AMENDED AND RESTATED SALE AND SERVICING AGREEMENT
dated as of March 5, 2004
by and among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as Depositor,
ABFS MORTGAGE LOAN TRUST 1999-2,
as Issuer,
AMERICAN BUSINESS CREDIT, INC.,
as Servicer,
WILSHIRE CREDIT CORPORATION,
as Back-up Servicer
JPMORGAN CHASE BANK,
as Collateral Agent and Indenture Trustee
AMENDED AND RESTATED SALE AND SERVICING AGREEMENT, dated as of
March 5, 2004 (this "Agreement"), by and among PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION, a Delaware corporation, as depositor (the "Depositor"),
ABFS MORTGAGE LOAN TRUST 1999-2, a Delaware statutory trust, as issuer (the
"Trust"), AMERICAN BUSINESS CREDIT, INC., a Pennsylvania corporation, as
servicer (the "Servicer"), WILSHIRE CREDIT CORPORATION, a Nevada corporation, as
back-up servicer (the "Back-up Servicer"), JPMORGAN CHASE BANK, (f/k/a Chase
Bank of Texas, N.A.), a New York banking corporation, as collateral agent (in
such capacity, the "Collateral Agent"), and JPMORGAN CHASE BANK (f/k/a The Chase
Manhattan Bank), a New York banking corporation, as indenture trustee (in such
capacity, the "Indenture Trustee"), which amends and restates the Sale and
Servicing Agreement, dated as of June 1, 1999 (the "Original Agreement"), by and
among the Depositor, the Trust, the Servicer, the Collateral Agent and the
Indenture Trustee.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, pursuant to the Original Agreement, the Depositor has
sold to the Trust, and the Trust has purchased from the Depositor, the mortgage
loans (the "Mortgage Loans") listed on Schedule I to this Agreement;
WHEREAS, immediately after such purchase, the Trust has
pledged such Mortgage Loans to the Indenture Trustee pursuant to the terms of an
Indenture, dated as of June 1, 1999 (the "Indenture"), between the Trust and the
Indenture Trustee, and issued the ABFS Mortgage Loan Trust 1999-2, 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 holds, on behalf of the
Indenture Trustee, the Mortgage Loans and certain other assets pledged to the
Indenture Trustee pursuant to the Indenture;
WHEREAS, Financial Security Assurance Inc. (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; and
WHEREAS, the Depositor, the Servicer, the Collateral Agent and
the Indenture Trustee, with the consent of the Note Insurer, desire to amend and
restate the Original Agreement to provide for a Back-up Servicer, and Wilshire
Credit Corporation has agreed to serve in the capacity of Back-up Servicer
hereunder.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Trust, the Depositor, the Servicer, the
Back-up 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 Class A-1
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
the Class A-2 Notes provided for herein shall be on the basis of a 360-day year
and the actual number of days elapsed in the related Accrual Period. 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 1999 and 2000) 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, the Back-up Servicer and the Collateral
Agent a certificate of a Servicing Officer specifying the days on which banking
institutions in the Commonwealth of Pennsylvania are authorized or obligated by
law, executive order or governmental decree to be closed.
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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 Unaffiliated Seller's
Agreement, the Depositor does hereby also irrevocably transfer, assign, set over
and otherwise convey to the Trust all of its rights under the Unaffiliated
Seller's Agreement, including, without limitation, its right to exercise the
remedies created by Sections 2.06 and 3.05 of the Unaffiliated Seller's
Agreement for defective documentation and for breaches of representations and
warranties, agreements and covenants of the Unaffiliated Seller and the
Originators contained in Sections 3.01, 3.02 and 3.03 of the Unaffiliated
Seller's Agreement.
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 Unaffiliated
Seller's Agreement, the Depositor will also irrevocably transfer, assign, set
over and otherwise convey to the Trust all of its rights under the Unaffiliated
Seller's 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 Unaffiliated Seller's Agreement for defective documentation and
for breaches of representations and warranties, agreements and covenants of the
Unaffiliated Seller and the Originators contained in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's 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 cause the
Unaffiliated Seller to 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
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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) 99.65%
and 99.65% 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 at the rate of
7.130% per annum from (and including) June 1, 1999 to (but not including) the
Closing Date, minus (C) the Original Pre-Funded Amount and the Original
Capitalized Interest Amount 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 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
Unaffiliated Seller's Agreement, the Unaffiliated Seller 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, the Servicer and the Back-up 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, or cause the Unaffiliated Seller to 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:
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(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;
(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 Unaffiliated Seller, and by the Unaffiliated Seller 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.
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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: "The
Chase Manhattan Bank, as Indenture Trustee under the Indenture dated as of June
1, 1999, ABFS Mortgage Loan Trust 1999-2."
(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 Unaffiliated Seller 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 Unaffiliated
Seller or such Originator shall promptly prepare a substitute assignment or cure
such defect, as the case may be, and thereafter the Unaffiliated Seller or such
Originator shall 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 Unaffiliated Seller.
(c) The Unaffiliated Seller or the related Originator shall,
within five (5) Business Days after the receipt thereof, deliver, or cause to be
delivered, to the Collateral Agent, on behalf of the Indenture Trustee: (i) the
original recorded Mortgage and related power of attorney, if any, in those
instances where a copy thereof certified by the related Originator was delivered
to the Collateral Agent, on behalf of the Indenture Trustee; (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
Unaffiliated Seller or the related Originator shall be deemed to have satisfied
its obligations hereunder upon delivery to the Collateral Agent, on behalf of
the Indenture Trustee, 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.
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From time to time the Unaffiliated Seller or the related
Originator may forward, or cause to be forwarded, to the Collateral Agent, on
behalf of the Indenture Trustee, 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 Unaffiliated Seller 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 Unaffiliated
Seller 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 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, the Servicer and the Unaffiliated Seller, 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
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receipt by the Collateral Agent, on behalf of the Indenture Trustee,
thereof), and to deliver to the Unaffiliated Seller, 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 Unaffiliated Seller, 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 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 Unaffiliated Seller 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.
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(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 Back-up Servicer,
the Unaffiliated Seller, the Originators, the Note Insurer and the Indenture
Trustee. Pursuant to Section 2.06(b) of the Unaffiliated Seller's Agreement, the
Unaffiliated Seller 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 Unaffiliated Seller 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 Unaffiliated Seller and the Originators will be obligated, pursuant to
Section 3.05 of the Unaffiliated Seller's 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 Unaffiliated
Seller's 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 Unaffiliated Seller the related
Indenture Trustee's Mortgage File and the Indenture Trustee shall execute,
without recourse, and deliver such instruments of transfer furnished by the
Unaffiliated Seller as may be necessary to transfer such Mortgage Loan to the
Unaffiliated Seller. The Collateral Agent shall notify the Indenture Trustee,
who shall notify the Note Insurer if the Unaffiliated Seller 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
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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 Unaffiliated Seller, 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 Unaffiliated Seller, 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.
Section 2.08 Further Action Evidencing Assignments. (a) The
Servicer agrees that, from time to time, at its expense, it shall cause the
Unaffiliated Seller to (and the Depositor on behalf of itself also agrees that
it shall), 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 Unaffiliated Seller's 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
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right to exercise the remedies created by Section 2.06 and 3.05 of the
Unaffiliated Seller's Agreement for breaches of the representations, warranties,
agreements and covenants of the Unaffiliated Seller or the Originators contained
in Sections 2.05, 2.06, 3.02 and 3.03 of the Unaffiliated Seller's 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 Unaffiliated Seller and 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, the Back-up Servicer 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 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;
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(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:
(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, the Servicer and the Back-up
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;
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(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 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.
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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, the Back-up 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.
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, the Back-up 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 New York;
(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);
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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.
Section 3.05 Representations, Warranties and Covenants of the
Back-up Servicer. The Back-up Servicer hereby represents, warrants and covenants
to the Indenture Trustee, the Depositor, the Servicer, the Collateral Agent, the
Note Insurer and the Noteholders that as of the date of this Agreement, or as of
such date specifically provided herein:
(a) The Back-up Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has the corporate power to own its assets and to transact the business in which
it is currently engaged. The Back-up Servicer 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 could reasonably be expected to have a
material adverse effect on the business, properties, assets, or condition
(financial or other) of the Back-up Servicer or the performance of its
obligations hereunder;
(b) The Back-up 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. When
executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Back-up Servicer, enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies;
(c) The Back-up 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 date hereof;
(d) The execution, delivery and performance of this Agreement
by the Back-up Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court or the Articles of Incorporation
or Bylaws of the Back-up Servicer or constitute a breach of any mortgage,
indenture, contract or other Agreement to which the Back-up 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 Back-up Servicer which, either in any one
instance or in the aggregate, is, in the Back-up Servicer's judgment, likely to
result in any material adverse change in the business, operations, financial
condition, properties, or assets of the Back-up Servicer, or in any material
impairment of the right or ability of it to carry on its business substantially
as now conducted, or in any material liability on the part of the Back-up
Servicer or which would draw into question the validity of this Agreement, the
15
Certificates, or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Back-up Servicer contemplated herein or
therein, or which would be likely to impair materially the ability of the
Back-up Servicer to perform its obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other
document furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any untrue
statement of fact provided by or on behalf of the Back-up Servicer or omits to
state a fact necessary to make the statements provided by or on behalf of the
Back-up Servicer contained herein or therein not misleading; and
(g) The Back-up 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.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.05 shall survive delivery
of the respective Mortgage Files to the Collateral Agent on behalf of the
Indenture Trustee or to a custodian, as the case may be, and shall inure to the
benefit of the Indenture Trustee.
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 Unaffiliated Seller's Agreement,
the representations, warranties and covenants of the Unaffiliated Seller and the
Originators set forth in Sections 3.01, 3.02 and 3.03 of the Unaffiliated
Seller's 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,
3.02 and 3.03 of the Unaffiliated Seller's 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 Unaffiliated Seller's Agreement.
(b) Upon discovery by the Unaffiliated Seller, the Depositor,
the Servicer, the Back-up 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, 3.02 or 3.03 of the
Unaffiliated Seller's Agreement which materially and adversely affects the value
16
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 Unaffiliated Seller's or 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 the Unaffiliated Seller or 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 Unaffiliated
Seller substitutes a Qualified Substitute Mortgage Loan or Loans, the Servicer
shall cause the Unaffiliated Seller 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 Unaffiliated Seller. The Trust will own all
payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Unaffiliated Seller 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, the Back-up Servicer 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
Unaffiliated Seller and the Originators set forth in Sections 2.06 and 3.05 of
the Unaffiliated Seller's Agreement to, and the Servicer's obligation set forth
in this Section 4.02 to cause the Unaffiliated Seller 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 Unaffiliated Seller's Agreement, constitute
the sole remedies of the Indenture Trustee, the Collateral Agent, the Note
Insurer and the Noteholders respecting a breach of the representations and
warranties of the Unaffiliated Seller and the Originators set forth in Sections
3.01, 3.02 and 3.03 of the Unaffiliated Seller's Agreement.
17
(g) Pursuant to Section 3.05(g) of the Unaffiliated Seller's
Agreement, the Unaffiliated Seller 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 Unaffiliated Seller or the related Originator of
representations or warranties regarding the Mortgage Loans.
(h) Pursuant to Section 3.05(h) of the Unaffiliated Seller's
Agreement, the Unaffiliated Seller and each of the Originators shall be jointly
and severally responsible for any repurchase, cure or substitution obligation of
the Unaffiliated Seller or any of the Originators under this Agreement, the
Unaffiliated Seller's 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 unless (i) the modifications do
not decrease the Mortgage Interest Rate, reduce or increase the principal
balance, decrease the lien priority, increase the current LTV above the lesser
of the current LTV or the original LTV, or change the final maturity date on or
of such Mortgage Loan 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.
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.
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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 Servicer shall invest any funds in the Collection
Account in Permitted Investments, 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 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.
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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 Unaffiliated Seller amounts received in
respect of any Defective Mortgage Loan purchased or substituted for by
the Unaffiliated Seller 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.
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.
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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).
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"
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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 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.
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(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 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
23
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;
provided, however, that prior to the termination of the Back-up Servicer, the
Monthly Servicing Fee shall be reduced on each Distribution Date by the amount,
if any, of the Back-up Servicing Fee Deficiency on such Distribution Date. The
Servicer shall provide written notice to the Indenture Trustee and the
Collateral Agent setting forth the amount of such reduction at least five (5)
Business Days prior to the next Distribution Date. 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, 2000, 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, 2000, 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; Reports to the Back-up Servicer. (a) Not later than fifteen
(15) days after each Distribution Date, the Servicer shall provide to the
Indenture Trustee, the Collateral Agent, the Back-up Servicer 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 payments required by this Agreement to be
made by the Servicer on behalf of the Indenture Trustee have been made (or if
any required payment 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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(b) No later than 12:00 noon, New York, New York time on the
Servicer Distribution Date, the Servicer shall deliver to the Back-up Servicer
an electronic transmission acceptable to the Back-up Servicer containing the
Servicer Remittance Report and the Required Information with respect to such
Servicer Distribution Date.
Section 5.15 Optional Purchase of Defaulted Mortgage Loans.
(a) Subject to Section 5.15(b), the Unaffiliated Seller or any Affiliate of the
Unaffiliated Seller, 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. The
purchaser of such Mortgage Loan shall give written notice to the Note Insurer of
the means by which any Mortgage Loan purchased pursuant to this Section 5.15 is
ultimately disposed of.
(b) After the Unaffiliated Seller or an Affiliate of the
Unaffiliated Seller 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
Unaffiliated Seller or Affiliate of the Unaffiliated Seller 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 Unaffiliated Seller or Affiliate to the Note
Insurer 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 Unaffiliated
Seller 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
Unaffiliated Seller 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.
26
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, the Back-up Servicer and the Note Insurer (via
E-mail at xxxxxxxx@xxx.xxx) 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 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;
27
(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.
(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
28
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 July 1999, of $314,364.25, with respect to interest on Mortgage
Loans in Pool I not having their first payment due until after June 1999 and
$19,079.89 with respect to interest on Mortgage Loans in Pool II not having
their first payment due until after June 1999. 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 Unaffiliated
Seller, the Note Insurer, the Back-up Servicer 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 Unaffiliated Seller, 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 Unaffiliated Seller, the Back-up Servicer, 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
29
(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
Unaffiliated Seller's Agreement, except to the extent that the claim relates
directly to the failure of the Servicer, if it is the Unaffiliated Seller, or is
an Affiliate of the Unaffiliated Seller, to perform its obligations to service
and administer the Mortgages in compliance with the terms of the Unaffiliated
Seller's Agreement and this Agreement, or the failure of the Unaffiliated Seller
to perform its duties in compliance with the terms of this Agreement.
(c) The Indenture Trustee shall reimburse the Unaffiliated
Seller from amounts otherwise distributable on the related Trust Certificates
for all amounts advanced by the Unaffiliated Seller pursuant to the second
sentence of Section 4.04(a)(ii) of the Unaffiliated Seller's Agreement except
when the relevant claim relates directly to the failure of the Unaffiliated
Seller to perform its duties in compliance with the terms of the Unaffiliated
Seller's Agreement.
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
Owner Trustee, on behalf of the Trust, at the direction of the Trust
Certificateholders, the Depositor, the Servicer, the Unaffiliated Seller, the
Note Insurer, the Collateral Agent, the Back-up Servicer 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 Unaffiliated Seller, the Trust, the
Depositor, the Back-up Servicer 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
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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.
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.
Section 5.23 Duties of Back-up Servicer. (a) Commencing with
the date of this Agreement, the Back-up Servicer shall perform its duties in
accordance with paragraph (b) below, and as further required by this Agreement
until such time as the services of the Back-up Servicer are terminated by the
Servicer (with the consent of the Certificate Insurer) by written notice to the
Back-up Servicer, (i) in accordance with Section 7.02(f), or (ii) in connection
with the termination of this Agreement in accordance with Section 8.01.
(b) Upon receiving the Servicer Remittance Report and the
Required Information in an electronic transmission from the Servicer in
accordance with Section 5.14 on each Servicer Distribution Date, the Back-up
Servicer shall use such electronic transmission to (i) confirm it is in readable
form, (ii) confirm the data included in such electronic transmission has been
successfully loaded onto the servicing system of the Back-up Servicer and (iii)
with respect to the first Servicer Distribution Date after the date of this
Agreement only, compare the following information contained in the Servicer
Remittance Report with that contained in the Required Information: (A) the total
number of Mortgage Loans, (B) the aggregate Principal Balance of the Mortgage
Loans, (C) the weighted average Mortgage Interest Rate of the Mortgage Loans and
(D) the Aggregate Principal Balance of the Mortgage Loans which are (1) thirty
(30) days Delinquent, (2) sixty (60) days Delinquent, (3) ninety (90) days
Delinquent, (4) the underlying properties of which are subject to foreclosure
proceedings at such time and (5) REO Mortgage Loans. The Back-up Servicer shall
immediately notify the Servicer, the Note Insurer and the Indenture Trustee if
such electronic transmission does not comply with clauses (i), (ii) and (iii)
above. Within ten (10) days of each Distribution Date after the date of this
Agreement, the Back-up Servicer shall deliver an Officer's Certificate to the
Note Insurer, the Indenture Trustee and the Servicer certifying compliance by
the Back-up Servicer with this Section 5.23.
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(c) No payments are payable by the Trust to the Back-up
Servicer in connection with the commencement of its services hereunder, or any
termination under Section 7.02, other than as provided under Sections 5.07 and
8.02 of the Indenture (as amended by Supplemental Indenture No. 1).
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 July 1999 and August 1999, 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 and
the Back-up Servicer 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
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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 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;
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(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 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 Back-up Servicer or 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 12.75% of the aggregate outstanding Principal
Balance for the Mortgage Loans;
(ix) if on any Distribution Date, commencing in June 2000, the
Twelve Month Loss Amount exceeds 1.75% 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 June 1,
2000, the aggregate Cumulative Loan Losses since the Initial Cut-Off
Date exceed 1.00% of the Original Pool Principal Balance, (b) on any
Distribution Date on or after June 1, 2000 and before June 1, 2001, the
aggregate Cumulative Loan Losses since the Initial Cut-Off Date exceed
1.50% of the Original Pool Principal Balance, (c) on any Distribution
Date on or after June 1, 2001 and before June 1, 2002, the aggregate
Cumulative Loan Losses since the Initial Cut-Off Date exceed 2.25% of
the Original Pool Principal Balance, (d) on any Distribution Date on or
after June 1, 2002 and before June 1, 2003, the aggregate Cumulative
Loan Losses since the Initial Cut-Off Date exceed 3.00% of the Original
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Pool Principal Balance, or (e) on any Distribution Date on or after
June 1, 2003, the aggregate Cumulative Loan Losses since the Initial
Cut-Off Date exceed 3.75% of the Original Pool Principal Balance;
(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
Back-up Servicer 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 Back-up Servicer, 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; provided, however, that the Back-up Servicer
shall not be required to act as successor servicer until such time as the
Back-up Servicer has agreed in writing with the Indenture Trustee and the Note
Insurer to so act; (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 Back-up Servicer, or its
designee approved by the Note Insurer, and the Back-up Servicer 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 Back-up Servicer,
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.
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Section 7.02 Back-up Servicer 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 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 Back-up Servicer
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 Back-up
Servicer 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;
provided, further, that the Back-up Servicer shall be entitled to be indemnified
by American Business Credit, Inc., in its capacity as the Servicer, in
accordance with Section 5.19 and/or from the Distribution Accounts pursuant to
Section 8.02 of the Indenture for any losses or liabilities resulting from the
actions of any prior servicer, unless such losses or liabilities result from the
gross negligence, willful misconduct or reckless disregard of the Back-up
Servicer. The Back-up Servicer, 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 Back-up Servicer
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 Back-up Servicer delivered to the
Note Insurer.
(b) Notwithstanding the above, the Indenture Trustee may, if
the Back-up Servicer shall be unwilling to so act, or shall, if the Back-up
Servicer 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. Notwithstanding any other provisions of this Agreement,
prior to the Back-up Servicer becoming the Servicer hereunder, the Depositor and
the Servicer intend to revise this Agreement to remove certain provisions not
applicable to a substitute servicer and to revise and add certain provisions to
make this Agreement applicable to a substitute servicer. Without limitation,
these provisions include Sections 2.08; 3.01; 4.02; 5.03(d); 5.04; 5.06; 5.08;
5.13; 5.18(b); 7.01; and 8.04; and, with respect to Section 9.05, the Back-up
Servicer, prior to becoming the Servicer hereunder, will require reimbursement
of any of the Collateral Agent's expenses it is required to pay pursuant to
Section 9.05. Such reimbursement shall be paid by a person other than the
Collateral Agent. In no event will the Collateral Agent or the Indenture Trustee
assume, nor do any of the parties hereto anticipate that the Collateral Agent or
the Indenture Trustee will assume, any added responsibilities as a result of the
removal, revision or addition of any provisions, including, without limitation,
36
to the Sections listed herein upon the Back-up Servicer becoming the Servicer
hereunder. These revisions may be made only upon the agreement of the Servicer,
the Depositor and the Indenture Trustee, with the prior written consent of the
Note Insurer, in all cases in accordance with Section 10.03 hereof; provided,
however, should it become necessary to appoint a successor servicer hereunder
and no agreement is reached providing for the Back-up Servicer to become
Servicer hereunder, then the services of the Back-up Servicer will be terminated
and the Back-up Servicer will no longer be entitled to the Back-up Servicing
Fee.
(c) In the event the Back-up Servicer 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 Back-up Servicer is unable or
unwilling to act as successor Servicer, or, if the Note Insurer so directs, the
Indenture Trustee shall appoint such other entity as may be designated by the
Note Insurer or, if the Note Insurer shall not have designated another entity
within 30 days following written notice to the Trustee and the Note Insurer by
the Back-up Servicer that it will not serve as successor servicer, then, 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 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
37
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 Back-up Servicer 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) Subject to Section 7.02(b), 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 unless agreed to by the Note Insurer, 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.
(f) Upon the earliest to occur of (i) the appointment and
qualification of any successor servicer (whether it shall be the Back-up
Servicer or another entity) or (ii) notice by the Note Insurer, given in its
sole discretion on any date on or after twelve months from the date of this
Agreement, to the Back-up Servicer, with a copy to the Collateral Agent, the
Indenture Trustee and the Servicer or (iii) termination of the Back-up Servicer
for cause as provided in the succeeding sentence, the obligations of the Back-up
Servicer under Section 5.23 shall terminate, without expense to the Trust, and
the Back-up Servicer shall no longer be entitled to the Back-up Servicing Fee.
On any Distribution Date prior to the date which is twelve months from the date
of this Agreement, if the Back-up Servicer shall not have submitted an Officer's
Certificate (as required by Section 5.23 hereof) evidencing the performance by
it of its duties for the related Due Period, the Note Insurer may, by notice to
the Back-up Servicer with a copy to the Indenture Trustee and the Servicer,
terminate the obligations of the Back-up Servicer hereunder, effective 30 days
from the date of such notice, unless the Back-up Servicer cures such failure
within such 30-day period, or demonstrates to the Note Insurer's satisfaction
that its failure to perform was due to circumstances beyond the control of the
Back-up Servicer.
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.
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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
under this Agreement and under the Notes without any further consent of the
Noteholders, including, without limitation:
(a) the right to require the Unaffiliated Seller 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.
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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 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 Back-up 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, the
Back-up 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 Owner Trustee, on behalf of the Trust, at the direction of the Trust
Certificateholders, the Indenture Trustee, the Collateral Agent, the Servicer,
the Note Insurer and all Noteholders in writing.
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(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 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.
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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;
(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 8.04 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 September 30,
1999 (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
Section 9.01 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
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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.
(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
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(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 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;
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(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 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 9.05 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.
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(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 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.
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(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.
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 Unaffiliated Seller, the Depositor or the Servicer or any Person
known to a Responsible Officer of the Indenture Trustee to be an Affiliate of
the Unaffiliated Seller, 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.
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ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.01 Limitation on Liability. None of the Trust, the
Owner Trustee, the Depositor, the Servicer, the Back-up Servicer, the Collateral
Agent, the Indenture Trustee or any of the directors, 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 Back-up Servicer, the
Collateral Agent, the Indenture Trustee or any such Person against any breach of
warranties or representations made herein by such party, or against any specific
liability imposed on each such party pursuant to this Agreement or against any
liability which would otherwise be imposed upon such party 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 Back-up 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 Back-up 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
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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; 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 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 Back-up 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. It
shall not be necessary to obtain the consent of the Back-up Servicer under this
Section 10.03 (i) for any amendment that does not affect the rights or duties of
the Back-up Servicer under this Agreement, or (ii) after cessation of the
Back-up Servicer's obligations and right to receive the Back-up Servicing Fee,
as provided in Section 7.02(f); provided, however, any amendment made without
the consent of the Back-up Servicer shall not be applicable to the Back-up
Servicer, whether acting as the Back-up Servicer or as Servicer.
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.
49
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 Unaffiliated Seller, addressed to such Person, c/o American Business
Financial Services, Inc., The Xxxxxxxxx Building, 000 Xxxx Xxxxxx Xxxx, 0xx
Xxxxx, Xxxxxxxxxxxx, XX 00000, Attention: General Counsel; (ii) in the case of
the Trust, ABFS Mortgage Loan Trust 1999-2, c/o the Owner Trustee at its
Corporate Trust Office, Attention: Corporate Trust Administration; (iii) in the
case of the Collateral Agent, JPMorgan Chase Bank, 0 Xxx Xxxx Xxxxx, 0xx Xxxxx,
Xxx Xxxx, XX 00000 Attention: Institutional Trust Services/Global Debt; -ABFS
Mortgage Loan Trust 1999-2; (iv) in the case of the Indenture Trustee, c/o
JPMorgan Chase Bank, 0 Xxx Xxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000 Attention:
Institutional Trust Services/Global Debt-ABFS Mortgage Loan Trust 1999-2;
telephone (000) 000-0000, telecopy (000) 000-0000; (v) in the case of the
Depositor or 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, Financial Security Assurance Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 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 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 Xxxxx Xxxxxx, 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; (ix) in the case of the Back-up Servicer, Wilshire Credit
Corporation, 00000 X.X. Xxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxx, XX 00000, Attention:
Xxx Xxxxxxx and (x) 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 Back-up
Servicer, the Depositor, the Indenture Trustee, the Collateral Agent and the
Noteholders and their respective successors and permitted assigns.
50
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, the Unaffiliated Seller 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 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 BACK-UP 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 BACK-UP
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
BACK-UP 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.
51
(c) THE TRUST, THE DEPOSITOR, THE SERVICER, THE BACK-UP
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]
52
IN WITNESS WHEREOF, the Servicer, the back-up 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.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION, as Depositor
By:
---------------------------------------
Name:
Title:
ABFS MORTGAGE LOAN TRUST 1999-2
By: WACHOVIA TRUST COMPANY, NATIONAL
ASSOCIATION (as successor to First Union
Trust Company, National Association), not
in its individual capacity, but solely as
Owner Trustee under the Trust Agreement
By:
---------------------------------------
Name:
Title:
AMERICAN BUSINESS CREDIT, INC., as Servicer
By:
---------------------------------------
Name:
Title:
JPMORGAN CHASE BANK,
as Indenture Trustee
By:
---------------------------------------
Name:
Title:
[Signature Page to Sale and Servicing Agreement]
JPMORGAN CHASE BANK,
as Collateral Agent
By:
---------------------------------------
Name:
Title:
WILSHIRE CREDIT CORPORATION, as Back-up
Servicer
By:
---------------------------------------
Name:
Title:
Acknowledged, agreed and consented to
pursuant to Section 10.03:
FINANCIAL SECURITY ASSURANCE INC.,
as Certificate Insurer
By:
---------------------------------------
Name:
Title:
ABFS WAREHOUSE TRUST 2003-1,
as Holder of a majority of the Percentage Interest
in the Trust Certificates
By: WILMINGTON TRUST COMPANY,
not in its individual capacity, but solely as Owner Trustee
By:
---------------------------------------
Name:
Title:
[Signature Page to Sale and Servicing Agreement]
TABLE OF CONTENTS
Page
Article I. DEFINITIONS.........................................................................................2
Section 1.01 Certain Defined Terms........................................................................2
Section 1.02 Provisions of General Application............................................................2
Section 1.03 Business Day Certificate.....................................................................2
Article II. SALE AND CONVEYANCE OF THE MORTGAGE LOANS..........................................................3
Section 2.01 Purchase and Sale of Initial Mortgage Loans..................................................3
Section 2.02 Purchase and Sale of Subsequent Mortgage Loans...............................................3
Section 2.03 Purchase Price...............................................................................4
Section 2.04 Possession of Mortgage Files; Access to Mortgage Files.......................................4
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...................................................................11
Section 3.01 Representations of the Servicer.............................................................11
Section 3.02 Representations, Warranties and Covenants of the Depositor..................................12
Section 3.03 Representations, Warranties and Covenants of the Collateral Agent...........................14
Section 3.04 Representations, Warranties and Covenants of the Indenture Trustee..........................14
Article IV. THE MORTGAGE LOANS................................................................................16
Section 4.01 Representations and Warranties Concerning the Mortgage Loans................................16
Section 4.02 Purchase and Substitution...................................................................16
Article V. ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS.................................................18
Section 5.01 The Servicer................................................................................18
Section 5.02 Collection of Certain Mortgage Loan Payments; Collection Account............................19
Section 5.03 Permitted Withdrawals from the Collection Account...........................................20
Section 5.04 Hazard Insurance Policies; Property Protection Expenses.....................................21
Section 5.05 Assumption and Modification Agreements......................................................21
Section 5.06 Realization Upon Defaulted Mortgage Loans...................................................22
Section 5.07 Indenture Trustee to Cooperate..............................................................23
Section 5.08 Servicing Compensation; Payment of Certain Expenses by Servicer.............................24
Section 5.09 Annual Statement as to Compliance...........................................................24
Section 5.10 Annual Independent Public Accountants' Servicing Report.....................................24
Section 5.11 Access to Certain Documentation.............................................................25
Section 5.12 Maintenance of Fidelity Bond................................................................25
Section 5.13 The Subservicers............................................................................25
Section 5.14 Reports to the Indenture Trustee; Collection Account Statements.............................25
Section 5.15 Optional Purchase of Defaulted Mortgage Loans...............................................25
Section 5.16 Reports to be Provided by the Servicer......................................................27
Section 5.17 Adjustment of Servicing Compensation in Respect of Prepaid Mortgage Loans...................28
Section 5.18 Periodic Advances; Special Advance..........................................................28
Section 5.19 Indemnification; Third Party Claims.........................................................29
Section 5.20 Maintenance of Corporate Existence and Licenses; Merger or Consolidation of the Servicer....30
Section 5.21 Assignment of Agreement by Servicer; Servicer Not to Resign.................................30
Section 5.22 Periodic Filings with the Securities and Exchange Commission; Additional Information........31
Article VI. APPLICATION OF FUNDS..............................................................................32
Section 6.01 Deposits to the Distribution Account........................................................32
Section 6.02 Collection of Money.........................................................................32
Section 6.03 Application of Principal and Interest.......................................................32
Section 6.04 Information Concerning the Mortgage Loans...................................................32
Section 6.05 Compensating Interest.......................................................................32
Section 6.06 Effect of Payments by the Note Insurer; Subrogation.........................................33
Article VII. SERVICER DEFAULT.................................................................................33
Section 7.01 Servicer Events of Default..................................................................33
Section 7.02 Indenture Trustee to Act; Appointment of Successor..........................................36
Section 7.03 Waiver of Defaults..........................................................................38
Section 7.04 Rights of the Note Insurer to Exercise Rights of the Noteholders............................39
Section 7.05 Indenture Trustee To Act Solely with Consent of the Note Insurer............................39
Section 7.06 Mortgage Loans, Trust Estate and Accounts Held for Benefit of the Note Insurer..............40
Section 7.07 Note Insurer Default........................................................................40
Article VIII. TERMINATION.....................................................................................40
Section 8.01 Termination.................................................................................40
Section 8.02 Additional Termination Requirements.........................................................41
Section 8.03 Accounting Upon Termination of Servicer.....................................................42
Section 8.04 Retention and Termination of the Servicer...................................................42
Article IX. THE COLLATERAL AGENT..............................................................................42
Section 9.01 Duties of the Collateral Agent..............................................................42
Section 9.02 Certain Matters Affecting the Collateral Agent..............................................44
Section 9.03 Collateral Agent Not Liable for Notes or Mortgage Loans.....................................45
Section 9.04 Collateral Agent May Own Notes..............................................................45
Section 9.05 Collateral Agent's Fees and Expenses; Indemnity.............................................45
Section 9.06 Eligibility Requirements for Collateral Agent...............................................46
Section 9.07 Resignation and Removal of the Collateral Agent.............................................46
Section 9.08 Successor Collateral Agent..................................................................47
Section 9.09 Merger or Consolidation of Collateral Agent.................................................47
Article X. MISCELLANEOUS PROVISIONS...........................................................................48
Section 10.01 Limitation on Liability.....................................................................48
Section 10.02 Acts of Noteholders.........................................................................48
Section 10.03 Amendment...................................................................................48
Section 10.04 Recordation of Agreement....................................................................49
Section 10.05 Duration of Agreement.......................................................................49
Section 10.06 Notices.....................................................................................49
Section 10.07 Severability of Provisions..................................................................50
Section 10.08 No Partnership..............................................................................50
Section 10.09 Counterparts................................................................................50
Section 10.10 Successors and Assigns......................................................................50
Section 10.11 Headings....................................................................................51
Section 10.12 The Note Insurer Default....................................................................51
Section 10.13 Third Party Beneficiary.....................................................................51
Section 10.14 Intent of the Parties.......................................................................51
Section 10.15 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL................................51
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
EXHIBIT H Required Information
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
SCHEDULE I
----------
MORTGAGE LOAN SCHEDULE
[See Schedule I to Unaffiliated Seller's Agreement]
APPENDIX I
----------
DEFINED TERMS
[See Appendix I to Indenture]
