EXHIBIT 10.2
FORM OF SALE AND
SERVICING AGREEMENT
SALE AND SERVICING AGREEMENT
dated as of _________
by and among
______________________________,
as Depositor,
______________________________,
as Issuer,
______________________________,
as Servicer,
______________________________,
as Collateral Agent,
and
______________________________,
as Indenture Trustee
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS.........................................................1
Section 1.01 Certain Defined Terms.....................................1
Section 1.02 Provisions of General Application.........................1
Section 1.03 Business Day Certificate..................................2
ARTICLE II. SALE AND CONVEYANCE OF THE MORTGAGE LOANS..........................2
Section 2.01 Purchase and Sale of Initial Mortgage Loans...............2
Section 2.02 Purchase and Sale of Subsequent Mortgage Loans............3
Section 2.03 Purchase Price............................................3
Section 2.04 Possession of Mortgage Files; Access to Mortgage Files....3
Section 2.05 Delivery of Mortgage Loan Documents.......................4
Section 2.06 Acceptance of the Trust Estate; Certain Substitutions;
Certification by the Collateral Agent...................7
Section 2.07 Grant of Security Interest................................9
Section 2.08 Further Action Evidencing Assignments....................10
Section 2.09 Assignment of Agreement..................................10
ARTICLE III. REPRESENTATIONS AND WARRANTIES...................................10
Section 3.01 Representations of the Servicer..........................10
Section 3.02 Representations, Warranties and Covenants of the
Depositor..............................................12
Section 3.03 Representations, Warranties and Covenants of the
Collateral Agent.......................................13
Section 3.04 Representations, Warranties and Covenants of the
Indenture Trustee......................................14
ARTICLE IV. THE MORTGAGE LOANS................................................14
Section 4.01 Representations and Warranties Concerning the Mortgage
Loans..................................................14
Section 4.02 Purchase and Substitution................................14
ARTICLE V. ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS.................16
Section 5.01 The Servicer.............................................16
Section 5.02 Collection of Certain Mortgage Loan Payments; Collection
Account................................................17
Section 5.03 Permitted Withdrawals from the Collection Account........18
Section 5.04 Hazard Insurance Policies; Property Protection Expenses..19
Section 5.05 Assumption and Modification Agreements...................20
Section 5.06 Realization Upon Defaulted Mortgage Loans................20
Section 5.07 Indenture Trustee to Cooperate...........................21
Section 5.08 Servicing Compensation; Payment of Certain Expenses by
Servicer...............................................22
Section 5.09 Annual Statement as to Compliance........................22
Section 5.10 Annual Independent Public Accountants' Servicing Report..22
Section 5.11 Access to Certain Documentation..........................23
Section 5.12 Maintenance of Fidelity Bond.............................23
Section 5.13 The Subservicers.........................................23
Section 5.14 Reports to the Indenture Trustee; Collection Account
Statements.............................................23
Section 5.15 Optional Purchase of Defaulted Mortgage Loans............24
Section 5.16 Reports to be Provided by the Servicer...................24
Section 5.17 Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans.................................26
Section 5.18 Periodic Advances; Special Advance.......................26
Section 5.19 Indemnification; Third Party Claims......................27
Section 5.20 Maintenance of Corporate Existence and Licenses; Merger
or Consolidation of the Servicer.......................28
Section 5.21 Assignment of Agreement by Servicer; Servicer Not to
Resign.................................................28
Section 5.22 Periodic Filings with the Securities and Exchange
Commission; Additional Information.....................28
ARTICLE VI. APPLICATION OF FUNDS..............................................29
Section 6.01 Deposits to the Distribution Account.....................29
Section 6.02 Collection of Money......................................29
Section 6.03 Application of Principal and Interest....................29
Section 6.04 Information Concerning the Mortgage Loans................29
Section 6.05 Compensating Interest....................................29
Section 6.06 Effect of Payments by the Note Insurer; Subrogation......30
ARTICLE VII. SERVICER DEFAULT.................................................30
Section 7.01 Servicer Events of Default...............................30
Section 7.02 Indenture Trustee to Act; Appointment of Successor.......32
Section 7.03 Waiver of Defaults.......................................34
Section 7.04 Rights of the Note Insurer to Exercise Rights of the
Noteholders............................................34
Section 7.05 Indenture Trustee To Act Solely with Consent of the Note
Insurer................................................35
Section 7.06 Mortgage Loans, Trust Estate and Accounts Held for
Benefit of the Note Insurer............................35
Section 7.07 Note Insurer Default.....................................36
ARTICLE VIII. TERMINATION.....................................................36
Section 8.01 Termination..............................................36
Section 8.02 Additional Termination Requirements......................37
Section 8.03 Accounting Upon Termination of Servicer..................37
Section 8.04 Retention and Termination of the Servicer................38
ARTICLE IX. THE COLLATERAL AGENT..............................................38
Section 9.01 Duties of the Collateral Agent...........................38
Section 9.02 Certain Matters Affecting the Collateral Agent...........40
Section 9.03 Collateral Agent Not Liable for Notes or Mortgage Loans..41
Section 9.04 Collateral Agent May Own Notes...........................41
Section 9.05 Collateral Agent's Fees and Expenses; Indemnity..........41
Section 9.06 Eligibility Requirements for Collateral Agent............42
Section 9.07 Resignation and Removal of the Collateral Agent..........42
Section 9.08 Successor Collateral Agent...............................43
Section 9.09 Merger or Consolidation of Collateral Agent..............43
ARTICLE X. MISCELLANEOUS PROVISIONS...........................................43
Section 10.01 Limitation on Liability..................................43
Section 10.02 Acts of Noteholders......................................44
Section 10.03 Amendment................................................44
Section 10.04 Recordation of Agreement.................................45
Section 10.05 Duration of Agreement....................................45
Section 10.06 Notices..................................................45
Section 10.07 Severability of Provisions...............................46
Section 10.08 No Partnership...........................................46
Section 10.09 Counterparts.............................................46
Section 10.10 Successors and Assigns...................................46
Section 10.11 Headings.................................................46
Section 10.12 The Note Insurer Default.................................46
Section 10.13 Third Party Beneficiary..................................46
Section 10.14 Intent of the Parties....................................46
Section 10.15 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL.............................................47
EXHIBITS
EXHIBIT A Contents of the Mortgage File
EXHIBIT B Indenture Trustee's Acknowledgement of Receipt
EXHIBIT C Collateral Agent's Acknowledgement of Receipt
EXHIBIT D Initial Certification of Collateral Agent
EXHIBIT E Final Certification of Collateral Agent
EXHIBIT F Request for Release of Documents
EXHIBIT G Form of Subsequent Contribution Agreement
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
SALE AND SERVICING AGREEMENT, dated as of __________ (this
"Agreement"), by and among __________________, a _________corporation, as
depositor (the "Depositor"), ______________________, a _________ business trust,
as issuer (the "Trust"), ________________________, a _________ corporation, as
servicer (the "Servicer"), __________________________, a _________ association,
as collateral agent (the "Collateral Agent"), and ___________________, a
_________ banking corporation, as indenture trustee (the "Indenture Trustee").
W I T N E S S E T H
WHEREAS, the Depositor desires to sell to the Trust, and the
Trust desires to purchase from the Depositor, the mortgage loans (the "Mortgage
Loans") listed on Schedule I to this Agreement;
WHEREAS, immediately after such purchase, the Trust will
pledge such Mortgage Loans to the Indenture Trustee pursuant to the terms of an
Indenture, dated as of _________ (the "Indenture"), between the Trust and the
Indenture Trustee, and issue the ____________________________, Mortgage Backed
Notes (the "Notes");
WHEREAS, the Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the Trust;
WHEREAS, the Collateral Agent will hold, on behalf of the
Indenture Trustee, the Mortgage Loans and certain other assets pledged to the
Indenture Trustee pursuant to the Indenture; and
WHEREAS, ____________ (the "Note Insurer") is intended to be a
third-party beneficiary of this Agreement, and is hereby recognized by the
parties hereto to as a third-party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Trust, the Depositor, the Servicer, the
Collateral Agent and the Indenture Trustee hereby agree as follows:
Article I.
DEFINITIONS
Section 1.01 Certain Defined Terms. Capitalized terms used
herein but not defined herein shall have the meanings ascribed to such terms in
Appendix I attached hereto.
Section 1.02 Provisions of General Application. (a) All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
(b) The terms defined herein and in Appendix I to the
Indenture include the plural as well as the singular.
(c) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole. All references to
Articles and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Any reference to statutes are to be construed as including
all statutory provisions consolidating, amending or replacing the statute to
which reference is made and all regulations promulgated pursuant to such
statutes.
(e) All calculations of interest with respect to the Notes
provided for herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All calculations of interest with respect to any Mortgage
Loan provided for herein shall be made in accordance with the terms of the
related Mortgage Note and Mortgage or, if such documents do not specify the
basis upon which interest accrues thereon, on the basis of a 360-day year
consisting of twelve 30-day months, to the extent permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the
date such payment is actually received by the Servicer; provided, however, that,
for purposes of calculating distributions on the Notes, prepayments with respect
to any Mortgage Loan are deemed to be received on the date they are applied in
accordance with Accepted Servicing Practices consistent with the terms of the
related Mortgage Note and Mortgage to reduce the outstanding Principal Balance
of such Mortgage Loan on which interest accrues.
Section 1.03 Business Day Certificate. On the Closing Date
(with respect to the calendar years ____ and ____) and thereafter, within
fifteen (15) days prior to the end of each calendar year while this Agreement
remains in effect (with respect to the succeeding calendar years), the Servicer
shall provide to the Indenture Trustee and the Collateral Agent a certificate of
a Servicing Officer specifying the days on which banking institutions in the
____________________ are authorized or obligated by law, executive order or
governmental decree to be closed.
Article II.
SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01 Purchase and Sale of Initial Mortgage Loans. The
Depositor does hereby sell, transfer, assign, set over and convey to the Trust,
without recourse, but subject to the terms and provisions of this Agreement, all
of the right, title and interest of the Depositor in and to the Initial Mortgage
Loans, including the outstanding principal of, and interest due on, such Initial
Mortgage Loans listed on Schedule I attached hereto, and all other assets
included or to be included in the Trust Estate. In connection with such transfer
and assignment, and pursuant to Section 2.07 of the Loan Sale Agreement, the
Depositor does hereby also irrevocably transfer, assign, set over and otherwise
convey to the Trust all of its rights under the Loan Sale Agreement, including,
without limitation, its right to exercise the remedies created by Sections 2.06
and 3.05 of the Loan Sale Agreement for defective documentation and for breaches
of representations and warranties, agreements and covenants of the Originators
contained in Sections 3.01 and 3.03 of the Loan Sale Agreement.
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Section 2.02 Purchase and Sale of Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in Section 2.14(b)
of the Indenture, in consideration of the Trust's delivery on the related
Subsequent Transfer Dates to or upon the order of the Depositor of all or a
portion of the balance of funds in the related Pre-Funding Account, the
Depositor shall on any Subsequent Transfer Date sell, transfer, assign, set over
and convey to the Trust without recourse, but subject to terms and provisions of
this Agreement, all of the right, title and interest of the Depositor in and to
the Subsequent Mortgage Loans in the related Pool, including the outstanding
principal of, and interest due on, such Subsequent Mortgage Loans, and all other
assets included or to be included in the Trust Estate. In connection with such
transfer and assignment, and pursuant to Section 2.07 of the Loan Sale
Agreement, the Depositor will also irrevocably transfer, assign, set over and
otherwise convey to the Trust all of its rights under the Loan Sale Agreement
and the related Subsequent Transfer Agreement, including, without limitation,
its right to exercise the remedies created by Sections 2.06 and 3.05 of the Loan
Sale Agreement for defective documentation and for breaches of representations
and warranties, agreements and covenants of the Originators contained in
Sections 3.01 and 3.03 of the Loan Sale Agreement.
The amount released from a Pre-Funding Account with respect to
a transfer of Subsequent Mortgage Loans to the related Pool shall be one-hundred
percent (100%) of the Aggregate Principal Balances of the Subsequent Mortgage
Loans so transferred, as of the related Subsequent Cut-Off Date.
(b) In connection with the transfer and assignment of the
Subsequent Mortgage Loans to the Trust, the Depositor shall satisfy the document
delivery requirements set forth in Section 2.05 hereof.
(c) For any Subsequent Mortgage Loan that has a first Due Date
that occurs later than the last day of the Due Period following the Due Period
in which the Subsequent Mortgage Loan was sold to the Trust, on each applicable
Servicer Distribution Date, the Servicer will deposit into the Distribution
Account 30 days' interest at the related Mortgage Interest Rate, net of the
Servicing Fee, for each month after the month in which the Subsequent Transfer
occurs until, but not including, the month in which such first Due Date occurs.
Section 2.03 Purchase Price. On the Closing Date, as full
consideration for the Depositor's sale of the Initial Mortgage Loans to the
Trust, the Underwriter, on behalf of the Trust, will deliver to, or at the
direction of, the Depositor (i) an amount in cash equal to the sum of (A) ____%
and ____% of the Original Note Principal Balance as of the Closing Date of the
Class A-1 Notes and the Class A-2 Notes, respectively, plus (B) accrued interest
on the Original Note Principal Balance of the Class A-1 Notes and the Class A-2
Notes at the rate of ____% per annum and _____% per annum, respectively, from
(and including) _________ to (but not including) the Closing Date, minus (C) the
Original Pre-Funded Amount and the Original Capitalized Interest Amount for each
class of Notes, payable by wire transfer of same day funds, and (ii) the Trust
Certificates to be issued pursuant to the Trust Agreement.
Section 2.04 Possession of Mortgage Files; Access to Mortgage
Files. (a) Upon the receipt by the Depositor, or its designee, of the purchase
price for the Initial Mortgage Loans set forth in Section 2.03 hereof and the
issuance of the Notes pursuant to the
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Indenture, the ownership of each Mortgage Note, each Mortgage and the contents
of the Mortgage File related to each Initial Mortgage Loan will be vested in the
Trust, and will be pledged to the Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer.
(b) Pursuant to Section 2.05 hereof and Section 2.05 of the
Loan Sale Agreement, the Depositor has delivered or caused to be delivered the
Indenture Trustee's Mortgage File related to each Initial Mortgage Loan to the
Collateral Agent, on behalf of the Indenture Trustee.
(c) The Collateral Agent will be the custodian, on behalf of
the Indenture Trustee, to hold the Indenture Trustee's Mortgage Files in trust
for the benefit of all present and future Noteholders and the Note Insurer. In
the event the Collateral Agent resigns or is removed, the Indenture Trustee
shall either (x) hold the Indenture Trustee's Mortgage Files, or (y) appoint a
successor Collateral Agent to hold the Indenture Trustee's Mortgage Files as set
forth in Section 9.08 hereof.
(d) The Collateral Agent shall afford the Depositor, the
Trust, the Note Insurer and the Servicer reasonable access to all records and
documentation regarding the Mortgage Loans relating to this Agreement, such
access being afforded at customary charges, upon reasonable prior written
request and during normal business hours at the offices of the Collateral Agent.
Section 2.05 Delivery of Mortgage Loan Documents. (a) In
connection with the transfer and assignment of the Mortgage Loans, the Depositor
shall on or before the Closing Date, with respect to the Initial Mortgage Loans,
and shall on or before the Subsequent Transfer Date with respect to Subsequent
Mortgage Loans, deliver to the Collateral Agent, on behalf of the Indenture
Trustee (as pledgee of the Trust pursuant to the Indenture), the following
documents or instruments with respect to each Mortgage Loan so transferred or
assigned:
(i) the original Mortgage Note, endorsed
without recourse in blank by the related Originator, including
all intervening endorsements showing a complete chain of
endorsement;
(ii) the related original Mortgage with
evidence of recording indicated thereon or a copy thereof
certified by the applicable recording office;
(iii) the recorded mortgage assignment, or
copy thereof certified by the applicable recording office, if
any, showing a complete chain of assignment from the
originator of the related Mortgage Loan to the related
Originator (which assignment may, at such Originator's option,
be combined with the assignment referred to in subpart (iv)
hereof, in which case it must be in recordable form, but need
not have been previously recorded);
(iv) a mortgage assignment in recordable
form (which, if acceptable for recording in the relevant
jurisdiction, may be included in a blanket assignment or
assignments) of each Mortgage from the related Originator to
the Indenture Trustee;
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(v) originals of all assumption,
modification and substitution agreements in those instances
where the terms or provisions of a Mortgage or Mortgage Note
have been modified or such Mortgage or Mortgage Note has been
assumed; and
(vi) an original title insurance policy (or
(A) a copy of the title insurance policy, or (B) a binder
thereof or copy of such binder together with a certificate
from the related Originator that the original Mortgage has
been delivered to the title insurance company that issued such
binder for recordation).
In instances where the original recorded Mortgage and a
completed assignment thereof in recordable form cannot be delivered by the
related Originator to the Depositor, and by the Depositor to the Collateral
Agent, on behalf of the Indenture Trustee prior to or concurrently with the
execution and delivery of this Agreement (or, with respect to Subsequent
Mortgage Loans, prior to or on the related Subsequent Transfer Date), due to a
delay in connection with recording, the related Originator may:
(x) in lieu of delivering such original
recorded Mortgage, deliver to the Collateral Agent, on behalf
of the Indenture Trustee, a copy thereof; provided, that the
related Originator certifies that the original Mortgage has
been delivered to a title insurance company for recordation
after receipt of its policy of title insurance or binder
therefor; and
(y) in lieu of delivering the completed
assignment in recordable form, deliver to the Collateral
Agent, on behalf of the Indenture Trustee, the assignment in
recordable form, otherwise complete except for recording
information.
The Collateral Agent, on behalf of the Indenture Trustee,
shall promptly upon receipt thereof, with respect to each Mortgage Note
described in Section 2.05(a)(i) hereof and each assignment described in Section
2.05(a)(iv) hereof, endorse such Mortgage Note and assignment as follows:
___________ as Indenture Trustee under the Indenture dated as of
___________________.
(b) As promptly as practicable, but in any event within thirty
(30) days from the Closing Date or the Subsequent Transfer Date, as applicable,
the Depositor shall promptly submit, or cause to be submitted by the related
Originator, for recording in the appropriate public office for real property
records, each assignment referred to in Section 2.05(a)(iv). The Collateral
Agent, on behalf of the Indenture Trustee, shall retain a copy of each
assignment submitted for recording. In the event that any such assignment is
lost or returned unrecorded because of a defect therein, the Depositor or such
Originator shall promptly prepare a substitute assignment or cure such defect,
as the case may be, and thereafter the Depositor or such Originator shall submit
each such assignment for recording. The costs relating to the delivery and
recordation of the documents in connection with the Mortgage Loans as specified
in this Article II shall be borne by the Depositor.
(c) The Depositor or the related Originator shall, within five
(5) Business Days after the receipt thereof, deliver, or cause to be delivered,
to the Collateral Agent, on behalf of the Indenture Trustee: (i) the original
recorded Mortgage and related power of attorney, if any,
5
in those instances where a copy thereof certified by the related Originator was
delivered to the Collateral Agent, on behalf of the Indenture Trustee; (ii) the
original recorded assignment of Mortgage from the related Originator to the
Indenture Trustee, which, together with any intervening assignments of Mortgage,
evidences a complete chain of assignment from the originator of the Mortgage
Loan to the Indenture Trustee, in those instances where copies of such
assignments certified by the related Originator were delivered to the Collateral
Agent, on behalf of the Indenture Trustee, and (iii) the title insurance policy
or title opinion required in Section 2.05(a)(vi). The Collateral Agent shall
review the recorded assignment to confirm the information contained therein. The
Collateral Agent shall notify Indenture Trustee, the Note Insurer and the
Servicer, of any defect in such assignment based on such review. The Servicer
shall have a period of sixty (60) days following such notice to correct or cure
such defect. In the event that the Servicer fails to record an assignment of a
Mortgage as provided herein, the Collateral Agent shall, at the Servicer's
expense, use reasonable efforts to prepare and, if required hereunder, file such
assignments for recordation in the appropriate real property or other records
and the Servicer hereby appoints the Collateral Agent as its attorney-in-fact
with full power and authority acting in its stead for the purpose of such
preparation, execution and filing.
Notwithstanding anything to the contrary contained in this
Section 2.05, in those instances where the public recording office retains the
original Mortgage, power of attorney, if any, assignment or assignment of
Mortgage after it has been recorded or such original has been lost, the
Depositor or the related Originator shall be deemed to have satisfied its
obligations hereunder upon delivery to the Collateral Agent, on behalf of the
Indenture Trustee, of a copy of such Mortgage, power of attorney, if any,
assignment or assignment of Mortgage certified by the public recording office to
be a true copy of the recorded original thereof.
From time to time the Depositor or the related Originator may
forward, or cause to be forwarded, to the Collateral Agent, on behalf of the
Indenture Trustee, additional original documents evidencing any assumption or
modification of a Mortgage Loan.
(d) All original documents relating to the Mortgage Loans that
are not delivered to the Collateral Agent, on behalf of the Indenture Trustee,
as permitted by Section 2.05(a) hereof are, and shall be, held by the Servicer,
the Depositor or the related Originator, as the case may be, in trust for the
benefit of the Indenture Trustee, on behalf of the Noteholders and the Note
Insurer. In the event that any such original document is required pursuant to
the terms of this Section 2.05 to be a part of an Indenture Trustee's Mortgage
File, such document shall be delivered promptly to the Collateral Agent, on
behalf of the Indenture Trustee. From and after the sale of the Mortgage Loans
to the Trust pursuant hereto, to the extent that the Depositor or the related
Originator retains legal title of record to any Mortgage Loans prior to the
vesting of legal title in the Trust, such title shall be retained in trust for
the Trust as the owner of the Mortgage Loans, and the Indenture Trustee, as the
pledgee of the Trust under the Indenture. In acting as custodian of any original
document which is part of the Indenture Trustee's Mortgage Files, the Servicer
agrees further that it does not and will not have or assert any beneficial
ownership interest in the related Mortgage Loans or the Mortgage Files. Promptly
upon the Servicer's receipt of any such original document, the Servicer, on
behalf of the Trust, shall xxxx conspicuously each such original document, and
its master data processing records with a legend evidencing that the Trust has
purchased the related Mortgage Loan and all right and title thereto and interest
therein, and pledged such Mortgage Loan and all right and title
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thereto and interest therein to the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer.
Section 2.06 Acceptance of the Trust Estate; Certain
Substitutions; Certification by the Collateral Agent. (a) The Indenture Trustee
agrees to execute and deliver to the Depositor, the Note Insurer, the Collateral
Agent and the Servicer on or prior to the Closing Date an acknowledgement of
receipt of the Note Insurance Policy in the form attached as Exhibit B hereto.
(b) The Collateral Agent, on behalf of the Indenture Trustee,
agrees to:
(i) execute and deliver to the Depositor,
the Note Insurer, the Indenture Trustee and the Servicer, on
or prior to the Closing Date or any Subsequent Transfer Date,
as applicable, with respect to each Mortgage Loan transferred
on such date, an acknowledgement of receipt of the Mortgage
File containing the original Mortgage Note (with any
exceptions noted), in the form attached as Exhibit C hereto,
and declares that it will hold such documents and any
amendments, replacements or supplements thereto, as well as
any other assets included in the definition of Trust Estate
and delivered to the Collateral Agent, on behalf of the
Indenture Trustee, in trust upon and subject to the conditions
set forth herein, for the benefit of the Noteholders and the
Note Insurer.
(ii) to review (or cause to be reviewed)
each Indenture Trustee's Mortgage File within thirty (30) days
after the Closing Date or any Subsequent Transfer Date, as
applicable (or, with respect to any Qualified Substitute
Mortgage Loans, within thirty (30) days after the receipt by
the Collateral Agent, on behalf of the Indenture Trustee,
thereof), and to deliver to the Servicer, the Depositor, the
Indenture Trustee and the Note Insurer a certification, in the
form attached hereto as Exhibit D, to the effect that, except
as otherwise noted, as to each Mortgage Loan listed in the
related Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in
such certification as not covered by such certification), (i)
all documents required to be delivered to it pursuant to
Section 2.05 are in its possession, (ii) each such document
has been reviewed by it and has not been mutilated, damaged,
torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical
alteration if they reasonably appear to have been initialed by
the Mortgagor), appears regular on its face and relates to
such Mortgage Loan, and (iii) based on its examination and
only as to the foregoing documents, the information set forth
on the Mortgage Loan Schedule as to the information set forth
in (i), (ii), (v) and (vi) of the definition of "Mortgage Loan
Schedule" accurately reflects the information set forth in the
Indenture Trustee's Mortgage File delivered on such date.
(iii) to review (or cause to be reviewed)
each Indenture Trustee's Mortgage File within ninety (90) days
after the Closing Date or any Subsequent Transfer Date, as
applicable (or, with respect to any Qualified Substitute
Mortgage Loans, within ninety (90) days after the receipt by
the Collateral Agent, on behalf of the Indenture Trustee,
thereof), and to deliver to the Servicer, the Depositor, the
Indenture Trustee, the Rating Agencies and the Note Insurer a
certification in the form attached hereto as Exhibit E to the
effect that, except as otherwise noted, as to each Mortgage
Loan listed in the related
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Mortgage - Loan Schedule (other than any Mortgage Loan paid in
full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), (i) all
documents required to be delivered to it pursuant to Section
2.05 are in its possession, (ii) each such document has been
reviewed by it and has not been mutilated, damaged, torn or
otherwise physically altered (handwritten additions, changes
or corrections shall not constitute physical alteration if
they reasonably appear to be initialed by the Mortgagor),
appears regular on its face and relates to such Mortgage Loan,
and (iii) based on its examination and only as to the
foregoing documents, the information set forth in the
definition of "Mortgage Loan Schedule" accurately reflects the
information set forth in the Indenture Trustee's Mortgage File
delivered on such date.
In performing any such review, the Collateral Agent may
conclusively rely on the Depositor as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Collateral Agent's review of the Indenture Trustee's Mortgage Files is limited
solely to confirming that the documents listed in Section 2.05 have been
executed and received and relate to the Indenture Trustee's Mortgage Files
identified in the related Mortgage Loan Schedule. The Collateral Agent shall be
under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face.
(c) If the Collateral Agent during the process of reviewing
the Indenture Trustee's Mortgage Files finds any document constituting a part of
a Indenture Trustee's Mortgage File which is not executed, has not been
received, is unrelated to the Mortgage Loan identified in the related Mortgage
Loan Schedule, or does not conform to the requirements of Section 2.05 or the
description thereof as set forth in the related Mortgage Loan Schedule, the
Collateral Agent shall promptly so notify the Servicer, the Depositor, the
Originators, the Note Insurer and the Indenture Trustee. Pursuant to Section
2.06(b) of the Loan Sale Agreement, the Depositor and the Originators have
agreed to use reasonable efforts to cause to be remedied a material defect in a
document constituting part of an Indenture Trustee's Mortgage File of which it
is so notified by the Collateral Agent. If, however, within sixty (60) days
after the Collateral Agent's notice to it respecting such defect the Depositor
or the Originators have not caused to be remedied the defect and the defect
materially and adversely affects the interest of the Noteholders and the Note
Insurer in the related Mortgage Loan, the Depositor and the Originators will be
obligated, pursuant to Section 3.05 of the Loan Sale Agreement, to either (i)
substitute in lieu of such Mortgage Loan a Qualified Substitute Mortgage Loan in
the manner and subject to the conditions set forth in Section 3.05 of the Loan
Sale Agreement or (ii) purchase such Mortgage Loan at a purchase price equal to
the Loan Repurchase Price. Upon receipt by the Collateral Agent and the
Indenture Trustee of a certification, in the form attached hereto as Exhibit F,
of a Servicing Officer of such substitution or purchase and, in the case of a
substitution, upon receipt by the Collateral Agent, on behalf of the Indenture
Trustee, of the related Indenture Trustee's Mortgage File, and the deposit of
the amounts described above in the Collection Account, the Collateral Agent
shall release to the Servicer for release to the Depositor the related Indenture
Trustee's Mortgage File and the Indenture Trustee shall execute, without
recourse, and deliver such instruments of transfer furnished by the Depositor as
may be necessary to transfer such Mortgage Loan to the Depositor. The Collateral
Agent shall notify the
8
Indenture Trustee, who shall notify the Note Insurer if the Depositor fails to
repurchase or substitute for a Mortgage Loan in accordance with the foregoing.
Section 2.07 Grant of Security Interest. (a) It is intended
that the conveyance of the Mortgage Loans and other property by the Depositor to
the Trust as provided in this Article II be, and be construed as, a sale of the
Mortgage Loans and such other property by the Depositor to the Trust. It is,
further, not intended that such conveyance be deemed a pledge of the Mortgage
Loans or such other property by the Depositor to the Trust to secure a debt or
other obligation of the Depositor. However, in the event that the Mortgage Loans
or any of such other property are held to be property of the Depositor, or if
for any reason this Agreement is held or deemed to create a security interest in
the Mortgage Loans or any of such other property, then it is intended that: (i)
this Agreement shall also be deemed to be a security agreement within the
meaning of the Uniform Commercial Code; (ii) the conveyance provided for in this
Article II shall be deemed to be a grant by the Depositor to the Trust of a
security interest in all of the Depositor's right, title and interest in and to
the Mortgage Loans and such other property and all amounts payable to the
holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including, without limitation,
all amounts from time to time held or invested in the Distribution Account,
whether in the form of cash, instruments, securities or other property; (iii)
the possession by the Collateral Agent, on behalf of the Indenture Trustee, of
the Mortgage Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to the Uniform Commercial Code; and (iv) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from financial intermediaries, bailees or agents, as applicable,
of the Indenture Trustee for the purpose of perfecting such security interest
under applicable law. The Depositor, the Servicer, on behalf of the Trust, the
Collateral Agent and the Indenture Trustee, shall, to the extent consistent with
this Agreement, take such actions as may be reasonably necessary to ensure that,
if this Agreement were deemed to create a security interest in the Mortgage
Loans or any of such other property, such security interest would be deemed to
be a perfected security interest of first priority under applicable law and will
be maintained as such throughout the term of this Agreement.
(b) The Depositor and the Servicer shall take no action
inconsistent with the Trust's ownership of the Trust Estate and each shall
indicate or shall cause to be indicated in its records and records held on its
behalf that ownership of each Mortgage Loan and the other assets in the Trust
Estate are held by the Collateral Agent, on behalf of the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer. In addition, the Depositor,
the Depositor and the Servicer shall respond to any inquiries from third parties
with respect to ownership of a Mortgage Loan or any other asset in the Trust
Estate by stating that it is not the owner of such asset and that the Trust is
the owner of such Mortgage Loan or other asset in the Trust Estate, which is
held by the Collateral Agent, on behalf of the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer.
9
Section 2.08 Further Action Evidencing Assignments. (a) The
Servicer agrees that, from time to time, at its expense, it shall cause the
Depositor to promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or appropriate, or that the
Servicer, the Indenture Trustee or the Collateral Agent may reasonably request,
in order to perfect, protect or more fully evidence the transfer of ownership of
the Mortgage Loans and other assets in the Trust Estate or to enable the
Collateral Agent, on behalf of the Indenture Trustee, to exercise or enforce any
of its rights hereunder. Without limiting the generality of the foregoing, the
Servicer and the Depositor will, upon the request of the Servicer, the Indenture
Trustee or the Collateral Agent execute and file (or cause to be executed and
filed) such real estate filings, financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate.
(b) The Depositor hereby grants to the Servicer, the Indenture
Trustee and the Collateral Agent powers of attorney to execute all documents on
its behalf under this Agreement and the Loan Sale Agreement as may be necessary
or desirable to effectuate the foregoing.
Section 2.09 Assignment of Agreement. The Depositor hereby
acknowledges and agrees that the Trust may assign its interest under this
Agreement to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, as may be required to effect the purposes of the Indenture,
without further notice to, or consent of, the Depositor, and the Indenture
Trustee shall succeed to such of the rights and obligations of the Trust
hereunder as shall be so assigned. The Trust shall, pursuant to the Indenture,
assign all of its right, title and interest in and to the Mortgage Loans and its
right to exercise the remedies created by Section 2.06 and 3.05 of the Loan Sale
Agreement for breaches of the representations, warranties, agreements and
covenants of the Originators contained in Sections 2.05, 2.06 and 3.03 of the
Loan Sale Agreement, assign such right, title and interest to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer. The Depositor
agrees that, upon such assignment to the Indenture Trustee, such
representations, warranties, agreements and covenants will run to and be for the
benefit of the Indenture Trustee and the Indenture Trustee may enforce, without
joinder of the Depositor or the Trust, the repurchase obligations of the
Originators set forth herein with respect to breaches of such representations,
warranties, agreements and covenants.
Article III.
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of the Servicer. The Servicer
hereby represents and warrants to the Indenture Trustee, the Depositor, the
Collateral Agent, the Trust, the Note Insurer and the Noteholders as of the
Closing Date and during the term of this Agreement that:
(a) Each of the Servicer and the
Subservicers is duly organized, validly existing and in good
standing under the laws of their respective states of
incorporation and has the power to own its assets and to
transact the business in which it is currently engaged. Each
of the Servicer and the Subservicers is duly qualified to do
business as a foreign corporation and is in good standing in
each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it or the
performance of its obligations hereunder requires such
qualification and in which the failure so to qualify
10
could reasonably be expected to have a material adverse effect
on the business, properties, assets, or condition (financial
or other) of the Servicer or the Subservicers or the
performance of their respective obligations hereunder;
(b) The Servicer has the power and authority
to make, execute, deliver and perform this Agreement and all
of the transactions contemplated under this Agreement, and has
taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement, and
assuming the due authorization, execution and delivery hereof
by the other parties hereto constitutes, or will constitute,
the legal, valid and binding obligation of the Servicer,
enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally,
and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at
law);
(c) The Servicer is not required to obtain
the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration
with, any governmental authority, bureau or agency which
consent already has not been obtained in connection with the
execution, delivery, performance, validity or enforceability
of this Agreement, except such as have been obtained prior to
the Closing Date;
(d) The execution, delivery and performance
of this Agreement by the Servicer will not violate any
provision of any existing law or regulation or any order or
decree of any court or the charter or bylaws of the Servicer,
or constitute a breach of any mortgage, indenture, contract or
other Agreement to which the Servicer is a party or by which
it may be bound;
(e) There is no action, suit, proceeding or
investigation pending or threatened against the Servicer or
the Subservicers which, either in any one instance or in the
aggregate, is, in the Servicer's judgment, likely to result in
any material adverse change in the business, operations,
financial condition, properties, or assets of the Servicer or
the Subservicers, or in any material impairment of the right
or ability of any of them to carry on its business
substantially as now conducted, or in any material liability
on the part of any of them, or which would draw into question
the validity of this Agreement, the Notes, or the Mortgage
Loans or of any action taken or to be taken in connection with
the obligations of the Servicer or the Subservicers
contemplated herein or therein, or which would be likely to
impair materially the ability of the Servicer or the
Subservicers to perform their respective obligations
hereunder;
(f) Neither this Agreement nor any
statement, report, or other document furnished by the Servicer
or the Subservicers pursuant to this Agreement or in
connection with the transactions contemplated hereby,
including, without limitation, the sale or placement of the
Notes, contains any untrue statement of fact provided by or on
behalf of the Servicer or omits to state a fact necessary to
make the statements provided by or on behalf of the Servicer
contained herein or therein not misleading:
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(g) 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; and
(h) None of the Servicer or the Subservicers
is an "investment company" or a company "controlled by an
investment company," within the meaning of the Investment
Company Act of 1940, as amended.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.01 shall survive the
delivery of the respective Indenture Trustee's Mortgage Files to the Collateral
Agent, on behalf of the Indenture Trustee or to another custodian, as the case
may be, and inure to the benefit of the Indenture Trustee.
Section 3.02 Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Indenture Trustee, the Trust, the Collateral Agent and the Servicer that as of
the date of this Agreement or as of such date specifically provided herein:
(a) The Depositor is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware;
(b) The Depositor has the corporate power
and authority to convey the Mortgage Loans and to execute,
deliver and perform, and to enter into and consummate
transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly
authorized, executed and delivered by the Depositor, all
requisite corporate action having been taken, and, assuming
the due authorization, execution and delivery hereof by the
other parties hereto, constitutes or will constitute the
legal, valid and binding agreement of the Depositor,
enforceable against the Depositor in accordance with its
terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in
equity or at law);
(d) No consent, approval, authorization or
order of or registration or filing with, or notice to, any
governmental authority or court is required for the execution,
delivery and performance of or compliance by the Depositor
with this Agreement or the consummation by the Depositor of
any of the transactions contemplated hereby, except as have
been made on or prior to the Closing Date;
(e) None of the execution and delivery of
this Agreement, the consummation of the transactions
contemplated hereby or thereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result
in a breach of, or constitutes or will constitute a default or
results or will result in an acceleration under (A) the
charter or bylaws of the Depositor, or (B) of any term,
condition or provision of any material indenture, deed of
trust, contract or other agreement or instrument to which the
Depositor or any of its subsidiaries is a party or by which it
or any of its subsidiaries is bound; (ii) results or will
result in a violation of any
12
law, rule, regulation, order, judgment or decree applicable to
the Depositor of any court or governmental authority having
jurisdiction over the Depositor or its subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or
encumbrance which would have a material adverse effect upon
the Mortgage Loans or any documents or instruments evidencing
or securing the Mortgage Loans;
(f) There are no actions, suits or
proceedings before or against or investigations of, the
Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other
tribunal, and no notice of any such action, which, in the
Depositor's reasonable judgment, might materially and
adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or
enforceability of this Agreement; and
(g) The Depositor is not in default with
respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or
governmental agency that may materially and adversely affect
its performance hereunder.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.02 shall survive delivery
of the respective Indenture Trustee's Mortgage Files to the Collateral Agent, on
behalf of the Indenture Trustee or to another custodian, as the case may be, and
shall inure to the benefit of the Indenture Trustee.
Section 3.03 Representations, Warranties and Covenants of the
Collateral Agent. The Collateral Agent hereby represents, warrants and covenants
to the Indenture Trustee, the Trust, the Servicer and the Depositor that as of
the date of this Agreement or as of such date specifically provided herein:
(a) The Collateral Agent is a national
banking association duly organized, validly existing and in
good standing under the laws of the United States of America;
(b) The Collateral Agent has the corporate
power and authority to execute, deliver and perform, and to
enter into and consummate transactions contemplated by this
Agreement; and
(c) This Agreement has been duly and validly
authorized, executed and delivered by the Collateral Agent,
all requisite corporate action having been taken, and,
assuming the due authorization, execution and delivery hereof
by the other parties hereto, constitutes or will constitute
the legal, valid and binding agreement of the Collateral
Agent, enforceable against the Collateral Agent in accordance
with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in
equity or at law).
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.03 shall survive delivery
of the respective Indenture Trustee's Mortgage Files to the Collateral Agent, on
behalf of the Indenture Trustee or to another custodian, as the case may be, and
shall inure to the benefit of the Indenture Trustee.
13
Section 3.04 Representations, Warranties and Covenants of the
Indenture Trustee. The Indenture Trustee hereby represents, warrants and
covenants to the Collateral Agent, the Trust, the Servicer and the Depositor
that as of the date of this Agreement or as of such date specifically provided
herein:
(a) The Indenture Trustee is a banking
corporation duly organized, validly existing and in good
standing under the laws of the State of ______________;
(b) The Indenture Trustee has the corporate
power and authority to execute, deliver and perform, and to
enter into and consummate transactions contemplated by this
Agreement;
(c) This Agreement has been duly and validly
authorized, executed and delivered by the Indenture Trustee,
all requisite corporate action having been taken, and,
assuming the due authorization, execution and delivery hereof
by the other parties hereto, constitutes or will constitute
the legal, valid and binding agreement of the Indenture
Trustee, enforceable against the Indenture Trustee in
accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights of
creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a
proceeding in equity or at law);
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.04 shall survive delivery
of the respective Indenture Trustee's Mortgage Files to the Collateral Agent, on
behalf of the Indenture Trustee or to another custodian, as the case may be.
Article IV.
THE MORTGAGE LOANS
Section 4.01 Representations and Warranties Concerning the
Mortgage Loans. With respect to each Mortgage Loan, the Depositor hereby assigns
to the Trust, pursuant to Section 2.07 of the Loan Sale Agreement, the
representations, warranties and covenants of the Originators set forth in
Sections 3.01 and 3.03 of the Loan Sale Agreement. Such representations,
warranties and covenants are made or deemed to be made (x) with respect to the
Initial Mortgage Loans, as of the Initial Cut-Off Date and (y) with respect to
the Subsequent Mortgage Loans, as of the related Subsequent Cut-Off Date.
Section 4.02 Purchase and Substitution. (a) It is understood
and agreed that the representations and warranties set forth in Sections 3.01
and 3.03 of the Loan Sale Agreement shall survive the purchase by the Depositor
of the Mortgage Loans, the subsequent transfer thereof by the Depositor to the
Trust, the subsequent pledge thereof by the Trust to the Indenture Trustee, for
the benefit of the Noteholders and the Notes Insurer, and the delivery of the
Notes to the Noteholders, and shall continue in full force and effect,
notwithstanding any restrictive or qualified endorsement on the Mortgage Notes
and notwithstanding subsequent termination of this Agreement or the Loan Sale
Agreement.
14
(b) Upon discovery by the Depositor, the Servicer, any
Subservicer, the Indenture Trustee, the Collateral Agent, the Note Insurer or a
Noteholder of a breach of any of the representations and warranties in Sections
3.01 or 3.03 of the Loan Sale Agreement which materially and adversely affects
the value of the Mortgage Loans or the interest of the Noteholders or the Note
Insurer, or which materially and adversely affects the interests of the Note
Insurer or the Noteholders in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan
(notwithstanding that such representation and warranty was made to the the
Originator's best knowledge), the party discovering such breach or failure shall
promptly (and in any event within five (5) days of the discovery) give written
notice thereof to the others. Within sixty (60) days of the earlier of its
discovery or its receipt of notice of any breach of a representation or
warranty, the Servicer shall, or shall cause an Originator to, (a) promptly cure
such breach in all material respects, (b) purchase such Mortgage Loan on the
next succeeding Servicer Distribution Date, in the manner and at the price
specified in Section 2.06(b) and this Section 4.02, or (c) remove such Mortgage
Loan from the Trust Estate (in which case it shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans in the
manner specified in Section 2.06(b) and this Section 4.02. The Collateral Agent
shall give prompt written notice to the Indenture Trustee, who shall deliver
such notice to the Note Insurer and the Rating Agencies of any repurchase or
substitution made pursuant to this Section 4.02 or Section 2.06(b).
(c) As to any Deleted Mortgage Loan for which the Depositor
substitutes a Qualified Substitute Mortgage Loan or Loans, the Servicer shall
cause the Depositor or an Originator, as applicable, to effect such substitution
by delivering to the Indenture Trustee a certification, in the form attached
hereto as Exhibit F, executed by a Servicing Officer, and the documents
described in Sections 2.05(a)(i)-(vi) for such Qualified Substitute Mortgage
Loan or Loans.
(d) The Servicer shall deposit in the Distribution Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loan or Loans on or before the date of
substitution will be retained by the Depositor. The Trust will own all payments
received on the Deleted Mortgage Loan on or before the date of substitution, and
the Depositor shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Servicer shall give
written notice to the Indenture Trustee, the Collateral Agent and the Note
Insurer that such substitution has taken place and shall amend the Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
this Agreement and the substitution of the Qualified Substitute Mortgage Loan or
Loans. Upon such substitution, such Qualified Substitute Mortgage Loan or Loans
shall be subject to the terms of this Agreement in all respects.
(e) [Reserved];
(f) It is understood and agreed that the obligations of the
Depositor and the Originators set forth in Sections 2.06 and 3.05 of the Loan
Sale Agreement to, and the Servicer's obligation set forth in this Section 4.02
to cause the Depositor and the Originators to, cure, purchase or substitute for
a defective Mortgage Loan, or to indemnify as described in Section 3.05(g) of
the Loan Sale Agreement, constitute the sole remedies of the Indenture Trustee,
the
15
Collateral Agent, the Note Insurer and the Noteholders respecting a breach of
the representations and warranties of the Originators set forth in Sections 3.01
and 3.03 of the Loan Sale Agreement.
(g) Pursuant to Section 3.05(g) of the Loan Sale Agreement,
the Depositor and the Originators shall be obligated to indemnify the Indenture
Trustee, the Trust, the Owner Trustee, the Collateral Agent, the Noteholders and
the Note Insurer for any third party claims arising out of a breach by the
Depositor or the related Originator of representations or warranties regarding
the Mortgage Loans.
(h) Pursuant to Section 3.05(h) of the Loan Sale Agreement,
the Depositor and each of the Originators shall be jointly and severally
responsible for any repurchase, cure or substitution obligation of the Depositor
or any of the Originators under this Agreement, the Loan Sale Agreement or the
Indenture.
Article V.
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 The Servicer. The Servicer shall service and
administer the Mortgage Loans in accordance with the Accepted Servicing
Practices and shall have full power and authority to do any and all things not
inconsistent therewith in connection with such servicing and administration
which it may deem necessary or desirable subject to the limitations set forth in
this Agreement. The Indenture Trustee 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 hereunder. Without limiting
the generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered by the Indenture Trustee, to execute and deliver, on
behalf of itself, the Noteholders and the Indenture Trustee or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, and to effect such
modifications, waivers, indulgences and other like matters as are in its
judgment necessary or desirable, with respect to the Mortgage Loans and the
Mortgaged Properties and the servicing and administration thereof. The Servicer
shall notify the Indenture Trustee of any such waiver, release, discharge,
modification, indulgence or other such matter by delivering to the Indenture
Trustee an Officer's Certificate certifying that such agreement is in compliance
with this Section 5.01 together with the original copy of any written agreement
or other document executed in connection therewith, all of which written
agreements or documents shall, for all purposes, be considered a part of the
related Indenture Trustee's Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. Notwithstanding anything
in this Agreement to the contrary, the Servicer shall not permit any
modification with respect to any Mortgage Loan that would decrease the Mortgage
Interest Rate, reduce or increase the principal balance, decrease the lien
priority, or change the final maturity date on or of such Mortgage Loan unless
(i) the Mortgagor is in default with respect to the Mortgage Loan or such
default is, in the judgment of the Servicer, imminent and (ii) the Note Insurer
consents to such modifications in writing; provided, however, that the Servicer
shall be permitted to extend the final maturity date on a Mortgage Loan by 180
days or less without the consent of the Note Insurer.
16
The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Indenture Trustee under this
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent.
Section 5.02 Collection of Certain Mortgage Loan Payments;
Collection Account. (a) The Servicer shall make its reasonable efforts to
collect all payments called for under the terms and provisions of the Mortgage
Loans, and shall, to the extent such procedures shall be consistent with this
Agreement, follow Accepted Servicing Practices. Consistent with the foregoing,
the Servicer may in its discretion waive any assumption fees or other fees which
may be collected in the ordinary course of servicing such Mortgage Loans.
(b) The Servicer shall establish and maintain, in the name of
the Indenture Trustee, the Collection Account, in trust for the benefit of the
Noteholders and the Note Insurer. The Collection Account shall be established
and maintained as an Eligible Account.
(c) The Servicer shall deposit in the Collection Account any
amounts representing Monthly Payments on the Mortgage Loans due or to be applied
as of a date after the Cut-Off Date, and thereafter, on each Business Day
(except as otherwise permitted herein), the following payments and collections
received or made by it (other than in respect of principal collected and
interest due on the Mortgage Loans on or before the Cut-Off Date):
(i) payments of interest on the Mortgage
Loans;
(ii) payments of principal of the Mortgage
Loans;
(iii) the Loan Repurchase Price of Mortgage
Loans repurchased pursuant to Sections 2.06, 4.02 or 5.05;
(iv) the Substitution Adjustment received in
connection with Mortgage Loans for which Qualified Substitute
Mortgage Loans are received pursuant to Sections 2.06, 4.02
and 3.03;
(v) all Liquidation Proceeds; and
(vi) all Insurance Proceeds (including, for
this purpose, any amounts required to be deposited by the
Servicer pursuant to Section 5.04 hereof).
It is understood that the Servicer need not deposit amounts
representing fees, prepayment premiums, late payment charges or extension or
other administrative charges payable by Mortgagors, or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items.
(d) The Indenture Trustee shall invest any funds in the
Collection Account in Permitted Investments as directed by the Servicer, which
shall mature not later than the Business Day next preceding the Servicer
Distribution Date next following the date of such investment (except that any
investment held by the Indenture Trustee may mature on such Servicer
Distribution Date) and shall not be sold or disposed of prior to its maturity.
All net income and gain realized from any such investment shall be for the
benefit of the Servicer and shall be
17
subject to its withdrawal or order on a Servicer Distribution Date. The Servicer
shall deposit from its own funds the amount of any loss, to the extent not
offset by investment income or earnings, in the Collection Account upon the
realization of such loss.
Section 5.03 Permitted Withdrawals from the Collection
Account. The Servicer may make withdrawals from the Collection Account, on or
prior to any Servicer Distribution Date, for the following purposes:
(a) to reimburse the Servicer for
Liquidation Expenses theretofore incurred in respect of any
Mortgage Loan in an amount not to exceed the amount of the sum
of the related Insurance Proceeds and Liquidation Proceeds
deposited in the Collection Account pursuant to Section
5.02(c)(v)-(vi);
(b) to reimburse the Servicer for amounts
expended by it pursuant to Section 5.04 in good faith in
connection with the restoration of damaged property, in an
amount not to exceed the amount of the related Insurance
Proceeds and Liquidation Proceeds (net of withdrawals pursuant
to Section 5.03(a)) and amounts representing proceeds of other
insurance policies covering the property subject to the
related Mortgage deposited in the Collection Account pursuant
to Section 5.02(c)(v)-(vi);
(c) to pay to the Depositor amounts received
in respect of any Defective Mortgage Loan purchased or
substituted for by the Depositor to the extent that the
distribution of any such amounts on the Servicer Distribution
Date upon which the proceeds of such purchase are distributed
would make the total amount distributed in respect of any such
Mortgage Loan on such Servicer Distribution Date greater than
the Loan Repurchase Price or the Substitution Adjustment
therefor;
(d) to reimburse the Servicer for
unreimbursed Servicing Advances, without interest, with
respect to the Mortgage Loans for which it has made a
Servicing Advance, from subsequent collections with respect to
interest on such Mortgage Loans and from Liquidation Proceeds,
Insurance Proceeds and/or the Loan Repurchase Price or
Substitution Adjustment of or relating to such Mortgage Loans;
(e) to reimburse the Servicer for any
Periodic Advances determined in good faith to have become
Nonrecoverable Advances, such reimbursement to be made from
any funds in the Collection Account;
(f) to withdraw any amount received from a
Mortgagor that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the
Bankruptcy Code in accordance with a final, nonappealable
order of a court having competent jurisdiction;
(g) to withdraw any funds deposited in the
Collection Account that were not required to be deposited
therein; and
(h) to pay the Servicer the Servicing
Compensation pursuant to Section 5.08 hereof to the extent not
retained or paid.
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The Servicer shall keep and maintain a separate accounting for
each Mortgage Loan for the purpose of accounting for withdrawals from the
Collection Account pursuant to this Section 5.03.
Section 5.04 Hazard Insurance Policies; Property Protection
Expenses. (a) The Servicer shall cause to be maintained for each Mortgage Loan a
hazard insurance policy with extended coverage which contains a standard
mortgagee's clause with an appropriate endorsement in an amount equal to the
lesser of (x) the maximum insurable value of the related Mortgaged Property or
(y) the sum of the Principal Balance of such Mortgage Loan plus the outstanding
balance of any mortgage loan senior to such Mortgage Loan, but in no event shall
such amount be less than is necessary to prevent the Mortgagor from becoming a
coinsurer thereunder. The Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property or (ii) the sum of the Principal Balance of such Mortgage Loan and the
principal balance of any mortgage loan senior to such Mortgage Loan at the time
of such foreclosure plus accrued interest and the good-faith estimate of the
Servicer of related Liquidation Expenses to be incurred in connection therewith.
Amounts collected by the Servicer under any such policies shall be deposited in
the Collection Account to the extent that they constitute Liquidation Proceeds
or Insurance Proceeds. Each hazard insurance policy shall contain a standard
mortgage clause naming the Originator, its successors and assigns, as mortgagee.
The Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or flood or other additional insurance and shall be under no
obligation itself to maintain any such additional insurance on property acquired
in respect of a Mortgage Loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance.
(b) If the Servicer shall obtain and maintain a blanket policy
issued by an insurer acceptable to the Rating Agencies and the Note Insurer
insuring against hazard losses on all of the Mortgage Loans, it shall
conclusively be deemed to have satisfied its obligations as set forth in Section
5.04(a), it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with Section 5.04(a), and there shall have been a loss which would
have been covered by such policy, deposit in the Collection Account the amount
not otherwise payable under the blanket policy because of such deductible
clause.
(c) If the Mortgaged Property or REO Property is located at
the time of origination of the Mortgage Loan in a federally designated special
flood hazard area (and if the flood insurance policy referenced herein has been
made available), the Servicer will cause to be maintained flood insurance in
respect thereof. Such flood insurance shall be in an amount equal to the lesser
of (i) the sum of the Principal Balance of the related Mortgage Loan and the
principal balance of the related first lien, if any, (ii) the maximum insurable
value of the related Mortgaged Property, and (iii) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).
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Section 5.05 Assumption and Modification Agreements. In any
case in which a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall exercise its right to accelerate the maturity of
the related Mortgage Loan and require that the Principal Balance thereof be paid
in full on or prior to such conveyance by the Mortgagor under any "due-on-sale"
clause applicable thereto. If such "due-on-sale" clause, by its terms, is not
operable or the Servicer is prevented, as provided in the last paragraph of this
Section 5.05, from enforcing any such clause, the Servicer is authorized,
subject to the consent of the Note Insurer, to take or enter into an assumption
and modification agreement from or with the Person to whom such property has
been or is about to be conveyed, pursuant to which such Person becomes liable
under the Mortgage Note and the Mortgagor remains liable thereon or, if the
Servicer in its reasonable judgment finds it appropriate, is released from
liability thereon. The Servicer shall notify the Indenture Trustee and the
Collateral Agent that any assumption and modification agreement has been
completed by delivering to the Indenture Trustee, the Collateral Agent and the
Note Insurer an Officer's Certificate certifying that such agreement is in
compliance with this Section 5.05 together with the original copy of such
assumption and modification agreement. Any such assumption and modification
agreement shall, for all purposes, be considered a part of the related Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any such agreement, the then current Mortgage
Interest Rate thereon shall not be increased or decreased. Any fee collected by
the Servicer for entering into any such agreement will be retained by the
Servicer as additional servicing compensation. At its sole election, the
Servicer may purchase from the Trust any Mortgage Loan that has been assumed in
accordance with this Section 5.05 within one month after the date of such
assumption at a price equal to the greater of (i) the fair market value of such
Mortgage Loan (as determined by the Servicer in its good faith judgment) and
(ii) the Loan Repurchase Price. Such amount, if any, shall be deposited into the
Collection Account in the Due Period in which such repurchase is made.
Notwithstanding the foregoing paragraph of this Section 5.05
or any other provision of this Agreement, the Servicer shall not be deemed to be
in default, breach or any other violation of its obligations hereunder by reason
of any assumption of a Mortgage Loan, or transfer of any Mortgaged Property
without the assumption thereof, by operation of law or any assumption or
transfer which the Servicer reasonably believes it may be restricted by law from
preventing for any reason whatsoever.
Section 5.06 Realization Upon Defaulted Mortgage Loans. (a)
The Servicer shall foreclose upon or otherwise comparably convert to ownership
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 5.02(a). Prior to
conducting any sale in a foreclosure proceeding or accepting a deed-in-lieu of
foreclosure with respect to any Mortgaged Property, the Servicer shall cause an
environmental review to be performed, in accordance with Accepted Servicing
Practices on the Mortgaged Property by a company such as Equifax, Inc. or
Toxicheck. If such review reveals that the Mortgaged Property has on it, under
it or is near hazardous or toxic material or waste or reveals any other
environmental problem, the Servicer shall not foreclose or accept a deed-in-lieu
of foreclosure, without the prior written consent of the Note Insurer. In
connection with such foreclosure or other conversion, the Servicer shall follow
such practices (including, in the case of any default on a related senior
mortgage loan, the advancing of funds to correct such default) and
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procedures which are consistent with Accepted Servicing Practices as it shall
deem necessary or advisable and as shall be normal and usual in its general
first and second mortgage loan servicing activities. The foregoing is subject to
the proviso that the Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the correction of any default on a
related senior mortgage loan or restoration of any property unless, in the
reasonable judgment of the Servicer, such expenses will be recoverable from
Liquidation Proceeds.
(b) 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 issued to the Indenture Trustee, or to its nominee,
on behalf of Noteholders and the Note Insurer.
(c) Any Insurance Proceeds or Liquidation Proceeds received
with respect to a Mortgage Loan or REO Property (other than received in
connection with a purchase by the Trust Certificateholders of all the Mortgage
Loans and REO Properties in the Trust Estate pursuant to Section 10.01 of the
Indenture) will be applied in the following order of priority, in each case to
the extent of Available Funds: first, to pay the Servicer any accrued and unpaid
Servicing Fees relating to such Mortgage Loan; second, to reimburse the Servicer
or any Subservicer for any related unreimbursed Servicing Advances, and any
related unreimbursed Periodic Advances theretofore funded by the Servicer or any
Subservicer from its own funds, in each case, with respect to the related
Mortgage Loan; third, to accrued and unpaid interest on the Mortgage Loan, at
the Mortgage Interest Rate (or at such lesser rate as may be in effect for such
Mortgage Loan pursuant to application of the Civil Relief Act) on the Principal
Balance of such Mortgage Loan, to the date such Mortgage Loan is determined to
be a Liquidated Mortgage Loan if it is a Liquidated Mortgage Loan, or to the Due
Date in the Due Period prior to the Distribution Date on which such amounts are
to be distributed if such determination has not yet been made, minus any unpaid
Servicing Fees with respect to such Mortgage Loan; fourth, to the extent of the
Principal Balance of the Mortgage Loan outstanding immediately prior to the
receipt of such proceeds, as a recovery of principal of the related Mortgage
Loan; and fifth, to any prepayment or late payment charges or penalty interest
payable in connection with the receipt of such proceeds and to all other fees
and charges due and payable with respect to such Mortgage Loan. The amount of
any gross Insurance Proceeds and Liquidation Proceeds received with respect to
any Mortgage Loan or REO Property minus the amount of any unreimbursed Servicing
Advances, unreimbursed Periodic Advances or unpaid Servicing Fees, in each case,
with respect to the related Mortgage Loan, are the "Net Recovery Proceeds" with
respect to such Mortgage Loan or REO Property.
Section 5.07 Indenture Trustee to Cooperate. Upon the payment
in full of the Principal Balance of any Mortgage Loan, the Servicer will notify
the Indenture Trustee and the Collateral Agent by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 5.02 have been so deposited) of a
Servicing Officer. Upon any such payment in full, the Servicer is authorized to
execute, pursuant to the authorization contained in Section 5.01, an instrument
of satisfaction regarding the related Mortgage, which instrument of satisfaction
shall be recorded by the Servicer if required by applicable law and be delivered
to the Person entitled thereto, it being understood and agreed that no expenses
incurred in connection with such instrument of satisfaction shall be reimbursed
from the Collection Account. From time to time and as appropriate for the
servicing or foreclosure of
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any Mortgage Loan, the Collateral Agent shall, upon request of the Servicer and
delivery to the Collateral Agent of a Request for Release signed by a Servicing
Officer, release the related Mortgage File to the Servicer and shall execute
such documents as shall be necessary for the prosecution of any such
proceedings. Such Request for Release shall obligate the Servicer to return the
Indenture Trustee's Mortgage File to the Collateral Agent when the need therefor
by the Servicer no longer exists unless the Mortgage Loan shall be liquidated,
in which case, upon receipt of a certificate of a Servicing Officer similar to
that hereinabove specified, the Request for Release shall be released by the
Collateral Agent to the Servicer.
Section 5.08 Servicing Compensation; Payment of Certain
Expenses by Servicer. On each Distribution Date, the Servicer shall be entitled
to receive, and the Indenture Trustee shall pay, out of collections on the
Mortgage Loans for the Due Period, as servicing compensation for such Due
Period, an amount (the "Monthly Servicing Fee") equal to the product of
one-twelfth of the Servicing Fee Rate and the aggregate outstanding Principal
Balance of each Pool of Mortgage Loans as of the beginning of such Due Period.
Additional servicing compensation in the form of assumption fees, late payment
charges or extension and other administrative charges shall be retained by the
Servicer. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all fees and
expenses of the Subservicer, payment of the Indenture Trustee Fee and payment of
the Collateral Agent Fee to the extent that monies in the Collection Account are
insufficient therefor, as provided in Section 6.16 of the Indenture and Section
9.05 hereof, and all other fees and expenses not expressly stated hereunder to
be payable by or from another source) and shall not be entitled to reimbursement
therefor except as specifically provided herein.
Section 5.09 Annual Statement as to Compliance. The Servicer
will deliver to the Indenture Trustee, the Collateral Agent, the Rating
Agencies, the Note Insurer and each Noteholder, on or before April 30 of each
year, beginning April 30, ______, an Officer's Certificate of the Servicer
stating that (a) a review of the activities of the Servicer during the preceding
calendar year and of its performance under this Agreement has been made under
such officer's supervision and (b) to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all its material obligations
under this Agreement throughout such year, 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.
Section 5.10 Annual Independent Public Accountants' Servicing
Report. On or before April 30 of each year, beginning April 30, _____, the
Servicer at its expense shall cause a firm of independent public accountants
that is a member of the American Institute of Certified Public Accountants (who
may also render other services to the Servicer) to furnish a report to the
Indenture Trustee, the Collateral Agent, the Rating Agencies and each Noteholder
to the effect that such firm has examined certain documents and records relating
to the servicing of mortgage loans under servicing agreements (including this
Agreement) substantially similar to this Agreement, and that such examination,
which has been conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers (to the extent that the procedures in
such audit guide are applicable to the servicing obligations set forth in such
agreements), has disclosed no items of noncompliance with the provisions of this
Agreement which, in the opinion of such firm, are material, except for such
items of noncompliance as shall be set forth in such report.
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Section 5.11 Access to Certain Documentation. The Servicer
shall permit the designated agents or representatives of each Noteholder, the
Note Insurer, the Collateral Agent and the Indenture Trustee (i) to examine and
make copies of and abstracts from all books, records and documents (including
computer tapes and disks) in the possession or under the control of the Servicer
relating to the Mortgage Loans and (ii) to visit the offices and properties of
the Servicer for the purpose of examining such materials and to discuss matters
relating to the Mortgage Loans and the Servicer's performance under this
Agreement with any of the officers or employees of the Servicer having knowledge
thereof and with the independent public accountants of the Servicer (and by this
provision the Servicer authorizes its accountants to discuss their respective
finances and affairs), all at such reasonable times, as often as may be
reasonably requested and without charge to such Noteholder, the Note Insurer,
the Collateral Agent or the Indenture Trustee.
Section 5.12 Maintenance of Fidelity Bond. The Servicer shall
during the term of its service as Servicer maintain in force a fidelity bond and
errors and omissions insurance in respect of its officers, employees or agents.
Such bond and insurance shall comply with the requirements from time to time of
the FNMA for Persons performing servicing for mortgage loans purchased by such
association.
Section 5.13 The Subservicers. The parties acknowledge that
the Servicer intends to appoint the Subservicers as the Servicer's agents for
the purpose of servicing on the Servicer's behalf such of the Mortgage Loans as
were originated in the States of New Jersey, Pennsylvania and New York. The
Servicer agrees to cause the Subservicers to service such Mortgage Loans in a
manner consistent with the Accepted Servicing Practices set forth in this
Agreement, and agrees that receipt by the Subservicers of any and all amounts
which by the terms hereof are required to be deposited in the Collection Account
shall constitute receipt thereof by the Servicer for all purposes hereof as of
the date so received by the Subservicers. Notwithstanding such designation of
the Subservicers, the Servicer agrees that it is, and it shall remain, fully
obligated under the terms hereof as Servicer with respect to all such Mortgage
Loans, and nothing herein shall relieve or release the Servicer from its
obligations to the other parties hereto to service such Mortgage Loans in the
manner provided in this Agreement.
Section 5.14 Reports to the Indenture Trustee; Collection
Account Statements. Not later than fifteen (15) days after each Distribution
Date, the Servicer shall provide to the Indenture Trustee, the Collateral Agent
and the Note Insurer a statement, certified by a Servicing Officer, setting
forth the status of the Collection Account as of the close of business on the
related Distribution Date, stating that all distributions required by this
Agreement to be made by the Servicer on behalf of the Indenture Trustee have
been made (or if any required distribution has not been made by the Servicer,
specifying the nature and status thereof) and showing, for the period covered by
such statement, the aggregate of deposits into and withdrawals from the
Collection Account for each category of deposit specified in Section 5.02 and
each category of withdrawal specified in Section 5.03 and the aggregate of
deposits into the Collection Account as specified in Section 6.01. Such
statement shall also state the aggregate unpaid principal balance of all the
Mortgage Loans as of the close of business on the last day of the month
preceding the month in which such Distribution Date occurs. Copies of such
statement shall be provided by the Indenture Trustee to any Noteholder upon
request.
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Section 5.15 Optional Purchase of Defaulted Mortgage Loans.
(a) Subject to Section 5.15(b), the Depositor or any Affiliate of the Depositor,
in its sole discretion, shall have the right to elect (by written notice sent to
the Servicer, the Indenture Trustee and the Note Insurer), but shall not be
obligated, to purchase for its own account from the Trust any Mortgage Loan
which is ninety (90) days or more Delinquent in the manner and at the Loan
Purchase Price (except that the amount described in clause (ii) of the
definition of Loan Purchase Price shall in no case be net of the Servicing Fee).
The purchase price for any Mortgage Loan purchased hereunder shall be deposited
in the Collection Account and the Collateral Agent, upon the Indenture Trustee's
receipt of such deposit, shall release or cause to be released to the purchaser
of such Mortgage Loan the related Indenture Trustee's Mortgage File and shall
execute and deliver such instruments of transfer or assignment prepared by the
purchaser of such Mortgage Loan, in each case without recourse, as shall be
necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
released pursuant hereto and the purchaser of such Mortgage Loan shall succeed
to all the Indenture Trustee's right, title and interest in and to such Mortgage
Loan and all security and documents related thereto. Such assignment shall be an
assignment outright and not for security. The purchaser of such Mortgage Loan
shall thereupon own such Mortgage Loan, and all security and documents, free of
any further obligation to the Indenture Trustee, the Collateral Agent, the Note
Insurer or the Noteholders with respect thereto.
(b) After the Depositor or an Affiliate of the Depositor has
repurchased defaulted Mortgage Loans in a Aggregate Principal Balance equal to
1% of the Maximum Collateral Amount, then notwithstanding the foregoing, unless
the Note Insurer consents, any such Depositor or Affiliate of the Depositor may
only exercise its option pursuant to this Section 5.15 with respect to the
Mortgage Loan or Mortgage Loans that have been Delinquent for the longest period
at the time of such repurchase. Any request by the Depositor or Affiliate to the
Depositor for consent to repurchase Mortgage Loans that are not the most
Delinquent shall be accompanied by a description of the Mortgage Loans that have
been Delinquent longer than the Mortgage Loan or Mortgage Loans the Depositor or
such Affiliate proposes to repurchase. If the Note Insurer fails to respond to
such request within ten (10) Business Days after receipt thereof, the Depositor
or such Affiliate may repurchase the Mortgage Loan or Mortgage Loans proposed to
be repurchased without the consent of, or any further action by, the Note
Insurer. Notice to the Note Insurer shall be delivered in accordance with the
terms of the Insurance and Indemnity Agreement.
Section 5.16 Reports to be Provided by the Servicer. (a) Two
(2) Business Days prior to each Servicer Distribution Date, the Servicer shall
deliver to the Indenture Trustee a Servicer Remittance Report for such
Distribution Date, setting forth the information required in the definition of
"Indenture Trustee's Remittance Report."
(b) On each Servicer Distribution Date, the Servicer shall
deliver to the Indenture Trustee and the Note Insurer the following information
with respect to all Mortgage Loans as well as a break out as to (x) consumer
purpose and business purpose Mortgage Loans and (y) each Mortgage Loan Group, in
each case, as of the close of business on the last Business Day of the prior
calendar month (except as otherwise provided in clause (v) below):
(i) the total number of Mortgage Loans and
the Aggregate Principal Balances thereof, together with the
number, Aggregate principal balances of such Mortgage Loans
24
and the percentage (based on the Aggregate Principal Balances
of the Mortgage Loans) of the Aggregate Principal Balances of
such Mortgage Loans to the Aggregate Principal Balance of all
Mortgage Loans (A) 31-59 days Delinquent, (B) 60-89 days
Delinquent and (C) 90 or more days Delinquent;
(ii) the number, Aggregate Principal
Balances of all Mortgage Loans and percentage (based on the
Aggregate Principal Balances of the Mortgage Loans) of the
Aggregate Principal Balances of such Mortgage Loans to the
aggregate Principal Balance of all Mortgage Loans in
foreclosure proceedings and the number, Aggregate Principal
Balances of all Mortgage Loans and percentage (based on the
Aggregate Principal Balances of the Mortgage Loans) of any
such Mortgage Loans also included in any of the statistics
described in the foregoing clause (i);
(iii) the number, Aggregate Principal
Balances of all Mortgage Loans and percentage (based on the
Aggregate Principal Balances of the Mortgage Loans) of the
Aggregate Principal Balances of such Mortgage Loans to the
Aggregate Principal Balance of all Mortgage Loans relating to
Mortgagors in bankruptcy proceedings and the number, Aggregate
Principal Balances of all Mortgage Loans and percentage (based
on the Aggregate Principal Balances of the Mortgage Loans) of
any such Mortgage Loans also included in any of the statistics
described in the foregoing clause (i);
(iv) the number, Aggregate Principal
Balances of all Mortgage Loans and percentage (based on the
Aggregate Principal Balances of the Mortgage Loans) of the
Aggregate Principal Balances of such Mortgage Loans to the
Aggregate Principal Balance of all Mortgage Loans relating to
REO Properties and the number, Aggregate Principal Balances of
all Mortgage Loans and percentage (based on the Aggregate
Principal Balances of the Mortgage Loans) of any such Mortgage
Loans also included in any of the statistics described in the
foregoing clause (i);
(v) the weighted average Mortgage Interest
Rate as of the Due Date occurring in the Due Period related to
such Distribution Date;
(vi) the weighted average remaining term to
stated maturity of all Mortgage Loans;
(vii) the book value of any REO Property;
(viii) the Cumulative Loan Losses and the
aggregate Cumulative Loan Losses since the Closing Date; and
(ix) the total number of Mortgage Loans and
the Pool Principal Balance.
(c) In connection with the transfer of the Notes, the
Indenture Trustee on behalf of any Noteholder may request that the Servicer make
available to any prospective Noteholder annual audited financial statements of
the Servicer for one or more of the most recently completed five (5) fiscal
years for which such statements are publicly available, which request shall not
be unreasonably denied or unreasonably delayed. Such annual audited financial
statements also shall be made available to the Note Insurer upon request.
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(d) The Servicer also agrees to make available on a reasonable
basis to the Note Insurer or any prospective Noteholder a knowledgeable
financial or accounting officer for the purpose of answering reasonable
questions respecting recent developments affecting the Servicer or the financial
statements of the Servicer and to permit the Note Insurer or any prospective
Noteholder to inspect the Servicer's servicing facilities during normal business
hours for the purpose of satisfying the Note Insurer or such prospective
Noteholder that the Servicer has the ability to service the Mortgage Loans in
accordance with this Agreement.
Section 5.17 Adjustment of Servicing Compensation in Respect
of Prepaid Mortgage Loans. The Monthly Servicing Fee that the Servicer shall be
entitled to receive with respect to each Mortgage Loan and each Distribution
Date shall be offset on such Distribution Date by an amount equal to the
Prepayment Interest Shortfall with respect to such Mortgage Loan to the extent
that it is the subject of Principal Prepayments during the month preceding the
month of such Distribution Date. The amount of any offset against the Monthly
Servicing Fee with respect to any Distribution Date under this Section 5.17
shall be limited to the Monthly Servicing Fee otherwise payable to the Servicer
(without adjustment on account of Prepayment Interest Shortfalls) with respect
to such Mortgage Loan, and the rights of the Noteholders to the offset of the
aggregate Prepayment Interest Shortfalls against the Monthly Servicing Fee shall
not be cumulative.
Section 5.18 Periodic Advances; Special Advance. (a) If, on
any Servicer Distribution Date, the Servicer determines that any Monthly
Payments due on the Due Date immediately preceding such Servicer Distribution
Date have not been received as of the end of the related Due Period, the
Servicer shall determine the amount of any Periodic Advance required to be made
with respect to the related Distribution Date. The Servicer shall, one (1)
Business Day after such Servicer Distribution Date, deliver a magnetic tape or
diskette to the Indenture Trustee indicating the payment status of each Mortgage
Loan as of such Servicer Distribution Date. The Servicer shall include in the
amount to be deposited in the Collection Account on such Servicer Distribution
Date an amount equal to the Periodic Advance, if any, which deposit may be made
in whole or in part from funds in the Collection Account being held for future
distribution or withdrawal on or in connection with Distribution Dates in
subsequent months. Any funds being held for future distribution to Noteholders
and so used shall be replaced by the Servicer from its own funds by deposit in
the Collection Account on or before the Business Day preceding any such future
Servicer Distribution Date to the extent that funds in the Collection Account on
such Servicer Distribution Date shall be less than payments to Noteholders
required to be made on such date.
The Servicer shall designate on its records the specific
Mortgage Loans and related installments (or portions thereof) as to which such
Periodic Advance shall be deemed to have been made, such determination being
conclusive for purposes of withdrawals from the Collection Account pursuant to
Section 5.03 hereof.
(b) In addition to the Periodic Advances, the Servicer shall
make special advances ("Special Advances") on the Servicer Distribution Date
occurring in __________, of $__________, with respect to interest on Mortgage
Loans in Pool I not having their first payment due until after __________ and
$__________ with respect to interest on Mortgage Loans in Pool II not having
their first payment due until after __________. The Servicer shall also make a
26
Special Advance on the Servicer Distribution Date occurring in __________, of
$__________, with respect to interest on Mortgage Loans in Pool I not having
their first payment due until after __________. The Special Advances shall be
made without regard to recoverability, and shall not be reimbursable. In no
event shall the Indenture Trustee, as successor Servicer, be liable for the
payment of the Special Advances.
On each Subsequent Transfer Date, the Servicer will make the
Special Advance set forth in the related subsequent Pledge Agreement.
Section 5.19 Indemnification; Third Party Claims. (a) The
Servicer agrees to indemnify and to hold each of the Trust, the Owner Trustee,
the Depositor, the Indenture Trustee, the Collateral Agent, the Note Insurer and
each Noteholder harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Trust, the Owner Trustee, the Depositor, the Indenture
Trustee, the Collateral Agent, the Note Insurer and any Noteholder may sustain
in any way related to the failure of the Servicer to perform its duties and
service the Mortgage Loans in compliance with the terms of this Agreement and
the other Basic Document. Each indemnified party and the Servicer shall
immediately notify the other indemnified parties if a claim is made by a third
party with respect to this Agreement and the other Basic Documents, and the
Servicer shall assume the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Trust, the Owner Trustee, the Depositor, the Servicer, the Indenture Trustee,
the Collateral Agent, the Note Insurer and/or a Noteholder in respect of such
claim. The Indenture Trustee shall reimburse the Servicer in accordance with
Section 5.08 hereof, out of collections on the Mortgage Loans for the Due
Period, for all amounts advanced by it pursuant to the preceding sentence except
to the extent that the claim relates directly to the failure of the Servicer to
service and administer the Mortgages in compliance with the terms of this
Agreement; provided, that the Servicer's indemnity hereunder shall not be in any
manner conditioned on the availability of funds for such reimbursement. The
obligations of the Servicer under this Section 5.19 arising prior to any
resignation or termination of the Servicer hereunder shall survive the
resignation or termination of the Servicer
(b) The Indenture Trustee may, if necessary, reimburse the
Servicer from amounts otherwise distributable on the related Trust Certificates
for all amounts advanced by it pursuant to Section 4.04(a)(ii) of the Loan Sale
Agreement, except to the extent that the claim relates directly to the failure
of the Servicer, if it is the Depositor, or is an Affiliate of the Depositor, to
perform its obligations to service and administer the Mortgages in compliance
with the terms of the Loan Sale Agreement and this Agreement, or the failure of
the Depositor to perform its duties in compliance with the terms of this
Agreement.
(c) The Indenture Trustee shall reimburse the Depositor from
amounts otherwise distributable on the related Trust Certificates for all
amounts advanced by the Depositor pursuant to the second sentence of Section
4.04(a)(ii) of the Loan Sale Agreement except when the relevant claim relates
directly to the failure of the Depositor to perform its duties in compliance
with the terms of the Loan Sale Agreement.
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Section 5.20 Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer. (a) The Servicer will keep in full
effect its existence, rights and franchises as a corporation, will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.01 to be true and correct at all
times under this Agreement.
(b) 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 an established mortgage loan servicing
institution that has a net worth of at least $15,000,000 and is a Permitted
Transferee, and in all events shall be the successor of the Servicer without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding. The Servicer
shall send notice of any such merger or consolidation to the Owner Trustee, the
Indenture Trustee, the Collateral Agent and the Note Insurer.
Section 5.21 Assignment of Agreement by Servicer; Servicer Not
to Resign. The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Trust, the Depositor, the Servicer, the Note Insurer, the Collateral Agent and
the Indenture Trustee or upon the determination that the Servicer's duties
hereunder are no longer permissible under applicable law and that such
incapacity cannot be cured by the Servicer without incurring, in the reasonable
judgment of the Note Insurer, unreasonable expense. Any such determination that
the Servicer's duties hereunder are no longer permissible under applicable law
permitting the resignation of the Servicer shall be evidenced by a written
Opinion of Counsel (who may be counsel for the Servicer) to such effect
delivered to the Indenture Trustee, the Collateral Agent, the Trust, the
Depositor and the Note Insurer. No such resignation shall become effective until
the Indenture Trustee or a successor appointed in accordance with the terms of
this Agreement has assumed the Servicer's responsibilities and obligations
hereunder in accordance with Section 7.02. The Servicer shall provide the
Indenture Trustee, the Collateral Agent, the Rating Agencies and the Note
Insurer with 30 days' prior written notice of its intention to resign pursuant
to this Section 5.21.
Section 5.22 Periodic Filings with the Securities and Exchange
Commission; Additional Information. The Indenture Trustee shall prepare or cause
to be prepared for filing with the Commission (other than the initial Current
Report on Form 8-K to be filed by the Depositor in connection with the issuance
of the Notes) any and all reports, statements and information respecting the
Trust and/or the Notes required to be filed, and shall solicit any and all
proxies of the Noteholders whenever such proxies are required to be solicited,
pursuant to the Securities Exchange Act of 1934, as amended. The Depositor shall
promptly file, and exercise its reasonable best efforts to obtain a favorable
response to, no-action requests with, or other appropriate exemptive relief
from, the Commission seeking the usual and customary exemption from such
reporting requirements granted to issuers of securities similar to the Notes.
Fees and expenses incurred by the Indenture Trustee in connection with the
foregoing shall be reimbursed pursuant to Section 6.16 of the Indenture and
shall not be paid by the Trust.
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The Servicer and the Depositor each agree to promptly furnish
to the Indenture Trustee, from time to time upon request, such further
information, reports and financial statements as the Indenture Trustee deems
appropriate to prepare and file all necessary reports with the Commission.
Article VI.
APPLICATION OF FUNDS
Section 6.01 Deposits to the Distribution Account. On each
Servicer Distribution Date, the Servicer shall cause to be deposited in the
Distribution Account, from funds on deposit in the Collection Account, (a) an
amount equal to the Servicer Remittance Amount and (b) Net Foreclosure Profits,
if any with respect to the related Distribution Date, minus any portion thereof
payable to the Servicer pursuant to Section 5.03. On each Servicer Distribution
Date, the Servicer shall also deposit into the Distribution Account any Periodic
Advances with respect to the related Distribution Date calculated in accordance
with Section 5.18 and any amounts required to be deposited in connection with a
Subsequent Mortgage Loan pursuant to Section 2.14(b) of the Indenture; on the
Servicer Distribution Date occurring in _______, the Servicer also will deposit
the related Special Advance pursuant to Section 5.18(b).
Section 6.02 Collection of Money. Except as otherwise
expressly provided herein, the Indenture Trustee may demand payment or delivery
of all money and other property payable to or receivable by the Indenture
Trustee pursuant to this Agreement, including (a) all payments due on the
Mortgage Loans in accordance with the respective terms and conditions of such
Mortgage Loans and required to be paid over to the Indenture Trustee by the
Servicer or by any Subservicer and (b) Insured Payments. The Indenture Trustee
shall hold all such money and property received by it, as part of the Trust
Estate and shall apply it as provided in the Indenture.
Section 6.03 Application of Principal and Interest. In the
event that Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than
the Principal Balance of the related Mortgage Loan plus accrued interest
thereon, or any Mortgagor makes a partial payment of any Monthly Payment due on
a Mortgage Loan, such Net Liquidation Proceeds or partial payment shall be
applied to payment of the related Mortgage Note as provided therein, and if not
so provided, first to interest accrued at the Mortgage Interest Rate and then to
principal.
Section 6.04 Information Concerning the Mortgage Loans. No
later than 12:00 noon Pennsylvania time on the fourth Business Day preceding
each Distribution Date, the Servicer shall deliver to the Indenture Trustee a
report in computer-readable form containing such information as to each Mortgage
Loan and as to each Mortgage Loan Pool as of such Distribution Date and such
other information as the Indenture Trustee shall reasonably require.
Section 6.05 Compensating Interest. Not later than the close
of business on the third Business Day prior to the Distribution Date, the
Servicer shall remit to the Indenture Trustee (without right to reimbursement
therefor) for deposit into the related Distribution Account, an amount equal to,
for each Mortgage Loan, the lesser of (a) the Prepayment Interest Shortfall for
such Mortgage Loan for the related Distribution Date resulting from Principal
Prepayments during the related Due Period and (b) its Monthly Servicing Fees
with respect to
29
such Mortgage Loan received in the related Due Period and shall not have the
right to reimbursement therefor (the "Compensating Interest").
Section 6.06 Effect of Payments by the Note Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Notes which is made with moneys
received pursuant to the terms of the Note Insurance Policy shall not be
considered payment of the Notes from the Trust Estate. The Depositor, the
Servicer, the Trust, the Collateral Agent and the Indenture Trustee acknowledge
and agree, that without the need for any further action on the part of the Note
Insurer, the Depositor, the Servicer, the Trust, the Collateral Agent, the
Indenture Trustee or the Note Registrar (a) to the extent the Note Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Notes to the Holders of such Notes, the Note Insurer will be fully subrogated
to, and each Noteholder, the Servicer, the Depositor, the Trust, the Collateral
Agent and the Indenture Trustee hereby delegate and assign to the Note Insurer,
to the fullest extent permitted by law, the rights of such Holders to receive
such principal and interest from the Trust Estate, including, without
limitation, any amounts due to the Noteholders in respect of securities law
violations arising from the offer and sale of the Notes, and (b) the Note
Insurer shall be paid such amounts from the sources and in the manner provided
herein for the payment of such amounts and as provided in the Insurance
Agreement. The Indenture Trustee, the Collateral Agent and the Servicer shall
cooperate in all respects with any reasonable request by the Note Insurer for
action to preserve or enforce the Note Insurer's rights or interests under this
Agreement without limiting the rights or affecting the interests of the Holders
as otherwise set forth herein.
Article VII.
SERVICER DEFAULT
Section 7.01 Servicer Events of Default. (a) The following
events shall each constitute a "Servicer Event of Default" hereunder:
(i) any failure by the Servicer to remit to
the Indenture Trustee any payment required to be made by the
Servicer under the terms of this Agreement (other than
Servicing Advances covered by clause (ii) below), which
continues unremedied for one (1) Business Day after the date
upon which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer and the
Note Insurer by the Indenture Trustee or to the Servicer and
the Indenture Trustee by the Note Insurer or Noteholders of
Notes evidencing Percentage Interests of at least 25%;
(ii) the failure by the Servicer to make any
required Servicing Advance, which failure continues unremedied
for a period of thirty (30) days 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
Indenture Trustee or to the Servicer and the Indenture Trustee
by any Noteholder or the Note Insurer;
(iii) any failure on the part of the
Servicer duly to observe or perform in any material respect
any other of the covenants or agreements on the part of the
Servicer contained in this Agreement, or the failure of any
representation and warranty made
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pursuant to Section 3.01(a) hereof to be true and correct
which continues unremedied for a period of thirty (30) days
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 Indenture Trustee or to the Servicer and
the Indenture Trustee by any Noteholder or the Note Insurer;
(iv) a decree or order of a court or agency
or supervisory authority having jurisdiction in an involuntary
case under any present or future federal or state bankruptcy,
insolvency or similar law or for the appointment of a
conservator or receiver or liquidation in any insolvency,
readjustment of debt, marshalling 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;
(v) the Servicer shall consent to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of the
Servicer's property;
(vi) the Servicer shall admit in writing its
inability generally to pay its debts 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;
(vii) the Note Insurer shall notify the
Indenture Trustee of any "event of default" under the
Insurance Agreement;
(viii) if on any Distribution Date the
Rolling Six Month Delinquency Rate exceeds ____% of the
aggregate outstanding Principal Balance for the Mortgage
Loans;
(ix) if on any Distribution Date, commencing
in _______, the Twelve Month Loss Amount exceeds ____% of the
aggregate outstanding Principal Balance for the Mortgage
Loans, as of the close of business on the first day of the
twelfth preceding calendar month;
(x) if (a) on any Distribution Date
occurring before ________, the aggregate Cumulative Loan
Losses since the Initial Cut-Off Date exceed ____% of the
Original Pool Principal Balance, (b) on any Distribution Date
on or after _______ and before _______, the aggregate
Cumulative Loan Losses since the Initial Cut-Off Date exceed
_____% of the Original Pool Principal Balance, (c) on any
Distribution Date on or after _______ and before _______, the
aggregate Cumulative Loan Losses since the Initial Cut-Off
Date exceed ____% of the Original Pool Principal Balance, (d)
on any Distribution Date on or after _______ and before
_______, the aggregate Cumulative Loan Losses since the
Initial Cut-Off Date exceed _____% of the Original Pool
Principal Balance, or (e) on any Distribution Date on or after
_______, the aggregate Cumulative Loan Losses since the
Initial Cut-Off Date exceed ____% of the Original Pool
Principal Balance;
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(xi) the occurrence of an Event of Default
under the Indenture; or
(xii) a Servicer Extension Notice shall not
have been delivered as set forth in Section 8.04 hereof.
(b) So long as a Servicer Event of Default shall have occurred
and not have been remedied: (x) with respect solely to Section 7.01(a)(i), if
such payment is in respect of Periodic Advances or Compensating Interest owing
by the Servicer and such payment is not made by 12:00 noon New York time on the
second Business Day prior to the applicable Distribution Date, the Indenture
Trustee, upon receipt of written notice or discovery by a Responsible Officer of
such failure, shall give immediate telephonic and facsimile notice of such
failure to a Servicing Officer of the Servicer and to the Note Insurer and the
Indenture Trustee shall, with the consent of the Note Insurer, terminate all of
the rights and obligations of the Servicer under this Agreement and the
Indenture Trustee, or a successor Servicer appointed in accordance with Section
7.02, shall immediately make such Periodic Advance or payment of Compensating
Interest and assume, pursuant to Section 7.02 hereof, the duties of a successor
Servicer; (y) with respect to that portion of Section 7.01(a)(i) not referred to
in the preceding clause (x) and with respect to clauses (ii), (iii), (iv), (v),
(vi) and (vii) of Section 7.01, the Indenture Trustee shall, but only at the
direction of the Note Insurer or the Majority Noteholders, by notice in writing
to the Servicer and a Responsible Officer of the Indenture Trustee and subject
to the prior written consent of the Note Insurer, in the case of any removal at
the direction of the Majority Noteholders, and in addition to whatever rights
such Noteholders may have at law or equity to damages, including injunctive
relief and specific performance, terminate all the rights and obligations of the
Servicer under this Agreement and in and to the Mortgage Loans and the proceeds
thereof, as servicer; and (z) with respect to clauses (viii)-(x) of Section
7.01(a), the Indenture Trustee shall, but only at the direction of the Note
Insurer, after notice in writing to the Servicer and a Responsible Officer of
the Indenture Trustee, terminate all the rights and obligations of the Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
as Servicer. 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, subject to Section 7.02, pass to and be
vested in the Indenture Trustee, or its designee approved by the Note Insurer,
and the Indenture Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, at the
expense of the Servicer, any and all documents and other instruments and do or
cause to be done all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, including, but not limited to, the
transfer and endorsement or assignment of the Mortgage Loans and related
documents. The Servicer agrees to cooperate (and pay any related costs and
expenses) with the Indenture Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Indenture Trustee, or its designee, for administration by it
of all amounts which shall at the time be credited by the Servicer to the
Collection Account or thereafter received with respect to the Mortgage Loans.
The Indenture Trustee shall promptly notify the Note Insurer and the Rating
Agencies of the occurrence of a Servicer Event of Default.
Section 7.02 Indenture Trustee to Act; Appointment of
Successor. (a) On and after the time the Servicer receives a notice of
termination pursuant to Section 7.01 or fails to receive a Servicer Extension
Notice pursuant to Section 8.04, or the Indenture Trustee receives
32
the resignation of the Servicer evidenced by an Opinion of Counsel pursuant to
Section 5.21, or the Servicer is removed as Servicer pursuant to this Article
VII, in which event the Indenture Trustee shall promptly notify the Rating
Agencies, except as otherwise provided in Section 7.01, the Indenture Trustee
shall be the successor in all respects to the Servicer in its capacity as
servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof
arising on or after the date of succession; provided, however, that the
Indenture Trustee shall not be liable for any actions or the representations and
warranties of any Servicer prior to it and including, without limitation, the
obligations of the Servicer set forth in Sections 2.06 and 4.02 hereof. The
Indenture Trustee, as successor Servicer, shall be obligated to pay Compensating
Interest pursuant to Section 6.05 in any event and to make advances pursuant to
Section 5.18 unless, and only to the extent the Indenture Trustee determines
reasonably and in good faith that such advances would not be recoverable
pursuant to Section 5.04, such determination to be evidenced by a certification
of a Responsible Officer of the Indenture Trustee delivered to the Note Insurer.
(b) Notwithstanding the above, the Indenture Trustee may, if
it shall be unwilling to so act, or shall, if it is unable to so act or if the
Majority Noteholders with the consent of the Note Insurer or the Note Insurer so
requests in writing to the Indenture Trustee, appoint, pursuant to such
direction of the Majority Noteholders and Note Insurer or the Note Insurer, or
if no such direction is provided to the Indenture Trustee, pursuant to the
provisions set forth in Section 7.02(c), or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
acceptable to the Note Insurer that has a net worth of not less than $15,000,000
as the successor to the Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Servicer hereunder.
(c) In the event the Indenture Trustee is the successor
Servicer, it shall be entitled to the same Servicing Compensation (including the
Servicing Fee as adjusted pursuant to the definition thereof) and other funds
pursuant to Section 5.08 hereof as the Servicer if the Servicer had continued to
act as servicer hereunder. In the event the Indenture Trustee is unable or
unwilling to act as successor Servicer, the Indenture Trustee shall solicit, by
public announcement, bids from housing and home finance institutions, banks and
mortgage servicing institutions meeting the qualifications set forth above. Such
public announcement shall specify that the successor servicer shall be entitled
to the full amount of the aggregate Servicing Fees hereunder as servicing
compensation, together with the other Servicing Compensation. Within thirty (30)
days after any such public announcement, the Indenture Trustee shall negotiate
and effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Indenture Trustee shall deduct from any sum received by the
Indenture Trustee from the successor to the Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
hereunder and the amount of any unreimbursed Servicing Advances and Periodic
Advances owed to the Indenture Trustee. After such deductions, the remainder of
such sum shall be paid by the Indenture Trustee to the Servicer at the time of
such sale, transfer and assignment to the Servicer's successor.
(d) The Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. The
33
Servicer agrees to cooperate with the Indenture Trustee and any successor
Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Indenture
Trustee or such successor Servicer, as applicable, at the Servicer's cost and
expense, all documents and records reasonably requested by it to enable it to
assume the Servicer's functions hereunder and shall promptly also transfer to
the Indenture Trustee or such successor servicer, as applicable, all amounts
that then have been or should have been deposited in the Collection Account by
the Servicer or that are thereafter received with respect to the Mortgage Loans.
Any collections received by the Servicer after such removal or resignation shall
be endorsed by it to the Indenture Trustee and remitted directly to the
Indenture Trustee or, at the direction of the Indenture Trustee, to the
successor Servicer. Neither the Indenture Trustee nor any other successor
Servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer hereunder. Notwithstanding anything to the
contrary herein, no appointment of a successor Servicer under this Agreement
shall be effective until the Indenture Trustee and the Note Insurer shall have
consented thereto, and written notice of such proposed appointment shall have
been provided by the Indenture Trustee to the Note Insurer and to each
Noteholder. The Indenture Trustee shall not resign as Servicer until a successor
Servicer reasonably acceptable to the Note Insurer has been appointed. The Note
Insurer shall have the right to remove the Indenture Trustee as successor
Servicer under this Section 7.02 without cause, and the Indenture Trustee shall
appoint such other successor Servicer as directed by the Note Insurer.
(e) Pending appointment of a successor Servicer hereunder, the
Indenture Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Indenture Trustee may make
such arrangements for the compensation of such successor Servicer out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Servicer pursuant to Section 5.08, together with other Servicing Compensation.
The Servicer, the Indenture Trustee and such successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
Section 7.03 Waiver of Defaults. The Majority Noteholders may,
on behalf of all Noteholders, and subject to the consent of the Note Insurer,
waive any events permitting removal of the Servicer as servicer pursuant to this
Article VII; provided, however, that the Majority Noteholders may not waive a
default in making a required distribution on a Note without the consent of the
Holder of such Note. Upon any waiver of a past default, such default shall cease
to exist, and any Servicer 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 thereto
except to the extent expressly so waived. Notice of any such waiver shall be
given by the Indenture Trustee to the Rating Agencies and the Note Insurer.
Section 7.04 Rights of the Note Insurer to Exercise Rights of
the Noteholders. By accepting its Note, each Noteholder agrees that unless a
Note Insurer Default exists, the Note Insurer shall be deemed to be the
Noteholders for all purposes (other than with respect to the receipt of payment
on the Notes) and shall have the right to exercise all rights of the Noteholders
34
under this Agreement and under the Notes without any further consent of the
Noteholders, including, without limitation:
(a) the right to require the Originators to
repurchase Mortgage Loans pursuant to Sections 2.06 and 4.02
hereof to the extent set forth therein;
(b) the right to give notices of breach or
to terminate the rights and obligations of the Servicer as
servicer pursuant to Section 7.01 hereof and to consent to or
direct waivers of Servicer defaults pursuant to Section 7.03
hereof;
(c) the right to direct the actions of the
Indenture Trustee during the continuance of a Servicer Event
of Default pursuant to Sections 7.01 and 7.02 hereof;
(d) the right to institute proceedings
against the Servicer pursuant to Section 7.01 hereof;
(e) the right to remove the Indenture
Trustee pursuant to Section 6.09 of the Indenture;
(f) the right to direct foreclosures upon
the failure of the Servicer to do so in accordance with the
provisions of Section 5.06 of this Agreement; and
(g) any rights or remedies expressly given
the Majority Noteholders.
In addition, each Noteholder agrees that, subject to Section
10.02, unless a Note Insurer Default exists, the rights specifically enumerated
above may only be exercised by the Noteholders with the prior written consent of
the Note Insurer.
Section 7.05 Indenture Trustee To Act Solely with Consent of
the Note Insurer. Unless a Note Insurer Default exists, the Indenture Trustee
shall not, without the Note Insurer's consent or unless directed by the Note
Insurer:
(a) terminate the rights and obligations of
the Servicer as Servicer pursuant to Section 7.01 hereof;
(b) agree to any amendment pursuant to
Section 10.03 hereof; or
(c) undertake any litigation.
The Note Insurer may, in writing and in its sole discretion
renounce all or any of its rights under Sections 7.04, 7.05 or 7.06 or any
requirement for the Note Insurer's consent for any period of time.
Section 7.06 Mortgage Loans, Trust Estate and Accounts Held
for Benefit of the Note Insurer. (a) The Indenture Trustee shall hold the Trust
Estate and the Indenture Trustee's Mortgage Files, for the benefit of the
Noteholders and the Note Insurer, and all references in this Agreement and in
the Notes to the benefit of Noteholders shall be deemed to include the Note
Insurer. The Indenture Trustee shall cooperate in all reasonable
35
respects with any reasonable request by the Note Insurer for action to preserve
or enforce the Note Insurer's rights or interests under this Agreement and the
Notes unless, as stated in an Opinion of Counsel addressed to the Indenture
Trustee and the Note Insurer, such action is adverse to the interests of the
Noteholders or diminishes the rights of the Noteholders or imposes additional
burdens or restrictions on the Noteholders.
(b) The Servicer hereby acknowledges and agrees that it shall
service the Mortgage Loans for the benefit of the Noteholders and for the
benefit of the Note Insurer, and all references in this Agreement to the benefit
of or actions on behalf of the Noteholders shall be deemed to include the Note
Insurer.
Section 7.07 Note Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Notes to the contrary, if a Note Insurer
Default exists, or if and to the extent the Note Insurer has delivered its
written renunciation of all of its rights under this Agreement, the provisions
of this Article VII and all other provisions of this Agreement which (a) permit
the Note Insurer to exercise rights of the Noteholders, (b) restrict the ability
of the Noteholders, the Servicer, the Collateral Agent or the Indenture Trustee
to act without the consent or approval of the Note Insurer, (c) provide that a
particular act or thing must be acceptable to the Note Insurer, (d) permit the
Note Insurer to direct (or otherwise to require) the actions of the Indenture
Trustee, the Collateral Agent, the Servicer or the Noteholders, (e) provide that
any action or omission taken with the consent, approval or authorization of the
Note Insurer shall be authorized hereunder or shall not subject the party taking
or omitting to take such action to any liability hereunder or (f) which have a
similar effect, shall be of no further force and effect and the Indenture
Trustee shall administer the Trust Estate and perform its obligations hereunder
solely for the benefit of the Holders of the Notes. Nothing in the foregoing
sentence, nor any action taken pursuant thereto or in compliance therewith,
shall be deemed to have released the Note Insurer from any obligation or
liability it may have to any party or to the Noteholders hereunder, under any
other agreement, instrument or document (including, without limitation, the Note
Insurance Policy) or under applicable law.
Article VIII.
TERMINATION
Section 8.01 Termination. (a) Subject to Section 8.02, this
Agreement shall terminate upon notice to the Indenture Trustee of either: (i)
the disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due hereunder and the payment of all amounts due and
payable to the Note Insurer and the Indenture Trustee or (ii) mutual consent of
the Trust, the Indenture Trustee, the Collateral Agent, the Servicer, the Note
Insurer and all Noteholders in writing.
(b) In addition, subject to Section 8.02, the Servicer may, at
its option and at its sole cost and expense, call the Class A-1 Notes or the
Class A-2 Notes or terminate the Trust in accordance with the terms of Section
10.01 of the Indenture.
(c) If on any Distribution Date, the Servicer determines that
there are no outstanding Mortgage Loans and no other funds or assets in the
Trust Estate other than funds in
36
the Distribution Account, the Servicer shall send a final distribution notice
promptly to each Noteholder in accordance with Section 8.01(d).
(d) Notice of any termination, specifying the Distribution
Date upon which the Trust will terminate and the Noteholders shall surrender
their Notes to the Indenture Trustee for payment of the final distribution and
cancellation, shall be given promptly by the Servicer by letter to Noteholders
mailed during the month of such final distribution before the Servicer
Distribution Date in such month, specifying (i) the Distribution Date upon which
final payment of the Notes will be made upon presentation and surrender of Notes
at the office of the Indenture Trustee therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Notes at the office of the Indenture Trustee
therein specified. The Servicer shall give such notice to the Indenture Trustee
therein specified at the time such notice is given to Noteholders. The
obligations of the Note Insurer hereunder shall terminate upon the deposit by
the Servicer with the Indenture Trustee of a sum sufficient to purchase all of
the Mortgage Loans and REO Properties as set forth in Section 10.01 of the
Indenture or when the Note Principal Balance of the Notes has been reduced to
zero.
(e) In the event that all of the Noteholders do not surrender
their Notes for cancellation within six (6) months after the time specified in
the above-mentioned written notice, the Servicer shall give a second written
notice to the remaining Noteholders to surrender their Notes for cancellation
and receive the final distribution with respect thereto. If within six (6)
months after the second notice, all of the Notes shall not have been surrendered
for cancellation, the Indenture Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining Noteholders
concerning surrender of their Notes and the cost thereof shall be paid out of
the funds and other assets which remain subject hereto. If within nine (9)
months after the second notice all the Notes shall not have been surrendered for
cancellation, the related Trust Certificateholders shall be entitled to all
unclaimed funds and other assets which remain subject hereto and the Indenture
Trustee upon transfer of such funds shall be discharged of any responsibility
for such funds and the Noteholders shall look only to the related Trust
Certificateholders for payment and not to the Note Insurer. Such funds shall
remain uninvested.
Section 8.02 Additional Termination Requirements. By their
acceptance of the Notes, the Holders thereof hereby agree to appoint the
Servicer as their attorney in fact to: (i) adopt such a plan of complete
liquidation (and the Noteholders hereby appoint the Indenture Trustee as their
attorney in fact to sign such plan) as appropriate or upon the written request
of the Note Insurer and (ii) to take such other action in connection therewith
as may be reasonably required to carry out such plan of complete liquidation all
in accordance with the terms hereof.
Section 8.03 Accounting Upon Termination of Servicer. Upon
termination of the Servicer, the Servicer shall, at its expense:
(a) deliver to the successor Servicer or, if none shall yet
have been appointed, to the Indenture Trustee, the funds in any
Account;
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(b) deliver to the successor Servicer or, if none shall yet
have been appointed, to the Indenture Trustee all Indenture
Trustee's Mortgage Files and related documents and statements held
by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to the successor Servicer or, if none shall yet
have been appointed, to the Indenture Trustee and, upon request, to
the Noteholders a full accounting of all funds, including a
statement showing the Monthly Payments collected by it and a
statement of monies held in trust by it for the payments or charges
with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient
transfer of servicing of the Mortgage Loans to the successor
Servicer and to more fully and definitively vest in such successor
all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer under this Agreement.
Section 8.0.4 Retention and Termination of the Servicer. The
Servicer hereby covenants and agrees to act as Servicer under this Agreement for
an initial term commencing on the Closing Date and expiring on _________ (the
"Initial Term"). Thereafter, the Initial Term shall be extendible in the sole
discretion of the Note Insurer by written notice (each, a "Servicer Extension
Notice") of the Note Insurer (or the Indenture Trustee if revocable written
standing instructions of the Note Insurer have been previously delivered to the
Indenture Trustee), for any specified number of three (3) month terms to the
Servicer. Each such Servicer Extension Notice, if any, shall be delivered by the
Note Insurer (or the Indenture Trustee, as applicable,) to the other parties to
this Agreement. The Servicer hereby agrees that, as of the date hereof and upon
its receipt of any Servicer Extension Notice, the Servicer shall be bound for
the duration of the Initial Term and the term covered by any such Servicer
Extension Notice to act as the Servicer, subject to and in accordance with the
other provisions of this Agreement. The Servicer agrees that if, as of the
fifteenth day prior to the last day of any such servicing term, the Servicer
shall not have received a Servicer Extension Notice from the Note Insurer or
Indenture Trustee, as applicable, the Servicer shall, within five (5) days
thereafter, give written notice of such non-receipt to the Note Insurer and the
Indenture Trustee. The failure of the Note Insurer or the Indenture Trustee, as
applicable, to deliver a Servicer Extension Notice by the end of any such
three-month term shall result in the automatic termination of the Servicer.
ARTICLE IX.
THE COLLATERAL AGENT
THE COLLATERAL AGENT
Section 9.0.1 Duties of the Collateral Agent. (a) The
Collateral Agent, prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Collateral Agent shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in its exercise as
a prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
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(b) The Collateral Agent, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Collateral Agent which are specifically required to
be furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform on their face to the requirements of this
Agreement; provided, however, that the Collateral Agent shall not be responsible
for the accuracy or content of any resolution, certificate, statement, opinion,
report, document, order or other instrument furnished by any Person hereunder.
If any such instrument is found not to conform on its face to the requirements
of this Agreement, the Collateral Agent shall note it as such on the Initial
Certification or Final Certification delivered pursuant to Section 2.06(b).
(c) No provision of this Agreement shall be construed to
relieve the Collateral Agent from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct; provided, however,
that:
(i) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default which may have occurred,
the duties and obligations of the Collateral Agent shall be
determined solely by the express provisions of this Agreement, the
Collateral Agent shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into
this Agreement against the Collateral Agent and, in the absence of
bad faith on the part of the Collateral Agent, the Collateral Agent
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Collateral Agent and conforming to the
requirements of this Agreement;
(ii) the Collateral Agent shall not be personally liable for
an error of judgment made in good faith by a Responsible Officer or
other officers of the Collateral Agent, unless it shall be proved
that the Collateral Agent was negligent in ascertaining the
pertinent facts;
(iii) the Collateral Agent shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with the direction of the Note Insurer
or the Indenture Trustee or with the consent of the Note Insurer or
the Indenture Trustee;
(iv) the Collateral Agent shall not be required to expend or
risk its own funds or otherwise incur financial liability for the
performance of any of its duties hereunder or the exercise of any of
its rights or powers if there is reasonable ground for believing
that the repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it and none of the
provisions contained in this Agreement shall in any event require
the Collateral Agent to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer or the
Indenture Trustee under this Agreement; and
(v) subject to the other provisions of this Agreement and
without limiting the generality of this Section 9.01, the Collateral
Agent shall have no duty (A) to see to any
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recording, filing, or depositing of this Agreement or any agreement
referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any
rerecording, refiling or redepositing of any thereof, (B) to see to
any insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any lien or encumbrance
of any kind owing with respect to, assessed or levied against, any
part of the Trust, the Trust Estate, the Noteholders or the Mortgage
Loans, (D) to confirm or verify the contents of any reports or
certificates of any Person delivered to the Collateral Agent
pursuant to this Agreement believed by the Collateral Agent to be
genuine and to have been signed or presented by the proper party or
parties.
Section 9.02 Certain Matters Affecting the Collateral Agent.
Except as otherwise provided in Section 9.01 hereof:
(a) the Collateral Agent may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, Opinion of Counsel, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) the Collateral Agent may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by
it hereunder in good faith and in accordance with such Opinion of
Counsel;
(c) the Collateral Agent shall be under no obligation to
exercise any of the trusts or powers vested in it by this Agreement
or to institute, conduct or defend by litigation hereunder or in
relation hereto at the request, order or direction of the Note
Insurer or any of the Noteholders, pursuant to the provisions of
this Agreement, unless such Noteholders or the Note Insurer, as
applicable, shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which may be incurred therein by the Collateral Agent or thereby;
nothing contained herein shall, however, relieve the Collateral
Agent of the obligation, upon the occurrence of an Event of Default
(which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of
care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own
affairs;
(d) the Collateral Agent shall not be personally liable for
any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or rights
or powers conferred upon it by this Agreement;
(e) prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, the
Collateral Agent shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested
in writing to do so by the Note Insurer or
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Holders of Class A Notes evidencing Percentage Interests aggregating
not less than 25%; provided, however, that if the payment within a
reasonable time to the Collateral Agent of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Collateral Agent, not
reasonably assured to the Collateral Agent by the security afforded
to it by the terms of this Agreement, the Collateral Agent may
require reasonable indemnity against such expense or liability as a
condition to taking any such action. The reasonable expense of every
such examination shall be paid by the Servicer or, if paid by the
Collateral Agent, shall be repaid by the Servicer upon demand from
the Servicer's own funds;
(f) the right of the Collateral Agent to perform any
discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Collateral Agent shall not be
answerable for anything other than its negligence or willful
misconduct in the performance of such act;
(g) the Collateral Agent may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or
by or through agents or attorneys.
Section 9.03 Collateral Agent Not Liable for Notes or Mortgage
Loans. (a) The recitals contained herein shall be taken as the statements of the
Trust and the Servicer, as the case may be, and the Collateral Agent assumes no
responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Collateral Agent shall not be accountable
for the use or application of any funds paid to the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Servicer. The Collateral Agent shall not be responsible for the legality or
validity of the Agreement or the validity, priority, perfection or sufficiency
of the security for the Notes issued or intended to be issued under the
Indenture.
Section 9.04 Collateral Agent May Own Notes. (a) The
Collateral Agent in its individual or any other capacity may become the owner or
pledgor of Notes with the same rights it would have if it were not Collateral
Agent, and may otherwise deal with the parties hereto.
Section 9.0.5 Collateral Agent's Fees and Expenses; Indemnity.
(a) The Collateral Agent acknowledges that in consideration of the performance
of its duties hereunder it is entitled to receive its fees and expenses from the
Servicer, as separately agreed between the Servicer and the Collateral Agent.
The Trust, the Depositor, the Indenture Trustee and the Note Insurer shall not
pay any of the Collateral Agent fees and expenses in connection with this
transaction. The Collateral Agent shall not be entitled to compensation for any
expense, disbursement or advance as may arise from its negligence or bad faith,
and the Collateral Agent shall have no lien on the Trust Estate for the payment
of its fees and expenses.
(b) The Collateral Agent and any director, officer, employee
or agent of the Collateral Agent shall be indemnified by the Servicer and held
harmless against any loss, liability, claim, damage or expense arising out of,
or imposed upon the Trust Estate or the Collateral Agent through the Servicer's
acts or omissions in violation of this Agreement, other than any loss, liability
or expense incurred by reason of willful misfeasance, bad faith or
41
negligence of the Collateral Agent in the performance of its duties hereunder or
by reason of the Collateral Agent 's reckless disregard of obligations and
duties hereunder. The obligations of the Servicer under this Section 9.05
arising prior to any resignation or termination of the Servicer hereunder shall
survive termination of the Servicer and payment of the Notes.
Section 9.06 Eligibility Requirements for Collateral Agent.
(a) The Collateral Agent hereunder shall at all times be a banking entity (a)
organized and doing business under the laws of any state or the United States of
America subject to supervision or examination by federal or state authority, (b)
authorized under such laws to exercise corporate trust powers, including taking
title to the Trust Estate on behalf of the Indenture Trustee, for the benefit of
the Noteholders and the Note Insurer, (c) having a combined capital and surplus
of at least $50,000,000, (d) whose long-term deposits, if any, shall be rated at
least BBB- by S&P and Baa3 by Moody's (except as provided herein) or such lower
long-term deposit rating as may be approved in writing by the Note Insurer, and
(e) reasonably acceptable to the Note Insurer as evidenced in writing. If such
banking entity publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority, then
for the purposes of determining an entity's combined capital and surplus for
clause (c) of this Section 9.06, the amount set forth in its most recent report
of condition so published shall be deemed to be its combined capital and
surplus. In case at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of this Section 9.06, the Collateral Agent shall
resign immediately in the manner and with the effect specified in Section 9.07.
Section 9.07 Resignation and Removal of the Collateral Agent.
(a) The Collateral Agent may at any time resign and be discharged from the
trusts hereby created by giving thirty (30) days' written notice thereof to the
Indenture Trustee, the Servicer, and the Note Insurer.
(b) If at any time the Collateral Agent shall cease to be
eligible in accordance with the provisions of Section 9.06 and shall fail to
resign after written request therefor by the Indenture Trustee, the Servicer or
the Note Insurer, or if at any time the Collateral Agent shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Indenture Trustee or the Servicer, with the consent of the Note Insurer, or the
Note Insurer may remove the Collateral Agent.
(c) If the Collateral Agent fails to perform in accordance
with the terms of this Agreement, the Indenture Trustee, the Servicer or the
Majority Noteholders, with the consent of the Note Insurer, or the Note Insurer
may remove the Collateral Agent.
(d) Upon removal or receipt of notice of resignation of the
Collateral Agent, the Indenture Trustee shall either (i) take possession of the
Indenture Trustee's Mortgage Files and assume the duties of the Collateral Agent
hereunder or (ii) appoint a successor Collateral Agent pursuant to Section 9.08.
If the Indenture Trustee shall assume the duties of the Collateral Agent
hereunder, it shall notify the Trust, the Depositor, the Servicer and Note
Insurer in writing.
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Section 9.08 Successor Collateral Agent. Upon the resignation
or removal of the Collateral Agent, the Indenture Trustee may appoint a
successor Collateral Agent, with the written approval of the Note Insurer;
provided, however, that the successor Collateral Agent so appointed shall in no
event be the Depositor or the Servicer or any Person known to a Responsible
Officer of the Indenture Trustee to be an Affiliate of the Depositor or the
Servicer and shall be approved by the Note Insurer. The Indenture Trustee or
such custodian, as the case may be, shall assume the duties of the Collateral
Agent hereunder. Any successor Collateral Agent appointed as provided in this
Section 9.08 shall execute, acknowledge and deliver to the Trust, the Depositor,
the Note Insurer, the Servicer, the Indenture Trustee and to its predecessor
Collateral Agent an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Collateral Agent shall
become effective and such successor Collateral Agent, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect as if
originally named as Collateral Agent herein. The predecessor Collateral Agent
shall deliver to the successor Collateral Agent all Indenture Trustee's Mortgage
Files and related documents and statements held by it hereunder, and the
Servicer and the predecessor Collateral Agent shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor Collateral Agent all
such rights, powers, duties and obligations. The cost of any such transfer to
the successor Collateral Agent shall be for the account of the Collateral Agent
in the event of the resignation of the Collateral Agent, and shall be for the
account of the Servicer in the event of the removal of the Collateral Agent. No
successor Collateral Agent shall accept appointment as provided in this Section
9.08 unless at the time of such acceptance such successor Collateral Agent shall
be eligible under the provisions of Section 9.06. Upon acceptance of appointment
by a successor Collateral Agent as provided in this Section 9.08, the Servicer
shall mail notice of the succession of such Collateral Agent hereunder to all
Noteholders at their addresses as shown in the Note Register and to the Rating
Agencies. If the Servicer fails to mail such notice within ten (10) days after
acceptance of appointment by the successor Collateral Agent, the successor
Collateral Agent shall cause such notice to be mailed at the expense of the
Servicer.
Section 9.09 Merger or Consolidation of Collateral Agent. Any
Person into which the Collateral Agent may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation or national banking association
succeeding to the business of the Collateral Agent, shall be the successor of
the Collateral Agent hereunder; provided, that such corporation or national
banking association shall be eligible under the provisions of Section 9.06,
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.
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Limitation on Liability. None of the Trust, the
Owner Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee or any of the directors,
43
officers, employees or agents of such Persons shall be under any liability to
the Trust, the Noteholders or the Note Insurer 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 Trust, the Owner Trustee, the Depositor, the Servicer, the
Collateral Agent, the Indenture Trustee or any such Person against any breach of
warranties or representations made herein, or against any specific liability
imposed on each such party pursuant to this Agreement or against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations or duties hereunder. The Trust, the Owner Trustee, the Depositor,
the Servicer, the Collateral Agent, the Indenture Trustee and any director,
officer, employee or agent of such Person may rely in good faith on any document
of any kind which, prima facie, is properly executed and submitted by any
appropriate Person respecting any matters arising hereunder.
Section 10.02 Acts of Noteholders. (a) Except as otherwise
specifically provided herein, whenever Noteholder action, consent or approval is
required under this Agreement, such action, consent or approval shall be deemed
to have been taken or given on behalf of, and shall be binding upon, all
Noteholders if the Majority Noteholders or the Note Insurer agrees to take such
action or give such consent or approval.
(b) The death or incapacity of any Noteholder shall not
operate to terminate this Agreement or the Trust, nor entitle such Noteholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Noteholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Notes, be construed
so as to constitute the Noteholders from time to time as partners or members of
an association; nor shall any Noteholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
Section 10.03 Amendment. (a) This Agreement may be amended
from time to time by the Owner Trustee, on behalf of the Trust, the Servicer,
the Depositor, the Collateral Agent and the Indenture Trustee by written
agreement, upon the prior written consent of the Note Insurer, without notice to
or consent of the Noteholders to cure any ambiguity, to correct or supplement
any provisions herein, to comply with any changes in the Code, or to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel, at the expense of the party requesting the change, delivered to the
Indenture Trustee, adversely affect in any material respect the interests of any
Noteholder; and provided further, that no such amendment shall reduce in any
manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Note without the consent of
such Noteholder, or change the rights or obligations of any other party hereto
without the consent of such party. The Indenture Trustee
44
shall give prompt written notice to the Rating Agencies of any amendment made
pursuant to this Section 10.03.
(b) This Agreement may be amended from time to time by the
Owner Trustee, on behalf of the Trust, the Servicer, the Depositor, the
Collateral Agent and the Indenture Trustee, with the consent of the Note
Insurer, the Majority Noteholders and the Holders of the majority of the
Percentage Interest in the Trust Certificates, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders;
provided, however, that no such amendment shall reduce in any manner the amount
of, or delay the timing of, payments received on Mortgage Loans which are
required to be distributed on any Class of Notes without the consent of the
Holders of such Class of Notes or reduce the percentage for the Holders of which
are required to consent to any such amendment without the consent of the Holders
of 100% of such Class of Notes affected thereby.
(c) It shall not be necessary for the consent of Holders under
this Section 10.03 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.
Section 10.04 Recordation of Agreement. To the extent
permitted by applicable law, this Agreement, or a memorandum thereof if
permitted under applicable law, is subject to recordation in all appropriate
public offices for real property records in all of the counties or other
comparable jurisdictions in which any or all of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the Noteholders'
expense on direction and at the expense of Majority Noteholders requesting such
recordation, but only when accompanied by an Opinion of Counsel to the effect
that such recordation materially and beneficially affects the interests of the
Noteholders or is necessary for the administration or servicing of the Mortgage
Loans.
Section 10.05 Duration of Agreement. This Agreement shall
continue in existence and effect until terminated as herein provided.
Section 10.06 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Servicer, the Subservicers, the Originators
or the Depositor, addressed to such Person, c/o _______________________,
Attention: General Counsel; (ii) in the case of the Trust, ___________________,
c/o the Owner Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration; (iii) in the case of the Collateral Agent, ___________________,
at its Corporate Trust Office, Attention: Document Custody Manager; (iv) in the
case of the Indenture Trustee, _________________, at its Corporate Trust Office,
Attention: _____________________; (v) in the case of the Underwriter, Prudential
Securities Secured Financing Corporation or Prudential Securities Incorporated,
Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Managing Director-
Asset Backed Finance Group; (vi) in the case of the Note Insurer,
_______________________________ Attention: Surveillance Department (in each case
in which notice or other communication to the Note Insurer refers to an Event of
Default, a Servicer Event of Default or a claim on the Note Insurance Policy or
with respect to which failure on the part of the Note Insurer to respond shall
be deemed to constitute consent or
45
acceptance, then a copy of such notice or other communication should also be
sent to the attention of each of the General Counsel and the Head- Financial
Guaranty Group, and shall be marked to indicate "URGENT MATERIAL ENCLOSED");
(vii) in the case of Standard & Poor's Rating Services, 00 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 Attention: Residential Mortgage Surveillance Group; (viii) in the
case of Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 Attention: Home Equity Monitoring Group; and (ix) in the case of the
Noteholders, as set forth in the Note Register. Any such notices shall be deemed
to be effective with respect to any party hereto upon the receipt of such notice
by such party, except that notices to the Noteholders shall be effective upon
mailing or personal delivery.
Section 10.07 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 covenants, agreements, provisions or
terms of this Agreement.
Section 10.08 No Partnership. Nothing herein contained shall
be deemed or construed to create a co-partnership or joint venture between the
parties hereto and the services of the Servicer shall be rendered as an
independent contractor and not as agent for the Noteholders.
Section 10.09 Counterparts. 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.
Section 10.10 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the Trust, the Servicer, the
Depositor, the Indenture Trustee, the Collateral Agent and the Noteholders and
their respective successors and permitted assigns.
Section 10.11 Headings. The headings of the various sections
of this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
Section 10.12 The Note Insurer Default. Any right conferred to
the Note Insurer shall be suspended during any period in which a Note Insurer
Default exists. At such time as the Notes are no longer outstanding hereunder,
and no amounts owed to the Note Insurer hereunder remain unpaid, the Note
Insurer's rights hereunder shall terminate.
Section 10.13 Third Party Beneficiary. The parties agree that
each of the Owner Trustee and the Note Insurer is intended and shall have all
rights of a third-party beneficiary of this Agreement.
Section 10.14 Intent of the Parties. It is the intent of the
parties hereto and Noteholders that, for federal income taxes, state and local
income or franchise taxes and other taxes imposed on or measured by income, the
Notes be treated as debt. The parties to this Agreement and the Holder of each
Note, by acceptance of its Note, and each Beneficial Owner
46
thereof, agree to treat, and to take no action inconsistent with the treatment
of, the related Notes in accordance with the preceding sentence for purposes of
federal income taxes, state and local income and franchise taxes and other taxes
imposed on or measured by income.
Section 10.15 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(b) THE TRUST, THE SERVICER, THE DEPOSITOR, THE COLLATERAL
AGENT AND THE INDENTURE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT
LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION
10.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS
AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE
TRUST, THE DEPOSITOR, THE SERVICER, THE COLLATERAL AGENT AND THE INDENTURE
TRUSTEE EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION 10.15 SHALL AFFECT THE RIGHT OF THE TRUST, THE
DEPOSITOR, THE SERVICER, THE COLLATERAL AGENT OR THE INDENTURE TRUSTEE TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS
TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE TRUST, THE DEPOSITOR, THE SERVICER, THE COLLATERAL
AGENT AND THE INDENTURE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A
JURY.
[Remainder of Page Intentionally Left Blank]
47
IN WITNESS WHEREOF, the Servicer, the Trust, the Indenture
Trustee, the Collateral Agent and the Depositor have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
_____________________________________
________________________, as Depositor
By:__________________________________________
Name:
Title:
_____________________________________
By: _____________________________,
__________________________, not in its
individual capacity, but solely as Owner
Trustee under the Trust Agreement
By:__________________________________________
Name:
Title:
__________________________________, as
Servicer
By:__________________________________________
Name:
Title:
________________________, as Indenture Trustee
By:__________________________________________
Name:
Title:
_____________________________, as Collateral
Agent
By:__________________________________________
Name:
Title
[Signature Page to Sale and Servicing Agreement]
EXHIBIT A
CONTENTS OF THE MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall
include each of the following items (copies to the extent the originals have
been delivered to the Collateral Agent, on behalf of the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer, pursuant to Section 2.05 of
the Sale and Servicing Agreement), all of which shall be available for
inspection by the Noteholders, to the extent required by applicable laws:
1. The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the
originator of the Mortgage Loan to the Person so endorsing the
Mortgage Loan to the Trustee, endorsed by such Person "Pay to
the order of ________________ without recourse" and signed, by
facsimile or manual signature, in the name of the Depositor by
a Responsible Officer.
2. Either: (i) the original Mortgage, and related power of
attorney, if any, with evidence of recording thereon, or (ii)
a copy of the Mortgage and related power of attorney, if any,
certified as a true copy of the original Mortgage or power of
attorney by a Responsible Officer of the Depositor on the face
of such copy substantially as follows: "certified true and
correct copy of original which has been transmitted for
recordation."
3. Either: (i) The original Assignment of Mortgage in recordable
form in blank or (ii) a copy of the Assignment of Mortgage
certified as a true copy of the original Assignment of
Mortgage by a Responsible Officer of the Depositor on the face
of such copy substantially as follows: "certified true and
correct copy of original which has been transmitted for
recordation." Any such Assignments of Mortgage may be made by
blanket assignments for Mortgage Loans secured by the
Mortgaged Properties located in the same county, if permitted
by applicable law.
4. The original lender's policy of title insurance or a true copy
thereof, or if such original lender's title insurance policy
has been lost, a copy thereof certified by the appropriate
title insurer to be true and complete, or if such lender's
title insurance policy has not been issued as of the Closing
Date, a marked up commitment (binder) to issue such policy.
5. All original intervening assignments, if any, showing a
complete chain of assignments from the originator to the
related Originator, including any recorded warehousing
assignments, with evidence of recording thereon, certified by
a Responsible Officer of the related Originator by facsimile
or manual signature as a true copy of the original of such
intervening assignments.
6. Originals of all assumption, written assurance, substitution
and modification agreements, if any.
A-1
EXHIBIT B
INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
_______________
[Depositor] [Servicer]
[Collateral Agent] [Note Insurer]
Re: Sale and Servicing Agreement, dated as of ___________ among
________________________, as Depositor,
________________________, as Servicer, _______________, as
Indenture Trustee, and ________________________________, as
Collateral Agent
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Sale
and Servicing Agreement, the undersigned, as Indenture Trustee, hereby
acknowledges receipt by it in good faith without notice of adverse claims, of
(x) the Original Pre-Funded Amount and the Original Capitalized Interest Amount
for both Pool I and Pool II and (y) the Note Insurance Policy, and declares that
it holds and will hold such Accounts and the Note Insurance Policy in trust for
the exclusive use and benefit of all present and future Noteholders.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in Appendix I to the Indenture, dated as of
________________, by and between ________________________ and the Indenture
Trustee.
_______________________________,
as Indenture Trustee
By:_____________________________
Name:
Title:
B-1
EXHIBIT C
COLLATERAL AGENT'S ACKNOWLEDGEMENT OF RECEIPT
[Depositor] [Servicer]
[Indenture Trustee] [Note Insurer]
Re: Sale and Servicing Agreement, dated as of _____________ among
_______________, as Depositor, ______________________,
__________________, as Servicer, __________________, as
Indenture Trustee, and ______________________, as Collateral
Agent
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Sale
and Servicing Agreement, the undersigned, as Collateral Agent, hereby
acknowledges receipt by it in good faith without notice of adverse claims,
subject to the provisions of Sections 2.04 and 2.05 of the Sale and Servicing
Agreement (as such provisions relate to the Initial Mortgage Loans), of, with
respect to each of the Initial Mortgage Loans, the Mortgage File containing the
original Mortgage Note, except with respect to the list of exceptions attached
hereto, and based on its examination and only as to the foregoing, the
information set forth in the Mortgage Loan Schedule accurately reflects
information set forth in the Mortgage Note, and declares that it holds and will
hold such documents and the other documents delivered to it constituting the
Indenture Trustee's Mortgage Files, and that it holds or will hold all such
assets and such other assets included in the definition of "Trust Estate" that
are delivered to it, on behalf of the Indenture Trustee, in trust for the
exclusive use and benefit of all present and future Noteholders and the Note
Insurer.
The Collateral Agent has made no independent examination of
any such documents beyond the review specifically required in the
above-referenced Sale and Servicing Agreement. The Collateral Agent makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any such documents or any of the Mortgage Loans identified on
the Mortgage Loan Schedule, or (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
The Schedule of Mortgage Loans is attached to this Receipt.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in Appendix I to the Indenture, dated as of
_____________, by and between _________________ and the Indenture Trustee.
_______________________________,
as Collateral Agent
By:_____________________________
Name:
Title:
C-1
EXHIBIT D
INITIAL CERTIFICATION OF COLLATERAL AGENT
[Depositor] [Servicer]
[Indenture Trustee] [Note Insurer]
Re: Sale and Servicing Agreement, dated as of _____________ among
___________________, as Depositor, _________________________,
as Servicer, ___________________________, as Indenture
Trustee, and ___________________, as Collateral Agent
Ladies and Gentlemen:
In accordance with the provisions of Section 2.06 of the
above-referenced Sale and Servicing Agreement, the undersigned, as Collateral
Agent, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
listed on the attachment hereto), it has reviewed the documents delivered to it
pursuant to Section 2.05 of the Sale and Servicing Agreement and has determined
that (i) all documents required to be delivered to it pursuant to Section 2.05
of the above-referenced Sale and Servicing Agreement are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
have not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections do not constitute physical
alteration if they reasonably appear to have been initialed by the Mortgagor)
appears regular on its face and relates to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing documents, the information set
forth in the Mortgage Loan Schedule as to the information in clauses (i), (ii),
(v) and (vi) of the definition of "Mortgage Loan Schedule" respecting such
Mortgage Loan accurately reflects the information set forth in Indenture
Trustee's Mortgage File. The Collateral Agent has made no independent
examination of such documents beyond the review specifically required in the
above-referenced Sale and Servicing Agreement. The Collateral Agent makes no
representations as to: (x) the validity, legality, enforceability or genuineness
of any such documents contained in each or any of the Mortgage Loans identified
on the Mortgage Loan Schedule, or (y) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Sale and Servicing
Agreement.
_______________________________,
as Collateral Agent
By:_____________________________
Name:
Title:
D-1
EXHIBIT E
FINAL CERTIFICATION OF COLLATERAL AGENT
[Depositor] [Servicer]
[Indenture Trustee] [Note Insurer]
Re: Sale and Servicing Agreement, dated as of _____________ among
_______________________, as Depositor, _____________________,
as Servicer, ________________________, as Indenture Trustee,
and _________________, as Collateral Agent
Ladies and Gentlemen:
In accordance with the provisions of Section 2.06 of the
above-referenced Sale and Servicing Agreement, the undersigned, as Collateral
Agent, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
listed on the attachment hereto), it has reviewed the documents delivered to it
pursuant to Section 2.05 of the Sale and Servicing Agreement and has determined
that (i) all documents required to be delivered to it pursuant to Section 2.05
of the above-referenced Sale and Servicing Agreement are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
have not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections do not constitute physical
alteration if they reasonably appear to have been initialed by the Mortgagor)
appears regular on its face and relates to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing documents, the information set
forth in the Mortgage Loan Schedule respecting such Mortgage Loan accurately
reflects the information set forth in the Indenture Trustee's Mortgage File. The
Collateral Agent has made no independent examination of such documents beyond
the review specifically required in the above-referenced Sale and Servicing
Agreement. The Collateral Agent makes no representations as to: (x) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (y) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Sale and Servicing
Agreement.
_______________________________
as Collateral Agent
By:____________________________
Name:
Title:
E-1
EXHIBIT F
REQUEST FOR RELEASE OF DOCUMENTS
________________,
[Collateral Agent]
[Indenture Trustee]
Re: Sale and Servicing Agreement, dated as of _____________ among
________________________, as Depositor,
_______________________, _______________________, as Servicer,
_____________________, as Indenture Trustee, and
____________________, as Collateral Agent
In connection with the administration of the pool of Mortgage
Loans held by ____________________, as Collateral Agent, on behalf of
____________________, as Indenture Trustee, for the benefit of the Noteholders
and the Note Insurer, we request the release, and acknowledge receipt, of the
(Indenture Trustee's Mortgage File/[specify document]) for the Mortgage Loan
described below, for the reason indicated.
Mortgagor's Name, Address & Zip Code:
Mortgage Loan Number:
Reason for Requesting Documents (check one)
____ 1. Mortgage Loan Paid in Full
(Servicer hereby certifies that all amounts received
in connection therewith have been credited to the
Collection Account.)
____ 2. Mortgage Loan Liquidated
(Servicer hereby certifies that all proceeds of
foreclosure, insurance or other liquidation have been
finally received and credited to the Collection
Account.)
____ 3. Mortgage Loan in Foreclosure
____ 4. Mortgage Loan Repurchased Pursuant to Section 5.18 of the
Pooling and Servicing Agreement.
F-1
____ 5. Mortgage Loan Repurchased or Substituted pursuant to
Article II or III of the Sale and Servicing Agreement
(Servicer hereby certifies that the repurchase price or
Substitution Adjustment has been credited to the related
Distribution Account and that the substituted mortgage loan
is a Qualified Substitute Mortgage Loan.)
____ 6. Other (explain)_______________________________________________
If box 1 or 2 above is checked, and if all or part of the
Indenture Trustee's Mortgage File was previously released to us, please release
to us our previous receipt on file with you, as well as any additional documents
in your possession relating to the above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all
of the above documents to the Collateral Agent, please acknowledge your receipt
by signing in the space indicated below, and returning this form.
___________________________________,
as Servicer
By:_________________________________
Name:
Title:
Documents returned to Collateral Agent:
_______________________________,
as Collateral Agent
By:_____________________________
Name:
Title:
Date:
F-2
EXHIBIT G
FORM OF SUBSEQUENT CONTRIBUTION AGREEMENT
This SUBSEQUENT CONTRIBUTION AGREEMENT, dated as of ________,
1999 (the "Subsequent Transfer Date"), is entered into by and between
________________________, as depositor (the "Depositor"), and the
_____________________________(the "Trust").
W I T N E S S E T H:
Reference is hereby made to (x) that certain Sale and
Servicing Agreement, dated as of _____________ (the "Sale and Servicing
Agreement"), by and among the Depositor and the Trust, and (y) that certain
Indenture, dated as of _____________ (the "Indenture"), by and between the Trust
and _____________, as indenture trustee (the "Indenture Trustee"). Pursuant to
the Sale and Servicing Agreement, the Depositor has agreed to sell, assign and
transfer, and the Trust has agreed to accept, from time to time, Subsequent
Mortgage Loans (as defined below). The Sale and Servicing Agreement provides
that each such sale of Subsequent Mortgage Loans be evidenced by the execution
and delivery of a Subsequent Contribution Agreement such as this Subsequent
Contribution Agreement.
The assets sold to the Trust pursuant to this Subsequent
Contribution Agreement consist of (a) the Subsequent Mortgage Loans in Pool I
and Pool II listed in the Mortgage Loan Schedule attached hereto (including
property that secures a Subsequent Mortgage Loan that becomes an REO Property),
including the related Mortgage Files delivered or to be delivered to the
Collateral Agent, on behalf of the Indenture Trustee, including all payments of
principal received, collected or otherwise recovered after the Subsequent
Cut-Off Date for each Subsequent Mortgage Loan, all payments of interest
accruing on each Subsequent Mortgage Loan after the Subsequent Cut-Off Date
therefor whenever received and all other proceeds received in respect of such
Subsequent Mortgage Loans, (b) the Insurance Policies relating to the Subsequent
Mortgage Loans, and (c) all proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid assets,
including, without limitation, all insurance proceeds and condemnation awards.
The "Subsequent Mortgage Loans" are those listed on the
Schedule of Mortgage Loans attached hereto. The Aggregate Principal Balance of
such Subsequent Mortgage Loans as of the Subsequent Cut-Off Date is $__________
in Pool I and $__________ in Pool II.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Subsequent
Contribution Agreement, capitalized terms used herein but not otherwise defined
shall have the respective meanings assigned to such terms in Appendix I to the
Indenture.
Section 2. Sale, Assignment and Transfer. In consideration of
the receipt of $_________ (such amount being approximately 100% of the Aggregate
Principal Balance of the
G-1
Subsequent Mortgage Loans) from the Trust, the Depositor hereby sells, assigns
and transfers to the Trust, without recourse, all of its right, title and
interest in, to, and under the Subsequent Mortgage Loans and related assets
described above, whether now existing or hereafter arising.
In connection with such sale, assignment and transfer, the
Originators shall satisfy the document delivery requirements set forth in
Section 2.05 of the Sale and Servicing Agreement with respect to each Subsequent
Mortgage Loan.
Section 3. Representations and Warranties of Concerning the
Subsequent Mortgage Loans. With respect to each Subsequent Mortgage Loan, the
Depositor hereby assigns each of the representations and warranties made by the
Originators in Section 3 of the Subsequent Transfer Agreement, on which the
Trust relies in accepting the pledge of the Subsequent Mortgage Loans. Such
representations and warranties speak as of the Subsequent Transfer Date unless
otherwise indicated, and shall survive each sale, assignment, transfer and
conveyance of the respective Subsequent Mortgage Loans to the Trust.
Section 4. Repurchase of Subsequent Mortgage Loans. Upon
discovery by any of the Depositor, an Originator, the Indenture Trustee, the
Servicer (on behalf of the Trust), the Note Insurer or any Noteholder of a
breach of any of the representations and warranties made by the Originators
pursuant to Section 3.03 of the Loan Sale Agreement or this Section 3, the party
discovering such breach shall give prompt written notice to such other Person;
provided, that the Indenture Trustee shall have no duty to inquire or to
investigate the breach of any such representations and warranties. The
Originators and the Depositor will be obligated to repurchase a Subsequent
Mortgage Loan which breaches a representation or warranty in accordance with the
provisions of Section 4.02 of the Sale and Servicing Agreement or to indemnify
as described in Section 3.05(g) of the Loan Sale Agreement. Such repurchase and
indemnification obligation of the Originators and the Depositor shall constitute
the sole remedy against the Originators and the Depositor, and the Trust for
such breach available to the Servicer, the Trust, the Indenture Trustee, the
Note Insurer and the Noteholders.
Section 5. Amendment. This Subsequent Contribution Agreement
may be amended from time to time by the Depositor and the Trust only with the
prior written consent of the Note Insurer (or, in the event of a Note Insurer
Default, the Majority Holders).
Section 6. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS
SUBSEQUENT CONTRIBUTION AGREEMENT AND ANY AMENDMENT HEREOF PURSUANT TO SECTION 5
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSEQUENT
CONTRIBUTION AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY AND FOR ANY
COUNTERCLAIM THEREIN.
Section 7. Counterparts. This Subsequent Contribution
Agreement may be executed in counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which shall
constitute one and the same instrument.
G-2
Section 8. Binding Effect; Third-Party Beneficiaries. This
Subsequent Contribution Agreement will inure to the benefit of and be binding
upon the parties hereto, the Note Insurer, the Noteholders, and their respective
successors and permitted assigns.
Section 9. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 10. Exhibits. The exhibits attached hereto and
referred to herein shall constitute a part of this Subsequent Contribution
Agreement and are incorporated into this Subsequent Contribution Agreement for
all purposes.
Section 11. Intent of the Parties; Security Agreement. The
Depositor and the Trust intend that the conveyance of all right, title and
interest in and to the Subsequent Mortgage Loans and related assets described
above by the Depositor to the Trust pursuant to this Subsequent Contribution
Agreement shall be, and be construed as, a sale of the Subsequent Mortgage Loans
from the Depositor to the Trust. It is, further, not intended that such
conveyances be deemed to be pledges of the Subsequent Mortgage Loans by the
Depositor to the Trust to secure a debt or other obligation of the Depositor.
However, in the event that the Subsequent Mortgage Loans are held to be property
of the Depositor, or if for any reason this Subsequent Contribution Agreement is
held or deemed to create a security interest in the Subsequent Mortgage Loans,
then it is intended that: (a) this Subsequent Contribution Agreement shall also
be deemed to be a security agreement within the meaning of Articles 8 and 9 of
the Uniform Commercial Code of any other applicable jurisdiction; (b) the
conveyance provided for in this Subsequent Contribution Agreement shall be
deemed to be a grant by the Depositor to the Trust of a security interest in all
of the Depositor's right, title and interest, whether now owned or hereafter
acquired, in and to the Subsequent Mortgage Loans and related assets described
above. The Depositor shall, to the extent consistent with this Subsequent
Contribution Agreement, take such reasonable actions as may be necessary to
ensure that, if this Subsequent Contribution Agreement were deemed to create a
security interest in the Subsequent Mortgage Loans and the other property
described above, such interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of this Subsequent Contribution Agreement.
[Remainder of Page Intentionally Left Blank]
G-3
IN WITNESS WHEREOF, the Depositor and the Trust have caused this
Subsequent Contribution Agreement to be duly executed by their respective
officers as of the day and year first above written.
__________________________________________
By: _________________________________,
_________________________, not in its
individual capacity, but solely as Owner
Trustee
By:______________________________________
Name:
Title:
__________________________________________
By:________________________________________
Name:
Title:
G-4
