EXHIBIT 4.3
EXECUTION COPY
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SALE AND SERVICING AGREEMENT
dated as of September 1, 2001
by and among
XXXXXX XXXXXXX ABS CAPITAL I INC.,
as Depositor,
ABFS MORTGAGE LOAN TRUST 2001-3,
as Issuer,
AMERICAN BUSINESS CREDIT, INC.,
as Servicer,
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee and Collateral Agent
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.............................................................................................1
Section 1.01. Certain Defined Terms............................................................................1
Section 1.02. Provisions of General Application................................................................1
Section 1.03. Business Day Certificate.........................................................................2
ARTICLE II SALE AND CONVEYANCE OF THE MORTGAGE LOANS..............................................................2
Section 2.01. Purchase and Sale of Mortgage Loans..............................................................2
Section 2.02. [Reserved].......................................................................................3
Section 2.03. Purchase Price...................................................................................3
Section 2.04. Possession of Mortgage Files; Access to Mortgage Files...........................................3
Section 2.05. Delivery of Mortgage Loan Documents..............................................................4
Section 2.06. Acceptance by Indenture Trustee of the Trust Estate; Certain
Substitutions; Certification by Indenture Trustee............................................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 and the Unaffiliated Seller.....................................11
Section 3.02. Representations, Warranties and Covenants of the Depositor......................................13
Section 3.03. Representations, Warranties and Covenants of the Collateral Agent...............................15
Section 3.04. Representations, Warranties and Covenants of the Indenture Trustee..............................15
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..........................................................22
Section 5.06. Realization Upon Defaulted Mortgage Loans.......................................................23
Section 5.07. Indenture Trustee to Cooperate..................................................................24
Section 5.08. Servicing Compensation; Payment of Certain Expenses by Servicer.................................24
Section 5.09. Annual Statement as to Compliance...............................................................25
Section 5.10. Annual Independent Public Accountants' Servicing Report.........................................25
Section 5.11. Access to Certain Documentation.................................................................25
Section 5.12. Maintenance of Fidelity Bond....................................................................26
(i)
Section 5.13. The Subservicers................................................................................26
Section 5.14. Reports to the Indenture Trustee; Collection Account Statements.................................26
Section 5.15. Optional Purchase of Defaulted Mortgage Loans...................................................26
Section 5.16. Reports to be Provided by the Servicer..........................................................27
Section 5.17. Adjustment of Servicing Compensation in Respect of Prepaid Mortgage Loans.......................29
Section 5.18. Periodic Advances; Special Advance..............................................................29
Section 5.19. Indemnification; Third Party Claims.............................................................30
Section 5.20. Maintenance of Corporate Existence and Licenses; Merger or Consolidation of the Servicer........31
Section 5.21. Assignment of Agreement by Servicer; Servicer Not to Resign.....................................31
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.......................................................33
Section 6.05. Compensating Interest...........................................................................33
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..............................................................................37
Section 7.04. Rights of the Note Insurer to Exercise Rights of the Noteholders................................38
Section 7.05. Indenture Trustee To Act Solely with Consent of the Note Insurer................................38
Section 7.06. Mortgage Loans, Trust Estate and Accounts Held for Benefit of the Note Insurer..................39
Section 7.07. Note Insurer Default............................................................................39
ARTICLE VIII TERMINATION.........................................................................................39
Section 8.01. Termination.....................................................................................39
Section 8.02. Additional Termination Requirements.............................................................40
Section 8.03. Accounting Upon Termination of Servicer.........................................................41
ARTICLE IX THE COLLATERAL AGENT..................................................................................41
Section 9.01. Duties of the Collateral Agent..................................................................41
Section 9.02. Certain Matters Affecting the Collateral Agent..................................................43
Section 9.03. Collateral Agent Not Liable for Notes or Mortgage Loans.........................................44
Section 9.04. Collateral Agent May Own Notes..................................................................44
Section 9.05. Collateral Agent's Fees and Expenses; Indemnity.................................................44
Section 9.06. Eligibility Requirements for Collateral Agent...................................................44
Section 9.07. Resignation and Removal of the Collateral Agent.................................................45
(ii)
Section 9.08. Successor Collateral Agent......................................................................45
Section 9.09. Merger or Consolidation of Collateral Agent.....................................................46
ARTICLE X MISCELLANEOUS PROVISIONS...............................................................................46
Section 10.01. Limitation on Liability........................................................................46
Section 10.02. Acts of Noteholders............................................................................47
Section 10.03. Amendment......................................................................................47
Section 10.04. Recordation of Agreement.......................................................................48
Section 10.05. Duration of Agreement..........................................................................48
Section 10.06. Notices........................................................................................48
Section 10.07. Severability of Provisions.....................................................................49
Section 10.08. No Partnership.................................................................................49
Section 10.09. Counterparts...................................................................................49
Section 10.10. Successors and Assigns.........................................................................49
Section 10.11. Headings.......................................................................................49
Section 10.12. The Note Insurer Default.......................................................................49
Section 10.13. Third Party Beneficiary........................................................................49
Section 10.14. Intent of the Parties..........................................................................50
Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL...................................50
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 [Reserved]
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
(iii)
SALE AND SERVICING AGREEMENT, dated as of September 1, 2001
(this "Agreement"), by and among XXXXXX XXXXXXX ABS CAPITAL I INC., a Delaware
corporation, as depositor (the "Depositor"), ABFS MORTGAGE LOAN TRUST 2001-3, a
Delaware statutory business trust, as issuer (the "Trust"), AMERICAN BUSINESS
CREDIT, INC., a Pennsylvania corporation, as servicer (the "Servicer"), and THE
CHASE MANHATTAN BANK, a New York banking corporation, as indenture trustee and
collateral agent (respectively, the "Indenture Trustee" and the "Collateral
Agent").
W I T N E S S E T H
WHEREAS, the Depositor desires to sell to the Trust, and the
Trust desires to purchase from the Depositor, the mortgage loans (the "Mortgage
Loans") listed on Schedule I to this Agreement;
WHEREAS, immediately after such purchase, the Trust will
pledge such Mortgage Loans to the Indenture Trustee pursuant to the terms of an
Indenture, dated as of September 1, 2001 (the "Indenture"), between the Trust
and the Indenture Trustee, and issue the ABFS Mortgage Loan Trust 2001-3,
Mortgage Backed Notes (the "Notes");
WHEREAS, the Servicer has agreed to service the Mortgage
Loans, which constitute the principal assets of the Trust;
WHEREAS, the Collateral Agent will hold, on behalf of the
Indenture Trustee, the Mortgage Loans and certain other assets pledged to the
Indenture Trustee pursuant to the Indenture; and
WHEREAS, MBIA Insurance Corporation (the "Note Insurer") is
intended to be a third-party beneficiary of this Agreement, and is hereby
recognized by the parties hereto as a third-party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Trust, the Depositor, the Servicer, the
Collateral Agent and the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. Capitalized terms used
herein but not defined herein shall have the meanings ascribed to such terms in
Appendix I attached hereto.
Section 1.02. Provisions of General Application. (a) All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
(b) The terms defined herein and in Appendix I to the
Indenture include the plural as well as the singular.
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(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
Notes provided for herein shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All calculations of interest with respect to
any Mortgage Loan provided for herein shall be made in accordance with the terms
of the related Mortgage Note and Mortgage or, if such documents do not specify
the basis upon which interest accrues thereon, on the basis of a 360-day year
consisting of twelve 30-day months, to the extent permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the
date such payment is actually received by the Servicer; provided, however, that,
for purposes of calculating payments 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 year 2001) and thereafter, within fifteen
(15) days prior to the end of each calendar year while this Agreement remains in
effect (with respect to the succeeding calendar years), the Servicer shall
provide to the Indenture Trustee and the Collateral Agent a certificate of a
Servicing Officer specifying the days on which banking institutions in the
Commonwealth of Pennsylvania are authorized or obligated by law, executive order
or governmental decree to be closed.
ARTICLE II
SALE AND CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01. Purchase and Sale of 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 Mortgage Loans,
including the outstanding principal as of, and interest due and accruing after
the Cut-off Date on such 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 Indenture Trustee, on
behalf of 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 certain 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.
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Section 2.02. [Reserved]
Section 2.03. Purchase Price. On the Closing Date, as full
consideration for the Depositor's sale of the 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) 99.72317% and
101.21344% of the Original Aggregate 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 Aggregate Principal Balance of the Class A-1 Notes and
the Class A-2 Notes at the rate of 5.63% per annum and 6.17% per annum,
respectively, from (and including) September 1, 2001 to (but not including) the
Closing Date, 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 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 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 Mortgage
Loan to the Collateral Agent, on behalf of the Indenture Trustee.
(c) The Collateral Agent, on behalf of the Indenture Trustee,
will be the custodian, on behalf of the Indenture Trustee, with the consent of
the Note Insurer, 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) with the consent
of the Note Insurer appoint a successor Collateral Agent to hold the Indenture
Trustee's Mortgage Files as set forth in Section 9.08 hereof.
(d) The Collateral Agent shall afford the Depositor, the
Trust, the Note Insurer and the Servicer reasonable access to all records and
documentation regarding the Mortgage Loans relating to this Agreement, such
access being afforded, upon reasonable prior written request and during normal
business hours at the offices of the Collateral Agent at customary charges.
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Section 2.05. Delivery of Mortgage Loan Documents. (a) In
connection with the transfer and assignment of the Mortgage Loans, the Depositor
shall deliver or cause to be delivered to the Collateral Agent, on behalf of the
Indenture Trustee, the following documents or instruments with respect to each
Mortgage Loan so transferred or assigned:
(i) the original Mortgage Note, endorsed without recourse in
blank by the related Originator, including all intervening endorsements
showing a complete chain of endorsement;
(ii) the related Mortgage with evidence of recording indicated
thereon or a copy thereof certified by the applicable recording office;
(iii) the recorded Assignment of Mortgage, 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);
(iv) an Assignment of Mortgage 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 any
original recorded Assignment of Mortgage thereof pursuant to clause (iii) above
cannot be delivered by the Depositor to the Collateral Agent on behalf of the
Indenture Trustee prior to or concurrently with the execution and delivery of
this Agreement, due to a delay in connection with recording, the Depositor 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 original recorded Assignment of
Mortgage, deliver to the Collateral Agent on behalf of the Indenture Trustee a
copy of the Assignment of Mortgage certified by the related Originator.
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Indenture Trustee shall promptly upon receipt thereof, with
respect to each Mortgage Note described in clause (i) above and each Assignment
of Mortgage described in clause (iv) above, endorse such Mortgage Note and
Assignment of Mortgage as follows: "The Chase Manhattan Bank, as the Indenture
Trustee under the Indenture dated as of September 1, 2001, ABFS Mortgage Loan
Trust 2001-3."
As promptly as practicable, but in any event within thirty
(30) days from the Closing Date, the related Originator shall cause to be
recorded, at the related Originator's expense, in the appropriate public office
for real property records, the Assignments of Mortgages to the Indenture
Trustee.
All original documents relating to the Mortgage Loans which
are not delivered to the Collateral Agent on behalf of the Indenture Trustee, as
permitted by Section 2.05(d) of the Unaffiliated Seller's Agreement and this
Section 2.05(a), are and shall be held by the related Originator, the
Unaffiliated Seller or the Servicer in trust for the benefit of the Indenture
Trustee on behalf of the Noteholders and the Note Insurer.
(b) Within thirty (30) days following delivery of the Mortgage
Files to the Collateral Agent on behalf of the Indenture Trustee, the Collateral
Agent will review each Mortgage File to ascertain that all required documents
set forth in Section 2.05(a) (other than clause (v) thereof) have been executed
and received, and that such documents relate to the Mortgage Loans identified on
the Mortgage Loan Schedule, and in so doing the Collateral Agent may rely on the
purported due execution and genuineness of any signature thereon. If within such
30-day period (or, with respect to any Qualified Substitute Mortgage Loan,
within thirty (30) days after the assignment thereof) the Collateral Agent on
behalf of the Indenture Trustee finds any document constituting a part of a
Mortgage File not to have been executed or received or to be unrelated to the
Mortgage Loans identified in the Mortgage Loan Schedule, the Collateral Agent
shall promptly notify the Servicer, the Indenture Trustee and the Note Insurer,
and the Servicer shall have a period of sixty (60) days after such notice within
which to correct or cure any such defect. Each original recorded Assignment of
Mortgage shall be delivered to the Collateral Agent, behalf of the Indenture
Trustee within ten (10) days following the date on which it is returned to the
Servicer by the office with which such Assignment of Mortgage was filed for
recording and within ten (10) days following receipt by the Collateral Agent or
the Collateral Agent shall review such Assignment of Mortgage to confirm the
information specified above with respect to the documents constituting the
Mortgage File. Upon receipt by the Collateral Agent on behalf of the Indenture
Trustee of the recorded assignment such recorded assignment shall become part of
the Mortgage File. The Collateral Agent shall notify the Servicer and the
Indenture Trustee 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 Mortgage as herein provided the Collateral Agent on behalf of the
Indenture Trustee 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 on behalf of the Indenture Trustee as its attorney-in-fact with
full power and authority acting in its stead for the purpose of such
preparation, execution and filing.
(c) Without diminution of the requirements of Sections 2.04(c)
and this Section 2.05, all original documents relating to the Mortgage Loans
that are not delivered to the Collateral Agent on behalf of the Indenture
Trustee, are and shall be held by the Servicer in trust for the benefit of the
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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 a Mortgage File, such document shall be delivered
promptly to the Collateral Agent on behalf of the Indenture Trustee pursuant to
the Unaffiliated Seller's Agreement. In acting as custodian of any such original
document, the Servicer agrees further that it does not and will not have or
assert any beneficial ownership interest in the Mortgage Loans or the Mortgage
Files. Promptly upon the Depositor's and the Trust's acquisition thereof and the
Servicer's receipt thereof, the Servicer, and the Unaffiliated Seller, if
applicable, on behalf of the Trust shall xxxx conspicuously each original
document not delivered to the Collateral Agent on behalf of the Indenture
Trustee, and note in its master data processing records evidencing each Mortgage
Loan with a legend or data tag, acceptable to the Indenture Trustee and the Note
Insurer, evidencing that the Trust has purchased the Mortgage Loans and all
right and title thereto and interest therein pursuant to the Unaffiliated
Seller's Agreement 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.
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Section 2.06. Acceptance by Indenture Trustee of the Trust
Estate; Certain Substitutions; Certification by Indenture Trustee. (a) The
Indenture Trustee, agrees to execute and deliver to the Depositor, the Note
Insurer, the Servicer and the Unaffiliated Seller on or prior to the Closing
Date an acknowledgment of receipt of the Note Insurance Policy, in a form
attached as Exhibit B hereto, and, on or prior to the Closing Date, with respect
to each Mortgage Loan transferred on such date, the original Mortgage Note (with
any exceptions noted), in the form attached as Exhibit C hereto and declares
that it will hold or cause the Collateral Agent on its behalf to 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 it
or the Collateral Agent on its behalf in trust upon and subject to the
conditions set forth herein for the benefit of the Noteholders and the Note
Insurer. The Collateral Agent agrees, for the benefit of the Noteholders and the
Note Insurer, to review (or cause to be reviewed) each Indenture Trustee's
Mortgage File within thirty (30) days after the Closing Date (or, with respect
to any Qualified Substitute Mortgage Loans, within thirty (30) days after the
receipt by the Collateral Agent, on behalf of the Indenture Trustee, thereof),
and to deliver to the Unaffiliated Seller, the Servicer, the Depositor and the
Note Insurer a certification in the form attached hereto as Exhibit D to the
effect that, 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 (other than the items listed in clause (a)(v) thereof) are in its
possession, (ii) each such document has been reviewed by it and has not been
mutilated, damaged, torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical alteration if initialed by
the Mortgagor), appears regular on its face and relates to such Mortgage Loan,
and (iii) based on its examination and only as to the foregoing documents, the
information set forth on the Mortgage Loan Schedule as to the information set
forth in (i), (ii), (v) and (vi) of the definition of "Mortgage Loan Schedule"
set forth herein accurately reflects the information set forth in the Indenture
Trustee's Mortgage File delivered on such date. The Collateral Agent on behalf
of the Indenture Trustee shall be under no duty or obligation to inspect, review
or examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the represented
purpose or that they are other than what they purport to be on their face.
(b) Within ninety (90) days of the Closing Date, with respect
to the Mortgage Loans transferred on such date; the Collateral Agent on behalf
of the Indenture Trustee shall deliver (or cause to be delivered) to the
Servicer, the Unaffiliated Seller, the Depositor, the Rating Agencies and the
Note Insurer a final certification in the form attached hereto as Exhibit E to
the effect that, 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 (other than the items listed in clause (a)(v) thereof) are in its
possession, (ii) each such document has been reviewed by it and has not been
mutilated, damaged, torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical alteration if initialed by
the Mortgagor), appears regular on its face and relates to such Mortgage Loan,
and (iii) based on its examination and only as to the foregoing documents, the
information set forth in (i), (ii), (v) and (vi) of the definition of "Mortgage
Loan Schedule" set forth herein accurately reflects the information set forth in
the Indenture Trustee's Mortgage File delivered on such date.
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(c) If the Collateral Agent on behalf of the Indenture Trustee
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
Indenture Trustee, the Unaffiliated Seller and the Note Insurer. In performing
any such review, the Collateral Agent on behalf of the Indenture Trustee 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 Mortgage Files is limited solely to
confirming that the documents listed in Section 2.05 (other than those listed in
clause (v) thereof) have been executed and received and relate to the Mortgage
Files identified in the related Mortgage Loan Schedule. The Collateral Agent on
behalf of the Indenture Trustee shall have no responsibility for determining
whether any document is valid and binding, whether the text of any assignment or
endorsement is in proper or recordable form, whether any document has been
recorded in accordance with the requirements of any applicable jurisdiction, or
whether a blanket assignment is permitted in any applicable jurisdiction.
Pursuant to 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 a Mortgage File of which it
is so notified by the Collateral Agent or the Indenture Trustee. If, however,
within sixty (60) days after the Collateral Agent or Indenture Trustee'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 value of, or the interest of the Noteholders in the related Mortgage Loan or
the interests of the Note Insurer, the Unaffiliated Seller and the Originators
will be obligated, pursuant to 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 the Unaffiliated
Seller's Agreement or (ii) purchase such Mortgage Loan at a purchase price equal
to the Principal Balance of such Mortgage Loan as of the date of purchase, plus
all accrued and unpaid interest on such Principal Balance computed at the
Mortgage Interest Rate, net of the Servicing Fee if the Unaffiliated Seller or
an Originator, as applicable, is the Servicer, plus the amount of any
unreimbursed Servicing Advances made by the Servicer with respect to such
Mortgage Loan, which purchase price shall be deposited in the Collection Account
on the next succeeding Servicer Remittance Date, after deducting therefrom any
amounts received in respect of such repurchased Mortgage Loan or Loans and being
held in the Collection Account for future distribution to the extent such
amounts have not yet been applied to principal or interest on such Mortgage Loan
(the "Loan Repurchase Price"). For purposes of calculating the Available Funds,
any Loan Repurchase Price or Substitution Adjustment that is paid shall be
deemed deposited in the Distribution Account in the Due Period preceding such
Servicer Remittance Date.
(d) Upon receipt by the Indenture Trustee of a certification
of a Servicing Officer of such substitution or purchase and, in the case of a
substitution, upon receipt of the related Indenture Trustee's Mortgage File, and
the deposit of the amounts described above in the Collection Account (which
certification shall be in the form of Exhibit F hereto), the Indenture Trustee
shall release or cause the Collateral Agent to release to the Servicer for
release to the Unaffiliated Seller the related Indenture Trustee's Mortgage File
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and 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 Indenture Trustee shall notify the
Note Insurer if the Unaffiliated Seller fails to repurchase or substitute for a
Mortgage Loan in accordance with the foregoing or Section 2.05(c).
Section 2.07. Grant of Security Interest. (a) It is intended
that the conveyance of the Mortgage Loans and other property by the Depositor to
the Trust as provided in this Article II be, and be construed as, a sale of the
Mortgage Loans and such other property by the Depositor to the Trust. It is,
further, not intended that such conveyance be deemed a pledge of the Mortgage
Loans or such other property by the Depositor to the Trust to secure a debt or
other obligation of the Depositor. However, in the event that the Mortgage Loans
or any of such other property are held to be property of the Depositor, or if
for any reason this Agreement is held or deemed to create a security interest in
the Mortgage Loans or any of such other property, then it is intended that: (i)
this Agreement shall also be deemed to be a security agreement within the
meaning of the Uniform Commercial Code; (ii) the conveyance provided for in this
Article II shall be deemed to be a grant by the Depositor to the Trust of a
security interest in all of the Depositor's right, title and interest in and to
the Mortgage Loans and such other property and all amounts payable to the
holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including, without limitation,
all amounts from time to time held or invested in the Distribution Account,
whether in the form of cash, instruments, securities or other property; (iii)
the possession by the Collateral Agent, on behalf of the Indenture Trustee, of
the Mortgage Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to the Uniform Commercial Code; and (iv) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from financial intermediaries, bailees or agents, as applicable,
of the Indenture Trustee for the purpose of perfecting such security interest
under applicable law. The Depositor, the Servicer, on behalf of the Trust, the
Collateral Agent and the Indenture Trustee, shall, to the extent consistent with
this Agreement, take such actions as may be reasonably necessary to ensure that,
if this Agreement were deemed to create a security interest in the Mortgage
Loans or any of such other property, such security interest would be deemed to
be a perfected security interest of first priority under applicable law and will
be maintained as such throughout the term of this Agreement.
(b) The 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. The
Collateral Agent is authorized to act, pursuant to the terms of this Agreement,
as agent and bailee of the Indenture Trustee for the benefit of the Noteholders
and Note Insurer and shall be authorized to act at the direction of such
parties. 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.
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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 Note Insurer (absent a Note Insurer Default), 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 Note Insurer (absent a
Note Insurer Default), 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
right to exercise the remedies created by the Unaffiliated Seller's Agreement
for breaches of the representations, warranties, agreements and covenants of the
Unaffiliated Seller or the Originators contained in 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.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Servicer and the
Unaffiliated Seller. The Servicer and the Unaffiliated Seller hereby represent
and warrant to the Indenture Trustee, the Depositor, the Collateral Agent, the
Trust, the Note Insurer and the Noteholders as of the Closing Date and during
the term of this Agreement that:
(a) Each of the Unaffiliated Seller, the Servicer and the
Subservicers is a corporation duly organized, validly existing and in good
standing under the laws of their respective states of incorporation and has the
corporate power to own its assets and to transact the business in which it is
currently engaged. Each of the Unaffiliated Seller, 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
Unaffiliated Seller, the Servicer or the Subservicers or the performance of
their respective obligations hereunder;
(b) The Unaffiliated Seller and the Servicer each 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 Unaffiliated Seller and the
Servicer, enforceable in accordance with its terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency, reorganization, moratorium
or 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) Neither the Unaffiliated Seller nor the Servicer is
required to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with, any
governmental authority, bureau or agency which consent already has not been
obtained in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except such as have been obtained prior to the
Closing Date;
(d) The execution, delivery and performance of this Agreement
by the Unaffiliated Seller and the Servicer will not violate any provision of
any existing law or regulation or any order or decree of any court or the
Certificate of Incorporation or Bylaws of the Unaffiliated Seller or the
Servicer, respectively, or constitute a breach of any mortgage, indenture,
contract or other agreement to which the Unaffiliated Seller or the Servicer,
respectively, is a party or by which it may be bound;
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(e) There is no action, suit, proceeding or investigation
pending or threatened against the Servicer, the Unaffiliated Seller or the
Subservicers which, either in any one instance or in the aggregate, is, likely
to result in any material adverse change in the business, operations, financial
condition, properties, or assets of the Servicer, the Unaffiliated Seller 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 Unaffiliated
Seller or the Servicer contemplated herein or therein, or which would be likely
to impair materially the ability of the Unaffiliated Seller or the Servicer to
perform its obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other
document furnished or to be furnished by the Servicer, the Unaffiliated Seller
or the Subservicer pursuant to this Agreement or the Insurance 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 Unaffiliated Seller or the Servicer or
omits to state a fact necessary to make the statements provided by or on behalf
of the Unaffiliated Seller or the Servicer contained herein or therein not
misleading:
(g) Neither the Unaffiliated Seller nor the Servicer believes,
nor does either have any reason or cause to believe, that it cannot perform each
and every covenant contained in this Agreement;
(h) The transfer, assignment, and conveyance of the Mortgage
Loans by the Unaffiliated Seller pursuant to this Agreement is not subject to
the bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction;
(i) The Unaffiliated Seller is solvent and will not as a
result of this Agreement and the undertakings of the Unaffiliated Seller
hereunder be rendered insolvent;
(j) None of the Unaffiliated Seller, 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; and
(k) Immediately prior to the transfer and assignment by the
Depositor to the Trust, the Depositor had good title to, and was the sole owner
of each Mortgage Loan, free of any interest of any other Person, and the
Depositor has transferred all right, title and interest in each Mortgage Loan to
the Trust. The transfer of the Mortgage Note and the Mortgage as and in the
manner contemplated by this Agreement is sufficient either (i) fully to transfer
to the Trust, all right, title, and interest of the Depositor thereto as note
holder and mortgagee or (ii) to grant to the Trust, the security interest
referred to in Section 2.07 hereof. The Mortgage has been duly assigned and the
Mortgage Note has been duly endorsed. The Assignment of Mortgage delivered to
the Collateral Agent on behalf of the Indenture Trustee pursuant to Section
2.05(a)(iv) is in recordable form and is acceptable for recording under the laws
of the applicable jurisdiction. The endorsement of the Mortgage Note, the
delivery to the Collateral Agent on behalf of the Indenture Trustee of the
endorsed Mortgage Note, and such Assignment of Mortgage, and the delivery of
such Assignment of Mortgage for recording to, and the due recording of such
Assignment of Mortgage in, the appropriate public recording office in the
jurisdiction in which the Mortgaged Property is located are sufficient to permit
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the Indenture Trustee to avail itself of all protection available under
applicable law against the claims of any present or future creditors of the
Depositor, and are sufficient to prevent any other sale, transfer, assignment,
pledge, or hypothecation of the Mortgage Note and Mortgage by the Depositor from
being enforceable.
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 Mortgage Files to the Collateral Agent on behalf of
the Indenture Trustee or to a custodian, as the case may be, and inure to the
benefit of the Indenture Trustee and the Note Insurer.
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 Note Insurer and the
Servicer that as of the date of this Agreement or as of such date specifically
provided herein:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to
convey the Mortgage Loans and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, all requisite corporate action having
been taken, and, assuming the due authorization, execution and delivery hereof
by the other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or court
is required for the execution, delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except as have been made on or prior to the
Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
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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.
(h) Immediately prior to the transfer and assignment by the
Depositor to the Trust, the Depositor had good title to, and was the sole owner
of each Mortgage Loan, free of any interest of any other Person, and the
Depositor has transferred all right, title and interest in each Mortgage Loan to
the Trust. The transfer of the Mortgage Note and the Mortgage as and in the
manner contemplated by this Agreement is sufficient either (i) fully to transfer
to the Trust, all right, title, and interest of the Depositor thereto as note
holder and mortgagee or (ii) to grant to the Trust, the security interest
referred to in Section 2.07 hereof. The Mortgage has been duly assigned and the
Mortgage Note has been duly endorsed. The Assignment of Mortgage delivered to
the Collateral Agent on behalf of the Indenture Trustee pursuant to Section
2.05(a)(iv) is in recordable form and is acceptable for recording under the laws
of the applicable jurisdiction. The endorsement of the Mortgage Note, the
delivery to the Collateral Agent on behalf of the Indenture Trustee of the
endorsed Mortgage Note, and such Assignment of Mortgage, and the delivery of
such Assignment of Mortgage for recording to, and the due recording of such
Assignment of Mortgage in, the appropriate public recording office in the
jurisdiction in which the Mortgaged Property is located are sufficient to permit
the Indenture Trustee to avail itself of all protection available under
applicable law against the claims of any present or future creditors of the
Depositor, and are sufficient to prevent any other sale, transfer, assignment,
pledge, or hypothecation of the Mortgage Note and Mortgage by the Depositor from
being enforceable.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 3.02 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 and the Note Insurer.
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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 Note Insurer 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 banking corporation duly
organized, validly existing and in good standing under the laws of the State of
New York;
(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(b) and 3.03(c) 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 and the
Note Insurer.
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 Note Insurer 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);
15
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 and
shall inure to the benefit of the Note Insurer.
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 with respect to the Mortgage Loans, as of the 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 Note 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. Pursuant to the Unaffiliated Seller's
Agreement, with respect to any representation or warranty contained in Sections
3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement that is made to the
best of the Unaffiliated Seller's knowledge, the Unaffiliated Seller shall be
deemed to have knowledge of all facts and circumstances in existence as of such
date and, if it is discovered by the Servicer, any Subservicer, the Indenture
Trustee, the Note Insurer or any Noteholder that the substance of such
representation and warranty was inaccurate as of the Closing Date and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan or the interests of the Trust, the Indenture Trustee or the Note Insurer
with respect thereto, then notwithstanding the Unaffiliated Seller's lack of
knowledge with respect to the inaccuracy at the time the representation or
warranty was made, such inaccuracy shall be deemed a breach of the applicable
representation or warranty. Upon discovery by the Unaffiliated Seller, the
Servicer, any Subservicer, the Indenture Trustee or the Note Insurer of a breach
of any of such representations and warranties which materially and adversely
affects the value of the Mortgage Loans or the interest of the Trust, the
Indenture Trustee, the Noteholders or the Note Insurer, or which materially and
adversely affects the interests of the Trust, the Indenture Trustee, 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 best knowledge), the party discovering such breach shall
promptly (and in any event within five (5) Business Days of the discovery) give
written notice 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, pursuant to the Unaffiliated Seller's Agreement, the Servicer shall,
16
or shall cause the Unaffiliated Seller or an Originator to (a) promptly cure
such breach in all material respects, or (b) purchase such Mortgage Loan on the
next succeeding Servicer Remittance Date, by depositing an amount equal to the
Loan Repurchase Price into the Collection Account, 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
accordance with this Section 4.02; provided, that, such substitution is effected
not later than the date which is two years after the Startup Day or at such
later date, if the Indenture Trustee and the Note Insurer receive an Opinion of
Counsel to the effect set forth below in this Section. In addition, pursuant to
the Unaffiliated Seller's Agreement, the Unaffiliated Seller and the related
Originator shall be obligated to indemnify the Indenture Trustee, the
Noteholders and the Note Insurer for any third party claims arising out of a
breach by the Unaffiliated Seller of representations or warranties regarding the
Mortgage Loans. Pursuant to the Unaffiliated Seller's Agreement any such
substitution shall be accompanied by payment by the Unaffiliated Seller of the
Substitution Adjustment, if any, to be deposited in the Collection Account.
(b) 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 Collateral Agent on behalf of the
Indenture Trustee a certification in the form attached hereto as Exhibit F,
executed by a Servicing Officer and shall cause the Unaffiliated Seller or an
Originator, as applicable, to deliver the documents described in Sections
2.05(a)(i)-(vi) for such Qualified Substitute Mortgage Loan or Loans to the
Collateral Agent on behalf of the Indenture Trustee.
(c) The Servicer shall deposit in the Collection Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution. Monthly Payments received with
respect to a 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 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.
(d) With respect to any Mortgage Loan that has been converted
to an REO Mortgage Loan, all references in this Section 4.02 or Section 2.06 to
"Mortgage Loan" shall be deemed to also refer to the REO Mortgage Loan. With
respect to any Mortgage Loan that the Servicer, Originator or Unaffiliated
Seller is required to repurchase that is or becomes a Liquidated Mortgage Loan,
in lieu of repurchasing such Mortgage Loan, the Servicer, Originator or
Unaffiliated Seller shall deposit into the related Distribution Account,
pursuant to Section 8.01 of the Indenture, an amount equal to the amount of the
Liquidated Loan Loss, if any, incurred in connection with the liquidation of
such Mortgage Loan within the same time period in which the Servicer, Originator
or Unaffiliated Seller would have otherwise been required to repurchase such
Mortgage Loan.
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(e) It is understood and agreed that the obligations of the
Unaffiliated Seller and the related Originator set forth in Sections 2.06 and
3.05 of the Unaffiliated Seller's Agreement to and the Servicer's obligation to
cause the Unaffiliated Seller and the Originator to cure, purchase or substitute
for a defective Mortgage Loan, or to indemnify as described in clause (a) above,
constitute the sole remedies of the Indenture Trustee, 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. The Indenture Trustee shall give
prompt written notice to the Note Insurer and the Rating Agencies of any
repurchase or substitution made pursuant to this Section 3.03 or Section
2.06(b).
(f) Upon discovery by the Servicer, the Indenture Trustee, the
Note Insurer or any Noteholder that any Mortgage Loan does not constitute a
qualified Mortgage Loan, the party discovering such fact shall promptly (and in
any event within five (5) Business Days of the discovery) give written notice
thereof to the other parties. In connection therewith, pursuant to the
Unaffiliated Seller's Agreement, the Unaffiliated Seller shall be required to
repurchase or substitute a Qualified Substitute Mortgage Loan for the affected
Mortgage Loan within sixty (60) days of the earlier of such discovery by any of
the foregoing parties, or the Indenture Trustee's or the Unaffiliated Seller's
receipt of notice, in the same manner as it would a Mortgage Loan for a breach
of representation or warranty contained in Sections 3.01, 3.02 or 3.03 of the
Unaffiliated Seller's Agreement. The Indenture Trustee shall reconvey to the
Unaffiliated Seller the Mortgage Loan to be released pursuant hereto in the same
manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty contained in Sections
3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement.
(g) Pursuant to 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. (a) 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 in order to maximize collections on the
Mortgage Loans, 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
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Mortgaged Properties and the servicing and administration thereof in order to
maximize collections on the Mortgage Loans subject to the limitations set forth
in this Agreement. 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(a) together with the
original copy of any written agreement or other document executed in connection
therewith, all of which written agreements or documents shall, for all purposes,
be considered a part of the related Indenture Trustee's Mortgage File to the
same extent as all other documents and instruments constituting a part thereof.
Notwithstanding anything in this Agreement to the contrary, the Servicer shall
not permit any modification with respect to any Mortgage Loan that would change
the Mortgage Interest Rate, reduce or increase the principal balance, change the
lien priority, the original LTV or change the final maturity date on or of such
Mortgage Loan unless (i) the Mortgagor is in default with respect to the
Mortgage Loan or such default is, in the judgment of the Servicer, imminent and
(ii) the Note Insurer consents to such modifications in writing such consent not
to be unreasonably withheld, conditioned or delayed; 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, so long as such
final maturity date (as so extended) is not later than the later of (i) the
Class A-1 Final Scheduled Maturity Date and (ii) the Class A-2 Final Scheduled
Maturity Date.
(b) 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.
(c) The Servicer agrees to give notice as required under
Section 3.07 and Section 3.13 of the Indenture.
Section 5.02. Collection of Certain Mortgage Loan Payments;
Collection Account. (a) The Servicer shall make 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 the Accepted Servicing Practices. Consistent with the
foregoing, the Servicer may in its sole 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 or cause to be deposited in the
Collection Account any amounts representing Monthly Payments on the Mortgage
Loans due and accrued 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 and accrued on the Mortgage Loans on or
before the Cut-Off Date):
(i) Payments of interest on the Mortgage Loans;
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(ii) Payments of principal of the Mortgage Loans;
(iii) The Loan Repurchase Price of Mortgage Loans repurchased
pursuant to Sections 2.06, 4.02, 5.05, 5.15 or otherwise hereunder;
(iv) The Substitution Adjustment received in connection with
Mortgage Loans for which Qualified Substitute Mortgage Loans are
received pursuant to Sections 2.06 and 4.02;
(v) All Liquidation Proceeds; and
(vi) All Insurance Proceeds (including, for this purpose, any
amounts required to be deposited by the Servicer pursuant to the last
sentence of Section 5.04).
It is understood that the Servicer need not deposit amounts
representing fees, prepayment premiums, late payment charges or extension or
other administrative charges payable by Mortgagors, or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items.
(d) The Indenture Trustee shall invest any funds in the
Collection Account in Permitted Investments as directed in writing by the
Servicer, which shall mature not later than the Business Day next preceding the
Servicer Remittance Date next following the date of such investment (except that
any investment held by the Indenture Trustee may mature on such Servicer
Remittance 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
Distribution Date. The Servicer shall deposit from its own funds the amount of
any loss, to the extent not offset by investment income or earnings, in the
Collection Account upon the realization of such loss.
Section 5.03. Permitted Withdrawals from the Collection
Account. The Indenture Trustee shall make withdrawals from the Collection
Account, on any 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 clause (a)
above) 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 Deleted Mortgage Loan purchased or substituted for by the
Unaffiliated Seller to the extent that the distribution to the Noteholders of
any such amounts on the Distribution Date upon which the proceeds of such
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purchase are distributed to the Noteholders would make the total amount
distributed in respect of any such Mortgage Loan on such 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, such
reimbursement to be made from any collections in respect of the related Mortgage
Loan with respect to which such Periodic Advance was made;
(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 United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
(g) to withdraw any Net Foreclosure Profits;
(h) to withdraw any funds deposited in the Collection Account
that were not required to be deposited therein; and
(i) to pay the Servicer 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 subclause (a).
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 (a) the maximum insurable value of the related Mortgaged Property or
(b) 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 combined 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
mortgagee clause naming the Originator, its successors and assigns, as
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mortgagee. Subject to Section 5.04(c) 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 Principal Balance of the related Mortgage Loan and the 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"
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, the Note
Insurer 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
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Servicer may purchase from the Trust Estate 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 record a deed-in-lieu
of foreclosure without the prior written consent of the Note Insurer, such
consent not to be unreasonably withheld, conditioned or delayed. 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.
(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. With respect to any REO Property,
the Servicer either itself or through an agent selected by the Servicer shall
manage, conserve, protect and operate such REO Property in the same manner and
to such extent as is customary in the locality where such REO Property is
located. Any net income generated from the REO Property and the proceeds from a
sale of any REO Property shall be deposited in the Collection Account. Any
expenses incurred by the Servicer pursuant to its obligations with respect to
any REO Property shall constitute Servicing Advances.
(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 Servicer of all the Mortgage Loans and REO
Properties in the Trust Estate pursuant to Section 10.01 of the Indenture will
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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 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 on behalf of
the Indenture Trustee 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 on behalf of the Indenture Trustee 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 on behalf of the Indenture Trustee 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
24
one-twelfth of the Servicing Fee. 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 and payment of
the Indenture Trustee Fee to the extent that monies in the Collection Account
are insufficient therefor, as provided in Section 6.16 of the Indenture and
payment of the Collateral Agent Fee as provided in 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. (a) The
Servicer will deliver to the Indenture Trustee, the Collateral Agent, the Rating
Agencies, the Depositor, the Note Insurer and each Noteholder, on or before
April 30 of each year, beginning April 30, 2002, 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, 2002, 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 Depositor, the Rating Agencies, the
Note Insurer 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.
Section 5.11. Access to Certain Documentation. Each of the
Servicer, the Depositor and the Unaffiliated Seller 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, the Depositor or the
Unaffiliated Seller relating to the Mortgage Loans and (ii) to visit the offices
and properties of the Servicer, of the Depositor and of the Unaffiliated Seller
for the purpose of examining such materials and to discuss matters relating to
the Mortgage Loans and the Servicer's, the Depositor's and the Unaffiliated
Seller's performance under this Agreement with any of the officers or employees
of the Servicer, the Depositor and the Unaffiliated Seller having knowledge
thereof and with the independent public accountants of the Servicer (and by this
provision the Servicer, the Depositor and the Unaffiliated Seller each authorize
their respective 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.
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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 Xxxxxx Xxx 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 by such subservicer. The Servicer agrees to cause the
Subservicers to service such Mortgage Loans in a manner consistent with the
Accepted Servicing Practices set forth in this Agreement, and agrees that
receipt by the Subservicers of any and all amounts which by the terms hereof are
required to be deposited in the Collection Account shall constitute receipt
thereof by the Servicer for all purposes hereof as of the date so received by
the Subservicers. Notwithstanding such designation of the Subservicers, the
Servicer agrees that it is, and it shall remain, fully obligated under the terms
hereof as Servicer with respect to all such Mortgage Loans, and nothing herein
shall relieve or release the Servicer from its obligations to the other parties
hereto to service such Mortgage Loans in the manner provided in this Agreement.
Section 5.14. Reports to the Indenture Trustee; Collection
Account Statements. Not later than fifteen (15) days after each Distribution
Date, the Servicer shall provide to the Indenture Trustee, the Collateral Agent
and the Note Insurer a statement, certified by a Servicing Officer, setting
forth the status of the Collection Account as of the close of business on the
related Distribution Date, stating that all distributions required by this
Agreement to be made by the Servicer on behalf of the Indenture Trustee have
been made (or if any required distribution has not been made by the Servicer,
specifying the nature and status thereof) and showing, for the period covered by
such statement, the aggregate of deposits into and withdrawals from the
Collection Account for each category of deposit specified in Section 5.02 and
each category of withdrawal specified in Section 5.03 and the aggregate of
deposits into the Collection Account as specified in Section 6.01(c). 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.
Section 5.15. Optional Purchase of Defaulted Mortgage Loans.
(a) The Unaffiliated Seller, in its sole discretion, shall have the right to
elect (by written notice sent to 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 180 days or more Delinquent in the manner and at the Loan
Repurchase 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 Indenture Trustee, upon receipt of such
deposit, shall release or cause to be released to the Unaffiliated Seller the
related Indenture Trustee's Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the Unaffiliated Seller, in
26
each case without recourse, representation or warranty as shall be necessary to
vest in the Unaffiliated Seller any Mortgage Loan released pursuant hereto and
the Unaffiliated Seller 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 Unaffiliated Seller shall thereupon own such Mortgage Loan, and
all security and documents, free of any further obligation to the Indenture
Trustee or the Noteholders with respect thereto.
(b) If the Unaffiliated Seller shall have repurchased Mortgage
Loans which are 180 days or more Delinquent under this Section 5.15 in an
aggregate principal amount equal to 2.00% of the Original Aggregate Principal
Balance, the Unaffiliated Seller may not thereafter exercise its right under
this Section 5.15 to purchase any Mortgage Loan without the prior written
consent of the Note Insurer. Any request by the Unaffiliated Seller 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 proposes to repurchase. If the Note Insurer fails to respond to such
request within ten (10) Business Days after receipt thereof, the Unaffiliated
Seller shall be deemed to have been granted consent to repurchase the Mortgage
Loan or Mortgage Loans proposed to be repurchased. Notice to the Note Insurer
shall be delivered in accordance with the terms of the Insurance Agreement.
Section 5.16. Reports to be Provided by the Servicer. (a) No
later than 12:00 noon, New York, New York time on the Servicer Remittance Date,
the Servicer shall deliver to the Indenture Trustee a report in
computer-readable form containing such information as to enable the Indenture
Trustee to make the distribution pursuant to Section 8.02(a) (i) through (x) of
the Indenture, and such other information as the Indenture Trustee shall
reasonably require.
(b) On each Servicer Remittance Date, the Servicer shall
deliver to the Indenture Trustee and the Note Insurer: (i) a Noteholder
Statement and (ii) a Servicer Remittance Report. The Servicer Remittance Report
shall include the following information with respect to all Mortgage Loans in
both Mortgage Loan Groups on a group-by-group basis as well as a break out as to
(x) consumer purpose and business purpose Mortgage Loans as of the close of
business on the last Business Day of the prior calendar month (except as
otherwise provided in clause (v) below), which is hereby required to be prepared
by the Servicer and furnished to the Indenture Trustee for such purpose and to
the Note Insurer on or prior to the related Servicer Remittance Date:
(i) for the related Due Period, 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) 31-60 days
Delinquent, (B) 61-90 days Delinquent and (C) 91 or more days
Delinquent;
(ii) for the related Due Period, 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
27
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) for the related Due Period, 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) for the related Due Period, the number, aggregate
Principal Balances of all Mortgage Loans and percentage (based on the
aggregate Principal Balances of the Mortgage Loans) of the aggregate
Principal Balances of such Mortgage Loans to the aggregate Principal
Balance of all Mortgage Loans relating to REO Properties and the
number, aggregate Principal Balances of all Mortgage Loans and
percentage (based on the aggregate Principal Balances of the Mortgage
Loans) of any such Mortgage Loans also included in any of the
statistics described in the foregoing clause (i);
(v) the weighted average Mortgage Interest Rate as of the Due
Date occurring in the Due Period related to such Distribution Date;
(vi) the weighted average remaining term to stated maturity of
all Mortgage Loans;
(vii) the book value of any REO Property;
(viii) the Cumulative Loss Percentage for the related Due
Period and the aggregate Cumulative Loss Percentage since the Closing
Date;
(ix) the Delinquency Ratio, the Rolling Three Month
Delinquency Rate and the Twelve Month Loss Amount;
(x) the aggregate Principal Balance of the three largest
Mortgage Loans; and
(xi) the total number of Mortgage Loans and the Aggregate
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 financial statements of the
Servicer for one or more of the most recently completed five fiscal years for
which such statements are publicly available, which request shall not be
unreasonably denied or unreasonably delayed. Such annual financial statements
also shall be made available to the Note Insurer upon request.
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(d) The Servicer also agrees, upon reasonable advanced written
notice, 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 all of the Mortgage Loans and each
Distribution Date shall be offset on such Distribution Date by an amount equal
to the aggregate Prepayment Interest Shortfall with respect to all Mortgage
Loans which were subjects 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 Distribution Date, and the rights of the Noteholders to the
offset of the aggregate Prepayment Interest Shortfalls shall not be cumulative.
Section 5.18. Periodic Advances; Special Advance. (a) If, on
any Servicer Remittance Date, the Servicer determines that any Monthly Payments
due on the Due Date immediately preceding such Servicer Remittance Date have not
been received as of the close of business on the Business Day preceding such
Servicer Remittance Date, the Servicer shall determine the amount of any
Periodic Advance required to be made with respect to the related Distribution
Date. The Servicer shall include in the amount to be deposited in the Collection
Account on such Servicer Remittance Date an amount equal to the Periodic
Advance, if any, which deposit may be made in whole or in part from funds in the
Collection Account being held for future distribution or withdrawal on or in
connection with Distribution Dates in subsequent months. Any funds being held
for future distribution to Noteholders and so used shall be replaced by the
Servicer from its own funds by deposit in the Collection Account on or before
the Business Day preceding the next Servicer Remittance Date on which the funds
in the Collection Account shall be less than the amount necessary to pay in full
the Required Distribution with respect to such date be made on such date;
provided, that if such funds are not sufficient the Servicer will use its own
funds to the extent necessary to fulfill its replacement or advance obligation.
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.
(b) In addition to the Periodic Advances the Servicer shall
make a special advance (the "Special Advance") on the Servicer Remittance Date
occurring in October 2001, with respect to interest on Mortgage Loans not having
their first payment due until after September 2001. The Special Advance will be
deposited into the Interest Reserve Account and will be paid out of the Interest
Reserve Account, and will be equal to the lesser of (1) the difference of (i)
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the sum of (a) the Class A-1 Interest Distribution Amount and (b) the Class A-2
Interest Distribution Amount over (ii) the sum of (x) the amount of interest
collected for the first Due Period and (y) the amount on deposit in the Interest
Reserve Account immediately prior to such Special Advance and (2) an amount
equal to the amount of interest that would have accrued on all such Mortgage
Loans from the Cut-Off Date to its corresponding scheduled payment date,
assuming it had a payment date in September 2001. Any funds remaining in the
Interest Reserve Account after the immediately succeeding Distribution Date
shall be remitted to the Servicer on such Distribution Date. The Special Advance
shall be made without regard to recoverability, and shall not be reimbursable,
except as set forth in the preceding sentences. In no event shall the Indenture
Trustee, as successor Servicer, be liable for the payment of the Special Advance
except to the extent of the amount on deposit in the Interest Reserve Account.
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 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 Documents including Section 8.02 of the Trust Agreement and Section 6.16
of the Indenture. 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 Note Insurer and/or a Noteholder in respect
of such claim. The obligations of the Servicer under this Section 5.19 arising
prior to any resignation or termination of the Servicer hereunder shall survive
the resignation or termination of the Servicer.
(b) The Indenture Trustee shall, if necessary, reimburse the
Servicer from amounts otherwise distributable on the Trust Certificates for all
amounts advanced by it pursuant to Section 4.04 of the Unaffiliated Seller's
Agreement, except when the claim relates directly to the failure of the
Servicer, if it is, 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, 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 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.
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Section 5.20. Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer. (a) The Servicer will keep in full
effect its existence, rights and franchises as a corporation, will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 3.01 to be true and correct at all
times under this Agreement. Any person succeeding in business of the Servicer
shall assume all rights and obligations of the Servicer under the Basic
Documents.
(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, the Depositor 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 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 outside
counsel for the Servicer) to such effect delivered to the Indenture Trustee, the
Collateral Agent, the Unaffiliated Seller, the Trust, the Depositor and the Note
Insurer. No such resignation shall become effective until the Indenture Trustee
or a successor appointed in accordance with the terms of this Agreement has
assumed the Servicer's responsibilities and obligations hereunder in accordance
with Section 7.02. The Servicer shall provide the Indenture Trustee, the
Collateral Agent, the Depositor, 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
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Notes if and to the extent the Depositor shall deem any such relief to be
necessary or appropriate. 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.
ARTICLE VI
APPLICATION OF FUNDS
Section 6.01. Deposits to the Distribution Account. On each
Servicer Remittance Date, the Servicer shall cause to be deposited in the
related Distribution Account, from funds on deposit in the Collection Account,
(a) an amount equal to the Servicer Remittance Amount allocable to the related
Mortgage Loan Group and (b) Net Foreclosure Profits with respect to the related
Mortgage Loan Group, 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 Remittance Date, the Servicer shall also deposit into the related
Distribution Account any Periodic Advances with respect to the related
Distribution Date calculated in accordance with Section 5.18. If on any Servicer
Remittance Date the amount that would otherwise be deposited by the Servicer in
a Distribution Account for either Mortgage Loan Group exceeds the amount
required to reduce the Note Principal Balance of the related Note to zero (such
Mortgage Loan Group being the "Amortized Group"), then the Servicer shall on
such date and on each Servicer Remittance Date thereafter, deposit into the
Cross-Collateralization Reserve Account all principal in respect of the Mortgage
Loan for the Amortized Group actually collected during the related Due Period
(to the extent of such excess). The amount so deposited by the Servicer will be
included in the Available Funds for such other Mortgage Loan Group and will be
available for application in accordance with Section 8.02 of the Indenture on
the related Distribution Date.
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.
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Section 6.04. Information Concerning the Mortgage Loans. No
later than 12:00 noon Pennsylvania time on the fourth Business Day preceding
each Distribution Date, the Servicer shall deliver to the Indenture Trustee a
report in computer-readable form containing such information as to each Mortgage
Loan and as to the Mortgage Loan Pool as of such Distribution Date and such
other information as the Indenture Trustee shall reasonably require.
Section 6.05. Compensating Interest. Not later than the close
of business on the third Business Day prior to the Distribution Date, the
Servicer shall remit to the Indenture Trustee (without right to reimbursement
therefor) for deposit into the related Distribution Account, an amount equal to,
for each Mortgage Loan, the lesser of (a) the Prepayment Interest Shortfall for
such Mortgage Loan for the related Distribution Date resulting from Principal
Prepayments during the related Due Period and (b) its Monthly Servicing Fee with
respect to such Mortgage Loan received in the related Due Period (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 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%;
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(ii) the failure by the Servicer to make any required
Servicing Advance, which failure continues unremedied for a period of
thirty (30) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer by the Indenture Trustee or to the Servicer and the
Indenture Trustee by any Noteholder or the Note Insurer;
(iii) any failure on the part of the Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of the Servicer contained in this Agreement, or
the failure of any representation and warranty made pursuant to Section
3.01(a) hereof to be true and correct which continues unremedied for a
period of thirty (30) days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Indenture Trustee or to the Servicer and the
Indenture Trustee by any Noteholder or the Note Insurer;
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any present
or future federal or state bankruptcy, insolvency or similar law or for
the appointment of a conservator or receiver or liquidation in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and such decree
or order shall have remained in force, undischarged or unstayed for a
period of forty-five (45) 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 Three Month
Delinquency Rate exceeds 12.50% of the aggregate outstanding Principal
Balance of the Mortgage Loans;
(ix) if on any Distribution Date, commencing in September
2002, the Twelve Month Loss Amount exceeds 2.50% of the sum of
aggregate outstanding Principal Balance for the Mortgage Loans, as of
the close of business on the first day of the twelfth preceding
calendar month (or, if later, the Cut-Off Date);
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(x) ABFS or the Servicer shall fail to pay any principal or
interest when due on any outstanding indebtedness having an aggregate
principal amount in excess of $1,000,000 and such failure shall
continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such outstanding indebtedness, or
any such outstanding indebtedness of ABFS or the Servicer having an
aggregate principal amount in excess of $1,000,000 shall be declared to
be due and payable or required to be prepaid (other than a regular
scheduled payment) prior to the date of maturity thereof;
(xi) Net Worth of ABFS on a consolidated basis shall be less
than the sum of (i) $30,000,000 plus (ii) 50% of the cumulative Net
Income for each fiscal quarter ending after the Closing Date (excluding
any fiscal quarter for which Net Income was less than zero);
(xii) any Change of Control shall occur; or
(xiii) the occurrence of an Event of Default under the
Indenture.
(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, New York
time on the fourth Business Day prior to the applicable Distribution Date, the
Indenture Trustee, may, and upon receipt of written notice or discovery by a
Responsible Officer of such failure, shall give immediate telephonic and
facsimile notice of such failure to a Servicing Officer of the Servicer and to
the Note Insurer and the Indenture Trustee may, and shall, at the direction of
the Note Insurer (absent a Note Insurer Default), terminate all of the rights
and obligations of the Servicer under this Agreement, except for the Servicer's
indemnification obligation under Section 5.19, and the Indenture Trustee, or a
successor Servicer appointed in accordance with Section 7.02, shall immediately
make such Periodic Advance or payment of Compensating Interest and assume,
pursuant to Section 7.02 hereof, the duties of a successor Servicer and (y) with
respect to any other Servicer Event of Default, 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, except for the Servicer's
indemnification obligations under Section 5.19, and in and to the Mortgage Loans
and the proceeds thereof, as servicer. Upon receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Mortgage Loans or otherwise, shall, subject to
Section 7.02, pass to and be vested in the Indenture Trustee, or such other
Person as may be specified by the Note Insurer, and the Indenture Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, at the expense of the Servicer, any
and all documents and other instruments and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or
assignment of the Mortgage Loans and related documents. The Servicer agrees to
cooperate (and pay any related costs and expenses) with the Indenture Trustee in
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effecting the termination of the Servicer's responsibilities and rights
hereunder and the transfer of such responsibilities and rights to a successor
Servicer, including, without limitation, the transfer to the Indenture Trustee,
or its designee, for administration by it of all amounts which shall at the time
be credited by the Servicer to the Collection Account or thereafter received
with respect to the Mortgage Loans. The Indenture Trustee shall promptly notify
the Note Insurer and the Rating Agencies of the occurrence of a Servicer Event
of Default.
Section 7.02. Indenture Trustee to Act; Appointment of
Successor. On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 or the Indenture Trustee receives the resignation of
the Servicer evidenced by an Opinion of Counsel (if required) pursuant to
Section 5.21, or the Servicer is removed as Servicer pursuant to this Article
VII, in which event the Indenture Trustee shall promptly notify the Rating
Agencies, except as otherwise provided in Section 7.01, the Indenture Trustee or
such other Person as may be specified by the Note Insurer shall be the successor
in all respects to the Servicer in its capacity as servicer under this Agreement
and the transactions set forth or provided for herein and shall be subject to
all the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof arising on or after the date of
succession; provided, however, that the Indenture Trustee shall not be liable
for any actions or the representations and warranties of any Servicer prior to
it and including, without limitation, the obligations of the Servicer set forth
in Sections 2.06 and 4.02 hereof. The Indenture Trustee, as successor Servicer,
shall be obligated to pay Compensating Interest pursuant to Section 6.05 in any
event and to make advances pursuant to Section 5.18 unless, and only to the
extent the Indenture Trustee determines reasonably and in good faith that such
advances would not be recoverable pursuant to Section 5.04, such determination
to be evidenced by a certification of a Responsible Officer of the Indenture
Trustee delivered to the Note Insurer.
(b) Notwithstanding the above, the Indenture Trustee may, if
it shall be unwilling to so act, or shall, if it is unable to so act or if the
Note Insurer so requests in writing to the Indenture Trustee, appoint, pursuant
to such direction of the Note Insurer, or if no such direction is provided to
the Indenture Trustee, pursuant to the provisions set forth in Section 7.02(c),
or petition a court of competent jurisdiction to appoint, any established
mortgage loan servicing institution acceptable to the Note Insurer that has a
net worth of not less than $15,000,000 as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder.
(c) In the event the Indenture Trustee is the successor
Servicer, it shall be entitled to the same Servicing Compensation (including the
Servicing Fee as adjusted pursuant to the definition thereof) and other funds
pursuant to Section 5.08 hereof as the Servicer if the Servicer had continued to
act as servicer hereunder. In the event the Indenture Trustee is unable or
unwilling to act as successor Servicer, the Indenture Trustee shall solicit, by
public announcement, bids from housing and home finance institutions, banks and
mortgage servicing institutions meeting the qualifications set forth above. Such
public announcement shall specify that the successor servicer shall be entitled
to the full amount of the aggregate Servicing Fees hereunder as servicing
compensation, together with the other Servicing Compensation. Within thirty (30)
days after any such public announcement, the Indenture Trustee shall negotiate
and effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Indenture Trustee shall deduct from any sum received by the
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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 payment hereunder or any portion thereof caused by (i) the failure
of the Servicer to deliver, or any delay in delivering, cash, documents or
records to it, or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the Servicer hereunder. Notwithstanding anything to the
contrary herein, no appointment of a successor Servicer under this Agreement
shall be effective until the 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, the Depositor, 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 or until a
successor Servicer has been appointed in accordance with paragraph (c) above.
The Note Insurer shall have the right to remove the Indenture Trustee (or any
successor 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) 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 the Note Insurer and such successor shall agree;
provided, however, that unless otherwise 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.
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 payment on a Note without the
37
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, the Depositor and the Note Insurer.
Section 7.04. Rights of the Note Insurer to Exercise Rights of
the Noteholders. By accepting its Note, each Noteholder agrees that unless a
Note Insurer Default exists, the Note Insurer shall be deemed to be the
Noteholders for all purposes (other than with respect to the receipt of payment
on the Notes) and shall have the right to exercise all rights of the Noteholders
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
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(c) undertake any litigation.
The Note Insurer may, in writing and in its sole discretion
renounce all or any of its rights under Sections 7.04, 7.05 or 7.06 or any
requirement for the Note Insurer's consent for any period of time.
Section 7.06. Mortgage Loans, Trust Estate and Accounts Held
for Benefit of the Note Insurer. (a) The Indenture Trustee shall hold the Trust
Estate and shall cause the Collateral Agent on its behalf to hold 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 Collateral Agent or the Indenture Trustee
to act without the consent or approval of the Note Insurer, (c) provide that a
particular act or thing must be acceptable to the Note Insurer, (d) permit the
Note Insurer to direct (or otherwise to require) the actions of the Indenture
Trustee, the Collateral Agent, the Servicer or the Noteholders, (e) provide that
any action or omission taken with the consent, approval or authorization of the
Note Insurer shall be authorized hereunder or shall not subject the party taking
or omitting to take such action to any liability hereunder or (f) which have a
similar effect, shall be of no further force and effect and the Indenture
Trustee shall administer the Trust Estate and perform its obligations hereunder
solely for the benefit of the Holders of the Notes. Nothing in the foregoing
sentence, nor any action taken pursuant thereto or in compliance therewith,
shall be deemed to have released the Note Insurer from any obligation or
liability it may have to any party or to the Noteholders hereunder, under any
other agreement, instrument or document (including, without limitation, the
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 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 Reimbursement
Amounts, Premium Amounts, the Indenture Trustee Fee and other amounts due and
payable to the Note Insurer and the Indenture Trustee.
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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 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 payment notice promptly to each Noteholder and the Note Insurer 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 final payment and cancellation, shall
be given promptly by the Servicer by letter to Noteholders and the Note Insurer
mailed during the month of such final payment before the Servicer Remittance
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 payment 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 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 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 Collateral Agent on behalf of 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.
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 of which a
Responsible Officer shall have actual knowledge and after the curing of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. If an Event of
Default of which a Responsible Officer shall have actual knowledge 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).
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(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 of which a
Responsible Officer shall have actual knowledge , 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 this Agreement or at the direction of the
Note Insurer or the Indenture Trustee or with the consent of the Note
Insurer or the Indenture Trustee;
(iv) the Collateral Agent shall not be required to expend or
risk its own funds or otherwise incur financial liability for the
performance of any of its duties hereunder or the exercise of any of
its rights or powers if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it and none of the provisions
contained in this Agreement shall in any event require the Collateral
Agent to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer or the Indenture Trustee under
this Agreement; and
(v) subject to the other provisions of this Agreement and
without limiting the generality of this Section 9.01, the Collateral
Agent shall have no duty (A) to see to any 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
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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 or advice of such 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 or such advice of counsel;
(c) the Collateral Agent shall be under no obligation to
exercise any of the 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 Collateral Agent reasonable security or
indemnity reasonably satisfactory to it 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 of which a Responsible
Officer shall have actual knowledge (which has not been cured), to exercise such
of the rights and powers vested in it by this Agreement, and to use the same
degree of care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's own affairs;
(d) the Collateral Agent shall not be personally liable for
any action taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) 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 the Majority Noteholders; 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 reasonably satisfactory to
the Collateral Agent against such cost, 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;
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(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 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. 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. 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 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.
(b) The Collateral Agent and any director, officer, employee
or agent of the Collateral Agent shall be indemnified by first, the Trust and,
second, the Servicer and held harmless against any loss, liability, claim,
damage or reasonable expense incurred in connection with 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.
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) be a wholly owned subsidiary of a bank
holding company having a combined capital and surplus of at least $50,000,000,
44
(d) whose long-term deposits, if any, shall be rated at least BBB- by S&P and
Baa3 by Moody's (except as provided herein) or such lower long-term deposit
rating as may be approved in writing by the Note Insurer, and (e) reasonably
acceptable to the Note Insurer as evidenced in writing. If such banking entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of determining an entity's combined capital and surplus for clause (c)
of this Section 9.06, the amount set forth in its most recent report of
condition so published shall be deemed to be its combined capital and surplus.
In case at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of this Section 9.06, the Collateral Agent shall
resign immediately in the manner and with the effect specified in Section 9.07.
Section 9.07. Resignation and Removal of the Collateral Agent.
(a) The Collateral Agent may at any time resign and be discharged from the
trusts hereby created by giving thirty (30) days' written notice thereof to the
Indenture Trustee, the Servicer, and the Note Insurer.
(b) If at any time the Collateral Agent shall cease to be
eligible in accordance with the provisions of Section 9.06 and shall fail to
resign after written request therefor by the Indenture Trustee, the Servicer or
the Note Insurer, or if at any time the Collateral Agent shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Indenture Trustee or the Servicer, with the consent of the Note Insurer, or the
Note Insurer may remove the Collateral Agent.
(c) If the Collateral Agent fails to perform in accordance
with the terms of this Agreement, the Indenture Trustee, the Servicer or the
Majority Noteholders, with the consent of the Note Insurer, or the Note Insurer
may remove the Collateral Agent.
(d) Upon removal or receipt of notice of resignation of the
Collateral Agent, the Indenture Trustee shall either (i) take possession of the
Indenture Trustee's Mortgage Files and assume the duties of the Collateral Agent
hereunder or (ii) appoint a successor Collateral Agent pursuant to Section 9.08.
If the Indenture Trustee shall assume the duties of the Collateral Agent
hereunder, it shall notify the Trust, the Depositor, the Servicer and Note
Insurer in writing.
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
45
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 of the Indenture Trustee's Mortgage Files and related
documents and statements held by it hereunder, and the Servicer and the
predecessor Collateral Agent shall execute and deliver such instruments and do
such other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor Collateral Agent all such rights,
powers, duties and obligations. The cost of any such transfer to the successor
Collateral Agent shall be for the account of the Collateral Agent in the event
of the resignation of the Collateral Agent, and shall be for the account of the
Servicer in the event of the removal of the Collateral Agent. No successor
Collateral Agent shall accept appointment as provided in this Section 9.08
unless at the time of such acceptance such successor Collateral Agent shall be
eligible under the provisions of Section 9.06. Upon acceptance of appointment by
a successor Collateral Agent as provided in this Section 9.08, the Servicer
shall mail notice of the succession of such Collateral Agent hereunder to all
Noteholders at their addresses as shown in the Note Register and to the Rating
Agencies. If the Servicer fails to mail such notice within ten (10) days after
acceptance of appointment by the successor Collateral Agent, the successor
Collateral Agent shall cause such notice to be mailed at the expense of the
Servicer.
Section 9.09. Merger or Consolidation of Collateral Agent. Any
Person into which the Collateral Agent may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation or national banking association
succeeding to the business of the Collateral Agent, shall be the successor of
the Collateral Agent hereunder; provided, that such corporation or national
banking association shall be eligible under the provisions of Section 9.06,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Limitation on Liability. None of the Trust, the
Owner Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee or any of the directors, officers, employees or agents of such Persons
shall be under any liability to the Trust, the Noteholders or the Note Insurer
for any action taken, or for refraining from the taking of any action, in good
faith pursuant to this Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Trust, the Owner Trustee, the
Depositor, the Servicer, the Collateral Agent, the Indenture Trustee or any such
Person against any breach of warranties, representations, covenants or
agreements 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 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.
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Section 10.02. Acts of Noteholders. (a) Except as otherwise
specifically provided herein, whenever Noteholder action, consent or approval is
required under this Agreement, such action, consent or approval shall be deemed
to have been taken or given on behalf of, and shall be binding upon, all
Noteholders if the Majority Noteholders or the Note Insurer agrees to take such
action or give such consent or approval.
(b) The death or incapacity of any Noteholder shall not
operate to terminate this Agreement or the Trust, nor entitle such Noteholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Noteholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Notes, be construed
so as to constitute the Noteholders from time to time as partners or members of
an association; nor shall any Noteholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
Section 10.03. Amendment. (a) This Agreement may be amended
from time to time by the Owner Trustee, on behalf of the Trust, the Servicer,
the Depositor, the Collateral Agent and the Indenture Trustee by written
agreement, upon the prior written consent of the Note Insurer, without notice to
or consent of the Noteholders or the Holders of the Trust Certificates 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 or effect a significant changes in the
permitted activities of the Trust; provided, however, that such action shall
not, as evidenced by (i) an Opinion of Counsel, at the expense of the party
requesting the change, delivered to the Indenture Trustee or (ii) a letter from
each Rating Agency confirming that such action will not result in the reduction,
qualification or withdrawal of the then-current ratings on the Notes, adversely
affect in any material respect the interests of any Noteholder; and provided,
further, that no such amendment shall reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be paid 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 Depositor, the
Collateral Agent and the Indenture Trustee, with the consent of the Note
Insurer, the Majority Noteholders and the Holder of the majority of the
Percentage Interest of 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
47
of, or delay the timing of, payments received on Mortgage Loans which are
required to be paid 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.
(d) In executing, or accepting the additional trusts created
by, any supplemental indenture permitted by Article IX of the Indenture or the
modifications thereby of the trusts created by the Indenture, the Indenture
Trustee shall be entitled to receive, and (subject to Section 6.01 of the
Indenture) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by the Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties or immunities under the Indenture or
otherwise. The Servicer, on behalf of the Trust, shall cause executed copies of
any supplemental indentures to be delivered to the Note Insurer and the Rating
Agencies.
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 direction of
Majority Noteholders or the Note Insurer.
Section 10.05. Duration of Agreement. This Agreement shall
continue in existence and effect until terminated as herein provided.
Section 10.06. Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered to (i) in the case of the Servicer, the Subservicers
or the Originators, addressed to such Person, c/o American Business Financial
Services, Inc., Xxxxxxxxxx Xxxxxx Xxxxxx, 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxx Cynwyd, Pennsylvania 19004, Attention: General Counsel; (ii) in the case of
the Unaffiliated Seller, Balapointe Office Centre, 000 Xxxxxxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx,
Executive Vice President; (iii) in the case of the Trust, ABFS Mortgage Loan
Trust 2001-3, c/o the Owner Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration; (iv) in the case of the Indenture Trustee or the
Collateral Agent, x/x Xxx Xxxxx Xxxxxxxxx Bank, 000 Xxxx 00xx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Institutional Trust Services, ABFS
Mortgage Loan Trust 2001-3, telephone (000) 000-0000, telecopy (000) 000-0000;
(v) in the case of the Depositor or the Representative, Xxxxxx Xxxxxxx ABS
Capital I Inc. or Xxxxxx Xxxxxxx & Co. Incorporated, 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Managing Director - Asset Backed Finance Group; (vi)
in the case of the Co-Underwriter, Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Chief Counsel; (vii) in the case of the
Note Insurer, MBIA Insurance Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx
48
10504 Attention: Insured Portfolio Management - Mortgage-Backed Securities (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 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 the General Counsel,
and shall be marked to indicate "URGENT MATERIAL ENCLOSED"); (viii) in the case
of Standard & Poor's 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 Attention:
Residential Mortgage Surveillance Group; (ix) in the case of Xxxxx'x Investors
Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Home Equity
Monitoring Group; 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
Depositor, the Indenture Trustee, the Collateral Agent and the Noteholders and
their respective successors and permitted assigns.
Section 10.11. Headings. The headings of the various sections
of this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
Section 10.12. The Note Insurer Default. Any right conferred
to the Note Insurer shall be suspended during any period in which a Note Insurer
Default exists. At such time as the Notes are no longer outstanding hereunder,
the Note Insurance Policy has terminated in accordance with its terms and no
amounts owed to the Note Insurer hereunder and no Reimbursement Amounts 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.
49
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) . (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(b) THE TRUST, THE SERVICER, THE DEPOSITOR, THE COLLATERAL
AGENT AND THE INDENTURE TRUSTEE HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT
LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION
10.06 HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS
AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE
TRUST, THE DEPOSITOR, THE SERVICER, THE COLLATERAL AGENT AND THE INDENTURE
TRUSTEE EACH HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION 10.15 SHALL AFFECT THE RIGHT OF THE TRUST, THE
DEPOSITOR, THE SERVICER, THE COLLATERAL AGENT OR THE INDENTURE TRUSTEE TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT ANY OF THEIR RIGHTS
TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE TRUST, THE DEPOSITOR, THE SERVICER, THE COLLATERAL
AGENT AND THE INDENTURE TRUSTEE EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A
JURY.
[Remainder of Page Intentionally Left Blank]
50
IN WITNESS WHEREOF, the Servicer, the Trust, the Indenture
Trustee, the Collateral Agent and the Depositor have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
XXXXXX XXXXXXX ABS CAPITAL I INC.,
as Depositor
By:
---------------------------------------------
Name:
Title:
ABFS MORTGAGE LOAN TRUST 2001-3
By: 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:
THE CHASE MANHATTAN BANK,
as Indenture Trustee and Collateral Agent
By:
---------------------------------------------
Name:
Title:
[Signature Page to Sale and Servicing Agreement]
EXHIBIT A
CONTENTS OF THE MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall
include each of the following items (copies to the extent the originals have
been delivered to the Collateral Agent, on behalf of the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer, pursuant to Section 2.05 of
the Sale and Servicing Agreement), all of which shall be available for
inspection by the Noteholders, to the extent required by applicable laws:
1. The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the
originator of the Mortgage Loan to the Person so endorsing the
Mortgage Loan to the Trustee, endorsed by such Person "Pay to
the order of ________________ without recourse" and signed, by
facsimile or manual signature, in the name of the Unaffiliated
Seller by a Responsible Officer.
2. Either: (i) the original Mortgage, and related power of
attorney, if any, with evidence of recording thereon, or (ii)
a copy of the Mortgage and related power of attorney, if any,
certified as a true copy of the original Mortgage or power of
attorney by a Responsible Officer of the Unaffiliated Seller
on the face of such copy substantially as follows: "certified
true and correct copy of original which has been transmitted
for recordation."
3. Either: (i) The original Assignment of Mortgage in recordable
form in blank or (ii) a copy of the Assignment of Mortgage
certified as a true copy of the original Assignment of
Mortgage by a Responsible Officer of the Unaffiliated Seller
on the face of such copy substantially as follows: "certified
true and correct copy of original which has been transmitted
for recordation." Any such Assignments of Mortgage may be made
by blanket assignments for Mortgage Loans secured by the
Mortgaged Properties located in the same county, if permitted
by applicable law.
4. The original lender's policy of title insurance or a true copy
thereof, or if such original lender's title insurance policy
has been lost, a copy thereof certified by the appropriate
title insurer to be true and complete, or if such lender's
title insurance policy has not been issued as of the Closing
Date, a marked up commitment (binder) to issue such policy.
5. All original intervening assignments, if any, showing a
complete chain of assignments from the originator to the
related Originator, including any recorded warehousing
assignments, with evidence of recording thereon, certified by
a Responsible Officer of the related Originator by facsimile
or manual signature as a true copy of the original of such
intervening assignments.
A-1
6. Originals of all assumption, written assurance, substitution
and modification agreements, if any.
A-2
EXHIBIT B
INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
September __, 2001
Xxxxxx Xxxxxxx ABS Capital I Inc. American Business Credit, Inc.
0000 Xxxxxxxx XxxxXxxxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
The Chase Manhattan Bank, MBIA Insurance Corporation
as Collateral Agent 000 Xxxx Xxxxxx
000 Xxxx 00xx Xxxxxx Xxxxxx, Xxx Xxxx 00000
Xxx Xxxx, Xxx Xxxx 00000
Re: The Sale and Servicing Agreement, dated as of September 1,
2001 among Xxxxxx Xxxxxxx ABS Capital I Inc., as Depositor,
American Business Credit, Inc., as Servicer, The Chase
Manhattan Bank, as Indenture Trustee and as Collateral Agent
and ABFS Mortgage Loan Trust 2001-3, as the Trust
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Sale and Servicing
Agreement, the undersigned, as Indenture Trustee, hereby acknowledges receipt by
it in good faith without notice of adverse claims, of the Note Insurance Policy,
and declares that it holds and will hold the Note Insurance Policy in trust for
the exclusive use and benefit of all present and future Noteholders.
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Appendix I to the Indenture.
THE CHASE MANHATTAN BANK
as Indenture Trustee
By:
---------------------------------------
Name:
Title:
B-1
EXHIBIT C
COLLATERAL AGENT'S ACKNOWLEDGMENT OF RECEIPT
September __, 2001
Xxxxxx Xxxxxxx ABS Capital I Inc. American Business Credit, Inc.
0000 Xxxxxxxx XxxxXxxxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
The Chase Manhattan Bank, MBIA Insurance Corporation
as Collateral Agent 000 Xxxx Xxxxxx
000 Xxxx 00xx Xxxxxx Xxxxxx, Xxx Xxxx 00000
Xxx Xxxx, Xxx Xxxx 00000
Re: The Sale and Servicing Agreement, dated as of September 1,
2001 among Xxxxxx Xxxxxxx ABS Capital I Inc., as Depositor,
American Business Credit, Inc., as Servicer, The Chase
Manhattan Bank, as Indenture Trustee and as Collateral Agent
and ABFS Mortgage Loan Trust 2001-3, as the Trust
Ladies and Gentlemen:
In accordance with Section 2.06 of the above-captioned Sale and Servicing
Agreement, the undersigned, as Collateral Agent, hereby acknowledges receipt by
it in good faith without notice of adverse claims, subject to the provisions of
Sections 2.04 and 2.05 of the Sale and Servicing Agreement (as such provisions
relate to the Mortgage Loans), of, with respect to each of the Mortgage Loans,
the Mortgage File containing the original Mortgage Note, except with respect to
the list of exceptions attached hereto, and based on its examination and only as
to the foregoing, the information set forth in the Mortgage Loan Schedule
accurately reflects information set forth in the Mortgage Note, and declares
that it holds and will hold such documents and the other documents delivered to
it constituting the Indenture Trustee's Mortgage Files, and that it holds or
will hold all such assets and such other assets included in the definition of
"Trust Estate" that are delivered to it, on behalf of the Indenture Trustee, in
trust for the exclusive use and benefit of all present and future Noteholders
and the Note Insurer.
The Collateral Agent has made no independent examination of any such documents
beyond the review specifically required in the above-referenced Sale and
Servicing Agreement. The Collateral Agent makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of the Mortgage Loans identified on the Mortgage Loan Schedule,
or (ii) the collectibility, insurability, effectiveness or suitability of any
such Mortgage Loan.
The Schedule of Mortgage Loans is attached to this Receipt.
C-1
Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Appendix I to the Indenture.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
---------------------------------------
Name:
Title:
C-2
EXHIBIT D
INITIAL CERTIFICATION OF COLLATERAL AGENT
______________, 2001
Xxxxxx Xxxxxxx ABS Capital I Inc. American Business Credit, Inc.
0000 Xxxxxxxx XxxxXxxxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
The Chase Manhattan Bank, MBIA Insurance Corporation
as Indenture Trustee 000 Xxxx Xxxxxx
and Collateral Agent Xxxxxx, Xxx Xxxx 00000
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Sale and Servicing Agreement, dated as of September
1, 2001 among Xxxxxx Xxxxxxx ABS Capital I Inc., as
Depositor, ABFS Mortgage Loan Trust 2001-3, American
Business Credit, Inc., as Servicer and The Chase
Manhattan Bank, as Indenture Trustee and as
Collateral Agent
Ladies and Gentlemen:
In accordance with the provisions of Section 2.06 of the
above-referenced Sale and Servicing Agreement, the undersigned, as Collateral
Agent, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
listed on the attachment hereto), it has reviewed the documents delivered to it
pursuant to Section 2.05 of the Sale and Servicing Agreement and has determined
that (i) all documents required to be delivered to it pursuant to Section 2.05
of the above-referenced Sale and Servicing Agreement are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
have not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections do not constitute physical
alteration if they reasonably appear to have been initialed by the Mortgagor),
appear regular on their face and relate to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing documents, the information set
forth in the Mortgage Loan Schedule as to the information in clauses (i), (ii),
(v) and (vi) of the definition of "Mortgage Loan Schedule" respecting such
Mortgage Loan accurately reflects the information set forth in Indenture
Trustee's Mortgage File. The Collateral Agent has made no independent
examination of such documents beyond the review specifically required in the
above-referenced Sale and Servicing Agreement. The Collateral Agent makes no
representations as to: (x) the validity, legality, enforceability or genuineness
of any such documents contained in each or any of the Mortgage Loans identified
on the Mortgage Loan Schedule, or (y) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
D-1
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Sale and Servicing
Agreement.
THE CHASE MANHATTAN BANK,
as Collateral Agent
By:
------------------------------------------
Name:
Title:
D-2
EXHIBIT E
FINAL CERTIFICATION OF COLLATERAL AGENT
________________, 2001
Xxxxxx Xxxxxxx ABS Capital I Inc. American Business Credit, Inc.
0000 Xxxxxxxx XxxxXxxxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
The Chase Manhattan Bank, MBIA Insurance Corporation
as Indenture Trustee 000 Xxxx Xxxxxx
and Collateral Agent Xxxxxx, Xxx Xxxx 00000
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Sale and Servicing Agreement, dated as of September
1, 2001 among Xxxxxx Xxxxxxx ABS Capital I Inc., as
Depositor, ABFS Mortgage Loan Trust 2001-3, American
Business Credit, Inc., as Servicer and The Chase
Manhattan Bank, as Indenture Trustee and as
Collateral Agent
Ladies and Gentlemen:
In accordance with the provisions of Section 2.06 of the
above-referenced Sale and Servicing Agreement, the undersigned, as Collateral
Agent, hereby certifies that as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
listed on the attachment hereto), it has reviewed the documents delivered to it
pursuant to Section 2.05 of the Sale and Servicing Agreement and has determined
that (i) all documents required to be delivered to it pursuant to Section 2.05
of the above-referenced Sale and Servicing Agreement are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
have not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections do not constitute physical
alteration if they reasonably appear to have been initialed by the Mortgagor)
appears regular on its face and relates to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing documents, the information set
forth in the Mortgage Loan Schedule respecting such Mortgage Loan accurately
reflects the information set forth in the Indenture Trustee's Mortgage File. The
Collateral Agent has made no independent examination of such documents beyond
the review specifically required in the above-referenced Sale and Servicing
Agreement. The Collateral Agent makes no representations as to: (x) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (y) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
E-1
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Sale and Servicing
Agreement.
THE CHASE MANHATTAN BANK,
as Collateral Agent
By:
------------------------------------------
Name:
Title:
E-2
EXHIBIT F
REQUEST FOR RELEASE OF DOCUMENTS
________________, 2001
The Chase Manhattan Bank,
as Indenture Trustee
and Collateral Agent
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Re: Sale and Servicing Agreement, dated as of September
1, 2001 among Xxxxxx Xxxxxxx ABS Capital I Inc., as
Depositor, ABFS Mortgage Loan Trust 2001-3, American
Business Credit, Inc., as Servicer and The Chase
Manhattan Bank, as Indenture Trustee and as
Collateral Agent
In connection with the administration of the pool of Mortgage
Loans held by The Chase Manhattan Bank, as Collateral Agent, on behalf of The
Chase Manhattan Bank, as Indenture Trustee, for the benefit of the Noteholders
and the Note Insurer, we request the release, and acknowledge receipt, of the
(Indenture Trustee's Mortgage File/[specify document]) for the Mortgage Loan
described below, for the reason indicated.
Mortgagor's Name, Address & Zip Code:
------------------------------------
Mortgage Loan Number:
--------------------
Reason for Requesting Documents (check one)
-------------------------------
____ 1. Mortgage Loan Paid in Full
(Servicer hereby certifies that all amounts received
in connection therewith have been credited to the
Collection Account.)
____ 2. Mortgage Loan Liquidated
(Servicer hereby certifies that all proceeds of
foreclosure, insurance or other liquidation have been
finally received and credited to the Collection
Account.)
____ 3. Mortgage Loan in Foreclosure
F-1
____ 4. Mortgage Loan Repurchased Pursuant to Section 5.15 of the Sale
and Servicing Agreement.
____ 5. Mortgage Loan Repurchased or Substituted pursuant to Article
II or III of the Sale and Servicing Agreement (Servicer hereby
certifies that the repurchase price or Substitution Adjustment
has been credited to the related Distribution Account and that
the substituted mortgage loan is a Qualified Substitute
Mortgage Loan.)
____ 6. Other (explain)_______________________________________________
If box 1 or 2 above is checked, and if all or part of the
Indenture Trustee's Mortgage File was previously released to us, please release
to us our previous receipt on file with you, as well as any additional documents
in your possession relating to the above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all
of the above documents to the Collateral Agent, please acknowledge your receipt
by signing in the space indicated below, and returning this form.
AMERICAN BUSINESS CREDIT, INC.,
as Servicer
By:
------------------------------------------
Name:
Title:
Documents returned to Collateral Agent:
THE CHASE MANHATTAN BANK,
as Collateral Agent
By:
-----------------------------------------
Name:
Title:
Date:
F-2
EXHIBIT G
[RESERVED]
SCHEDULE I
MORTGAGE LOAN SCHEDULE
[See Schedule I to Unaffiliated Seller's Agreement]
APPENDIX I
DEFINED TERMS
[See Appendix I to the Indenture]
