long as the Servicer is acting as servicer of any Mortgage Loan relating to any
REO Property, the Servicer shall withdraw funds on deposit in the Custodial
Account with respect to each related REO Property necessary for the proper
operation, management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Section 2.10 and the fees of any
managing agent acting on behalf of the Servicer. The Servicer shall make monthly
distributions on each Remittance Date to the Purchaser of the net cash flow from
the REO Property (which shall equal the revenues from such REO Property net of
the expenses described in Section 2.17 and of any reserves reasonably required
from time to time to be maintained to satisfy anticipated liabilities for such
expenses).
SECTION 2.19 Real Estate Owned Reports. For so long as the Servicer is
acting as servicer of any Mortgage Loan relating to any REO Property, the
Servicer shall furnish to the Purchaser on or before the 15th day of each month
a statement with respect to any REO Property covering the operation of such REO
Property for the previous month and the Servicer's efforts in connection with
the sale of such REO Property and any rental of such REO Property incidental to
the sale thereof for the previous month. That statement shall be accompanied by
such other information as the Purchaser shall reasonably request.
SECTION 2.20 Liquidation Reports. For so long as the Servicer is acting as
servicer of any Mortgage Loan relating to any REO Property, upon the foreclosure
sale of any Mortgaged Property or the acquisition thereof by the Purchaser
pursuant to a deed in lieu of foreclosure, the Servicer shall submit to the
Purchaser a liquidation report with respect to such Mortgaged Property.
SECTION 2.21 Reports Of Foreclosures and Abandonments. For so long as the
Servicer is acting as servicer of any Mortgage Loan relating to any REO
Property, following the foreclosure sale or abandonment of any Mortgaged
Property, the Servicer shall report such foreclosure or abandonment as required
pursuant to Section 6050J of the Code.
SECTION 2.22 Notification of Adjustments. With respect to each Adjustable
Rate Mortgage Loan, the Servicer shall adjust the Mortgage Interest Rate on the
related
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Interest Rate Adjustment Date and shall adjust the Monthly Payment accordingly
in compliance with the requirements of applicable law and the related Mortgage
and Mortgage Note. If, pursuant to the terms of the Mortgage Note, another index
is selected for determining the Mortgage Interest Rate, the same index will be
used with respect to each Mortgage Note which requires a new index to be
selected, provided that such selection does not conflict with the terms of the
related Mortgage Note. The Servicer shall execute and deliver any and all
necessary 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. The Servicer shall promptly upon written request therefor,
deliver to the Purchaser such notifications and any additional applicable data
regarding such adjustments and the methods used to calculate and implement such
adjustments. Upon the discovery by the Servicer or the Purchaser that the
Servicer has failed to adjust a Mortgage Interest Rate or a Monthly Payment
pursuant to the terms of the related Mortgage Note and Mortgage, the Servicer
shall immediately deposit in the Custodial Account from its own funds the amount
of any interest loss caused the Purchaser thereby.
SECTION 2.23 Notification of Maturity Date. With respect to each Fixed Rate
Mortgage Loan, the Purchaser shall execute and deliver to the Mortgagor any and
all necessary notices required under applicable law and the terms of the related
Mortgage Note and Mortgage regarding the maturity date if required under
applicable law.
ARTICLE III
PAYMENTS TO PURCHASER
SECTION 3.01 Remittances. On each Remittance Date the Servicer shall remit
by wire transfer of immediately available funds to the Purchaser (a) all amounts
deposited in the Custodial Account as of the close of business on the
Determination Date, except Principal Prepayments received on or after the first
day of the month in which the Remittance Date occurs which shall be remitted to
the Purchaser on the next following Remittance Date; plus (b) an amount
representing compensating interest (up to a maximum amount equal to the
aggregate Servicing Fee for the Mortgage Loans held by the Purchaser with
respect to such Mortgage Loans) which, when added to all amounts allocable to
interest received in connection with such Principal Prepayment equals thirty
(30) days' interest at the Mortgage Interest Rate net of the Servicing Fee on
the amount of principal so prepaid (net of charges against or withdrawals from
the Custodial Account pursuant to Section 2.05), plus (c) all amounts, if any,
which the Servicer is obligated to distribute pursuant to Section 3.03 and minus
(d) any amounts attributable to Monthly Payments collected but due on a Due Date
or Dates subsequent to the first day of the month of the Remittance Date, which
amounts shall be remitted on the Remittance Date next succeeding the Due Period
for such amounts.
With respect to any remittance received by the Purchaser after the second
Business Day following the Business Day on which such payment was due, the
Servicer shall
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pay to the Purchaser interest on any such late payment at an annual rate equal
to the Prime Rate, adjusted as of the date of each change, plus one (1)
percentage point, but in no event greater than the maximum amount permitted by
applicable law. Such interest shall be deposited in the Custodial Account by the
Servicer on the date such late payment is made and shall cover the period
commencing with and including the day following such second Business Day and
ending with the Business Day on which such payment is made, exclusive of such
Business Day; provided, however, that in the event that the Servicer remits such
amounts after 11:00 A.M. (New York City time) on any day, such period shall
include such day. Such interest shall be remitted along with the distribution
payable on the next succeeding Remittance Date. The payment by the Servicer of
any such interest shall not be deemed an extension of time for payment or a
waiver of any Event of Default by the Servicer.
SECTION 3.02 Statements to Purchaser. Not later than the twentieth day of
each month, the Servicer shall furnish by modem and/or diskette to the Purchaser
or its designee a listing of the outstanding Mortgage Loans, including with
respect to each Mortgage Loan: the Mortgage Loan number, the actual balance, the
actual paid-through dates and the Mortgage Interest Rate and principal and
interest payment, and with respect to Adjustable Rate Mortgage Loans, the next
Interest Rate Adjustment Date, the Mortgage Interest Rate and the principal and
interest payment effective as of the next Interest Rate Adjustment Date (if
available), and shall furnish to the Purchaser manually a Monthly Remittance
Advice, with a trial balance report attached thereto, in the form of Exhibit 1
annexed hereto as to the preceding remittance and the period ending on the
preceding Determination Date.
In addition, not more than sixty (60) days after the end of each calendar
year, the Servicer shall furnish to each Person who was a Purchaser at any time
during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Such obligation of the Servicer shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by the
Servicer pursuant to any requirements of the Code as from time to time are in
force.
The Servicer shall prepare and file, with respect to each Mortgage Loan,
any and all tax returns, information statements or other filings required to be
delivered to any governmental taxing authority or to the Purchaser pursuant to
any applicable law with respect to the Mortgage Loans and the transactions
contemplated hereby. In addition, the Servicer shall provide the Purchaser with
such information concerning the Mortgage Loans as is necessary for the Purchaser
to prepare its federal income tax return as the Purchaser may reasonably request
from time to time.
SECTION 3.03 Advances by Servicer. On the Business Day immediately
preceding each Remittance Date, the Servicer shall deposit in the Custodial
Account from its own funds an amount equal to all Monthly Payments which were
due on the Mortgage Loans during the applicable Due Period and which were
delinquent at the close of business on the
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immediately preceding Determination Date or which were deferred pursuant to
Section 2.01, provided that the Servicer shall only be required to make such
advances with respect to a Mortgage Loan until such advances are, in the
Servicer's good faith determination as evidenced by an Officer's Certificate of
the Servicer delivered to the Purchaser on the Business Day next following the
Determination Date on or prior to which said determination is or was made,
deemed to be a Nonrecoverable Advance. The Servicer's obligation to make such
advances as to any Mortgage Loan will continue through the earlier of (i) the
disposition of such Mortgage Loan and (ii) the date of foreclosure sale with
respect to such Mortgage Loan. Except as otherwise provided herein, the Servicer
shall be entitled to first priority reimbursement pursuant to Section 2.05
hereof for principal and interest advances and for servicing advances from
recoveries from the related mortgagor or from all Liquidation Proceeds and other
payments or recoveries (including Insurance Proceeds and Condemnation Proceeds)
with respect to the related Mortgage Loan.
ARTICLE IV
GENERAL SERVICING PROCEDURES
SECTION 4.01 Transfers of Mortgaged Property. The Servicer shall be
required to enforce any "due-on-sale" provision contained in any Mortgage or
Mortgage Note and to deny assumption by the person to whom the Mortgaged
Property has been or is about to be sold whether by absolute conveyance or by
contract of sale, whether or not the Mortgagor remains liable on the Mortgage
and the Mortgage Note. When the Mortgaged Property has been conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such
conveyance, exercise its rights to accelerate the maturity of such Mortgage Loan
under the "due-on-sale" clause applicable thereto, provided, however, that the
Servicer shall not exercise such rights if prohibited by law from doing so or if
the exercise of such rights would impair or threaten to impair any recovery
under the related PMI Policy, if any.
If the Servicer reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Servicer, in the Purchaser's name, shall,
to the extent permitted by applicable law, enter into (i) an assumption and
modification agreement with the person to whom such property has been conveyed,
pursuant to which such person becomes liable under the Mortgage Note and the
original Mortgagor remains liable thereon or (ii) in the event the Servicer is
unable under applicable law to require that the original Mortgagor remain liable
under the Mortgage Note and the Servicer has the prior consent of the primary
mortgagee guaranty insurer, a substitution of liability agreement with the
purchaser of the Mortgaged Property pursuant to which the original Mortgagor is
released from liability and the purchaser of the Mortgaged Property is
substituted as Mortgagor and becomes liable under the Mortgage Note. In
connection with any such assumption, neither the Mortgage Interest Rate borne by
the related Mortgage Note, the term of the Mortgage Loan nor the outstanding
principal amount of the Mortgage Loan shall be changed.
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To the extent that any Mortgage Loan is assumable, the Servicer shall
inquire diligently into the creditworthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used by FNMA with respect to underwriting mortgage loans of
the same type as the Mortgage Loans. If the credit of the proposed transferee
does not meet such underwriting criteria, the Servicer diligently shall, to the
extent permitted by the Mortgage or the Mortgage Note and by applicable law,
accelerate the maturity of the Mortgage Loan.
SECTION 4.02 Satisfaction of Mortgages and Release of Mortgage Files. Upon
the payment in full of any Mortgage Loan, or the receipt by the Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer shall notify the Purchaser in the Monthly Remittance
Advice as provided in Section 3.02, and may request the release of any Mortgage
Loan Documents from the Purchaser in accordance with this Section 4.02 hereof.
The Servicer shall obtain discharge of the related Mortgage Loan as of record
within any related time limit required by applicable law.
If the Servicer satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Servicer otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Servicer shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within two (2) Business Days of receipt of such demand
by the Purchaser. Upon such repurchase, all funds maintained in the Escrow
Account with respect to such repurchased Mortgage Loan shall be transferred to
the Servicer. The Servicer shall maintain the Fidelity Bond and Errors and
Omissions Insurance Policy as provided for in Section 2.12 insuring the Servicer
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.
SECTION 4.03 Servicing Compensation. As consideration for servicing the
Mortgage Loans hereunder, the Servicer shall withdraw the Servicing Fee with
respect to each Mortgage Loan from the Custodial Account pursuant to Section
2.05 hereof. Such Servicing Fee shall be payable monthly, computed on the basis
of the same principal amount and period in respect of which any related interest
payment on a Mortgage Loan is computed. The Servicing Fee shall be pro-rated
when servicing is for less than one month. The obligation of the Purchaser to
pay, and the Servicer's right to withdraw, 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 Section 2.05), of such Monthly Payment collected by the Servicer,
or as otherwise provided under Section 2.05.
Additional servicing compensation in the form of Ancillary Income shall be
retained by the Servicer. The Servicer shall be required to pay all expenses
incurred by it in
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connection with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except as specifically provided for herein.
SECTION 4.04 Annual Statement as to Compliance. The Servicer shall deliver
to the Purchaser, on or before March 31 each year beginning March 31, 1997, an
Officer's Certificate, stating that (i) a review of the activities of the
Servicer during the preceding calendar year and of performance under this
Agreement has been made under such officer's supervision, and (ii) the Servicer
has complied in all material respects with the provisions of Article II and
Article IV, and (iii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year or part thereof, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Servicer to cure such default.
SECTION 4.05 Annual Independent Public Accountants' Servicing Report. On or
before March 31 of each year, beginning with the first March 31 that occurs at
least six months after the Closing Date, the Servicer at its expense shall cause
a firm of independent public accountants (who may also render other services to
the Servicer or any affiliate thereof) which is a member of the American
Institute of Certified Public Accountants to furnish a statement to the
Purchaser to the effect that such firm has, as part of their examination of the
financial statements of the Servicer performed tests embracing the records and
documents relating to mortgage loans serviced by the Servicer in accordance with
the requirements of the Uniform Single Audit Program for Mortgage Bankers and
that their examination disclosed no exceptions that, in their opinion were
material, relating to mortgage loans serviced by the Servicer.
SECTION 4.06 Right to Examine Servicer Records. The Purchaser, upon
reasonable notice, shall have the right to examine and audit any and all of the
books, records, or other information of the Servicer, whether held by the
Servicer or by another on its behalf, with respect to or concerning this
Agreement or the Mortgage Loans, during business hours or at such other times as
may be reasonable under applicable circumstances, upon reasonable advance
notice.
ARTICLE V
SERVICER TO COOPERATE
SECTION 5.01 Provision of Information. During the term of this Agreement,
the Servicer shall furnish to the Purchaser such periodic, special, or other
reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Purchaser or the
purposes of this Agreement. All such reports or information shall be provided by
and in accordance with all reasonable instructions and directions which the
Purchaser may give.
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The Servicer shall execute and deliver all such instruments and take all
such action as the Purchaser may reasonably request from time to time, in order
to effectuate the purposes and to carry out the terms of this Agreement.
SECTION 5.02 Financial Statements; Servicing Facilities. In connection with
disposition of Mortgage Loans, the Purchaser may make available to a prospective
purchaser audited financial statements of the Servicer for the most recently
completed two (2) fiscal years for which such statements are available, as well
as a Consolidated Statement of Condition at the end of the last two (2) fiscal
years covered by any Consolidated Statement of Operations. If it has not already
done so, the Servicer shall furnish promptly to the Purchaser or a prospective
purchaser copies of the statements specified above; provided, however, that
prior to furnishing such statements or information to any prospective purchaser,
the Servicer may require such prospective purchaser to execute a confidentiality
agreement in form reasonably satisfactory to it.
The Servicer shall make available to the Purchaser or any prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions with respect to recent developments affecting the Servicer
or the financial statements of the Servicer, and to permit any prospective
purchaser to inspect the Servicer's servicing facilities for the purpose of
satisfying such prospective purchaser that the Servicer has the ability to
service the Mortgage Loans as provided in this Agreement.
ARTICLE VI
TERMINATION
SECTION 6.01 Agency Suspension. Should the Servicer at any time during the
term of this Agreement have its right to service temporarily or permanently
suspended by FNMA or FHLMC or otherwise cease to be an approved seller/servicer
of conventional residential mortgage loans for FNMA or FHLMC, then the Purchaser
may immediately terminate this Agreement and accelerate performance of the
provisions of the Purchase Agreement to require immediate transfer of the
Servicing Rights.
SECTION 6.02 Damages. The Purchaser shall have the right at any time to
seek and recover from the Servicer any damages or losses suffered by it as a
result of any failure by the Servicer to observe or perform any duties,
obligations, covenants or agreements herein contained, or as a result of a
party's failure to remain an approved FNMA mortgage servicer.
SECTION 6.03 Termination. The respective obligations and responsibilities
of the Servicer shall terminate upon: (i) the later of the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan serviced by the Servicer or the disposition of all REO Property serviced by
the Servicer and the remittance of all funds due
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hereunder; or (ii) by mutual consent of the Servicer and the Purchaser in
writing, unless earlier terminated pursuant to this Agreement.
SECTION 6.04 Termination Without Cause. The Purchaser may, at its sole
option, upon not less than thirty (30) days' prior written notice to the
Servicer terminate any rights the Servicer may have hereunder with respect to
any or all of the Mortgage Loans, without cause, upon written notice, provided
that the Servicer shall have an additional period of not more than sixty (60)
days from and after the date of said notice from the Purchaser within which to
effect the related transfer of servicing. Any such notice of termination shall
be in writing and delivered to the Servicer as provided in Section 12.01 of this
Agreement. In the event of such termination, the Servicer shall be entitled to a
Termination Fee, equal to 2.0% of the then current aggregate unpaid principal
balance of the related Mortgage Loans; provided, however, that the successor
servicer is not an Affiliate of the Servicer.
ARTICLE VII
BOOKS AND RECORDS
SECTION 7.01 Possession of Servicing Files. The contents of each Servicing
File are and shall be held in trust by the Servicer for the benefit of the
Purchaser as the owner thereof. The Servicer shall maintain in the Servicing
File a copy of the contents of each Mortgage File and the originals of the
documents in each Mortgage File not delivered to the Purchaser. The possession
of the Servicing File by the Servicer is at the will of the Purchaser for the
sole purpose of servicing the related Mortgage Loan, pursuant to this Agreement,
and such retention and possession by the Servicer is in its capacity as Servicer
only and at the election of the Purchaser. The Servicer shall release its
custody of the contents of any Servicing File only in accordance with written
instructions from the Purchaser or other termination of the Servicer with
respect to the related Mortgage Loans, unless such release is required as
incidental to the Servicer's servicing of the Mortgage Loans pursuant to this
Agreement, or is in connection with a repurchase of any Mortgage Loan pursuant
to Section 8.03 of the Purchase Agreement or Section 4.02 of this Agreement.
The Servicer shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be marked
clearly to reflect the ownership of each Mortgage Loan by the Purchaser. In
particular, the Servicer shall maintain in its possession, available for
inspection by the Purchaser or its designee during normal business hours, and
shall deliver to the Purchaser or its designee upon reasonable notice, evidence
of compliance with all federal, state and local laws, rules and regulations, and
requirements of FNMA or FHLMC, including but not limited to documentation as to
the method used in determining the applicability of the provisions of the Flood
Disaster Protection Act of 1973, as amended, to the Mortgaged Property,
documentation evidencing insurance coverage and eligibility of any condominium
project for approval by FNMA and periodic inspection reports as required by
Section 2.13 and the FNMA Guides.
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To the extent that original documents are not required for purposes of
realization of Liquidation Proceeds or Insurance Proceeds, documents maintained
by the Servicer may be in the form of microfilm or microfiche so long as the
Servicer complies with the requirements of the FNMA Guides.
The Servicer shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Servicer shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Servicer shall be under no obligation to deal with any
person with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell or transfer one or more of the
Mortgage Loans. The Purchaser also shall advise the Servicer of the transfer.
Upon receipt of notice of the transfer, the Servicer shall mark its books and
records to reflect the ownership of the Mortgage Loans of such assignee, and
shall release the Purchaser from its obligations hereunder with respect to the
Mortgage Loans sold or transferred.
ARTICLE VIII
INDEMNIFICATION AND ASSIGNMENT
SECTION 8.01 Indemnification. The Servicer agrees to indemnify and hold the
Purchaser harmless from any liability, claim, loss or damage (including, without
limitation, any reasonable legal fees, judgments or expenses relating to such
liability, claim, loss or damage) to the Purchaser directly or indirectly
resulting from the Servicer's failure to observe and perform any or all of
Servicer's duties, obligations, covenants, agreements, warranties or
representations contained in this Agreement or in the Purchase Agreement or the
Servicer's failure to comply with all applicable requirements with respect to
the transfer of Servicing Rights as set forth herein.
The Servicer shall notify the Purchaser as soon as reasonably possible if a
claim is made by a third party with respect to this Agreement.
SECTION 8.02 Limitation on Liability of Servicer and Others. Neither the
Servicer nor any of the directors, officers, employees or agents of the Servicer
shall be under any liability to the Purchaser for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment, provided, however, that this provision
shall not protect the Servicer or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in material compliance with any standard of care set forth in this Agreement, or
any liability which would otherwise be imposed by reason of any breach of the
terms and conditions of this Agreement. The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted
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by any Person with respect to any matter arising hereunder. The Servicer shall
not be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expense or liability, provided, however, that the Servicer may, with the prior
written consent of the Purchaser, undertake any such action which it may deem
necessary or desirable in respect to this Agreement and the rights and duties of
the parties hereto. In such event, the Servicer shall be entitled to
reimbursement from the Purchaser of the reasonable legal expenses and costs of
such action.
SECTION 8.03 Limitation on Registration and Assignment by Servicer. The
Purchaser has entered into this Agreement with the Servicer in reliance upon the
independent status of the Servicer, and the representations as to the adequacy
of its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Servicer shall not (i) assign this Agreement or the servicing
hereunder or (ii) delegate any substantial part of its rights or duties
hereunder without the prior written consent of the Purchaser, which consent
shall not be unreasonably withheld or conditioned provided that (a) any
delegation of such rights or duties shall not release the Servicer from its
obligations hereunder and the Servicer shall remain responsible hereunder for
all acts and omissions of any delegee as if such acts or omissions were those of
the Servicer and (b) any such assignee or designee shall satisfy the
requirements for a successor or surviving Person set forth in Section 8.05 and
Section 8.06 hereof. The Servicer shall notify the Purchaser in writing at least
30 days prior to selling or otherwise disposing of all or substantially all of
its assets and receipt of such notice shall entitle the Purchaser to terminate
this Agreement except as set forth in Section 8.05 hereof.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Servicer and the Purchaser or upon
the determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Servicer's responsibilities and obligations hereunder in the manner provided in
Section 8.06.
Without in any way limiting the generality of this Section 8.03, in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof without (i) satisfying the requirements set forth herein or (ii) the
prior written consent of the Purchaser, then the Purchaser shall have the right
to terminate this Agreement as set forth in Section 6.04, without any payment of
any penalty or damages and without any liability whatsoever to the Servicer
(other than with respect to accrued but unpaid Servicing Fees and Servicing
Advances remaining unpaid) or any third party.
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SECTION 8.04 Assignment by Purchaser. The Purchaser shall have the right,
without the consent of the Servicer, to assign, in whole or in part, its
interest under this Agreement with respect to some or all of the Mortgage Loans,
and designate any person to exercise any rights of the Purchaser hereunder, by
executing an Assignment and Assumption Agreement substantially in the form of
Exhibit G to the Purchase Agreement and the assignee or designee shall accede to
the rights and obligations hereunder of the Purchaser with respect to such
Mortgage Loans. All references to the Purchaser in this Agreement shall be
deemed to include its assignee or designee. Notwithstanding the foregoing, at
any one time there shall not be more than fifteen (15) separate Purchasers under
this Agreement.
SECTION 8.05 Merger or Consolidation of the Servicer. The Servicer will
keep in full effect its existence, rights and franchises as a corporation under
the laws of the state of its incorporation except as permitted herein, 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.
Any Person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be the successor of the Servicer 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 be an institution whose
deposits are insured by FDIC or a company whose business includes the
origination and servicing of mortgage loans, shall be qualified to service
mortgage loans on behalf of FNMA or FHLMC and shall satisfy the requirements of
Section 8.06 with respect to the qualifications of a successor to the Servicer.
SECTION 8.06 Successor to the Servicer. Prior to termination of Servicer's
responsibilities and duties under this Agreement pursuant to Sections 2.17,
6.04, 8.03 or 11.01, the Purchaser shall (i) succeed to and assume all of the
Servicer's responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having a tangible net worth of not less
than $30,000,000 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement
prior to the termination of Servicer's responsibilities, duties and liabilities
under this Agreement. Any successor to the Servicer shall be a FNMA- or
FHLMC-approved servicer in good standing. In connection with such appointment
and assumption, the Purchaser may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor shall
agree. In the event that the Servicer's duties, responsibilities and liabilities
under this Agreement should be terminated pursuant to the aforementioned
sections, the Servicer shall discharge such duties and responsibilities during
the period from the date it acquires knowledge of such termination until the
effective date thereof with the same degree of diligence and prudence which it
is obligated to exercise under this Agreement, and shall take no action
whatsoever that might impair or prejudice the rights
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or financial condition of its successor. The resignation or removal of Servicer
pursuant to the aforementioned Sections shall not become effective until a
successor shall be appointed pursuant to Article X hereof this Section and shall
in no event relieve the Servicer of the representations, warranties and
covenants made pursuant to and the remedies available to the Purchaser with
respect thereto, it being understood and agreed that the provisions of such
Article X shall be applicable to the Servicer notwithstanding any such
resignation or termination of the Servicer, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Servicer and to the Purchaser, an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement.
Any termination of this Agreement pursuant to Section 2.17, 6.04, 8.03 or 11.01
shall not affect any claims that the Purchaser may have against the Servicer
arising prior to any such termination or resignation.
The Servicer shall timely deliver to the successor the funds in the
Custodial Account and the Escrow Account and the Mortgage Files and related
documents and statements held by it hereunder and the Servicer shall account for
all funds. The Servicer shall execute and deliver such instruments and do such
other things all as may reasonably be required to more fully and definitely vest
and confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer. The successor shall make
arrangements as it may deem appropriate to reimburse the Servicer for amounts
the Servicer actually expended pursuant to this Agreement which the successor is
entitled to retain hereunder and which would otherwise have been recovered by
the Servicer pursuant to this Agreement but for the appointment of the successor
servicer.
Upon a successor's acceptance of appointment as such, the Servicer shall
notify by mail the Purchaser of such appointment.
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
As of the Closing Date, the Purchaser warrants and represents to, and
covenants and agrees with, the Servicer as follows:
SECTION 9.01 Due Organization and Authority. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware. The Purchaser has the full corporate power and authority to
execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement by the Purchaser and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the
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valid, binding and enforceable obligation of the Purchaser; and all requisite
corporate action has been taken by the Purchaser to make this Agreement valid
and binding upon the Purchaser in accordance with its terms;
SECTION 9.02 No Conflicts. Neither the execution and delivery of this
Agreement, 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 Purchaser's charter or by-laws or any legal
restriction or any agreement or instrument to which the Purchaser is now a party
or by which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Purchaser or its property is
subject;
SECTION 9.03 Ability to Perform. The Purchaser does not believe, nor does
it have any reason or cause to believe, that it cannot perform each and every
covenant made by it in this Agreement.
SECTION 9.04 No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Purchaser, 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, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Purchaser, or in
any material impairment of the right or ability of the Purchaser to carry on its
business substantially as now conducted, or in any material liability on the
part of the Purchaser, or which would draw into question the validity of this
Agreement or of any action taken or to be taken in connection with the
obligations of the Purchaser contemplated herein.
SECTION 9.05 No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Purchaser of, or compliance by the Purchaser
with, this Agreement as evidenced by the consummation of the transactions
contemplated by this Agreement, or if required, such approval has been obtained
prior to the Closing Date.
SECTION 9.06 Assistance. To the extent reasonably possible, the Purchaser
shall cooperate with and assist the Servicer as requested by the Servicer, in
carrying out Servicer's covenants, agreements, duties and responsibilities under
the Purchase Agreement and in connection therewith shall execute and deliver all
such papers, documents and instruments as nay be necessary and appropriate in
furtherance thereof.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SERVICER
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As of the Closing Date, the Servicer warrants and represents to, and
covenants and agrees with, the Purchaser as follows:
SECTION 10.01 Due Organization and Authority. The Servicer is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware as now being conducted and is licensed, qualified and in good
standing in each state where a Mortgaged Property is located if the laws of such
state require licensing or qualification in order to conduct business of the
type conducted by the Servicer, and in any event the Servicer 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 Servicer has the full corporate power and authority to execute
and deliver this Agreement and to perform in accordance herewith; the execution,
delivery and performance of this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) by the Servicer and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, legal, binding and enforceable
obligation of the Servicer 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 Servicer to make this Agreement valid and binding upon the Servicer
in accordance with its terms.
SECTION 10.02 Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Servicer.
SECTION 10.03 No Conflicts. Neither the execution and delivery of this
Agreement, 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 Servicer's charter or by-laws or any legal
restriction or any agreement or instrument to which the Servicer 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 Servicer or its property is
subject, 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.
SECTION 10.04 Ability to Service. The Servicer is an approved
seller/servicer of conventional residential mortgage loans for FNMA and FHLMC,
with the facilities, procedures, and experienced personnel necessary for the
sound servicing of mortgage loans of the same type as the Mortgage Loans. The
Servicer is duly qualified, licensed, registered and otherwise authorized under
all applicable federal, state and local laws,
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and regulations, if applicable, meets the minimum capital requirements set forth
by the OTS, the OCC or the FDIC, and is in good standing to enforce, originate,
sell mortgage loans to, and service mortgage loans in the jurisdiction wherein
the Mortgaged Properties are located for, either FNMA or FHLMC, and no event has
occurred, including but not limited to a change in insurance coverage, which
would make the Servicer unable to comply with either FNMA or FHLMC eligibility
requirements or which would require notification to FNMA or FHLMC.
SECTION 10.05 Ability to Perform. The Servicer 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.
SECTION 10.06 No Litigation Pending. There is no action, suit, proceeding
or investigation pending or threatened against the Servicer, 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, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Servicer, or in any
material impairment of the right or ability of the Servicer to carry on its
business substantially as now conducted, or in any material liability on the
part of the Servicer, 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 Servicer contemplated herein, or which
would be likely to impair materially the ability of the Servicer to perform
under the terms of this Agreement.
SECTION 10.07 No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Servicer of or compliance by the Servicer with
this Agreement or the servicing of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the Closing Date.
SECTION 10.08 No Untrue Information. Neither this Agreement nor any
statement, tape, diskette, form, report or other document furnished or to be
furnished pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of fact or omits to state a
fact necessary to make the statements contained therein not misleading.
SECTION 10.09 Reasonable Servicing Fee. The Servicer acknowledges and
agrees that the Servicing Fee represents reasonable compensation for performing
such services and that the entire Servicing Fee shall be treated by the
Servicer, for accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement.
33
<PAGE>
SECTION 10.10 Financial Statements. The Servicer has delivered to the
Purchaser financial statements as to its last two complete fiscal years. All
such financial statements fairly present the pertinent results of operations and
changes in financial position for each of such periods and the financial
position at the end of each such period of the Servicer and its subsidiaries and
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto. There has been no change in the business, operations, financial
condition, properties or assets of the Servicer since the date of the Servicer's
financial statements that would have a material adverse effect on its ability to
perform its obligations under this Agreement.
SECTION 10.11 Conflict of Interest. The Servicer agrees that it shall
services the Mortgage Loans hereunder solely with a view toward the interests of
the Purchaser, and without regard to the interests of the Seller or its other
affiliates.
ARTICLE XI
DEFAULT
SECTION 11.01 Events of Default. The following shall constitute an Event of
Default under this Agreement on the part of the Servicer:
(a) any failure by the Servicer to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of five (5) Business Days after the date upon which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Purchaser; or
(b) the failure by the Servicer duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the Servicer set
forth in this Agreement which continues unremedied for a period of thirty (30)
days (except that such number of days shall be fifteen (15) in the case of a
failure to pay any premium for any insurance policy required to be maintained
under this Agreement) after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by the
Purchaser; or
(c) a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or liquidator in
any insolvency, bankruptcy, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of sixty (60)
days; or
34
<PAGE>
(d) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Servicer or of or relating to all or substantially all of its property; or
(e) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(f) the Servicer ceases to meet the qualifications of a FNMA or FHLMC
seller/servicer which continues unremedied for a period of thirty (30) days
after the date of such cessation; or
(g) the Servicer, without the consent of the Purchaser, attempts to assign
this Agreement or the servicing responsibilities hereunder or to delegate any
substantial part of its duties hereunder or any portion thereof; or
(h) the Servicer fails to maintain its license to do business or service
residential mortgage loans in any jurisdiction where the Mortgaged Properties
are located and such failure results in a material adverse effect on the
Mortgage Loans, the servicing of the Mortgage Loans, or the Purchaser's rights
with respect to the Mortgage Loans.
In each and every such case, so long as an Event of Default shall not have
been remedied, in addition to whatsoever rights the Purchaser may have at law or
equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Servicer, may terminate without
compensation or reimbursement (other than Servicing Fees previously earned but
remaining unpaid and Servicing Advances remaining unreimbursed) all the rights
and obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof.
Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the successor appointed
pursuant to Section 8.06. Upon written request from the Purchaser, the Servicer
shall prepare, execute and deliver any and all documents and other instruments
reasonably requested by the Purchaser, place in such successor's possession all
Mortgage Files (to the extent not properly delivered to the Purchaser by the
Servicer previously), and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the Servicer's sole expense. The Servicer
agrees to reasonably cooperate with the Purchaser and such successor in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Servicer to
35
<PAGE>
the Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
SECTION 11.02 Waiver of Defaults. The Purchaser may waive any default by
the Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01 Notices. All notices, requests, demands and other
communications which are required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given upon the
delivery or mailing thereof, as the case may be, sent by registered or certified
mail, return receipt requested:
(a) If to Purchaser to:
Chase Preferred Capital Corporation
270 Park Avenue
New York, N.Y. 10017
Attention: Neila B. Radin
(b) If to Servicer to:
Chase Mortgage Services, Inc.
Attention:
SECTION 12.02 Waivers. Either the Servicer or the Purchaser may upon
consent of all parties, by written notice to the others:
(a) Waive compliance with any of the terms, conditions or covenants
required to be complied with by the others hereunder; and
(b) Waive or modify performance of any of the obligations of the others
hereunder.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other subsequent breach.
36
<PAGE>
SECTION 12.03 Entire Agreement; Amendment. This Agreement and the Purchase
Agreement constitute the entire agreement between the parties with respect to
servicing of the Mortgage Loans. This Agreement may be amended and any provision
hereof waived, but, only in writing signed by the party against whom such
enforcement is sought.
SECTION 12.04 Execution; Binding Effect. This Agreement may be executed in
one or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement. Subject to Sections 8.03 and 8.04, this Agreement shall inure to the
benefit of and be binding upon the Servicer and the Purchaser and their
respective successors and assigns.
SECTION 12.05 Headings. Headings of the Articles and Sections in this
Agreement are for reference purposes only and shall not be deemed to have any
substantive effect.
SECTION 12.06 Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies hereunder shall be determined in accordance with the substantive
laws of the State of New York (without regard to conflicts of laws principles),
except to the extent preempted by Federal law.
SECTION 12.07 Relationship of Parties. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture between the
parties. The duties and responsibilities of the Servicer shall be rendered by it
as an independent contractor and not as an agent of the Purchaser. The Servicer
shall have full control of all of its acts, doings, proceedings, relating to or
requisite in connection with the discharge of its duties and responsibilities
under this Agreement.
SECTION 12.08 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
SECTION 12.09 Recordation of Assignments of Mortgage. To the extent
permitted by applicable law, each of the Assignments of Mortgage is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Purchaser or the
Purchaser's designee, but in any event, at the Servicer's expense for a single
recordation relating to each Assignment of Mortgage in the event recordation is
either necessary under applicable law or requested by the Purchaser at its sole
option.
37
<PAGE>
SECTION 12.10 Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are integral parts of this Agreement.
38
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date and year first above written.
CHASE PREFERRED CAPITAL
CORPORATION
(the Purchaser)
By:______________________________
Name:____________________________
Title:___________________________
CHASE MORTGAGE SERVICES, INC.
(the Servicer)
By:______________________________
Name:____________________________
Title:___________________________
39
<PAGE>
EXHIBIT 1
MONTHLY REMITTANCE ADVICE
<PAGE>
EXHIBIT 2
CUSTODIAL ACCOUNT CERTIFICATION
_______, 1996
_________________ hereby certifies that it has established the account
described below as a Custodial Account pursuant to Section 2.04 of the Servicing
Agreement, dated as of ______, 1996.
Title of Account: "Chase Mortgage Services, Inc., in trust for Purchaser of
Residential Mortgage Loans, and various Mortgagors."
Account Number: ________________________
Address of office or branch of the Servicer at which Account is maintained:
______________________________
______________________________
______________________________
______________________________
______________________________
CHASE MORTGAGE SERVICES, INC.
By:______________________________
Name:____________________________
Title:___________________________
<PAGE>
EXHIBIT 3
CUSTODIAL ACCOUNT LETTER AGREEMENT
______, 1996
To: ____________________
____________________
____________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of ______, 1996,
Adjustable and Fixed Rate Mortgage Loans, (the "Agreement"), we hereby authorize
and request you to establish an account, as a Custodial Account pursuant to
Section 2.04 of the Agreement, to be designated as Chase Mortgage Services,
Inc., in trust for Purchaser of Residential Mortgage Loans, and various
Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. You may refuse any deposit which
would result in violation of the requirement that the account be fully insured
as described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
CHASE MORTGAGE SERVICES, INC.
By:______________________________
Name:____________________________
Title:___________________________
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number , at the office of the
Depository indicated above, and agrees to honor withdrawals on such account as
provided above. The full amount deposited at any time in the account will be
insured by the Federal Deposit Insurance Corporation through the Bank Insurance
Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
_________________________________
Depository
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
<PAGE>
EXHIBIT 4
ESCROW ACCOUNT CERTIFICATION
_____________, 1996
____________________________hereby certifies that it has established the
account described below as an Escrow Account pursuant to Section 2.06 of the
Servicing Agreement, dated as of ________, 1996, Conventional Residential
Mortgage Loans.
Title of Account: "Chase Mortgage Services, Inc. in trust for Purchaser of
Residential and various Mortgagors."
Account Number: _____________________________
Address of office or branch
of the Servicer at which
Account is maintained:
______________________________
______________________________
______________________________
______________________________
CHASE MORTGAGE SERVICES, INC.
By: __________________________
Name: ________________________
Title: _______________________
<PAGE>
EXHIBIT 5
ESCROW ACCOUNT LETTER AGREEMENT
______________, 1996
To: __________________________
__________________________
__________________________
(the "Depository")
As Servicer under the Servicing Agreement, dated as of ____________, 1996,
Conventional Residential Mortgage Loans (the "Agreement"), we hereby authorize
and request you to establish an account, as an Escrow Account pursuant to
Section 2.06 of the Agreement, to be designated as "Chase Mortgage Services,
Inc. in trust for the Purchasers of Residential Mortgage Loans, and various
Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. You may refuse any deposit which
would result in violation of the requirement that the account be fully insured
as described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
CHASE MORTGAGE SERVICES, INC.
By: _____________________________
Name: ___________________________
Title: __________________________
Date:____________________________
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number , at the office of the
Depository indicated above, and agrees to honor withdrawals on such account as
provided above. The full amount deposited at any time in the account will be
insured by the Federal Deposit Insurance Corporation through the Bank Insurance
Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
_________________________________
Depository
By: _____________________________
Name: ___________________________
Title: __________________________
Date:____________________________
================================================================================
SERVICING
AGREEMENT
between
CHASE PREFERRED CAPITAL CORPORATION
Purchaser
THE CHASE MANHATTAN BANK
Seller
Dated as of _____, 1996
CONVENTIONAL COMMERCIAL MORTGAGE LOANS
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.............................. 1
Section 1. Definitions............................................. 1
ARTICLE II
SERVICING............................... 5
Section 2.01 Seller to Act as Servicer.............................. 5
Section 2.02 Liquidation of Mortgage Loans.......................... 7
Section 2.03 Collection of Mortgage Loan Payments................... 8
Section 2.04 Establishment of and Deposits to Custodial Account..... 8
Section 2.05 Permitted Withdrawals From Custodial Account........... 9
Section 2.06 Establishment of and Deposits to Escrow Account........ 11
Section 2.07 Permitted Withdrawals From Escrow Account.............. 11
Section 2.09 Protection of Accounts................................. 13
Section 2.10 Maintenance of Hazard Insurance........................ 13
Section 2.11 Maintenance of Mortgage Impairment Insurance........... 14
Section 2.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance.......................................... 14
Section 2.13 Inspections............................................ 15
Section 2.14 Restoration of Mortgaged Property...................... 15
Section 2.15 Deteriorating Mortgage Loans........................... 16
Section 2.16 Title, Management and Disposition of REO Property...... 16
Section 2.17 Permitted Withdrawals with respect to REO Property..... 17
Section 2.18 Real Estate Owned Reports.............................. 18
Section 2.19 Liquidation Reports.................................... 18
Section 2.20 Reports Of Foreclosures and Abandonments............... 18
Section 2.21 Notification of Adjustments............................ 18
Section 2.22 Notification of Maturity Date.......................... 19
ARTICLE III
PAYMENTS TO PURCHASER......................... 19
Section 3.01 Remittances............................................ 19
Section 3.02 Statements to Purchaser................................ 20
ARTICLE IV
<PAGE>
GENERAL SERVICING PROCEDURES...................... 21
Section 4.01 Transfers of Mortgaged Property........................ 21
Section 4.02 Satisfaction of Mortgages and Release of Mortgage Files 21
Section 4.03 Servicing Compensation................................. 22
Section 4.04 Annual Statement as to Compliance...................... 22
Section 4.05 Annual Independent Public Accountants' Servicing Report 22
Section 4.06 Right to Examine Seller Records........................ 23
ARTICLE V
SELLER TO COOPERATE.......................... 23
Section 5.01 Provision of Information............................... 23
Section 5.02 Financial Statements; Servicing Facilities............. 23
ARTICLE VI
TERMINATION.............................. 24
Section 6.01 Damages................................................ 24
Section 6.02 Termination............................................ 24
Section 6.03 Termination Without Cause.............................. 24
ARTICLE VII
BOOKS AND RECORDS........................... 24
Section 7.01 Possession of Servicing Files.......................... 24
ARTICLE VIII
INDEMNIFICATION AND ASSIGNMENT..................... 25
Section 8.01 Indemnification........................................ 25
Section 8.02 Limitation on Liability of Seller and Others........... 26
Section 8.03 Limitation on Registration and Assignment by Seller.... 26
Section 8.04 Assignment by Purchaser................................ 27
Section 8.05 Merger or Consolidation of the Seller.................. 27
Section 8.06 Successor to the Seller................................ 28
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER......... 29
Section 9.01 Due Organization and Authority......................... 29
Section 9.02 No Conflicts........................................... 29
Section 9.03 Ability to Perform..................................... 29
Section 9.04 No Litigation Pending.................................. 29
Section 9.05 No Consent Required.................................... 30
<PAGE>
Section 9.06 Assistance............................................. 30
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SELLER................ 30
Section 10.01 Due Organization and Authority........................ 30
Section 10.02 Ordinary Course of Business........................... 30
Section 10.03 No Conflicts.......................................... 31
Section 10.05 Ability to Service.................................... 31
Section 10.05 Ability to Perform.................................... 31
Section 10.06 No Litigation Pending................................. 31
Section 10.07 No Consent Required................................... 31
Section 10.08 No Untrue Information................................. 31
Section 10.09 Reasonable Servicing Fee.............................. 32
Section 10.10 Financial Statements.................................. 32
Section 10.11 Conflict of Interest.................................. 32
ARTICLE XI
DEFAULT................................ 32
Section 11.01 Events of Default..................................... 32
Section 11.02 Waiver of Defaults.................................... 34
ARTICLE XII
MISCELLANEOUS PROVISIONS........................ 34
Section 12.01 Notices............................................... 34
Section 12.02 Waivers............................................... 34
Section 12.03 Entire Agreement; Amendment........................... 35
Section 12.04 Execution; Binding Effect............................. 35
Section 12.05 Headings.............................................. 35
Section 12.06 Applicable Law........................................ 35
Section 12.07 Relationship of Parties............................... 35
Section 12.08 Severability of Provisions............................ 35
Section 12.09 Recordation of Assignments of Mortgage................ 35
Section 12.10 Exhibits.............................................. 36
<PAGE>
EXHIBITS
EXHIBIT 1 FORM OF MONTHLY REMITTANCE ADVICE
EXHIBIT 2 FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT 3 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT 4 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT 5 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT 6 FORM OF CONFIDENTIALITY AGREEMENT
<PAGE>
SERVICING AGREEMENT
This Servicing Agreement (the "Servicing Agreement" or the "Agreement") is
entered into as of ________, 1996, by and between THE CHASE MANHATTAN BANK (the
"Seller"), a New York corporation, and CHASE PREFERRED CAPITAL CORPORATION, a
Delaware corporation (the "Purchaser").
WHEREAS, the Purchaser and the Seller entered into a Mortgage Loan Purchase
and Warranties Agreement dated as of ________, 1996 (the "Purchase Agreement")
pursuant to which the Purchaser agreed to purchase from the Seller certain
conventional, commercial, adjustable rate first mortgage loans (the "Mortgage
Loans") to be delivered as whole loans, with the Seller retaining servicing
rights in connection with the purchase of such Mortgage Loans; and
WHEREAS, the Purchaser desires to have the Seller service the Mortgage
Loans, the Seller desires to service and administer the Mortgage Loans on behalf
of the Purchaser, and the parties desire to provide the terms and conditions of
such servicing by the Seller.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein and for other good and valuable consideration, the receipt and the
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1. Definitions. All capitalized terms not otherwise defined herein
have the respective meanings set forth in the Purchase Agreement. The following
terms are defined as follows:
"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.
"Ancillary Income" means all late charges, prepayment fees, assumption
fees, escrow account benefits, reinstatement fees, and similar types of fees
arising from or in connection with any Mortgage Loan to the extent not otherwise
payable to the Mortgagor under applicable law or pursuant to the terms of the
related Mortgage Note.
"Best's" means Best's Key Rating Guide.
<PAGE>
"BIF" means The Bank Insurance Fund, or any successor thereto.
"Closing Date" means _______, 1996, or such other date as is mutually
agreed upon by the parties hereto.
"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.
"Custodial Account" means the separate account or accounts created and
maintained pursuant to Section 2.04.
"Cut-off Date" means __________, 1996.
"Due Period" means with respect to each Remittance Date, the period
commencing on the second day of the month preceding the month of the Remittance
Date and ending on the first day of the month of the Remittance Date.
"Errors and Omissions Insurance Policy" means an errors and omissions
insurance policy to be maintained by the Seller pursuant to Section 2.12.
"Escrow Account" means the separate account or accounts created and
maintained pursuant to Section 2.06.
"Escrow Payment" 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.
"Event of Default" means any one of the conditions or circumstances
enumerated in Section 11.01.
"FDIC" means The Federal Deposit Insurance Corporation, or any successor
thereto.
"Fidelity Bond" means a fidelity bond to be maintained by the Seller
pursuant to Section 2.12.
"Insurance Proceeds" means, with respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
2
<PAGE>
"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.
"Monthly Remittance Advice" means the monthly remittance advice, in the
form of Exhibit A annexed hereto, to be provided to the Purchaser pursuant to
Section 3.02.
"Mortgage Impairment Insurance Policy" means a mortgage impairment or
blanket hazard insurance policy as described in Section 2.11.
"Nonrecoverable Advance" means any advance of principal and interest
previously made or proposed to be made in respect of a Mortgage Loan which, in
the good faith judgment of the Seller, will not or, in the case of a proposed
advance of principal and interest, would not, be ultimately recoverable from
related Insurance Proceeds, Liquidation Proceeds or otherwise. The determination
by the Seller that it has made a Nonrecoverable Advance or that any proposed
advance of principal and interest, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by an Officers' Certificate delivered to the
Purchaser.
"OCC" means Office of the Comptroller of the Currency, or any successor
thereto.
"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.
"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 (Northeast
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 Agreement" means the Mortgage Loan Purchase and Warranties
Agreement between the Purchaser and the Seller related to the purchase of the
Mortgage Loans dated as of _________, 1996.
"Qualified Depository" means a depository the accounts of which are insured
by the FDIC through the BIF or the SAIF.
3
<PAGE>
"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.
"Record Date" means the close of business of the last Business Day of the
month preceding the month of the related Remittance Date.
"Remittance Date" means the 18th day (or if such 18th day is not a Business
Day, the first Business Day immediately following) of any month, beginning with
the first Remittance Date on _____ 18, 1996.
"REO Property" means a Mortgaged Property acquired by the Seller on behalf
of the Purchaser through foreclosure or by deed in lieu of foreclosure, as
described in Section 2.16.
"SAIF" means the Savings Association Insurance Fund, or any successor
thereto.
"Servicing Advances" means all customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Seller of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and liquidation
of the Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage and (d) compliance with the obligations under Section 2.08
(except with respect to any expenses incurred in connection with procuring or
transferring Tax Service Contracts, as provided therein).
"Servicing Agreement" means this agreement between the Purchaser and the
Seller for the servicing and administration of the Mortgage Loans.
"Servicing Fee" means, with respect to each Mortgage Loan, the amount of
the annual fee the Purchaser shall pay to the Seller, which shall, for a period
of one (1) full month, be equal to one-twelfth of the product of the Servicing
Fee Rate and (2) the Stated Principal Balance of such Mortgage Loan. Such fee
shall be payable monthly, computed on the basis of the same principal amount and
period in respect of which any related interest payment on a Mortgage Loan is
computed and shall be pro rated for any portion of a month during which the
Mortgage Loan is serviced by the Seller under this 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 Section 4.03) of
such Monthly Payment collected by the Seller, or as otherwise provided under
Section 4.03.
4
<PAGE>
"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 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 listed on Exhibit A to the Purchase Agreement.
"Servicing Officer" means any officer of the Seller involved in or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished by the Seller to the
Purchaser upon request, as such list may from time to time be amended.
"Tax Service Contract" means a paid-in-full, life-of-loan tax service
contract with TransAmerica Real Estate Tax Service, Inc., as described in
Section 2.08 hereof.
"Termination Fee" means the amount paid by the Purchaser to the Seller in
the event of the Seller's termination, without cause, as servicer. Such fee
shall equal the percentage amount set forth in Section 6.03 hereof of the then
current aggregate unpaid principal balance of the related Mortgage Loans.
ARTICLE II
SERVICING
Section 2.01 Seller to Act as Servicer. From and after the Closing Date,
the Seller, as an independent contractor, shall service and administer the
Mortgage Loans and shall have full power and authority, acting alone, to do any
and all things in connection with such servicing and administration which the
Seller may deem necessary or desirable, consistent with the terms of this
Agreement and with Accepted Servicing Practices.
Consistent with the terms of this Agreement, the Seller may waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of strict
compliance with any such term or in any manner grant indulgence to any Mortgagor
if in the Seller's reasonable and prudent determination such waiver,
modification, postponement or indulgence is not materially adverse to the
Purchaser, provided, however, that unless the Seller has obtained the prior
written consent of the Purchaser, the Seller shall not permit any modification
with respect to any Mortgage Loan that would change the Mortgage Interest Rate,
defer or forgive the payment of principal or interest, reduce or increase the
outstanding principal balance (except for actual payments of principal) or
change the final maturity date on such Mortgage Loan. In the event of any such
modification which permits the deferral of interest or principal payments on any
Mortgage Loan, the Seller shall, on the Business Day
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immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred, deposit in the Custodial
Account from its own funds, in accordance with Section 2.04, the difference
between (a) such month's principal and one (1) month's interest at the Mortgage
Interest Rate on the unpaid principal balance of such Mortgage Loan and (b) the
amount paid by the Mortgagor. The Seller shall be entitled to reimbursement for
such advances to the same extent as for all other advances made pursuant to
Section 2.05. Without limiting the generality of the foregoing, the Seller shall
continue, and is hereby authorized and empowered, to execute and deliver on
behalf of itself and the Purchaser, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Mortgage Loans and with respect to the
Mortgaged Properties. If reasonably required by the Seller, the Purchaser shall
furnish the Seller with any powers of attorney and other documents necessary or
appropriate to enable the Seller to carry out its servicing and administrative
duties under this Agreement.
In servicing and administering the Mortgage Loans, the Seller shall employ
procedures (including collection procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, giving due consideration to Accepted Servicing Practices
where such practices do not conflict with the requirements of this Agreement,
and the Purchaser's reliance on the Seller.
The Seller shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Seller shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, Seller shall be under no obligation to deal with any Person with
respect to this Agreement or the Mortgage Loans unless the Seller has been
notified of such transfers as provided in this Section 2.01. The Purchaser may
sell and transfer, in whole or in part, the Mortgage Loans, provided that no
such sale and transfer shall be binding upon the Seller unless such transferee
shall agree in writing in the form of the Assignment and Assumption Agreement
attached to the Purchase Agreement as Exhibit I, to be bound by the terms of
this Agreement and the Purchase Agreement, and an executed copy of the same
shall have been delivered to the Seller. Upon receipt thereof, the Seller shall
mark its books and records to reflect the ownership of the Mortgage Loans by
such assignee, and the previous Purchaser shall be released from its obligations
hereunder. The Seller shall be required to remit all amounts required to be
remitted to the Purchaser hereunder to said transferee 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. This Agreement shall be binding upon and inure to the
benefit of the Purchaser and the Seller and their permitted successors,
assignees and designees.
The Servicing File retained by the Seller pursuant to this Agreement shall
be appropriately marked and identified in the Seller's computer system to
clearly reflect the sale of the related Mortgage Loan to the Purchaser. The
Seller shall release from its custody the
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contents of any Servicing File retained by it only in accordance with this
Agreement, except when such release is required in connection with a repurchase
of any such Mortgage Loan pursuant to Section 8.03 of the Purchase Agreement.
The Seller must have an internal quality control program that verifies, on
a regular basis, the existence and accuracy of the legal documents, credit
documents, property appraisals, and underwriting decisions. The program must be
capable of evaluating and monitoring the overall quality of its loan production
and servicing activities. The program is to ensure that the Mortgage Loans are
serviced in accordance with prudent mortgage banking practices and accounting
principles; guard against dishonest, fraudulent, or negligent acts; and guard
against errors and omissions by officers, employees, or other authorized
persons.
Section 2.02 Liquidation of Mortgage Loans. In the event that any payment
due under any Mortgage Loan and not postponed pursuant to Section 2.01 is not
paid when the same becomes due and payable, or in the event the Mortgagor fails
to perform any other covenant or obligation under the Mortgage Loan and such
failure continues beyond any applicable grace period, the Seller shall take such
action as (1) the Seller would take under similar circumstances with respect to
a similar mortgage loan held for its own account for investment, (2) shall be
consistent with Accepted Servicing Practices and (3) the Seller shall determine
prudently to be in the best interest of Purchaser. In the event that any payment
due under any Mortgage Loan is not postponed pursuant to Section 2.01 and
remains delinquent for a period of ninety (90) days or any other default
continues for a period of ninety (90) days beyond the expiration of any grace or
cure period (or such other period as is required by law in the jurisdiction
where the related Mortgaged Property is located), the Seller shall commence
foreclosure proceedings, provided that, prior to commencing foreclosure
proceedings, the Seller shall notify the Purchaser in writing of the Seller's
intention to do so, and the Seller shall not commence foreclosure proceedings if
the Purchaser objects to such action within ten (10) Business Days of receiving
such notice or, if the provisions of the next two paragraphs apply, in any event
without the prior written consent of Purchaser. In such connection, the Seller
shall from its own funds make all necessary and proper Servicing Advances,
provided, however, that the Seller shall not be required to expend its own funds
in connection with any foreclosure or towards the restoration or preservation of
any Mortgaged Property, unless it shall determine (a) that such preservation,
restoration and/or foreclosure will increase the proceeds of liquidation of the
Mortgage Loan to Purchaser after reimbursement to itself for such expenses and
(b) that such expenses will be recoverable by it either through Liquidation
Proceeds (in respect of which it shall have priority for purposes of withdrawals
from the Custodial Account pursuant to Section 2.05) or through Insurance
Proceeds (in respect of which it shall have similar priority).
Notwithstanding anything to the contrary contained herein, in connection
with a foreclosure, in the event the Seller has reasonable cause to believe that
a Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if the Purchaser otherwise requests an environmental inspection or review of
such Mortgaged Property to be conducted by a qualified inspector, the Seller
shall cause the Mortgaged Property to be so inspected at
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the expense of the Purchaser. Upon completion of the inspection, the Seller
shall promptly provide the Purchaser with a written report of the environmental
inspection.
After reviewing the environmental inspection report, the Purchaser shall
determine how the Seller shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the Purchaser directs the Seller to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Seller shall be reimbursed for
all reasonable costs associated with such foreclosure or acceptance of a deed in
lieu of foreclosure and any related environmental clean up costs, as applicable,
from the related Liquidation Proceeds, or if the Liquidation Proceeds are
insufficient to fully reimburse the Seller, the Seller shall be entitled to be
reimbursed from amounts in the Custodial Account pursuant to Section 2.05 hereof
and to the extent amounts in the Custodial Account are insufficient to fully
reimburse the Seller,the Seller shall be entitled to be reimbursed by the
Purchaser for such deficiencies (upon presentation of evidence of such
deficiency). In the event the Purchaser directs the Seller not to proceed with
foreclosure or acceptance of a deed in lieu of foreclosure, the Seller shall be
reimbursed for all Servicing Advances made with respect to the related Mortgaged
Property from the Custodial Account pursuant to Section 2.05 hereof.
Section 2.03 Collection of Mortgage Loan Payments. Continuously from the
Closing Date the Seller shall proceed diligently to collect all payments due
under each of the Mortgage Loans when the same shall become due and payable and
shall take special care in ascertaining and estimating Escrow Payments and all
other charges that will become due and payable with respect to the Mortgage
Loans and each related Mortgaged Property, to the end that the installments
payable by the Mortgagors will be sufficient to pay such charges as and when
they become due and payable.
Section 2.04 Establishment of and Deposits to Custodial Account. The Seller
shall segregate and hold all funds collected and received pursuant to the
Mortgage Loans separate and apart from any of its own funds and general assets
and shall establish and maintain one or more Custodial Accounts, in the form of
time deposit or demand accounts, titled "The Chase Manhattan Bank in trust for
Purchaser of Conventional Commercial Mortgage Loans, and various Mortgagors".
The Custodial Account shall be established with a Qualified Depository
acceptable to the Purchaser. Any funds deposited in the Custodial Account shall
at all times be fully insured to the full extent permitted under applicable law;
provided, however, that to the extent the Custodial Account is established with
the Corporate Trust Department of the Seller, the Seller may maintain the
Custodial Account as a single account. Funds deposited in the Custodial Account
may be drawn on by the Seller in accordance with Section 2.05. The creation of
any Custodial Account shall be evidenced by a certification in the form of
Exhibit 2 hereto, in the case of an account established with the Seller, or by a
letter agreement in the form of Exhibit 3 hereto, in the case of an account held
by a depository other than the Seller. A copy of such certification or letter
agreement shall be furnished to the Purchaser and, upon request, to any
subsequent Purchaser.
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The Seller shall deposit in the Custodial Account within one Business Day
of receipt, and retain therein, the following collections received by the Seller
and payments made by the Seller after the Closing Date, other than payments of
principal and interest due on or before the Closing Date, or received by the
Seller prior to the Closing Date but allocable to a period subsequent thereto:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage;
(iii) all Liquidation Proceeds and any amount received with respect to
REO Property;
(iv) all Insurance Proceeds including amounts required to be deposited
pursuant to Section 2.10 (other than proceeds to be held in the Escrow
Account and applied to the restoration or repair of the Mortgaged Property
or released to the Mortgagor in accordance with Section 2.14), and Section
2.11;
(v) all Condemnation Proceeds which are not applied to the restoration
or repair of the Mortgaged Property or released to the Mortgagor in
accordance with Section 2.14;
(vi) any amount required to be deposited in the Custodial Account
pursuant to Section 2.01, 2.09, 2.14, 2.16, 3.01, 3.03 or 4.02;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan pursuant to Section 8.03 of the Purchase Agreement; and
(viii) any amounts required to be deposited by the Seller pursuant to
Section 2.11 in connection with the deductible clause in any blanket hazard
insurance policy.
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, Ancillary Income need not be deposited by the Seller into the
Custodial Account. Any interest paid on funds deposited in the Custodial Account
by the depository institution shall accrue to the benefit of the Seller and the
Seller shall be entitled to retain and withdraw such interest from the Custodial
Account pursuant to Section 2.05.
Section 2.05 Permitted Withdrawals From Custodial Account. Subject to
Section 2.16 hereof, the Seller shall, from time to time, withdraw funds from
the Custodial Account for the following purposes:
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(i) to make payments to the Purchaser in the amounts and in the manner
provided for in Section 3.01;
(ii) to pay to itself the Servicing Fee;
(iii) to reimburse itself for advances of the Seller's funds made
pursuant to Section 3.03, the Seller's right to reimburse itself pursuant
to this subclause (iii) being limited to amounts received on the related
Mortgage Loan which represent late payments of principal and/or interest in
respect of which any such advance was made, it being understood that, in
the case of any such reimbursement, the Seller's right thereto shall be
prior to the rights of Purchaser, except that, where the Seller is required
to repurchase a Mortgage Loan pursuant to Section 8.03 of the Purchase
Agreement or Section 4.02 of this Agreement, respectively, the Seller's
right to such reimbursement shall be subsequent to the payment to the
Purchaser of the Repurchase Price pursuant to such sections and all other
amounts required to be paid to the Purchaser with respect to such Mortgage
Loan;
(iv) to reimburse itself for unreimbursed Servicing Advances (except
to the extent reimbursed pursuant to Section 2.07), any accrued but unpaid
Servicing Fees and for unreimbursed advances of Seller funds made pursuant
to Sections 2.16, 2.16 or 3.03, the Seller's right to reimburse itself
pursuant to this subclause (iv) with respect to any Mortgage Loan being
limited to related Liquidation Proceeds, Condemnation Proceeds, Insurance
Proceeds and such other amounts as may be collected by the Seller from the
Mortgagor or otherwise relating to the Mortgage Loan, it being understood
that, in the case of any such reimbursement, the Seller's right thereto
shall be prior to the rights of the Purchaser except that, where the Seller
is required to repurchase a Mortgage Loan pursuant to Section 8.03 of the
Purchase Agreement or Section 4.02 of this Agreement, respectively, the
Seller's right to such reimbursement shall be subsequent to the payment to
the Purchaser of the Repurchase Price pursuant to such sections and all
other amounts required to be paid to the Purchaser with respect to such
Mortgage Loan;
(v) to pay itself any interest earned on funds deposited in the
Custodial Account (all such interest to be withdrawn monthly not later than
each Remittance Date); and
(vi) to clear and terminate the Custodial Account upon the termination
of this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Seller shall withdraw all funds from the Custodial Account
except for those amounts which, pursuant to Section 3.01, the Seller is not
obligated to remit on such Remittance Date. The Seller may use such withdrawn
funds only for the purposes described in this Section 2.05.
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Section 2.06 Establishment of and Deposits to Escrow Account. The Seller
shall segregate and hold all funds collected and received pursuant to a Mortgage
Loan constituting Escrow Payments separate and apart from any of its own funds
and general assets and shall establish and maintain one or more Escrow Accounts,
in the form of time deposit or demand accounts. The Escrow Account or Accounts
shall be established with a Qualified Depositary, in a manner which shall
provide maximum available insurance thereunder. Funds deposited in the Escrow
Accounts may be drawn on by the Seller in accordance with Section 2.07. The
creation of any Escrow Account shall be evidenced by a certification in the form
of Exhibit 2 hereto, in the case of an account established with the Seller, or
by a letter agreement in the form of Exhibit 5 hereto, in the case of an account
held by a depository other than the Seller. A copy of such certification shall
be furnished to the Purchaser and, upon request, to any subsequent Purchaser.
The Seller shall deposit in the Escrow Account or Accounts within one
Business Day of receipt, and retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans,
for the purpose of effecting timely payment of any such items as required
under the terms of this Agreement; and
(ii) all amounts representing Insurance Proceeds or Condemnation
Proceeds which are to be applied to the restoration or repair of any
Mortgaged Property.
The Seller shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement, as set forth in Section
2.07. The Seller shall be entitled to retain any interest paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Seller shall pay from its own funds interest on
escrowed funds to the Mortgagor notwithstanding that the Escrow Account may be
noninterest bearing or that interest paid thereon is insufficient for such
purposes.
Section 2.07 Permitted Withdrawals From Escrow Account. Withdrawals from
each Escrow Account may be made by the Seller only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges, fire and
hazard insurance premiums or other items constituting Escrow Payments for
the related Mortgage;
(ii) to reimburse the Seller for any Servicing Advance made by the
Seller pursuant to Section 2.08 (except with respect to any expenses
incurred in procuring or transferring Tax Service Contracts) with respect
to a related Mortgage Loan, but only from amounts received on the related
Mortgage Loan which represent late collections of Escrow Payments
thereunder;
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(iii) to refund to the related Mortgagor any funds found to be in
excess of the amounts required under the terms of the related Mortgage Loan
or applicable federal or state law or judicial or administrative ruling;
(iv) for transfer to the Custodial Account and application to reduce
the principal balance of the Mortgage Loan in accordance with the terms of
the related Mortgage and Mortgage Note;
(v) for application to restoration or repair of the related Mortgaged
Property in accordance with the procedures outlined in Section 2.14;
(vi) to pay to the Seller, or any Mortgagor to the extent required by
law, any interest paid on the funds deposited in the Escrow Account; and
(vii) to clear and terminate the Escrow Account on the termination of
this Agreement.
Section 2.08 Payment of Taxes, Insurance and Other Charges, Tax Contracts.
With respect to each Mortgage Loan, the Seller shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates, sewer
rents, and other charges, as applicable, which are or may become a lien upon the
Mortgaged Property and the status of fire and hazard insurance coverage and
shall obtain, from time to time, all bills for the payment of such charges
(including renewal premiums) and shall effect payment thereof prior to the
applicable penalty or termination date, employing for such purpose deposits of
the Mortgagor in the Escrow Account which shall have been estimated and
accumulated by the Seller in amounts sufficient for such purposes, as allowed
under the terms of the Mortgage. To the extent that a Mortgage does not provide
for Escrow Payments, the Seller shall determine that any such payments relating
to taxes or maintaining insurance policies are made by the Mortgagor at the time
they first become due. The Seller assumes full responsibility for the timely
payment of all such bills to the extent it has or should have notice of such
bills and shall effect timely payment of all such charges irrespective of each
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments, and the Seller shall make advances from its own funds to effect
such payments, such advances to be reimbursable to the same extent as Servicing
Advances.
The Seller shall ensure that each of the Mortgage Loans shall be covered by
a Tax Service Contract which shall be assigned to the Purchaser or the
Purchaser's designee at the Seller's expense in the event that the Seller is
terminated as servicer of the related Mortgage Loan(s) hereunder. To the extent
that a Mortgage Loan does not have a Tax Service Contract, the Purchaser shall
procure a Tax Service Contract for such Mortgage Loan and the Seller shall
reimburse the Purchaser upon request for reasonable expenses incurred in
connection therewith.
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Section 2.09 Protection of Accounts. The Seller may transfer the Custodial
Account or the Escrow Account to a different Qualified Depository from time to
time. Such transfer shall be made only upon obtaining the consent of the
Purchaser, which consent shall not be withheld unreasonably.
The Seller shall bear any expenses, losses or damages sustained by the
Purchaser because the Custodial Account and/or the Escrow Account are not demand
deposit accounts.
Section 2.10 Maintenance of Hazard Insurance. The Seller shall cause to be
maintained for each Mortgage Loan, hazard insurance such that all buildings upon
the Mortgaged Property are insured by a generally acceptable insurer rated A:VI
or better in the current Best's against loss by fire and hazards of extended
coverage, in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements securing such Mortgage Loan and (ii) the
greater of (a) the outstanding principal balance of the Mortgage Loan and (b) an
amount such that the proceeds thereof shall be sufficient to prevent the
Mortgagor or the loss payee from becoming a co-insurer.
If required by the Flood Disaster Protection Act of 1973, as amended, each
Mortgage Loan is covered by a flood insurance policy meeting the requirements of
the current guidelines of the Federal Insurance Administration in effect with a
generally acceptable insurance carrier rated A:VI or better in Best's in an
amount representing coverage not less than the lesser of (i) the outstanding
principal balance of the related Mortgage Loan and (ii) the maximum amount of
insurance which is available under the Flood Disaster Protection Act of 1973, as
amended. If at any time during the term of the Mortgage Loan, the Seller
determines in accordance with applicable law that a Mortgaged Property is
located in a special flood hazard area and is not covered by flood insurance or
is covered in an amount less than the amount required by the Flood Disaster
Protection Act of 1973, as amended, the Seller shall notify the related
Mortgagor that the Mortgagor must obtain such flood insurance coverage, and if
said Mortgagor fails to obtain the required flood insurance coverage within
forty five (45) days after such notification, the Seller shall immediately
purchase the required flood insurance on the Mortgagor's behalf.
The Seller shall cause to be maintained on each Mortgaged Property such
other or additional insurance as may be required pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance, or pursuant to the requirements of any primary mortgage
guaranty insurer.
All policies required hereunder shall name the Seller and its successors
and assigns as mortgagee and shall be endorsed with non-contributory standard
New York mortgagee clauses which shall provide for at least thirty (30) days'
prior written notice of any cancellation, reduction in amount or material change
in coverage.
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The Seller shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent, provided, however, that the
Seller shall not accept any such insurance policies from insurance companies
unless such companies are rated A:VI or better in Best's and are licensed to do
business in the jurisdiction in which the Mortgaged Property is located. The
Seller shall determine that such policies provide sufficient risk coverage and
amounts, that they insure the property owner, and that they properly describe
the property address. To the extent reasonably possible the Seller shall furnish
to the Mortgagor a formal notice of expiration of any such insurance in
sufficient time for the Mortgagor to arrange for renewal coverage by the
expiration date; provided, however, that in the event that no such notice is
furnished by the Seller, the Seller shall ensure that replacement insurance
policies are in place in the required coverages and the Seller shall be solely
liable for any losses in the event such coverage is not provided.
Pursuant to Section 2.04, any amounts collected by the Seller under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Seller's normal servicing procedures as
specified in Section 2.14) shall be deposited in the Custodial Account subject
to withdrawal pursuant to Section 2.05.
Section 2.11 Maintenance of Mortgage Impairment Insurance. In the event
that the Seller shall obtain and maintain a blanket policy insuring against
losses arising from fire and hazards covered under extended coverage on all of
the Mortgage Loans, then, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Section 2.11 and otherwise
complies with all other requirements of Section 2.11, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 2.11. Any
amounts collected by the Seller under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 2.05. Such policy may contain a deductible clause, in which case, in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 2.11, and there shall have been a loss
which would have been covered by such policy, the Seller shall deposit in the
Custodial Account at the time of such loss the amount not otherwise payable
under the blanket policy because of such deductible clause, such amount to be
deposited from the Seller's funds, without reimbursement therefor. Upon request
of the Purchaser, the Seller shall cause to be delivered to the Purchaser a
certified true copy of such policy and a statement from the insurer thereunder
that such policy shall in no event be terminated or materially modified without
thirty (30) days' prior written notice to the Purchaser.
Section 2.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance. The Seller shall maintain with responsible companies, at its own
expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy,
with broad coverage on all officers, employees or other persons acting in any
capacity requiring such persons to handle funds, money, documents or papers
relating to the Mortgage Loans ("Seller Employees"). Any such Fidelity Bond and
Errors and Omissions Insurance Policy shall be in
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the form of the Mortgage Banker's Blanket Bond and shall protect and insure the
Seller against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such Seller Employees. Such Fidelity Bond and
Errors and Omissions Insurance Policy also shall protect and insure the Seller
against losses in connection with the release or satisfaction of a Mortgage Loan
without having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 2.12 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy shall diminish or relieve the Seller from its duties
and obligations as set forth in this Agreement. Upon the request of the
Purchaser, the Seller shall cause to be delivered to the Purchaser a certified
true copy of such Fidelity Bond and Errors and Omissions Insurance Policy and a
statement from the surety and the insurer that such Fidelity Bond and Errors and
Omissions Insurance Policy shall in no event be terminated or materially
modified without thirty (30) days' prior written notice to the Purchaser. In the
event that the surety or insurer charges the Seller a fee for providing such
evidence, the Purchaser shall reimburse the Seller for the reasonable expense
incurred by the Seller in furnishing such evidence.
Section 2.13 Inspections. The Seller shall inspect the Mortgaged Property
as often as deemed necessary by the Seller to assure itself that the value of
the Mortgaged Property is being preserved. In addition, if any Mortgage Loan is
more than sixty (60) days delinquent, the Seller immediately shall inspect the
Mortgaged Property and shall conduct subsequent inspections in accordance with
Accepted Servicing Practices or as may be required by the primary mortgage
guaranty insurer. The Seller shall keep a written report of each such
inspection.
Section 2.14 Restoration of Mortgaged Property. The Seller need not obtain
the approval of the Purchaser prior to releasing any Insurance Proceeds or
Condemnation Proceeds to the Mortgagor to be applied to the restoration or
repair of the Mortgaged Property if such release is in accordance with Accepted
Servicing Practices and the terms of this Agreement. At a minimum, the Seller
shall comply with the following conditions in connection with any such release
of Insurance Proceeds or Condemnation Proceeds:
(i) the Seller shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;
(ii) the Seller shall take all steps necessary to preserve the
priority of the lien of the Mortgage, including, but not limited to
requiring waivers with respect to mechanics' and materialmen's liens;
(iii) the Seller shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Seller shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
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If the Purchaser is named as an additional mortgagee, the Seller is hereby
empowered to endorse any loss draft issued in respect of such a claim in the
name of the Purchaser.
Section 2.15 Deteriorating Mortgage Loans. If, in the course of carrying
out its obligations under this Agreement, the Seller discovers that a Mortgage
Loan (or an interest therein) (i) is or has been, at any time during the
preceding twelve months, (a) classified, (b) in nonaccrual status or (c)
renegotiated due to the financial deterioration of the Mortgagor or (ii) has
been, more than once during the preceding twelve months, more than 30 days past
due in the payment of principal and interest, the Seller shall notify the
Purchaser as soon as possible and cooperate with the Purchaser in the
disposition of any such Mortgage Loan as soon as possible.
Section 2.16 Title, Management and Disposition of REO Property. In the
event that title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be taken in the
name of the Purchaser, or in the event the Purchaser is not authorized or
permitted to hold title to real property in the state where the REO Property is
located, or would be adversely affected under the "doing business" or tax laws
of such state by so holding title, the deed or certificate of sale shall be
taken in the name of such Person or Persons as shall be consistent with an
Opinion of Counsel obtained by the Seller from any attorney duly licensed to
practice law in the state where the REO Property is located. The Person or
Persons holding such title other than the Purchaser shall acknowledge in writing
that such title is being held as nominee for the Purchaser.
The Seller shall manage, conserve, protect and operate each REO Property
for the Purchaser solely for the purpose of its prompt disposition and sale. The
Seller, either itself or through an agent selected by the Seller and reasonably
acceptable to the Purchaser, shall manage, conserve, protect and operate the REO
Property in the same manner that it manages, conserves, protects and operates
other foreclosed property for its own account, and in the same manner that
similar property in the same locality as the REO Property is managed. The Seller
shall attempt to sell the same (and may temporarily rent the same for a period
not greater than one (1) year, except as otherwise provided below) on such terms
and conditions as the Seller deems to be in the best interest of the Purchaser.
The Seller shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property, unless the Seller determines,
and gives an appropriate notice to the Purchaser to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property. If a
period longer than one (1) year is permitted under the foregoing sentence and is
necessary to sell any REO Property, the Seller shall report monthly to the
Purchaser as to the progress being made in selling such REO Property.
The Seller shall also maintain on each REO Property fire and hazard
insurance with extended coverage in an amount which is at least equal to the
maximum insurable value
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of the improvements which are a part of such property, liability insurance and,
to the extent required and available under the Flood Disaster Protection Act of
1973, as amended, flood insurance in the amount required above.
The disposition of REO Property shall be carried out by the Seller at such
price, and upon such terms and conditions, as the Seller deems to be in the best
interests of the Purchaser. The proceeds of sale of the REO Property shall be
promptly deposited in the Custodial Account. As soon as practical thereafter the
expenses of such sale shall be paid and the Seller shall reimburse itself
pursuant to Section 2.05(iii) or 2.05(iv) hereof, as applicable, for any related
unreimbursed Servicing Advances, unpaid Servicing Fees and unreimbursed advances
made pursuant to this Section, and on the Remittance Date immediately following
the Due Period in which such sale proceeds are received the net cash proceeds of
such sale remaining in the Custodial Account shall be distributed to the
Purchaser; provided that such distribution shall, in any event, be made within
ninety (90) days from and after the closing of the sale of such REO Property.
In addition to the Seller's obligations set forth in this Section 2.16, the
Seller shall deliver written notice to the Purchaser whenever title to any
Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure
together with a copy of the drive-by appraisal of the related Mortgaged Property
obtained by the Seller on or prior to the date of such acquisition.
Notwithstanding anything to the contrary contained herein, the Purchaser may, at
the Purchaser's sole option, terminate the Seller as servicer of any such REO
Property without payment of any Termination Fee with respect thereto, provided
that (i) the Purchaser gives the Seller notice of such termination within ten
(10) Business Days of receipt of said written notice from the Seller which
termination shall be effective no more than fifteen (15) Business Days from and
after the date of said notice from the Purchaser and (ii) the Seller shall on
the date said termination takes effect be reimbursed by Purchaser for any
unreimbursed advances of the Seller's funds made pursuant to Section 3.02 and
any unreimbursed Servicing Advances in each case relating to the Mortgage Loan
underlying such REO Property. In the event of any such termination, the
provisions of Section 8.06 hereof shall apply to said termination and the
transfer of servicing responsibilities with respect to such REO Property to the
Purchaser or its designee.
With respect to each REO Property, the Seller shall deposit all funds
collected and received in connection with the operation of the REO Property in
the Custodial Account. The Seller shall cause to be deposited on a daily basis
upon the receipt thereof in the Custodial Account all revenues received with
respect to the conservation and disposition of the related REO Property.
Section 2.17 Permitted Withdrawals with respect to REO Property. For so
long as the Seller is acting as servicer of any Mortgage Loan relating to any
REO Property, the Seller shall withdraw funds on deposit in the Custodial
Account with respect to each related REO Property necessary for the proper
operation, management and maintenance of the
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REO Property, including the cost of maintaining any hazard insurance pursuant to
Section 2.10 and the fees of any managing agent acting on behalf of the Seller.
The Seller shall make monthly distributions on each Remittance Date to the
Purchaser of the net cash flow from the REO Property (which shall equal the
revenues from such REO Property net of the expenses described in Section 2.16
and of any reserves reasonably required from time to time to be maintained to
satisfy anticipated liabilities for such expenses).
Section 2.18 Real Estate Owned Reports. For so long as the Seller is acting
as servicer of any Mortgage Loan relating to any REO Property, the Seller shall
furnish to the Purchaser on or before the 15th day of each month a statement
with respect to any REO Property covering the operation of such REO Property for
the previous month and the Seller's efforts in connection with the sale of such
REO Property and any rental of such REO Property incidental to the sale thereof
for the previous month. That statement shall be accompanied by such other
information as the Purchaser shall reasonably request.
Section 2.19 Liquidation Reports. For so long as the Seller is acting as
servicer of any Mortgage Loan relating to any REO Property, upon the foreclosure
sale of any Mortgaged Property or the acquisition thereof by the Purchaser
pursuant to a deed in lieu of foreclosure, the Seller shall submit to the
Purchaser a liquidation report with respect to such Mortgaged Property.
Section 2.20 Reports Of Foreclosures and Abandonments. For so long as the
Seller is acting as servicer of any Mortgage Loan relating to any REO Property,
following the foreclosure sale or abandonment of any Mortgaged Property, the
Seller shall report such foreclosure or abandonment as required pursuant to
Section 6050J of the Code.
Section 2.21 Notification of Adjustments. With respect to each Variable
Rate Mortgage Loan, the Seller shall adjust the Mortgage Interest Rate on the
related Interest Rate Adjustment Date and shall adjust the Monthly Payment
accordingly in compliance with the requirements of applicable law and the
related Mortgage and Mortgage Note. If, pursuant to the terms of the Mortgage
Note, another index is selected for determining the Mortgage Interest Rate, the
same index will be used with respect to each Mortgage Note which requires a new
index to be selected, provided that such selection does not conflict with the
terms of the related Mortgage Note. The Seller shall execute and deliver any and
all necessary 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. The Seller shall promptly upon written request therefor,
deliver to the Purchaser such notifications and any additional applicable data
regarding such adjustments and the methods used to calculate and implement such
adjustments. Upon the discovery by the Seller or the Purchaser that the Seller
has failed to adjust a Mortgage Interest Rate or a Monthly Payment pursuant to
the terms of the related Mortgage Note and Mortgage, the Seller shall
immediately deposit in the Custodial Account from its own funds the amount of
any interest loss caused the Purchaser thereby.
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Section 2.22 Notification of Maturity Date. With respect to each Fixed Rate
Mortgage Loan, the Purchaser shall execute and deliver to the Mortgagor any and
all necessary notices required under applicable law and the terms of the related
Mortgage Note and Mortgage regarding the maturity date if required under
applicable law.
ARTICLE III
PAYMENTS TO PURCHASER
Section 3.01 Remittances. On each Remittance Date the Seller shall remit by
wire transfer of immediately available funds to the Purchaser (a) all amounts
deposited in the Custodial Account as of the close of business on the
Determination Date, except Principal Prepayments received on or after the first
day of the month in which the Remittance Date occurs which shall be remitted to
the Purchaser on the next following Remittance Date; plus (b) an amount
representing compensating interest (up to a maximum amount equal to the
aggregate Servicing Fee for the Mortgage Loans held by the Purchaser with
respect to such Mortgage Loans) which, when added to all amounts allocable to
interest received in connection with such Principal Prepayment equals thirty
(30) days' interest at the Mortgage Interest Rate net of the Servicing Fee on
the amount of principal so prepaid (net of charges against or withdrawals from
the Custodial Account pursuant to Section 2.05), plus (c) all amounts, if any,
which the Servicer is obligated to distribute pursuant to Section 3.03 and minus
(d) any amounts attributable to Monthly Payments collected but due on a Due Date
or Dates subsequent to the first day of the month of the Remittance Date, which
amounts shall be remitted on the Remittance Date next succeeding the Due Period
for such amounts.
With respect to any Principal Prepayment in full, the Seller shall remit
such Principal Prepayment to the Purchaser within five (5) Business Days of
receipt of such Principal Prepayment by the Seller.
With respect to any remittance received by the Purchaser after the second
Business Day following the Business Day on which such payment was due, the
Seller shall pay to the Purchaser interest on any such late payment at an annual
rate equal to the Prime Rate, adjusted as of the date of each change, plus one
(1) percentage point, but in no event greater than the maximum amount permitted
by applicable law. Such interest shall be deposited in the Custodial Account by
the Seller on the date such late payment is made and shall cover the period
commencing with and including the day following such second Business Day and
ending with the Business Day on which such payment is made, exclusive of such
Business Day; provided, however, that in the event that the Seller remits such
amounts after 11:00 A.M. (New York City time) on any day, such period shall
include such day. Such interest shall be remitted along with the distribution
payable on the next succeeding Remittance Date. The payment by the Seller of any
such interest shall not be deemed an extension of time for payment or a waiver
of any Event of Default by the Seller.
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Section 3.02 Statements to Purchaser. Not later than the twentieth day of
each month, the Seller shall furnish by modem and/or diskette to the Purchaser
or its designee a listing of the outstanding Mortgage Loans, including with
respect to each Mortgage Loan: the Mortgage Loan number, the actual balance, the
actual paid-through dates, the Mortgage Interest Rate and principal and interest
payment, and with respect to Variable Rate Mortgage Loans, the next Interest
Rate Adjustment Date, the Mortgage Interest Rate and the principal and interest
payment effective as of the next Interest Rate Adjustment Date (if available),
and shall furnish to the Purchaser manually a Monthly Remittance Advice, with a
trial balance report attached thereto, in the form of Exhibit 1 annexed hereto
as to the preceding remittance and the period ending on the preceding
Determination Date.
In addition, not more than sixty (60) days after the end of each calendar
year, the Seller shall furnish to each Person who was a Purchaser at any time
during such calendar year an annual statement in accordance with the
requirements of applicable federal income tax law as to the aggregate of
remittances for the applicable portion of such year.
Such obligation of the Seller shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the Seller
pursuant to any requirements of the Code as from time to time are in force.
The Seller shall prepare and file, with respect to each Mortgage Loan, any
and all tax returns, information statements or other filings required to be
delivered to any governmental taxing authority or to the Purchaser pursuant to
any applicable law with respect to the Mortgage Loans and the transactions
contemplated hereby. In addition, the Seller shall provide the Purchaser with
such information concerning the Mortgage Loans as is necessary for the Purchaser
to prepare its federal income tax return as the Purchaser may reasonably request
from time to time.
Section 3.03 Advances by Seller. On the Business Day immediately preceding
each Remittance Date, the Seller shall deposit in the Custodial Account from its
own funds an amount equal to all Monthly Payments which were due on the Mortgage
Loans during the applicable Due Period and which were delinquent at the close of
business on the immediately preceding Determination Date or which were deferred
pursuant to Section 2.01, provided that the Seller shall only be required to
make such advances with respect to a Mortgage Loan until such advances are, in
the Seller's good faith determination as evidenced by an Officer's Certificate
of the Seller delivered to the Purchaser on the Business Day next following the
Determination Date on or prior to which said determination is or was made,
deemed to be a Nonrecoverable Advance. The Seller's obligation to make such
advances as to any Mortgage Loan will continue through the earlier of (i) the
disposition of such Mortgage Loan and (ii) the date of foreclosure sale with
respect to such Mortgage Loan. Except as otherwise provided herein, the Seller
shall be entitled to first priority reimbursement pursuant to Section 2.05
hereof for principal and interest advances and for servicing advances from
recoveries from the related mortgagor or from all Liquidation Proceeds and other
payments or recoveries
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(including Insurance Proceeds and Condemnation Proceeds) with respect to the
related Mortgage Loan.
ARTICLE IV
GENERAL SERVICING PROCEDURES
Section 4.01 Transfers of Mortgaged Property. The Seller shall be required
to enforce any "due-on-sale" provision contained in any Mortgage or Mortgage
Note and to deny assumption by the person to whom the Mortgaged Property has
been or is about to be sold whether by absolute conveyance or by contract of
sale, whether or not the Mortgagor remains liable on the Mortgage and the
Mortgage Note. When the Mortgaged Property has been conveyed by the Mortgagor,
the Seller shall, to the extent it has knowledge of such conveyance, exercise
its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause applicable thereto.
If the Seller reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, the Seller, in the Purchaser's name, shall,
to the extent permitted by applicable law, enter into (i) an assumption and
modification agreement with the person to whom such property has been conveyed,
pursuant to which such person becomes liable under the Mortgage Note and the
original Mortgagor remains liable thereon or (ii) in the event the Seller is
unable under applicable law to require that the original Mortgagor remain liable
under the Mortgage Note and the Seller has the prior consent of the primary
mortgagee guaranty insurer, a substitution of liability agreement with the
purchaser of the Mortgaged Property pursuant to which the original Mortgagor is
released from liability and the purchaser of the Mortgaged Property is
substituted as Mortgagor and becomes liable under the Mortgage Note. In
connection with any such assumption, neither the Mortgage Interest Rate borne by
the related Mortgage Note, the term of the Mortgage Loan nor the outstanding
principal amount of the Mortgage Loan shall be changed.
To the extent that any Mortgage Loan is assumable, the Seller shall inquire
diligently into the creditworthiness of the proposed transferee, and shall use
the underwriting criteria for approving the credit of the proposed transferee
which are used by the Seller with respect to underwriting mortgage loans of the
same type as the Mortgage Loans. If the credit of the proposed transferee does
not meet such underwriting criteria, the Seller diligently shall, to the extent
permitted by the Mortgage or the Mortgage Note and by applicable law, accelerate
the maturity of the Mortgage Loan.
Section 4.02 Satisfaction of Mortgages and Release of Mortgage Files. Upon
the payment in full of any Mortgage Loan, or the receipt by the Seller of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Seller shall notify the Purchaser in the Monthly Remittance
Advice as provided in Section 3.02, and may
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request the release of any Mortgage Loan Documents from the Purchaser in
accordance with this Section 4.02 hereof. The Seller shall obtain discharge of
the related Mortgage Loan as of record within any related time limit required by
applicable law.
If the Seller satisfies or releases a Mortgage without first having
obtained payment in full of the indebtedness secured by the Mortgage or should
the Seller otherwise prejudice any rights the Purchaser may have under the
mortgage instruments, upon written demand of the Purchaser, the Seller shall
repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof
in the Custodial Account within two (2) Business Days of receipt of such demand
by the Purchaser. Upon such repurchase, all funds maintained in the Escrow
Account with respect to such repurchased Mortgage Loan shall be transferred to
the Seller. The Seller shall maintain the Fidelity Bond and Errors and Omissions
Insurance Policy as provided for in Section 2.12 insuring the Seller against any
loss it may sustain with respect to any Mortgage Loan not satisfied in
accordance with the procedures set forth herein.
Section 4.03 Servicing Compensation. As consideration for servicing the
Mortgage Loans hereunder, the Seller shall withdraw the Servicing Fee with
respect to each Mortgage Loan from the Custodial Account pursuant to Section
2.05 hereof. Such Servicing Fee shall be payable monthly, computed on the basis
of the same principal amount and period in respect of which any related interest
payment on a Mortgage Loan is computed. The Servicing Fee shall be pro-rated
when servicing is for less than one month. The obligation of the Purchaser to
pay, and the Seller's right to withdraw, 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 Section 2.05), of such Monthly Payment collected by the Seller, or
as otherwise provided under Section 2.05.
Additional servicing compensation in the form of Ancillary Income shall be
retained by the Seller. The Seller shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement thereof except as specifically provided for
herein.
Section 4.04 Annual Statement as to Compliance. The Seller shall deliver to
the Purchaser, on or before March 31 each year beginning with March 31, 1997, an
Officer's Certificate, stating that (i) a review of the activities of the Seller
during the preceding calendar year and of performance under this Agreement has
been made under such officer's supervision, and (ii) the Seller has complied in
all material respects with the provisions of Article II and Article IV, and
(iii) to the best of such officer's knowledge, based on such review, the Seller
has fulfilled all its obligations under this Agreement throughout such year or
part thereof, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof and the action being taken by the Seller to cure such
default.
Section 4.05 Annual Independent Public Accountants' Servicing Report. On or
before March 31 of each year, beginning with the first March 31 that occurs at
least six
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months after the Closing Date, the Seller at its expense shall cause a firm of
independent public accountants (who may also render other services to the
Seller, or any affiliate thereof) which is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Purchaser to the
effect that such firm has, as part of their examination of the financial
statements of the Seller performed tests embracing the records and documents
relating to mortgage loans serviced by the Seller in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers and that
their examination disclosed no exceptions that, in their opinion were material,
relating to mortgage loans serviced by the Seller.
Section 4.06 Right to Examine Seller Records. The Purchaser, upon
reasonable notice, shall have the right to examine and audit any and all of the
books, records, or other information of the Seller, whether held by the Seller
or by another on its behalf, with respect to or concerning this Agreement or the
Mortgage Loans, during business hours or at such other times as may be
reasonable under applicable circumstances, upon reasonable advance notice.
ARTICLE V
SELLER TO COOPERATE
Section 5.01 Provision of Information. During the term of this Agreement,
the Seller shall furnish to the Purchaser such periodic, special, or other
reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Purchaser or the
purposes of this Agreement. All such reports or information shall be provided by
and in accordance with all reasonable instructions and directions which the
Purchaser may give.
The Seller shall execute and deliver all such instruments and take all such
action as the Purchaser may reasonably request from time to time, in order to
effectuate the purposes and to carry out the terms of this Agreement.
Section 5.02 Financial Statements; Servicing Facilities. In connection with
disposition of Mortgage Loans, the Purchaser may make available to a prospective
purchaser audited financial statements of the Seller for the most recently
completed two (2) fiscal years for which such statements are available, as well
as a Consolidated Statement of Condition at the end of the last two (2) fiscal
years covered by any Consolidated Statement of Operations. If it has not already
done so, the Seller shall furnish promptly to the Purchaser or a prospective
purchaser copies of the statements specified above; provided, however, that
prior to furnishing such statements or information to any prospective purchaser,
the Seller may require such prospective purchaser to execute a confidentiality
agreement in form reasonably satisfactory to it.
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The Seller shall make available to the Purchaser or any prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions with respect to recent developments affecting the Seller or
the financial statements of the Seller, and to permit any prospective purchaser
to inspect the Seller's servicing facilities for the purpose of satisfying such
prospective purchaser that the Seller has the ability to service the Mortgage
Loans as provided in this Agreement.
ARTICLE VI
TERMINATION
Section 6.01 Damages. The Purchaser shall have the right at any time to
seek and recover from the Seller any damages or losses suffered by it as a
result of any failure by the Seller to observe or perform any duties,
obligations, covenants or agreements herein contained.
Section 6.02 Termination. The respective obligations and responsibilities
of the Seller shall terminate upon: (i) the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
serviced by the Seller or the disposition of all REO Property serviced by the
Seller and the remittance of all funds due hereunder; or (ii) by mutual consent
of the Seller and the Purchaser in writing, unless earlier terminated pursuant
to this Agreement.
Section 6.03 Termination Without Cause. The Purchaser may, at its sole
option, upon not less than thirty (30) days' prior written notice to the Seller
terminate any rights the Seller may have hereunder with respect to any or all of
the Mortgage Loans, without cause, upon written notice, provided that the Seller
shall have an additional period of not more than sixty (60) days from and after
the date of said notice from the Purchaser within which to effect the related
transfer of servicing. Any such notice of termination shall be in writing and
delivered to the Seller as provided in Section 12.01 of this Agreement. In the
event of such termination, the Seller shall be entitled to a Termination Fee,
equal to [1.50]% of the then current aggregate unpaid principal balance of the
related Mortgage Loans; provided, however, that the successor servicer is not an
Affiliate of the Seller.
ARTICLE VII
BOOKS AND RECORDS
Section 7.01 Possession of Servicing Files. The contents of each Servicing
File are and shall be held in trust by the Seller for the benefit of the
Purchaser as the owner thereof. The Seller shall maintain in the Servicing File
a copy of the contents of each Mortgage File and the originals of the documents
in each Mortgage File not delivered to the
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Purchaser. The possession of the Servicing File by the Seller is at the will of
the Purchaser for the sole purpose of servicing the related Mortgage Loan,
pursuant to this Agreement, and such retention and possession by the Seller is
in its capacity as Seller only and at the election of the Purchaser. The Seller
shall release its custody of the contents of any Servicing File only in
accordance with written instructions from the Purchaser or other termination of
the Seller with respect to the related Mortgage Loans, unless such release is
required as incidental to the Seller's servicing of the Mortgage Loans pursuant
to this Agreement, or is in connection with a repurchase of any Mortgage Loan
pursuant to Section 8.03 of the Purchase Agreement or Section 4.02 of this
Agreement.
The Seller shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be marked
clearly to reflect the ownership of each Mortgage Loan by the Purchaser. In
particular, the Seller shall maintain in its possession, available for
inspection by the Purchaser or its designee during normal business hours, and
shall deliver to the Purchaser or its designee upon reasonable notice, evidence
of compliance with all federal, state and local laws, rules and regulations,
including but not limited to documentation as to the method used in determining
the applicability of the provisions of the Flood Disaster Protection Act of
1973, as amended, to the Mortgaged Property, documentation evidencing insurance
coverage and periodic inspection reports as required by Section 2.13. To the
extent that original documents are not required for purposes of realization of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the Seller
may be in the form of microfilm or microfiche.
The Seller shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Seller shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Seller shall be under no obligation to deal with any person
with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. The Purchaser may,
subject to the terms of this Agreement, sell or transfer one or more of the
Mortgage Loans. The Purchaser also shall advise the Seller of the transfer. Upon
receipt of notice of the transfer, the Seller shall mark its books and records
to reflect the ownership of the Mortgage Loans of such assignee, and shall
release the Purchaser from its obligations hereunder with respect to the
Mortgage Loans sold or transferred.
ARTICLE VIII
INDEMNIFICATION AND ASSIGNMENT
Section 8.01 Indemnification. The Seller agrees to indemnify and hold the
Purchaser harmless from any liability, claim, loss or damage (including, without
limitation,
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any reasonable legal fees, judgments or expenses relating to such liability,
claim, loss or damage) to the Purchaser directly or indirectly resulting from
the Seller's failure to observe and perform any or all of Seller's duties,
obligations, covenants, agreements, warranties or representations contained in
this Agreement or in the Purchase Agreement or the Seller's failure to comply
with all applicable requirements with respect to the transfer of Servicing
Rights as set forth herein.
The Seller shall notify the Purchaser as soon as reasonably possible if a
claim is made by a third party with respect to this Agreement.
Section 8.02 Limitation on Liability of Seller and Others. Neither the
Seller nor any of the directors, officers, employees or agents of the Seller
shall be under any liability to the Purchaser for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment, provided, however, that this provision
shall not protect the Seller or any such person against any breach of warranties
or representations made herein, or failure to perform its obligations in
material compliance with any standard of care set forth in this Agreement, or
any liability which would otherwise be imposed by reason of any breach of the
terms and conditions of this Agreement. The Seller and any director, officer,
employee or agent of the Seller may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person with respect to
any matter arising hereunder. The Seller shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
duties to service the Mortgage Loans in accordance with this Agreement and which
in its opinion may involve it in any expense or liability, provided, however,
that the Seller may, with the prior written consent of the Purchaser, undertake
any such action which it may deem necessary or desirable in respect to this
Agreement and the rights and duties of the parties hereto. In such event, the
Seller shall be entitled to reimbursement from the Purchaser of the reasonable
legal expenses and costs of such action.
Section 8.03 Limitation on Registration and Assignment by Seller. The
Purchaser has entered into this Agreement with the Seller in reliance upon the
independent status of the Seller, and the representations as to the adequacy of
its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Seller shall not (i) assign this Agreement or the servicing
hereunder or (ii) delegate any substantial part of its rights or duties
hereunder without the prior written consent of the Purchaser, which consent
shall not be unreasonably withheld or conditioned provided that (a) any
delegation of such rights or duties shall not release the Seller from its
obligations hereunder and the Seller shall remain responsible hereunder for all
acts and omissions of any delegee as if such acts or omissions were those of the
Seller and (b) any such assignee or designee shall satisfy the requirements for
a successor or surviving Person set forth in Section 8.05 and Section 8.06
hereof. The Seller shall notify the Purchaser in writing at least 30 days prior
to selling or otherwise disposing of all or substantially all of its assets and
receipt of such notice shall entitle the Purchaser to terminate this Agreement
except as set forth in Section 8.06 hereof.
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The Seller shall not resign from the obligations and duties hereby imposed
on it except by mutual consent of the Seller and the Purchaser or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Seller. Any such
determination permitting the resignation of the Seller shall be evidenced by an
Opinion of Counsel to such effect delivered to the Purchaser which Opinion of
Counsel shall be in form and substance acceptable to the Purchaser. No such
resignation shall become effective until a successor shall have assumed the
Seller's responsibilities and obligations hereunder in the manner provided in
Section 8.06.
Without in any way limiting the generality of this Section 8.03, in the
event that the Seller either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof without (i) satisfying the requirements set forth herein or (ii) the
prior written consent of the Purchaser, then the Purchaser shall have the right
to terminate this Agreement as set forth in Section 6.03, without any payment of
any penalty or damages and without any liability whatsoever to the Seller (other
than with respect to accrued but unpaid Servicing Fees and Servicing Advances
remaining unpaid) or any third party.
Section 8.04 Assignment by Purchaser. The Purchaser shall have the right,
without the consent of the Seller, to assign, in whole or in part, its interest
under this Agreement with respect to some or all of the Mortgage Loans, and
designate any person to exercise any rights of the Purchaser hereunder, by
executing an Assignment and Assumption Agreement substantially in the form of
Exhibit G to the Purchase Agreement and the assignee or designee shall accede to
the rights and obligations hereunder of the Purchaser with respect to such
Mortgage Loans. All references to the Purchaser in this Agreement shall be
deemed to include its assignee or designee. Notwithstanding the foregoing, at
any one time there shall not be more than fifteen (15) separate Purchasers under
this Agreement.
Section 8.05 Merger or Consolidation of the Seller. The Seller will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the state of its incorporation except as permitted herein, 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.
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 be an institution whose deposits are insured
by FDIC or a company whose business includes the origination and servicing of
mortgage loans and shall satisfy the requirements of Section 8.06 with respect
to the qualifications of a successor to the Seller.
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Section 8.06 Successor to the Seller. Prior to termination of Seller's
responsibilities and duties under this Agreement pursuant to Sections 2.16,
6.03, 8.03 or 11.01, the Purchaser shall (i) succeed to and assume all of the
Seller's responsibilities, rights, duties and obligations under this Agreement,
or (ii) appoint a successor having a tangible net worth of not less than
$30,000,000 and which shall succeed to all rights and assume all of the
responsibilities, duties and liabilities of the Seller under this Agreement
prior to the termination of Seller's responsibilities, duties and liabilities
under this Agreement. In connection with such appointment and assumption, the
Purchaser may make such arrangements for the compensation of such successor out
of payments on Mortgage Loans as it and such successor shall agree. In the event
that the Seller's duties, responsibilities and liabilities under this Agreement
should be terminated pursuant to the aforementioned sections, the Seller shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation or
removal of Seller pursuant to the aforementioned Sections shall not become
effective until a successor shall be appointed pursuant to Article X hereof this
Section and shall in no event relieve the Seller of the representations,
warranties and covenants made pursuant to and the remedies available to the
Purchaser with respect thereto, it being understood and agreed that the
provisions of such Article X shall be applicable to the Seller notwithstanding
any such resignation or termination of the Seller, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Seller and to the Purchaser, an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Seller, with like effect as if originally named as a party to this Agreement.
Any termination of this Agreement pursuant to Section 2.16, 6.03, 8.03 or 11.01
shall not affect any claims that the Purchaser may have against the Seller
arising prior to any such termination or resignation.
The Seller shall timely deliver to the successor the funds in the Custodial
Account and the Escrow Account and the Mortgage Files and related documents and
statements held by it hereunder and the Seller shall account for all funds. The
Seller shall execute and deliver such instruments and do such other things all
as may reasonably be required to more fully and definitely vest and confirm in
the successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Seller. The successor shall make arrangements as it may deem
appropriate to reimburse the Seller for amounts the Seller actually expended
pursuant to this Agreement which the successor is entitled to retain hereunder
and which would otherwise have been recovered by the Seller pursuant to this
Agreement but for the appointment of the successor servicer.
Upon a successor's acceptance of appointment as such, the Seller shall
notify by mail the Purchaser of such appointment.
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ARTICLE IX
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
As of the Closing Date, the Purchaser warrants and represents to, and
covenants and agrees with, the Seller as follows:
Section 9.01 Due Organization and Authority. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
state of Delaware. The Purchaser has the full corporate power and authority to
execute and deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement by the Purchaser and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Purchaser; and all requisite corporate action has been taken
by the Purchaser to make this Agreement valid and binding upon the Purchaser in
accordance with its terms;
Section 9.02 No Conflicts. Neither the execution and delivery of this
Agreement, 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 Purchaser's charter or by-laws or any legal
restriction or any agreement or instrument to which the Purchaser is now a party
or by which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Purchaser or its property is
subject;
Section 9.03 Ability to Perform. The Purchaser does not believe, nor does
it have any reason or cause to believe, that it cannot perform each and every
covenant made by it in this Agreement.
Section 9.04 No Litigation Pending. There is no action, suit, proceeding or
investigation pending or threatened against the Purchaser, 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, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Purchaser, or in
any material impairment of the right or ability of the Purchaser to carry on its
business substantially as now conducted, or in any material liability on the
part of the Purchaser, or which would draw into question the validity of this
Agreement or of any action taken or to be taken in connection with the
obligations of the Purchaser contemplated herein.
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Section 9.05 No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Purchaser of, or compliance by the Purchaser
with, this Agreement as evidenced by the consummation of the transactions
contemplated by this Agreement, or if required, such approval has been obtained
prior to the Closing Date.
Section 9.06 Assistance. To the extent reasonably possible, the Purchaser
shall cooperate with and assist the Seller as requested by the Seller, in
carrying out Seller's covenants, agreements, duties and responsibilities under
the Purchase Agreement and in connection therewith shall execute and deliver all
such papers, documents and instruments as nay be necessary and appropriate in
furtherance thereof.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SELLER
As of the Closing Date, the Seller warrants and represents to, and
covenants and agrees with, the Purchaser as follows:
Section 10.01 Due Organization and Authority. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of New York as now being conducted and is licensed, qualified and in good
standing in each state where a Mortgaged Property is located if the laws of such
state require licensing or qualification in order to conduct business of the
type conducted by the 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 and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Seller and the consummation of the
transactions contemplated hereby have been duly and validly authorized; this
Agreement evidences the valid, legal, binding and enforceable obligation 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 valid and binding upon the Seller in
accordance with its terms.
Section 10.02 Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller;
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Section 10.03 No Conflicts. Neither the execution and delivery of this
Agreement, 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
impair the ability of the Purchaser to realize on the Mortgage Loans, or 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.
Section 10.05 Ability to Service. The Seller is duly qualified, licensed,
registered and otherwise authorized under all applicable federal, state and
local laws and regulations, meets the minimum capital requirements set forth by
OTS, the OCC or the FDIC, and is in good standing to enforce, originate, sell
mortgage loans, and service mortgage loans in the jurisdiction wherein the
Mortgaged Properties are located.
Section 10.05 Ability to Perform. The Seller does not believe, nor does it
have any reason to believe, that it cannot perform each and every covenant
contained in this Agreement.
Section 10.06 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, 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 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.
Section 10.07 No Consent Required. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Seller of or compliance by the Seller with this
Agreement or the servicing of the Mortgage Loans as evidenced by the
consummation of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the Closing Date.
Section 10.08 No Untrue Information. Neither this Agreement nor any
statement, tape, diskette, form, report or other document furnished or to be
furnished pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any
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untrue statement of fact or omits to state a fact necessary to make the
statements contained therein not misleading.
Section 10.09 Reasonable Servicing Fee. The Seller acknowledges and agrees
that the Servicing Fee represents reasonable compensation for performing such
services and that the entire Servicing Fee shall be treated by the Seller, for
accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement.
SECTION 10.10 Financial Statements. The Servicer has delivered to the
Purchaser financial statements as to its last two complete fiscal years. All
such financial statements fairly present the pertinent results of operations and
changes in financial position for each of such periods and the financial
position at the end of each such period of the Servicer and its subsidiaries and
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto. There has been no change in the business, operations, financial
condition, properties or assets of the Servicer since the date of the Servicer's
financial statements that would have a material adverse effect on its ability to
perform its obligations under this Agreement.
Section 10.11 Conflict of Interest. The Seller agrees that it shall
services the Mortgage Loans hereunder solely with a view toward the interests of
the Purchaser, and without regard to the interests of the Seller or its other
affiliates.
ARTICLE XI
DEFAULT
Section 11.01 Events of Default. The following shall constitute an Event of
Default under this Agreement on the part of the Seller:
(a) any failure by the Seller to remit to the Purchaser any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of five (5) Business Days after the date upon which written notice
of such failure, requiring the same to be remedied, shall have been given to the
Seller by the Purchaser; or
(b) the failure by the Seller duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the Seller set
forth in this Agreement which continues unremedied for a period of thirty (30)
days (except that such number of days shall be fifteen (15) in the case of a
failure to pay any premium for any insurance policy
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required to be maintained under this Agreement) after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Seller by the Purchaser; or
(c) a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or liquidator in
any insolvency, bankruptcy, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Seller and such decree or order
shall have remained in force undischarged or unstayed for a period of sixty (60)
days; or
(d) the Seller shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, bankruptcy, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Seller or of or relating to all or substantially all of its property; or
(e) the Seller shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(f) the Seller, without the consent of the Purchaser, attempts to assign
this Agreement or the servicing responsibilities hereunder or to delegate any
substantial part of its duties hereunder or any portion thereof; or
(g) the Seller fails to maintain its license to do business or service
commercial mortgage loans in any jurisdiction where the Mortgaged Properties are
located and such failure results in a material adverse effect on the Mortgage
Loans, the servicing of the Mortgage Loans, or the Purchaser's rights with
respect to the Mortgage Loans.
In each and every such case, so long as an Event of Default shall not have
been remedied, in addition to whatsoever rights the Purchaser may have at law or
equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Seller, may terminate without
compensation or reimbursement (other than Servicing Fees previously earned but
remaining unpaid and Servicing Advances remaining unreimbursed) all the rights
and obligations of the Seller under this Agreement and in and to the Mortgage
Loans and the proceeds thereof.
Upon receipt by the Seller of such written notice, all authority and power
of the Seller under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 8.06. Upon written request from the Purchaser, the Seller shall prepare,
execute and deliver any and all documents and other instruments reasonably
requested by the Purchaser, place in such successor's possession all Mortgage
Files (to the extent not properly delivered to the
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Purchaser by the Seller previously), and do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise, at the Seller's sole
expense. The Seller agrees to reasonably cooperate with the Purchaser and such
successor in effecting the termination of the Seller's responsibilities and
rights hereunder, including, without limitation, the transfer to such successor
for administration by it of all cash amounts which shall at the time be credited
by the Seller to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.
Section 11.02 Waiver of Defaults. The Purchaser may waive any default by
the Seller in the performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Notices. All notices, requests, demands and other
communications which are required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given upon the
delivery or mailing thereof, as the case may be, sent by registered or certified
mail, return receipt requested:
(a) If to Purchaser to:
Chase Preferred Capital Corporation
270 Park Avenue
New York, N.Y. 10017
Attention: Neila B. Radin
(b) If to Seller to:
The Chase Manhattan Bank
Attention:
Section 12.02 Waivers. Either the Seller or the Purchaser may upon consent
of all parties, by written notice to the others:
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(a) Waive compliance with any of the terms, conditions or covenants
required to be complied with by the others hereunder; and
(b) Waive or modify performance of any of the obligations of the others
hereunder.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any other subsequent breach.
Section 12.03 Entire Agreement; Amendment. This Agreement and the Purchase
Agreement constitute the entire agreement between the parties with respect to
servicing of the Mortgage Loans. This Agreement may be amended and any provision
hereof waived, but, only in writing signed by the party against whom such
enforcement is sought.
Section 12.04 Execution; Binding Effect. This Agreement may be executed in
one or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement. Subject to Sections 8.03 and 8.04, this Agreement shall inure to the
benefit of and be binding upon the Seller and the Purchaser and their respective
successors and assigns.
Section 12.05 Headings. Headings of the Articles and Sections in this
Agreement are for reference purposes only and shall not be deemed to have any
substantive effect.
Section 12.06 Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies hereunder shall be determined in accordance with the substantive
laws of the State of New York (without regard to conflicts of laws principles),
except to the extent preempted by Federal law.
Section 12.07 Relationship of Parties. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture between the
parties. The duties and responsibilities of the Seller shall be rendered by it
as an independent contractor and not as an agent of the Purchaser. The Seller
shall have full control of all of its acts, doings, proceedings, relating to or
requisite in connection with the discharge of its duties and responsibilities
under this Agreement.
Section 12.08 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
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Section 12.09 Recordation of Assignments of Mortgage. To the extent
permitted by applicable law, each of the Assignments of Mortgage is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Purchaser or the
Purchaser's designee, but in any event, at the Seller's expense for a single
recordation relating to each Assignment of Mortgage in the event recordation is
either necessary under applicable law or requested by the Purchaser at its sole
option.
Section 12.10 Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereof and are integral parts of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date and year first above written.
CHASE PREFERRED CAPITAL
CORPORATION
(the Purchaser)
By:______________________________
Name:____________________________
Title:___________________________
THE CHASE MANHATTAN BANK
(the Seller)
By:______________________________
Name:____________________________
Title:___________________________
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EXHIBIT 1
MONTHLY REMITTANCE ADVICE
<PAGE>
EXHIBIT 2
CUSTODIAL ACCOUNT CERTIFICATION
_______, 1996
_________________ hereby certifies that it has established the account
described below as a Custodial Account pursuant to Section 2.04 of the Servicing
Agreement, dated as of ______, 1996.
Title of Account: "The Chase Manhattan Bank, in trust for Purchaser of
Commercial Mortgage Loans, and various Mortgagors."
Account Number: ________________________
Address of office or branch of the Seller at which Account is maintained:
______________________________
______________________________
______________________________
______________________________
______________________________
THE CHASE MANHATTAN BANK
By:______________________________
Name:____________________________
Title:___________________________
<PAGE>
EXHIBIT 3
CUSTODIAL ACCOUNT LETTER AGREEMENT
______, 1996
To: ____________________
____________________
____________________
(the "Depository")
As Seller under the Servicing Agreement, dated as of ______, 1996,
Adjustable and Fixed Rate Mortgage Loans, (the "Agreement"), we hereby authorize
and request you to establish an account, as a Custodial Account pursuant to
Section 2.04 of the Agreement, to be designated as The Chase Manhattan Bank, in
trust for Purchaser of Commercial Mortgage Loans and various Mortgagors." All
deposits in the account shall be subject to withdrawal therefrom by order signed
by the Seller. You may refuse any deposit which would result in violation of the
requirement that the account be fully insured as described below. This letter is
submitted to you in duplicate. Please execute and return one original to us.
THE CHASE MANHATTAN BANK
By:______________________________
Name:____________________________
Title:___________________________
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number , at the office of the
Depository indicated above, and agrees to honor withdrawals on such account as
provided above. The full amount deposited at any time in the account will be
insured by the Federal Deposit Insurance Corporation through the Bank Insurance
Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
_________________________________
Depository
By:______________________________
Name:____________________________
Title:___________________________
Date:____________________________
<PAGE>
EXHIBIT 4
ESCROW ACCOUNT CERTIFICATION
_____________, 1996
______________________________hereby certifies that it has established the
account described below as an Escrow Account pursuant to Section 2.06 of the
Servicing Agreement, dated as of ________, 1996, Conventional Commercial
Mortgage Loans.
Title of Account: "The Chase Manhattan Bank in trust for Purchaser of Commercial
Mortgage Loans and various Mortgagors."
Account Number: _____________________________
Address of office or branch
of the Seller at which
Account is maintained:
______________________________
______________________________
______________________________
______________________________
THE CHASE MANHATTAN BANK
By: __________________________
Name: ________________________
Title: _______________________
<PAGE>
EXHIBIT 5
ESCROW ACCOUNT LETTER AGREEMENT
______________, 1996
To: __________________________
__________________________
__________________________
(the "Depository")
As Seller under the Servicing Agreement, dated as of ____________, 1996,
Conventional Commercial Mortgage Loans (the "Agreement"), we hereby authorize
and request you to establish an account, as an Escrow Account pursuant to
Section 2.06 of the Agreement, to be designated as "The Chase Manhattan Bank in
trust for the Purchasers of Commercial Loans and various Mortgagors." All
deposits in the account shall be subject to withdrawal therefrom by order signed
by the Seller. You may refuse any deposit which would result in violation of the
requirement that the account be fully insured as described below. This letter is
submitted to you in duplicate. Please execute and return one original to us.
THE CHASE MANHATTAN BANK
By: _____________________________
Name: ___________________________
Title: __________________________
Date:____________________________
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number , at the office of the
Depository indicated above, and agrees to honor withdrawals on such account as
provided above. The full amount deposited at any time in the account will be
insured by the Federal Deposit Insurance Corporation through the Bank Insurance
Fund ("BIF") or the Savings Association Insurance Fund ("SAIF").
_________________________________
Depository
By: _____________________________
Name: ___________________________
Title: __________________________
Date:____________________________
ADVISORY AGREEMENT
THIS AGREEMENT is made this __ day of ____, 1996 between CHASE PREFERRED
CAPITAL CORPORATION, a Delaware corporation (the "Company"), and THE CHASE
MANHATTAN BANK, a banking corporation organized under the laws of the State of
New York (the "Advisor"). Capitalized terms used herein shall have the meanings
set forth in Section 1 of this Agreement.
WHEREAS, the Company intends to qualify as a "real estate investment trust"
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Company desires to avail itself of the experience and
assistance of the Advisor and to have the Advisor undertake, on the Company's
behalf, the duties and responsibilities hereinafter set forth, subject to the
control and supervision of the Board of Directors of the Company (the "Board of
Directors") as provided for herein; and
WHEREAS, the Advisor desires to render such services for the Company
subject to the control and supervision of the Board of Directors, on the terms
and conditions hereinafter set forth.
NOW THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. As used herein, the following terms shall have the
respective meanings set forth below:
"Advisor" has the meaning set forth in the forepart of this Agreement.
"Advisor Termination Date" means the date on which this Agreement
terminates.
"Agreement" means this Advisory Agreement, as amended, modified and
supplemented from time to time.
"Board of Directors" has the meaning set forth in the forepart of this
Agreement.
"Code" has the meaning set forth in the forepart of this Agreement.
"Company" has the meaning set forth in the forepart of this Agreement.
"Gross Mortgage Assets" means for any month the weighted average book value
of the real estate mortgage assets held by the Company, before reserves for
depreciation or bad debts or other similar noncash reserves, computed at the end
of such month.
<PAGE>
2
"Independent Directors" means the members of the Board of Directors of the
Company who are either (i) not current officers or employees of the Company, The
Chase Manhattan Corporation, the Advisor or any affiliate of the Advisor or (ii)
persons elected by the holders of the preferred stock of the Company.
"Operating Expenses" for any period means all of the operating expenses of
the Company (with the exception of those expenses to be borne by the Advisor in
accordance with Section 4 hereof), including without limitation the following:
(a) interest, taxes and other expenses incurred in connection with the
mortgage assets of the Company;
(b) expenses related to the officers, directors and employees of the
Company, including without limitation any fees or expenses of the
directors;
(c) fees and expenses payable to accountants, appraisers, auditors,
consultants, attorneys, collection and paying agents and all other Persons
who contract with or are retained by the Company or by the Advisor on
behalf of the Company;
(d) legal and other expenses incurred in connection with advice
concerning, obtaining or maintaining the Company's status as a REIT, the
determination of the Company's taxable income, any formal or informal
administrative action or legal proceedings which involve a challenge to the
REIT status of the Company or any claim that the activities of the Company,
any member of the Board of Directors or any officer were improper;
(e) expenses relating to communications and reports to stockholders of
the Company, including without limitation the costs of preparing, printing,
duplicating and mailing the certificates for the stock of the Company,
proxy solicitation materials and reports to stockholders, and the costs of
arranging meetings of stockholders;
(f) the costs of insurance described in Section 2 hereof, including
directors and officers liability insurance covering the directors and
officers of the Company;
(g) expenses relating to the acquisition, disposition and ownership of
mortgage assets, including without limitation and to the extent not paid by
others, legal fees and other expenses for professional services and fees;
(h) expenses connected with the payments of dividends or interest or
distributions in cash or any other form made or caused to be made by the
Board of Directors to the stockholders of the Company;
(i) expenses connected with any office or office facilities maintained
by the Company separate from the office of the Advisor, including without
limitation rent, telephone, utilities, office furniture and equipment and
machinery; and
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3
(j) other miscellaneous expenses of the Company which are not expenses
of the Advisor under Section 4.
"Person" means and includes individuals, corporations, limited
partnerships, general partnerships, joint stock companies or associations,
limited liability companies, joint ventures, associations, consortia, companies,
trusts, banks, trust companies, land trusts, common law trusts, business trusts
or other entities, governments and agencies and political subdivisions thereof.
"REIT" has the meaning set forth in the forepart of this Agreement.
Section 2. Duties of Advisor. The Advisor shall consult with the Board of
Directors and the officers of the Company and shall, at the request of the Board
of Directors or the officers of the Company, furnish advice and recommendations
with respect to all aspects of the business and affairs of the Company. Subject
to the control and discretion and at the request of the Board of Directors, the
Advisor shall:
(a) administer the day-to-day operations and affairs of the Company,
including without limitation the performance or supervision of the
functions described in this Section 2;
(b) monitor the credit quality of the mortgage loans and other real
estate mortgage assets held by the Company;
(c) advise the Company with respect to the acquisition, management,
financing, disposition of the Company's mortgage loans and other real
estate mortgage assets;
(d) represent the Company in its day-to-day dealings with Persons with
whom the Company interacts, including without limitation stockholders of
the Company, transfer agent, consultants, accountants, attorneys, servicers
of the Company's mortgage loans, custodians, insurers and banks;
(e) establish and provide necessary services for the Company,
including executive, administrative, accounting, stockholder relations,
secretarial, recordkeeping, copying, telephone, mailing and distribution
facilities;
(f) provide the Company with office space, conference room facilities,
office equipment and personnel necessary for the services to be performed
by the Advisor hereunder;
(g) arrange, schedule and coordinate the regular and special matters
of the Board of Directors required for the conduct of the affairs of the
Company or for timely action on any matters the Company is required to act
upon and implement all decisions of the Board of Directors, unless
otherwise instructed, with regard to the Company and its assets;
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4
(h) maintain communications and relations with the stockholders of the
Company, including, but not limited to, responding to inquiries, proxy
solicitations, providing reports to stockholders and arranging and
coordinating all meetings of stockholders;
(i) arrange for the investment and management of any short-term
investments of the Company;
(j) arrange for the services of third parties to collect and
distribute funds of the Company and to perform such functions as the Board
of Directors shall from time to time require;
(k) monitor and supervise the performance of all parties who have
contracts to perform services for the Company, provided that the Advisor
shall have no duty to assume the obligations or guarantee the performance
of such parties under such contracts;
(l) establish and maintain such bank accounts in the name of the
Company as may be required by the Company and approved by the Board of
Directors and ensure that all funds collected by the Advisor in the name or
on behalf of the Company shall be held in trust and shall not be commingled
with the Advisor's own funds or accounts;
(m) make payment on behalf of the Company of all Operating Expenses;
(n) arrange for the execution and delivery of such documents and
instruments by the officers of the Company as may be required in order to
perform the functions herein described and to take any other required
action;
(o) arrange for insurance for the Company including liability
insurance, errors and omissions policies and officers and directors
policies which shall cover and insure the Company, members of the Board of
Directors and the officers of the Company in amounts and with deductibles
and insurers approved by the Board of Directors;
(p) maintain proper books and records of the Company's affairs and
furnish or cause to be furnished to the Board of Directors such periodic
reports and accounting information as may be required from time to time by
the Board of Directors, including, but not limited to quarterly reports of
all income and expenses of and distribution of the Company;
(q) consult and work with legal counsel for the Company in
implementing Company decisions and undertaking measures consistent with all
pertinent Federal, state and local laws and rules or regulations of
governmental or quasi-governmental agencies, including, but not limited to,
Federal and state securities laws, the Code, as it
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5
relates to the Company's qualification as a REIT, and the regulations
promulgated under each of the foregoing;
(r) consult and work with accountants for the Company in connection
with the preparation of financial statements, annual reports and tax
returns;
(s) arrange for an annual audit of the books and records of the
Company by the accounting firm designated for such purposes by the Board of
Directors;
(t) prepare and distribute in consultation with the accountants for
the Company, annual reports to stockholders which will contain audited
financial statements;
(u) furnish reports to the Board of Directors and provide research,
economical and statistical data in connection with the Company's
investments; and
(v) as reasonably requested by the Company, make reports to the
Company of its performance of the foregoing services and furnish advice and
recommendations with respect to other aspects of the business of the
Company.
Section 3. Compensation. The Company shall pay to the Advisor, for services
rendered by the Advisor hereunder, a management fee payable monthly in arrears
in an amount equal to __% of the Gross Mortgage Assets for such month.
Section 4. Expenses of the Advisor. (a) Without regard to the compensation
received pursuant to Section 3, the Advisor will bear the following expenses:
(i) employment expenses of the personnel employed by the Advisor,
including without limitation salaries, wages, payroll taxes and the cost of
employee benefit plans; and
(ii) rent, telephone equipment, utilities, office furniture and
equipment and machinery and other office expenses of the Advisor incurred
in connection with the maintenance of any office facility of the Advisor.
(b) The Company shall reimburse the Advisor within 30 days of a written
request by the Advisor, for any Operating Expenses paid or incurred by the
Advisor on behalf of the Company.
Section 5. Records. The Advisor shall maintain appropriate books of account
and records relating to services performed hereunder, and such books of account
an records shall be accessible for inspection by the Board of Directors or
representatives of the Company at all times.
Section 6. REIT Qualification and Compliance. The Advisor shall consult and
work with the Company's legal counsel in maintaining the Company's qualification
as a REIT. Notwithstanding any other provisions of this Agreement to the
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6
contrary, the Advisor shall refrain from any action which, in its reasonable
judgment or in the judgment of the Board of Directors (of which the Advisor has
received written notice), would adversely affect the qualification of the
Company as a REIT or which would violate any law, rule or regulation of any
governmental body or agency having jurisdiction over the Company or its
securities, or which would otherwise not be permitted by the certificate of
incorporation or by-laws of the Company. Furthermore, the Advisor shall take any
action which, in its judgment or the judgment of the Board of Directors (of
which the Advisor has received written notice), may be necessary to maintain the
qualification of the Company as a REIT or prevent the violation of any law or
regulation of any governmental body or agency having jurisdiction over the
Company or its securities.
Section 7. Term; Termination. This Agreement shall be in full force and
effect for a term beginning on the date hereof with an initial term of five
years, and will be renewed automatically for additional five year periods unless
the Company delivers a notice of nonrenewal to the Advisor not less than 90 days
prior to the expiration of the initial term of this Agreement or 90 days prior
to the expiration of any renewal term. Notwithstanding the foregoing, at any
time after the initial term, the Company may terminate this Agreement at any
time upon 90 days' prior notice.
Section 8. Other Activities of the Advisor. (a) Nothing herein contained
shall prevent the Advisor, an affiliate of the Advisor or an officer, a
director, employee or stockholder of the Advisor from engaging in any activity,
including without limitation originating, purchasing and managing mortgage loans
and other real estate assets, rendering of services and investment advice with
respect to real estate investment opportunities to any other Person (including
other REITs) and managing other investments (including the investments of the
Advisor and its affiliates).
(b) Directors, officers, stockholders, employees and agents of the Advisor
or of the affiliates of the Advisor may serve as directors, officers, employees
or agents of the Company but shall receive no compensation (other than
reimbursement for expenses) from the Company for such service.
Section 9. Binding Effect; Assignment. This Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
successors and assigns. Neither party may assign this Agreement or any of its
respective rights hereunder (other than an assignment to a successor
organization which acquires substantially all of the property of such party or,
in the case of the Advisor, to an affiliate of the Advisor) without the prior
written consent of the other party to this Agreement.
Section 10. Subcontracting. The Advisor may at any time subcontract all or
a portion of its obligations under this Agreement to any affiliate of the
Advisor without the consent of the Company. The Advisor shall not subcontract,
and shall not permit any of its affiliates to subcontract, any of its
obligations under this Agreement to Persons who are not affiliates of the
Advisor. Notwithstanding the foregoing, the Advisor will not, in connection with
subcontracting any of its obligations under this Agreement, be relieved or
discharged in any respect from its obligations under this Agreement.
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7
Section 11. Liability and Indemnity of the Advisor. The Advisor assumes no
responsibilities under this Agreement other than to perform the services called
for hereunder in good faith. Neither the Advisor nor any of its affiliates,
stockholders, directors, officers or employees will have any liability to the
Company, or stockholders of the Company, or others except by reason of acts or
omissions constituting gross negligence or wilful breach of any of its material
obligations under this agreement. The Company shall indemnify and reimburse (if
necessary) the Advisor, its stockholders, directors, officers, employees and
agents for any and all expenses (including without limitation attorneys' fees),
losses, damages, liabilities, demands and charges of any nature whatsoever in
respect of or arising from any acts or omissions by the Advisor pursuant to this
Agreement, provided that the conduct against which the claim is made was
determined by such person, in good faith, to be in the best interest of the
Company and was not the result of gross negligence by such person or willful
breach of any of such person's material obligations by such person. The Advisor
agrees that any such indemnification is recoverable only from the assets of the
Company and not from the stockholders.
Section 12. Action Upon Notice of Non-Renewal or Termination. Forthwith
upon giving of notice of non-renewal of this Agreement by the Company or of
termination of this Agreement by the Company, the Advisor shall not be entitled
to compensation after the Advisor Termination Date for further services under
this Agreement but shall be paid all compensation accruing to the Advisor
Termination Date and shall be reimbursed for all expenses of the Company paid or
incurred by the Advisor as of the Advisor Termination Date which are
reimbursable by the Company under this Agreement. The Advisor shall promptly
after the Advisor Termination Date:
(i) deliver to the Company all assets and documents of the Company
then in the custody of the Advisor; and
(ii) cooperate with the Company and take all reasonable steps
requested to assist the Board of Directors in making an orderly transfer of
the administrative functions of the Company.
Section 13. No Joint Venture or Partnership. Nothing in this Agreement
shall be deemed to create a partnership or joint venture between the parties,
whether for purposes of taxation or otherwise.
Section 14. Notices. Unless expressly provided otherwise herein, all
notices, request, demands and other communications required or permitted under
this Agreement shall be in writing and shall be made by hand delivery, certified
mail, overnight courier service, telex or telecopier. Any notice shall be duly
addressed to the parties as follows:
If to the Company:
Chase Preferred Capital Corporation
270 Park Avenue
New York, New York 10017
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8
Attention: ____________________
If to the Advisor:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: ____________________
Either party may alter the address to which communications or copies are to
be sent by giving notice of such change of address in conformity with the
provisions of this Section 14 for the giving of notice.
Section 15. Severability. If any term or provision of this Agreement or the
application thereof with respect to any Person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of that term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
Section 16. Governing Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
New York.
Section 17. Amendments. This Agreement shall not be amended changed,
modified, terminated or discharged in whole or in part except by an instrument
in writing signed by both parties hereto or their respective successors or
assigns, or otherwise as provided herein.
Section 18. Headings. The section headings herein have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and year
first above written.
CHASE PREFERRED CAPITAL CORPORATION
By:____________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By:____________________________
Name:
Title:
