SALE AND SERVICING AGREEMENT
dated as of September 1, 1999
by and among
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
as Depositor,
ABFS MORTGAGE LOAN TRUST 1999-3,
as Issuer,
AMERICAN BUSINESS CREDIT, INC.,
as Servicer,
CHASE BANK OF TEXAS, N.A.,
as Collateral Agent,
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
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
Section 2.01. Purchase and Sale of Initial Mortgage Loans......................2
Section 2.02. Purchase and Sale of Subsequent Mortgage Loans...................3
Section 2.03. Purchase Price...................................................3
Section 2.04. Possession of Mortgage Files; Access to Mortgage Files...........4
Section 2.05. Delivery of Mortgage Loan Documents..............................4
Section 2.06. Acceptance of the Trust Estate; Certain Substitutions;
Certification by the Collateral Agent..........................7
Section 2.07. Grant of Security Interest.......................................9
Section 2.08. Further Action Evidencing Assignments...........................10
Section 2.09. Assignment of Agreement.........................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Servicer.................................10
Section 3.02. Representations, Warranties and Covenants of the
Depositor ....................................................12
Section 3.03. Representations, Warranties and Covenants of the
Collateral Agent .............................................13
Section 3.04. Representations, Warranties and Covenants of the
Indenture Trustee ............................................14
ARTICLE IV
THE MORTGAGE LOANS
Section 4.01. Representations and Warranties Concerning the
Mortgage Loans ...............................................14
Section 4.02. Purchase and Substitution.......................................14
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01. The Servicer....................................................16
Section 5.02. Collection of Certain Mortgage Loan Payments;
Collection Account ...........................................17
Section 5.03. Permitted Withdrawals from the Collection Account...............18
Section 5.04. Hazard Insurance Policies; Property Protection Expenses.........19
Section 5.05. Assumption and Modification Agreements..........................20
Section 5.06. Realization Upon Defaulted Mortgage Loans.......................20
Section 5.07. Indenture Trustee to Cooperate..................................21
Section 5.08. Servicing Compensation; Payment of Certain Expenses
by Servicer ..................................................22
Section 5.09. Annual Statement as to Compliance...............................22
Section 5.10. Annual Independent Public Accountants' Servicing Report.........22
Section 5.11. Access to Certain Documentation.................................23
Section 5.12. Maintenance of Fidelity Bond....................................23
Section 5.13. The Subservicers................................................23
Section 5.14. Reports to the Indenture Trustee; Collection
Account Statements ...........................................23
Section 5.15. Optional Purchase of Defaulted Mortgage Loans...................24
Section 5.16. Reports to be Provided by the Servicer..........................25
Section 5.17. Adjustment of Servicing Compensation in Respect
of Prepaid Mortgage Loans ....................................26
Section 5.18. Periodic Advances; Special Advance..............................26
Section 5.19. Indemnification; Third Party Claims.............................27
Section 5.20. Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer ......................28
Section 5.21. Assignment of Agreement by Servicer; Servicer Not to Resign.....28
Section 5.22. Periodic Filings with the Securities and Exchange
Commission; Additional Information ...........................29
ARTICLE VI
APPLICATION OF FUNDS
Section 6.01. Deposits to the Payment Account.................................29
Section 6.02. Collection of Money.............................................29
Section 6.03. Application of Principal and Interest...........................30
Section 6.04. Information Concerning the Mortgage Loans.......................30
Section 6.05. Compensating Interest...........................................30
Section 6.06. Effect of Payments by the Note Insurer; Subrogation.............30
ARTICLE VII
SERVICER DEFAULT
Section 7.01. Servicer Events of Default......................................31
Section 7.02. Indenture Trustee to Act; Appointment of Successor..............33
Section 7.03. Waiver of Defaults..............................................35
Section 7.04. Rights of the Note Insurer to Exercise Rights of
the Noteholders ..............................................35
Section 7.05. Indenture Trustee To Act Solely with Consent of the
Note Insurer .................................................36
Section 7.06. Mortgage Loans, Trust Estate and Accounts Held for Benefit
of the Note Insurer ..........................................36
Section 7.07. Note Insurer Default............................................36
ARTICLE VIII
TERMINATION
Section 8.01. Termination.....................................................37
Section 8.02. Additional Termination Requirements.............................38
Section 8.03. Accounting Upon Termination of Servicer.........................38
Section 8.04. Retention and Termination of the Servicer.......................38
ARTICLE IX
THE COLLATERAL AGENT
Section 9.01. Duties of the Collateral Agent..................................39
Section 9.02. Certain Matters Affecting the Collateral Agent..................40
Section 9.03. Collateral Agent Not Liable for Notes or Mortgage Loans.........41
Section 9.04. Collateral Agent May Own Notes..................................42
Section 9.05. Collateral Agent's Fees and Expenses; Indemnity.................42
Section 9.06. Eligibility Requirements for Collateral Agent...................42
Section 9.07. Resignation and Removal of the Collateral Agent.................42
Section 9.08. Successor Collateral Agent......................................43
Section 9.09. Merger or Consolidation of Collateral Agent.....................44
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Limitation on Liability........................................44
Section 10.02. Acts of Noteholders............................................44
Section 10.03. Amendment......................................................45
Section 10.04. Recordation of Agreement.......................................45
Section 10.05. Duration of Agreement..........................................46
Section 10.06. Notices........................................................46
Section 10.07. Severability of Provisions.....................................46
Section 10.08. No Partnership.................................................46
Section 10.09. Counterparts...................................................46
Section 10.10. Successors and Assigns.........................................47
Section 10.11. Headings.......................................................47
Section 10.12. The Note Insurer Default.......................................47
Section 10.13. Third Party Beneficiary........................................47
Section 10.14. Intent of the Parties..........................................47
Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL...47
EXHIBITS
EXHIBIT A Contents of the Mortgage File
EXHIBIT B Indenture Trustee's Acknowledgement of Receipt
EXHIBIT C Collateral Agent's Acknowledgement of Receipt
EXHIBIT D Initial Certification of Collateral Agent
EXHIBIT E Final Certification of Collateral Agent
EXHIBIT F Request for Release of Documents
EXHIBIT G Form of Subsequent Contribution Agreement
SCHEDULES
SCHEDULE I Mortgage Loan Schedule
SALE AND SERVICING AGREEMENT, dated as of September 1, 1999 (this
"Agreement"), by and among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
a Delaware corporation, as depositor (the "Depositor"), ABFS MORTGAGE LOAN TRUST
1999-3, a Delaware statutory business trust, as issuer (the "Trust"), AMERICAN
BUSINESS CREDIT, INC., a Pennsylvania corporation, as servicer (the "Servicer"),
CHASE BANK OF TEXAS, N.A., a national banking association, as collateral agent
(the "Collateral Agent"), and THE CHASE MANHATTAN BANK, a New York banking
corporation, as indenture trustee (the "Indenture Trustee").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Depositor desires to sell to the Trust, and the Trust
desires to purchase from the Depositor, the mortgage loans (the "Mortgage
Loans") listed on Schedule I to this Agreement;
WHEREAS, immediately after such purchase, the Trust will pledge such
Mortgage Loans to the Indenture Trustee pursuant to the terms of an Indenture,
dated as of September 1, 1999 (the "Indenture"), between the Trust and the
Indenture Trustee, and issue the ABFS Mortgage Loan Trust 1999-3, 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, Financial Security Assurance Inc. (the "Note Insurer") is
intended to be a third-party beneficiary of this Agreement, and is hereby
recognized by the parties hereto as a third-party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Trust, the Depositor, the Servicer, the
Collateral Agent and the Indenture Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. Capitalized terms used herein but
not defined herein shall have the meanings ascribed to such terms in Appendix I
attached hereto.
Section 1.02. Provisions of General Application. (a) All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP.
(b) The terms defined herein and in Appendix I to the Indenture include
the plural as well as the singular.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this
Agreement.
(d) Any reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes.
(e) All calculations of interest with respect to the Class A-1 Notes
provided for herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All calculations of interest with respect to the Class A-2
Notes provided for herein shall be on the basis of a 360-day year and the actual
number of days elapsed in the related Accrual Period. All calculations of
interest with respect to any Mortgage Loan provided for herein shall be made in
accordance with the terms of the related Mortgage Note and Mortgage or, if such
documents do not specify the basis upon which interest accrues thereon, on the
basis of a 360-day year consisting of twelve 30-day months, to the extent
permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the date such
payment is actually received by the Servicer; provided, however, that, for
purposes of calculating 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 years 1999 and 2000) and thereafter, within fifteen (15)
days prior to the end of each calendar year while this Agreement remains in
effect (with respect to the succeeding calendar years), the Servicer shall
provide to the Indenture Trustee 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 Initial Mortgage Loans. The
Depositor does hereby sell, transfer, assign, set over and convey to the Trust,
without recourse, but subject to the terms and provisions of this Agreement, all
of the right, title and interest of the Depositor in and to the Initial Mortgage
Loans, including the outstanding principal of, and interest due on, such Initial
Mortgage Loans listed on Schedule I attached hereto, and all other assets
included or to be included in the Trust Estate. In connection with such transfer
and assignment, and pursuant to Section 2.07 of the Unaffiliated Seller's
Agreement, the Depositor does hereby also irrevocably transfer, assign, set over
and otherwise convey to the Trust all of its rights under the Unaffiliated
Seller's Agreement, including, without limitation, its right to exercise the
remedies created by Sections 2.06 and 3.05 of the Unaffiliated Seller's
Agreement for defective documentation and for breaches of representations and
warranties, agreements and covenants of the Unaffiliated Seller and the
Originators contained in Sections 3.01, 3.02 and 3.03 of the Unaffiliated
Seller's Agreement.
Section 2.02. Purchase and Sale of Subsequent Mortgage Loans. (a)
Subject to the satisfaction of the conditions set forth in Section 2.14(b) of
the Indenture, in consideration of the Trust's delivery on the related
Subsequent Transfer Dates to or upon the order of the Depositor of all or a
portion of the balance of funds in the related Pre-Funding Account, the
Depositor shall on any Subsequent Transfer Date sell, transfer, assign, set over
and convey to the Trust without recourse, but subject to terms and provisions of
this Agreement, all of the right, title and interest of the Depositor in and to
the Subsequent Mortgage Loans in the related Pool, including the outstanding
principal of, and interest due on, such Subsequent Mortgage Loans, and all other
assets included or to be included in the Trust Estate. In connection with such
transfer and assignment, and pursuant to Section 2.07 of the Unaffiliated
Seller's Agreement, the Depositor will also irrevocably transfer, assign, set
over and otherwise convey to the Trust all of its rights under the Unaffiliated
Seller's Agreement and the related Subsequent Transfer Agreement, including,
without limitation, its right to exercise the remedies created by Sections 2.06
and 3.05 of the Unaffiliated Seller's Agreement for defective documentation and
for breaches of representations and warranties, agreements and covenants of the
Unaffiliated Seller and the Originators contained in Sections 3.01, 3.02 and
3.03 of the Unaffiliated Seller's Agreement.
The amount released from a Pre-Funding Account with respect to a
transfer of Subsequent Mortgage Loans to the related Pool shall be one-hundred
percent (100%) of the Aggregate Principal Balances of the Subsequent Mortgage
Loans so transferred, as of the related Subsequent Cut-Off Date.
(b) In connection with the transfer and assignment of the Subsequent
Mortgage Loans to the Trust, the Depositor shall cause the Unaffiliated Seller
to satisfy the document delivery requirements set forth in Section 2.05 hereof.
(c) For any Subsequent Mortgage Loan that has a first Due Date that
occurs later than the last day of the Due Period following the Due Period in
which the Subsequent Mortgage Loan was sold to the Trust, on each applicable
Servicer Payment Date, the Servicer will deposit into the Payment Account 30
days' interest at the related Mortgage Interest Rate, net of the Servicing Fee,
for each month after the month in which the Subsequent Transfer occurs until,
but not including, the month in which such first Due Date occurs.
Section 2.03. Purchase Price. On the Closing Date, as full
consideration for the Depositor's sale of the Initial Mortgage Loans to the
Trust, the Underwriter, on behalf of the Trust, will deliver to, or at the
direction of, the Depositor (i) an amount in cash equal to the sum of (A) 99.70%
and 99.6375% of the Original Note Principal Balance as of the Closing Date of
the Class A-1 Notes and the Class A-2 Notes, respectively, plus (B) accrued
interest on the Original Note Principal Balance of the Class A-1 Notes at the
rate of 7.49% per annum from (and including) September 1, 1999 to (but not
including) the Closing Date, minus (C) the Original Pre-Funded Amount and the
Original Capitalized Interest Amount with respect to each Class of Notes,
payable by wire transfer of same day funds, and (ii) the Trust Certificates to
be issued pursuant to the Trust Agreement.
Section 2.04. Possession of Mortgage Files; Access to Mortgage Files.
(a) Upon the receipt by the Depositor, or its designee, of the purchase price
for the Initial Mortgage Loans set forth in Section 2.03 hereof and the issuance
of the Notes pursuant to the Indenture, the ownership of each Mortgage Note,
each Mortgage and the contents of the Mortgage File related to each Initial
Mortgage Loan will be vested in the Trust, and will be pledged to the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer.
(b) Pursuant to Section 2.05 hereof and Section 2.05 of the
Unaffiliated Seller's Agreement, the Unaffiliated Seller has delivered or caused
to be delivered the Indenture Trustee's Mortgage File related to each Initial
Mortgage Loan to the Collateral Agent, on behalf of the Indenture Trustee.
(c) The Collateral Agent will be the custodian, on behalf of the
Indenture Trustee, to hold the Indenture Trustee's Mortgage Files in trust for
the benefit of all present and future Noteholders and the Note Insurer. In the
event the Collateral Agent resigns or is removed, the Indenture Trustee shall
either (x) hold the Indenture Trustee's Mortgage Files, or (y) appoint a
successor Collateral Agent to hold the Indenture Trustee's Mortgage Files as set
forth in Section 9.08 hereof.
(d) The Collateral Agent shall afford the Depositor, the Trust, the
Note Insurer and the Servicer reasonable access to all records and documentation
regarding the Mortgage Loans relating to this Agreement, such access being
afforded at customary charges, upon reasonable prior written request and during
normal business hours at the offices of the Collateral Agent.
Section 2.05. Delivery of Mortgage Loan Documents. (a) In connection
with the transfer and assignment of the Mortgage Loans, the Depositor shall on
or before the Closing Date, with respect to the Initial Mortgage Loans, and
shall on or before the Subsequent Transfer Date with respect to Subsequent
Mortgage Loans, deliver, or cause the Unaffiliated Seller to deliver, to the
Collateral Agent, on behalf of the Indenture Trustee (as pledgee of the Trust
pursuant to the Indenture), the following documents or instruments with respect
to each Mortgage Loan so transferred or assigned:
(i) the original Mortgage Note, endorsed without recourse in
blank by the related Originator, including all intervening endorsements
showing a complete chain of endorsement;
(ii) the related original Mortgage with evidence of recording
indicated thereon or a copy thereof certified by the applicable
recording office;
(iii) the recorded mortgage assignment, or copy thereof certified
by the applicable recording office, if any, showing a complete chain of
assignment from the originator of the related Mortgage Loan to the
related Originator (which assignment may, at such Originator's option,
be combined with the assignment referred to in subpart (iv) hereof, in
which case it must be in recordable form, but need not have been
previously recorded);
(iv) a mortgage assignment in recordable form (which, if
acceptable for recording in the relevant jurisdiction, may be included
in a blanket assignment or assignments) of each Mortgage from the
related Originator to the Indenture Trustee;
(v) originals of all assumption, modification and substitution
agreements in those instances where the terms or provisions of a
Mortgage or Mortgage Note have been modified or such Mortgage or
Mortgage Note has been assumed; and
(vi) an original title insurance policy (or (A) a copy of the
title insurance policy, or (B) a binder thereof or copy of such binder
together with a certificate from the related Originator that the
original Mortgage has been delivered to the title insurance company
that issued such binder for recordation).
In instances where the original recorded Mortgage and a completed
assignment thereof in recordable form cannot be delivered by the related
Originator to the Unaffiliated Seller, and by the Unaffiliated Seller to the
Collateral Agent, on behalf of the Indenture Trustee prior to or concurrently
with the execution and delivery of this Agreement (or, with respect to
Subsequent Mortgage Loans, prior to or on the related Subsequent Transfer Date),
due to a delay in connection with recording, the related Originator may:
(x) in lieu of delivering such original recorded Mortgage, deliver to
the Collateral Agent, on behalf of the Indenture Trustee, a copy thereof;
provided, that the related Originator certifies that the original Mortgage has
been delivered to a title insurance company for recordation after receipt of its
policy of title insurance or binder therefor; and
(y) in lieu of delivering the completed assignment in recordable form,
deliver to the Collateral Agent, on behalf of the Indenture Trustee, the
assignment in recordable form, otherwise complete except for recording
information.
The Collateral Agent, on behalf of the Indenture Trustee, shall
promptly upon receipt thereof, with respect to each Mortgage Note described in
Section 2.05(a)(i) hereof and each assignment described in Section 2.05(a)(iv)
hereof, endorse such Mortgage Note and assignment as follows: "The Chase
Manhattan Bank, as Indenture Trustee under the Indenture dated as of September
1, 1999, ABFS Mortgage Loan Trust 1999-3."
(b) As promptly as practicable, but in any event within thirty (30)
days from the Closing Date or the Subsequent Transfer Date, as applicable, the
Unaffiliated Seller shall promptly submit, or cause to be submitted by the
related Originator, for recording in the appropriate public office for real
property records, each assignment referred to in Section 2.05(a)(iv). The
Collateral Agent, on behalf of the Indenture Trustee, shall retain a copy of
each assignment submitted for recording. In the event that any such assignment
is lost or returned unrecorded because of a defect therein, the Unaffiliated
Seller or such Originator shall promptly prepare a substitute assignment or cure
such defect, as the case may be, and thereafter the Unaffiliated Seller or such
Originator shall submit each such assignment for recording. The costs relating
to the delivery and recordation of the documents in connection with the Mortgage
Loans as specified in this Article II shall be borne by the Unaffiliated Seller.
(c) The Unaffiliated Seller or the related Originator shall, within
five (5) Business Days after the receipt thereof, deliver, or cause to be
delivered, to the Collateral Agent, on behalf of the Indenture Trustee: (i) the
original recorded Mortgage and related power of attorney, if any, in those
instances where a copy thereof certified by the related Originator was delivered
to the Collateral Agent, on behalf of the Indenture Trustee; (ii) the original
recorded assignment of Mortgage from the related Originator to the Indenture
Trustee, which, together with any intervening assignments of Mortgage, evidences
a complete chain of assignment from the originator of the Mortgage Loan to the
Indenture Trustee, in those instances where copies of such assignments certified
by the related Originator were delivered to the Collateral Agent, on behalf of
the Indenture Trustee, and (iii) the title insurance policy or title opinion
required in Section 2.05(a)(vi). The Collateral Agent shall review the recorded
assignment to confirm the information contained therein. The Collateral Agent
shall notify the Indenture Trustee, the Note Insurer and the Servicer, of any
defect in such assignment based on such review. The Servicer shall have a period
of sixty (60) days following such notice to correct or cure such defect. In the
event that the Servicer fails to record an assignment of a Mortgage as provided
herein, the Collateral Agent shall, at the Servicer's expense, use reasonable
efforts to prepare and, if required hereunder, file such assignments for
recordation in the appropriate real property or other records and the Servicer
hereby appoints the Collateral Agent as its attorney-in-fact with full power and
authority acting in its stead for the purpose of such preparation, execution and
filing.
Notwithstanding anything to the contrary contained in this Section
2.05, in those instances where the public recording office retains the original
Mortgage, power of attorney, if any, assignment or assignment of Mortgage after
it has been recorded or such original has been lost, the Unaffiliated Seller or
the related Originator shall be deemed to have satisfied its obligations
hereunder upon delivery to the Collateral Agent, on behalf of the Indenture
Trustee, of a copy of such Mortgage, power of attorney, if any, assignment or
assignment of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
From time to time the Unaffiliated Seller or the related Originator may
forward, or cause to be forwarded, to the Collateral Agent, on behalf of the
Indenture Trustee, additional original documents evidencing any assumption or
modification of a Mortgage Loan.
(d) All original documents relating to the Mortgage Loans that are not
delivered to the Collateral Agent, on behalf of the Indenture Trustee, as
permitted by Section 2.05(a) hereof are, and shall be, held by the Servicer, the
Unaffiliated Seller or the related Originator, as the case may be, in trust for
the benefit of the Indenture Trustee, on behalf of the Noteholders and the Note
Insurer. In the event that any such original document is required pursuant to
the terms of this Section 2.05 to be a part of an Indenture Trustee's Mortgage
File, such document shall be delivered promptly to the Collateral Agent, on
behalf of the Indenture Trustee. From and after the sale of the Mortgage Loans
to the Trust pursuant hereto, to the extent that the Unaffiliated Seller or the
related Originator retains legal title of record to any Mortgage Loans prior to
the vesting of legal title in the Trust, such title shall be retained in trust
for the Trust as the owner of the Mortgage Loans, and the Indenture Trustee, as
the pledgee of the Trust under the Indenture. In acting as custodian of any
original document which is part of the Indenture Trustee's Mortgage Files, the
Servicer agrees further that it does not and will not have or assert any
beneficial ownership interest in the related Mortgage Loans or the Mortgage
Files. Promptly upon the Servicer's receipt of any such original document, the
Servicer, on behalf of the Trust, shall xxxx conspicuously each such original
document, and its master data processing records with a legend evidencing that
the Trust has purchased the related Mortgage Loan and all right and title
thereto and interest therein, and pledged such Mortgage Loan and all right and
title thereto and interest therein to the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer.
Section 2.06. Acceptance of the Trust Estate; Certain Substitutions;
Certification by the Collateral Agent. (a) The Indenture Trustee agrees to
execute and deliver to the Depositor, the Note Insurer, the Collateral Agent and
the Servicer on or prior to the Closing Date an acknowledgement of receipt of
the Note Insurance Policy in the form attached as Exhibit B hereto.
(b) The Collateral Agent, on behalf of the Indenture Trustee, agrees
to:
(i) execute and deliver to the Depositor, the Note Insurer, the
Indenture Trustee, the Servicer and the Unaffiliated Seller, on or
prior to the Closing Date or any Subsequent Transfer Date, as
applicable, with respect to each Mortgage Loan transferred on such
date, an acknowledgement of receipt of the Mortgage File containing the
original Mortgage Note (with any exceptions noted), in the form
attached as Exhibit C hereto, and declares that it will hold such
documents and any amendments, replacements or supplements thereto, as
well as any other assets included in the definition of Trust Estate and
delivered to the Collateral Agent, on behalf of the Indenture Trustee,
in trust upon and subject to the conditions set forth herein, for the
benefit of the Noteholders and the Note Insurer.
(ii) to review (or cause to be reviewed) each Indenture Trustee's
Mortgage File within thirty (30) days after the Closing Date or any
Subsequent Transfer Date, as applicable (or, with respect to any
Qualified Substitute Mortgage Loans, within thirty (30) days after the
receipt by the Collateral Agent, on behalf of the Indenture Trustee,
thereof), and to deliver to the Unaffiliated Seller, the Servicer, the
Depositor, the Indenture Trustee and the Note Insurer a certification,
in the form attached hereto as Exhibit D, to the effect that, except as
otherwise noted, as to each Mortgage Loan listed in the related
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
any Mortgage Loan specifically identified in such certification as not
covered by such certification), (i) all documents required to be
delivered to it pursuant to Section 2.05 are in its possession, (ii)
each such document has been reviewed by it and has not been mutilated,
damaged, torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical alteration if they
reasonably appear to have been initialed by the Mortgagor), appears
regular on its face and relates to such Mortgage Loan, and (iii) based
on its examination and only as to the foregoing documents, the
information set forth on the Mortgage Loan Schedule as to the
information set forth in (i), (ii), (v) and (vi) of the definition of
"Mortgage Loan Schedule" accurately reflects the information set forth
in the Indenture Trustee's Mortgage File delivered on such date.
(iii) to review (or cause to be reviewed) each Indenture
Trustee's Mortgage File within ninety (90) days after the Closing Date
or any Subsequent Transfer Date, as applicable (or, with respect to any
Qualified Substitute Mortgage Loans, within ninety (90) days after the
receipt by the Collateral Agent, on behalf of the Indenture Trustee,
thereof), and to deliver to the Unaffiliated Seller, the Servicer, the
Depositor, the Indenture Trustee, the Rating Agencies and the Note
Insurer a certification in the form attached hereto as Exhibit E to the
effect that, except as otherwise noted, as to each Mortgage Loan listed
in the related Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), (i) all documents
required to be delivered to it pursuant to Section 2.05 are in its
possession, (ii) each such document has been reviewed by it and has not
been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections shall not constitute
physical alteration if they reasonably appear to be initialed by the
Mortgagor), appears regular on its face and relates to such Mortgage
Loan, and (iii) based on its examination and only as to the foregoing
documents, the information set forth in the definition of "Mortgage
Loan Schedule" accurately reflects the information set forth in the
Indenture Trustee's Mortgage File delivered on such date.
In performing any such review, the Collateral Agent may conclusively
rely on the Unaffiliated Seller as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Collateral Agent's review of the Indenture Trustee's Mortgage Files is limited
solely to confirming that the documents listed in Section 2.05 have been
executed and received and relate to the Indenture Trustee's Mortgage Files
identified in the related Mortgage Loan Schedule. The Collateral Agent shall be
under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face.
(c) If the Collateral Agent during the process of reviewing the
Indenture Trustee's Mortgage Files finds any document constituting a part of a
Indenture Trustee's Mortgage File which is not executed, has not been received,
is unrelated to the Mortgage Loan identified in the related Mortgage Loan
Schedule, or does not conform to the requirements of Section 2.05 or the
description thereof as set forth in the related Mortgage Loan Schedule, the
Collateral Agent shall promptly so notify the Servicer, the Unaffiliated Seller,
the Originators, the Note Insurer and the Indenture Trustee. Pursuant to Section
2.06(b) of the Unaffiliated Seller's Agreement, the Unaffiliated Seller and the
Originators have agreed to use reasonable efforts to cause to be remedied a
material defect in a document constituting part of an Indenture Trustee's
Mortgage File of which it is so notified by the Collateral Agent. If, however,
within sixty (60) days after the Collateral Agent's notice to it respecting such
defect the Unaffiliated Seller or the Originators have not caused to be remedied
the defect and the defect materially and adversely affects the interest of the
Noteholders and the Note Insurer in the related Mortgage Loan, the Unaffiliated
Seller and the Originators will be obligated, pursuant to Section 3.05 of the
Unaffiliated Seller's Agreement, to either (i) substitute in lieu of such
Mortgage Loan a Qualified Substitute Mortgage Loan in the manner and subject to
the conditions set forth in Section 3.05 of the Unaffiliated Seller's Agreement
or (ii) purchase such Mortgage Loan at a purchase price equal to the Loan
Repurchase Price. Upon receipt by the Collateral Agent and the Indenture Trustee
of a certification, in the form attached hereto as Exhibit F, of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt by the Collateral Agent, on behalf of the Indenture Trustee, of the
related Indenture Trustee's Mortgage File, and the deposit of the amounts
described above in the Collection Account, the Collateral Agent shall release to
the Servicer for release to the Unaffiliated Seller the related Indenture
Trustee's Mortgage File and the Indenture Trustee shall execute, without
recourse, and deliver such instruments of transfer furnished by the Unaffiliated
Seller as may be necessary to transfer such Mortgage Loan to the Unaffiliated
Seller. The Collateral Agent shall notify the Indenture Trustee, who shall
notify the Note Insurer if the Unaffiliated Seller fails to repurchase or
substitute for a Mortgage Loan in accordance with the foregoing.
Section 2.07. Grant of Security Interest. (a) It is intended that the
conveyance of the Mortgage Loans and other property by the Depositor to the
Trust as provided in this Article II be, and be construed as, a sale of the
Mortgage Loans and such other property by the Depositor to the Trust. It is,
further, not intended that such conveyance be deemed a pledge of the Mortgage
Loans or such other property by the Depositor to the Trust to secure a debt or
other obligation of the Depositor. However, in the event that the Mortgage Loans
or any of such other property are held to be property of the Depositor, or if
for any reason this Agreement is held or deemed to create a security interest in
the Mortgage Loans or any of such other property, then it is intended that: (i)
this Agreement shall also be deemed to be a security agreement within the
meaning of the Uniform Commercial Code; (ii) the conveyance provided for in this
Article II shall be deemed to be a grant by the Depositor to the Trust of a
security interest in all of the Depositor's right, title and interest in and to
the Mortgage Loans and such other property and all amounts payable to the
holders of the Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including, without limitation,
all amounts from time to time held or invested in the Payment 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. In addition,
the Unaffiliated Seller, the Depositor and the Servicer shall respond to any
inquiries from third parties with respect to ownership of a Mortgage Loan or any
other asset in the Trust Estate by stating that it is not the owner of such
asset and that the Trust is the owner of such Mortgage Loan or other asset in
the Trust Estate, which is held by the Collateral Agent, on behalf of the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer.
Section 2.08. Further Action Evidencing Assignments. (a) The Servicer
agrees that, from time to time, at its expense, it shall cause the Unaffiliated
Seller to (and the Depositor on behalf of itself also agrees that it shall),
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or appropriate, or that the Servicer, the
Indenture Trustee or the Collateral Agent may reasonably request, in order to
perfect, protect or more fully evidence the transfer of ownership of the
Mortgage Loans and other assets in the Trust Estate or to enable the Collateral
Agent, on behalf of the Indenture Trustee, to exercise or enforce any of its
rights hereunder. Without limiting the generality of the foregoing, the Servicer
and the Depositor will, upon the request of the Servicer, the Indenture Trustee
or the Collateral Agent execute and file (or cause to be executed and filed)
such real estate filings, financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may be
necessary or appropriate.
(b) The Depositor hereby grants to the Servicer, the Indenture Trustee
and the Collateral Agent powers of attorney to execute all documents on its
behalf under this Agreement and the Unaffiliated Seller's Agreement as may be
necessary or desirable to effectuate the foregoing.
Section 2.09. Assignment of Agreement. The Depositor hereby
acknowledges and agrees that the Trust may assign its interest under this
Agreement to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer, as may be required to effect the purposes of the Indenture,
without further notice to, or consent of, the Depositor, and the Indenture
Trustee shall succeed to such of the rights and obligations of the Trust
hereunder as shall be so assigned. The Trust shall, pursuant to the Indenture,
assign all of its right, title and interest in and to the Mortgage Loans and its
right to exercise the remedies created by Section 2.06 and 3.05 of the
Unaffiliated Seller's Agreement for breaches of the representations, warranties,
agreements and covenants of the Unaffiliated Seller or the Originators contained
in Sections 2.05, 2.06, 3.02 and 3.03 of the Unaffiliated Seller's Agreement,
assign such right, title and interest to the Indenture Trustee, for the benefit
of the Noteholders and the Note Insurer. The Depositor agrees that, upon such
assignment to the Indenture Trustee, such representations, warranties,
agreements and covenants will run to and be for the benefit of the Indenture
Trustee and the Indenture Trustee may enforce, without joinder of the Depositor
or the Trust, the repurchase obligations of the Unaffiliated Seller and the
Originators set forth herein with respect to breaches of such representations,
warranties, agreements and covenants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations of the Servicer. The Servicer hereby
represents and warrants to the Indenture Trustee, the Depositor, the Collateral
Agent, the Trust, the Note Insurer and the Noteholders as of the Closing Date
and during the term of this Agreement that:
(a) Each of the Servicer and the Subservicers is duly organized,
validly existing and in good standing under the laws of their respective states
of incorporation and has the power to own its assets and to transact the
business in which it is currently engaged. Each of the Servicer and the
Subservicers is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it or the performance of its
obligations hereunder requires such qualification and in which the failure so to
qualify could reasonably be expected to have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the Servicer
or the Subservicers or the performance of their respective obligations
hereunder;
(b) The Servicer has the power and authority to make, execute, deliver
and perform this Agreement and all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement, and assuming the due
authorization, execution and delivery hereof by the other parties hereto
constitutes, or will constitute, the legal, valid and binding obligation of the
Servicer, enforceable in accordance with its terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(c) The Servicer is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency which consent
already has not been obtained in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except such as have
been obtained prior to the Closing Date;
(d) The execution, delivery and performance of this Agreement by the
Servicer will not violate any provision of any existing law or regulation or any
order or decree of any court or the charter or bylaws of the Servicer, or
constitute a breach of any mortgage, indenture, contract or other Agreement to
which the Servicer is a party or by which it may be bound;
(e) There is no action, suit, proceeding or investigation pending or
threatened against the Servicer or the Subservicers which, either in any one
instance or in the aggregate, is, in the Servicer's judgment, likely to result
in any material adverse change in the business, operations, financial condition,
properties, or assets of the Servicer or the Subservicers, or in any material
impairment of the right or ability of any of them to carry on its business
substantially as now conducted, or in any material liability on the part of any
of them, or which would draw into question the validity of this Agreement, the
Notes, or the Mortgage Loans or of any action taken or to be taken in connection
with the obligations of the Servicer or the Subservicers contemplated herein or
therein, or which would be likely to impair materially the ability of the
Servicer or the Subservicers to perform their respective obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other document
furnished by the Servicer or the Subservicers pursuant to this Agreement or in
connection with the transactions contemplated hereby, including, without
limitation, the sale or placement of the Notes, contains any untrue statement of
fact provided by or on behalf of the Servicer or omits to state a fact necessary
to make the statements provided by or on behalf of the Servicer contained herein
or therein not misleading:
(g) The Servicer does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Agreement; and
(h) None of the Servicer or the Subservicers is an "investment company"
or a company "controlled by an investment company," within the meaning of the
Investment Company Act of 1940, as amended.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.01 shall survive the delivery of the
respective Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be, and inure
to the benefit of the Indenture Trustee.
Section 3.02. Representations, Warranties and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Indenture Trustee, the Trust, the Collateral Agent and the Servicer that as of
the date of this Agreement or as of such date specifically provided herein:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes or will constitute the legal, valid and binding
agreement of the Depositor, enforceable against the Depositor in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except as have been made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement; and
(g) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency that may materially and adversely affect its performance
hereunder.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.02 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be, and shall
inure to the benefit of the Indenture Trustee.
Section 3.03. Representations, Warranties and Covenants of the
Collateral Agent. The Collateral Agent hereby represents, warrants and covenants
to the Indenture Trustee, the Trust, the Servicer and the Depositor that as of
the date of this Agreement or as of such date specifically provided herein:
(a) The Collateral Agent is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America;
(b) The Collateral Agent has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate transactions
contemplated by this Agreement; and
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Collateral Agent, all requisite corporate action having been
taken, and, assuming the due authorization, execution and delivery hereof by the
other parties hereto, constitutes or will constitute the legal, valid and
binding agreement of the Collateral Agent, enforceable against the Collateral
Agent in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.03 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be, and shall
inure to the benefit of the Indenture Trustee.
Section 3.04. Representations, Warranties and Covenants of the
Indenture Trustee. The Indenture Trustee hereby represents, warrants and
covenants to the Collateral Agent, the Trust, the Servicer and the Depositor
that as of the date of this Agreement or as of such date specifically provided
herein:
(a) The Indenture Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of 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);
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.04 shall survive delivery of the
respective Indenture Trustee's Mortgage Files to the Collateral Agent, on behalf
of the Indenture Trustee or to another custodian, as the case may be.
ARTICLE IV
THE MORTGAGE LOANS
Section 4.01. Representations and Warranties Concerning the Mortgage
Loans. With respect to each Mortgage Loan, the Depositor hereby assigns to the
Trust, pursuant to Section 2.07 of the Unaffiliated Seller's Agreement, the
representations, warranties and covenants of the Unaffiliated Seller and the
Originators set forth in Sections 3.01, 3.02 and 3.03 of the Unaffiliated
Seller's Agreement. Such representations, warranties and covenants are made or
deemed to be made (x) with respect to the Initial Mortgage Loans, as of the
Initial Cut-Off Date and (y) with respect to the Subsequent Mortgage Loans, as
of the related Subsequent Cut-Off Date.
Section 4.02. Purchase and Substitution. (a) It is understood and
agreed that the representations and warranties set forth in Sections 3.01, 3.02
and 3.03 of the Unaffiliated Seller's Agreement shall survive the purchase by
the Depositor of the Mortgage Loans, the subsequent transfer thereof by the
Depositor to the Trust, the subsequent pledge thereof by the Trust to the
Indenture Trustee, for the benefit of the Noteholders and the Notes Insurer, and
the delivery of the Notes to the Noteholders, and shall continue in full force
and effect, notwithstanding any restrictive or qualified endorsement on the
Mortgage Notes and notwithstanding subsequent termination of this Agreement or
the Unaffiliated Seller's Agreement.
(b) Upon discovery by the Unaffiliated Seller, the Depositor, the
Servicer, any Subservicer, the Indenture Trustee, the Collateral Agent, the Note
Insurer or a Noteholder of a breach of any of the representations and warranties
in Sections 3.01, 3.02 or 3.03 of the Unaffiliated Seller's Agreement which
materially and adversely affects the value of the Mortgage Loans or the interest
of the Noteholders or the Note Insurer, or which materially and adversely
affects the interests of the Note Insurer or the Noteholders in the related
Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan (notwithstanding that such representation and warranty
was made to the Unaffiliated Seller's or the Originator's best knowledge), the
party discovering such breach or failure shall promptly (and in any event within
five (5) days of the discovery) give written notice thereof to the others.
Within sixty (60) days of the earlier of its discovery or its receipt of notice
of any breach of a representation or warranty, the Servicer shall, or shall
cause the Unaffiliated Seller or an Originator to, (a) promptly cure such breach
in all material respects, (b) purchase such Mortgage Loan on the next succeeding
Servicer Payment Date, in the manner and at the price specified in Section
2.06(b) and this Section 4.02, or (c) remove such Mortgage Loan from the Trust
Estate (in which case it shall become a Deleted Mortgage Loan) and substitute
one or more Qualified Substitute Mortgage Loans in the manner specified in
Section 2.06(b) and this Section 4.02. The Collateral Agent shall give prompt
written notice to the Indenture Trustee, who shall deliver such notice to the
Note Insurer and the Rating Agencies of any repurchase or substitution made
pursuant to this Section 4.02 or Section 2.06(b).
(c) As to any Deleted Mortgage Loan for which the Unaffiliated Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, the Servicer shall
cause the Unaffiliated Seller or an Originator, as applicable, to effect such
substitution by delivering to the Indenture Trustee a certification, in the form
attached hereto as Exhibit F, executed by a Servicing Officer, and the documents
described in Sections 2.05(a)(i)-(vi) for such Qualified Substitute Mortgage
Loan or Loans.
(d) The Servicer shall deposit in the Payment Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Loans
after the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Mortgage Loan or Loans on or before the date of
substitution will be retained by the Unaffiliated Seller. The Trust will own all
payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Unaffiliated Seller shall thereafter be entitled to retain
all amounts subsequently received in respect of such Deleted Mortgage Loan. The
Servicer shall give written notice to the Indenture Trustee, the Collateral
Agent and the Note Insurer that such substitution has taken place and shall
amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage
Loan from the terms of this Agreement and the substitution of the Qualified
Substitute Mortgage Loan or Loans. Upon such substitution, such Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects.
(e) [Reserved];
(f) It is understood and agreed that the obligations of the
Unaffiliated Seller and the Originators set forth in Sections 2.06 and 3.05 of
the Unaffiliated Seller's Agreement to, and the Servicer's obligation set forth
in this Section 4.02 to cause the Unaffiliated Seller and the Originators to,
cure, purchase or substitute for a defective Mortgage Loan, or to indemnify as
described in Section 3.05(g) of the Unaffiliated Seller's Agreement, constitute
the sole remedies of the Indenture Trustee, the Collateral Agent, the Note
Insurer and the Noteholders respecting a breach of the representations and
warranties of the Unaffiliated Seller and the Originators set forth in Sections
3.01, 3.02 and 3.03 of the Unaffiliated Seller's Agreement.
(g) Pursuant to Section 3.05(g) of the Unaffiliated Seller's Agreement,
the Unaffiliated Seller and the Originators shall be obligated to indemnify the
Indenture Trustee, the Depositor, the Trust, the Owner Trustee, the Collateral
Agent, the Noteholders and the Note Insurer for any third party claims arising
out of a breach by the Unaffiliated Seller or the related Originator of
representations or warranties regarding the Mortgage Loans.
(h) Pursuant to Section 3.05(h) of the Unaffiliated Seller's Agreement,
the Unaffiliated Seller and each of the Originators shall be jointly and
severally responsible for any repurchase, cure or substitution obligation of the
Unaffiliated Seller or any of the Originators under this Agreement, the
Unaffiliated Seller's Agreement or the Indenture.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01. The Servicer. The Servicer shall service and administer
the Mortgage Loans in accordance with the Accepted Servicing Practices and shall
have full power and authority to do any and all things not inconsistent
therewith in connection with such servicing and administration which it may deem
necessary or desirable subject to the limitations set forth in this Agreement.
The Indenture Trustee shall furnish the Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. Without limiting the generality
of the foregoing, the Servicer shall continue, and is hereby authorized and
empowered by the Indenture Trustee, to execute and deliver, on behalf of itself,
the Noteholders and the Indenture Trustee or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, and to effect such
modifications, waivers, indulgences and other like matters as are in its
judgment necessary or desirable, with respect to the Mortgage Loans and the
Mortgaged Properties and the servicing and administration thereof. The Servicer
shall notify the Indenture Trustee of any such waiver, release, discharge,
modification, indulgence or other such matter by delivering to the Indenture
Trustee an Officer's Certificate certifying that such agreement is in compliance
with this Section 5.01 together with the original copy of any written agreement
or other document executed in connection therewith, all of which written
agreements or documents shall, for all purposes, be considered a part of the
related Indenture Trustee's Mortgage File to the same extent as all other
documents and instruments constituting a part thereof. Notwithstanding anything
in this Agreement to the contrary, the Servicer shall not permit any
modification with respect to any Mortgage Loan unless (i) the modifications do
not decrease the Mortgage Interest Rate, reduce or increase the principal
balance, decrease the lien priority, increase the current LTV above the lesser
of the current LTV or the original LTV, or change the final maturity date on or
of such Mortgage Loan and (ii) the Note Insurer consents to such modifications
in writing; provided, however, that the Servicer shall be permitted to extend
the final maturity date on a Mortgage Loan by 180 days or less without the
consent of the Note Insurer.
The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Indenture Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.
Section 5.02. Collection of Certain Mortgage Loan Payments; Collection
Account. (a) The Servicer shall make its reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow Accepted Servicing Practices. Consistent with the foregoing, the Servicer
may in its discretion waive any assumption fees or other fees which may be
collected in the ordinary course of servicing such Mortgage Loans.
(b) The Servicer shall establish and maintain, in the name of the
Indenture Trustee, the Collection Account, in trust for the benefit of the
Noteholders and the Note Insurer. The Collection Account shall be established
and maintained as an Eligible Account.
(c) The Servicer shall deposit in the Collection Account any amounts
representing Monthly Payments on the Mortgage Loans due or to be applied as of a
date after the related Cut-Off Date, and thereafter, on each Business Day
(except as otherwise permitted herein), the following payments and collections
received or made by it (other than in respect of principal collected and
interest due on the Mortgage Loans on or before the related Cut-Off Date):
(i) payments of interest on the Mortgage Loans;
(ii) payments of principal of the Mortgage Loans;
(iii) the Loan Repurchase Price of Mortgage Loans repurchased
pursuant to Sections 2.06, 4.02 or 5.05;
(iv) the Substitution Adjustment received in connection with
Mortgage Loans for which Qualified Substitute Mortgage Loans are
received pursuant to Sections 2.06, 4.02 and 3.03;
(v) all Liquidation Proceeds; and
(vi) all Insurance Proceeds (including, for this purpose, any
amounts required to be deposited by the Servicer pursuant to Section
5.04 hereof).
It is understood that the Servicer need not deposit amounts
representing fees, prepayment premiums, late payment charges or extension or
other administrative charges payable by Mortgagors, or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items.
(d) The Servicer shall invest any funds in the Collection Account in
Permitted Investments, which shall mature not later than the Business Day next
preceding the Servicer Payment Date next following the date of such investment
(except that any investment held by the Indenture Trustee may mature on such
Servicer Payment Date) and shall not be sold or disposed of prior to its
maturity. All net income and gain realized from any such investment shall be for
the benefit of the Servicer and shall be subject to its withdrawal or order on a
Servicer Payment Date. The Servicer shall deposit from its own funds the amount
of any loss, to the extent not offset by investment income or earnings, in the
Collection Account upon the realization of such loss.
Section 5.03. Permitted Withdrawals from the Collection Account. The
Servicer may make withdrawals from the Collection Account, on or prior to any
Servicer Payment Date, for the following purposes:
(a) to reimburse the Servicer for Liquidation Expenses theretofore
incurred in respect of any Mortgage Loan in an amount not to exceed the amount
of the sum of the related Insurance Proceeds and Liquidation Proceeds deposited
in the Collection Account pursuant to Section 5.02(c)(v)-(vi);
(b) to reimburse the Servicer for amounts expended by it pursuant to
Section 5.04 in good faith in connection with the restoration of damaged
property, in an amount not to exceed the amount of the related Insurance
Proceeds and Liquidation Proceeds (net of withdrawals pursuant to Section
5.03(a)) and amounts representing proceeds of other insurance policies covering
the property subject to the related Mortgage deposited in the Collection Account
pursuant to Section 5.02(c)(v)-(vi);
(c) to pay to the Unaffiliated Seller amounts received in respect of
any Defective Mortgage Loan purchased or substituted for by the Unaffiliated
Seller to the extent that the payment of any such amounts on the Servicer
Payment Date upon which the proceeds of such purchase are paid would make the
total amount distributed in respect of any such Mortgage Loan on such Servicer
Payment Date greater than the Loan Repurchase Price or the Substitution
Adjustment therefor;
(d) to reimburse the Servicer for unreimbursed Servicing Advances,
without interest, with respect to the Mortgage Loans for which it has made a
Servicing Advance, from subsequent collections with respect to interest on such
Mortgage Loans and from Liquidation Proceeds, Insurance Proceeds and/or the Loan
Repurchase Price or Substitution Adjustment of or relating to such Mortgage
Loans;
(e) to reimburse the Servicer for any Periodic Advances determined in
good faith to have become Nonrecoverable Advances, such reimbursement to be made
from any funds in the Collection Account;
(f) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;
(g) to withdraw any funds deposited in the Collection Account that were
not required to be deposited therein; and
(h) to pay the Servicer the Servicing Compensation pursuant to Section
5.08 hereof to the extent not retained or paid.
The Servicer shall keep and maintain a separate accounting for each
Mortgage Loan for the purpose of accounting for withdrawals from the Collection
Account pursuant to this Section 5.03.
Section 5.04. Hazard Insurance Policies; Property Protection Expenses.
(a) The Servicer shall cause to be maintained for each Mortgage Loan a hazard
insurance policy with extended coverage which contains a standard mortgagee's
clause with an appropriate endorsement in an amount equal to the lesser of (x)
the maximum insurable value of the related Mortgaged Property or (y) the sum of
the Principal Balance of such Mortgage Loan plus the outstanding balance of any
mortgage loan senior to such Mortgage Loan, but in no event shall such amount be
less than is necessary to prevent the Mortgagor from becoming a coinsurer
thereunder. The Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property or (ii) the sum of the Principal Balance of such Mortgage Loan and the
principal balance of any mortgage loan senior to such Mortgage Loan at the time
of such foreclosure plus accrued interest and the good-faith estimate of the
Servicer of related Liquidation Expenses to be incurred in connection therewith.
Amounts collected by the Servicer under any such policies shall be deposited in
the Collection Account to the extent that they constitute Liquidation Proceeds
or Insurance Proceeds. Each hazard insurance policy shall contain a standard
mortgage clause naming the Originator, its successors and assigns, as mortgagee.
The Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or flood or other additional insurance and shall be under no
obligation itself to maintain any such additional insurance on property acquired
in respect of a Mortgage Loan, other than pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance.
(b) If the Servicer shall obtain and maintain a blanket policy issued
by an insurer acceptable to the Rating Agencies and the Note Insurer insuring
against hazard losses on all of the Mortgage Loans, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 5.04(a), it
being understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property a policy complying with Section
5.04(a), and there shall have been a loss which would have been covered by such
policy, deposit in the Collection Account the amount not otherwise payable under
the blanket policy because of such deductible clause.
(c) If the Mortgaged Property or REO Property is located at the time of
origination of the Mortgage Loan in a federally designated special flood hazard
area (and if the flood insurance policy referenced herein has been made
available), the Servicer will cause to be maintained flood insurance in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the sum of the Principal Balance of the related Mortgage Loan and the principal
balance of the related first lien, if any, (ii) the maximum insurable value of
the related Mortgaged Property, and (iii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program).
Section 5.05. Assumption and Modification Agreements. In any case in
which a Mortgaged Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall exercise its right to accelerate the maturity of the related
Mortgage Loan and require that the Principal Balance thereof be paid in full on
or prior to such conveyance by the Mortgagor under any "due-on-sale" clause
applicable thereto. If such "due-on-sale" clause, by its terms, is not operable
or the Servicer is prevented, as provided in the last paragraph of this Section
5.05, from enforcing any such clause, the Servicer is authorized, subject to the
consent of the Note Insurer, to take or enter into an assumption and
modification agreement from or with the Person to whom such property has been or
is about to be conveyed, pursuant to which such Person becomes liable under the
Mortgage Note and the Mortgagor remains liable thereon or, if the Servicer in
its reasonable judgment finds it appropriate, is released from liability
thereon. The Servicer shall notify the Indenture Trustee and the Collateral
Agent that any assumption and modification agreement has been completed by
delivering to the Indenture Trustee, the Collateral Agent and the Note Insurer
an Officer's Certificate certifying that such agreement is in compliance with
this Section 5.05 together with the original copy of such assumption and
modification agreement. Any such assumption and modification agreement shall,
for all purposes, be considered a part of the related Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. In
connection with any such agreement, the then current Mortgage Interest Rate
thereon shall not be increased or decreased. Any fee collected by the Servicer
for entering into any such agreement will be retained by the Servicer as
additional servicing compensation. At its sole election, the Servicer may
purchase from the Trust any Mortgage Loan that has been assumed in accordance
with this Section 5.05 within one month after the date of such assumption at a
price equal to the greater of (i) the fair market value of such Mortgage Loan
(as determined by the Servicer in its good faith judgment) and (ii) the Loan
Repurchase Price. Such amount, if any, shall be deposited into the Collection
Account in the Due Period in which such repurchase is made.
Notwithstanding the foregoing paragraph of this Section 5.05 or any
other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan, or transfer of any Mortgaged Property without
the assumption thereof, by operation of law or any assumption or transfer which
the Servicer reasonably believes it may be restricted by law from preventing for
any reason whatsoever.
Section 5.06. Realization Upon Defaulted Mortgage Loans. (a) The
Servicer shall foreclose upon or otherwise comparably convert to ownership
Mortgaged Properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 5.02(a). Prior to
conducting any sale in a foreclosure proceeding or accepting a deed-in-lieu of
foreclosure with respect to any Mortgaged Property, the Servicer shall cause an
environmental review to be performed, in accordance with Accepted Servicing
Practices on the Mortgaged Property by a company such as Equifax, Inc. or
Toxicheck. If such review reveals that the Mortgaged Property has on it, under
it or is near hazardous or toxic material or waste or reveals any other
environmental problem, the Servicer shall not foreclose or accept a deed-in-lieu
of foreclosure, without the prior written consent of the Note Insurer. In
connection with such foreclosure or other conversion, the Servicer shall follow
such practices (including, in the case of any default on a related senior
mortgage loan, the advancing of funds to correct such default) and procedures
which are consistent with Accepted Servicing Practices as it shall deem
necessary or advisable and as shall be normal and usual in its general first and
second mortgage loan servicing activities. Notwithstanding the foregoing, the
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the correction of any default on a related senior
mortgage loan or restoration of any property unless, in the reasonable judgment
of the Servicer, such expenses will be recoverable from Liquidation Proceeds.
(b) In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Indenture Trustee, or to its nominee, on behalf of
Noteholders and the Note Insurer.
(c) Any Insurance Proceeds or Liquidation Proceeds received with
respect to a Mortgage Loan or REO Property (other than received in connection
with a purchase by the Trust Certificateholders of all the Mortgage Loans and
REO Properties in the Trust Estate pursuant to Section 10.01 of the Indenture)
will be applied in the following order of priority, in each case to the extent
of Available Funds: first, to pay the Servicer any accrued and unpaid Servicing
Fees relating to such Mortgage Loan; second, to reimburse the Servicer or any
Subservicer for any related unreimbursed Servicing Advances, and any related
unreimbursed Periodic Advances theretofore funded by the Servicer or any
Subservicer from its own funds, in each case, with respect to the related
Mortgage Loan; third, to accrued and unpaid interest on the Mortgage Loan, at
the Mortgage Interest Rate (or at such lesser rate as may be in effect for such
Mortgage Loan pursuant to application of the Civil Relief Act) on the Principal
Balance of such Mortgage Loan, to the date such Mortgage Loan is determined to
be a Liquidated Mortgage Loan if it is a Liquidated Mortgage Loan, or to the Due
Date in the Due Period prior to the Payment Date on which such amounts are to be
paid if such determination has not yet been made, minus any unpaid Servicing
Fees with respect to such Mortgage Loan; fourth, to the extent of the Principal
Balance of the Mortgage Loan outstanding immediately prior to the receipt of
such proceeds, as a recovery of principal of the related Mortgage Loan; and
fifth, to any prepayment or late payment charges or penalty interest payable in
connection with the receipt of such proceeds and to all other fees and charges
due and payable with respect to such Mortgage Loan. The amount of any gross
Insurance Proceeds and Liquidation Proceeds received with respect to any
Mortgage Loan or REO Property minus the amount of any unreimbursed Servicing
Advances, unreimbursed Periodic Advances or unpaid Servicing Fees, in each case,
with respect to the related Mortgage Loan, are the "Net Recovery Proceeds" with
respect to such Mortgage Loan or REO Property.
Section 5.07. Indenture Trustee to Cooperate. Upon the payment in full
of the Principal Balance of any Mortgage Loan, the Servicer will notify the
Indenture Trustee and the Collateral Agent by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 5.02 have been so deposited) of a
Servicing Officer. Upon any such payment in full, the Servicer is authorized to
execute, pursuant to the authorization contained in Section 5.01, an instrument
of satisfaction regarding the related Mortgage, which instrument of satisfaction
shall be recorded by the Servicer if required by applicable law and be delivered
to the Person entitled thereto, it being understood and agreed that no expenses
incurred in connection with such instrument of satisfaction shall be reimbursed
from the Collection Account. From time to time and as appropriate for the
servicing or foreclosure of any Mortgage Loan, the Collateral Agent shall, upon
request of the Servicer and delivery to the Collateral Agent of a Request for
Release signed by a Servicing Officer, release the related Mortgage File to the
Servicer and shall execute such documents as shall be necessary for the
prosecution of any such proceedings. Such Request for Release shall obligate the
Servicer to return the Indenture Trustee's Mortgage File to the Collateral Agent
when the need therefor by the Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified, the Request for Release shall be
released by the Collateral Agent to the Servicer.
Section 5.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. On each Payment Date, the Servicer shall be entitled to receive, and
the Indenture Trustee shall pay, out of collections on the Mortgage Loans for
the Due Period, as servicing compensation for such Due Period, an amount (the
"Monthly Servicing Fee") equal to the product of one-twelfth of the Servicing
Fee Rate and the aggregate outstanding Principal Balance of each Pool of
Mortgage Loans as of the beginning of such Due Period. Additional servicing
compensation in the form of assumption fees, late payment charges or extension
and other administrative charges shall be retained by the Servicer. The Servicer
shall be required to pay all expenses incurred by it in connection with its
activities hereunder (including payment of all fees and expenses of the
Subservicer, payment of the Indenture Trustee Fee and payment of the Collateral
Agent Fee to the extent that monies in the Collection Account are insufficient
therefor, as provided in Section 6.16 of the Indenture and Section 9.05 hereof,
and all other fees and expenses not expressly stated hereunder to be payable by
or from another source) and shall not be entitled to reimbursement therefor
except as specifically provided herein.
Section 5.09. Annual Statement as to Compliance. The Servicer will
deliver to the Indenture Trustee, the Collateral Agent, the Rating Agencies, the
Note Insurer and each Noteholder, on or before April 30 of each year, beginning
April 30, 2000, an Officer's Certificate of the Servicer stating that (a) a
review of the activities of the Servicer during the preceding calendar year and
of its performance under this Agreement has been made under such officer's
supervision and (b) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its material obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
Section 5.10. Annual Independent Public Accountants' Servicing Report.
On or before April 30 of each year, beginning April 30, 2000, the Servicer at
its expense shall cause a firm of independent public accountants that is a
member of the American Institute of Certified Public Accountants (who may also
render other services to the Servicer) to furnish a report to the Indenture
Trustee, the Collateral Agent, the Rating Agencies and each Noteholder to the
effect that such firm has examined certain documents and records relating to the
servicing of mortgage loans under servicing agreements (including this
Agreement) substantially similar to this Agreement, and that such examination,
which has been conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers (to the extent that the procedures in
such audit guide are applicable to the servicing obligations set forth in such
agreements), has disclosed no items of noncompliance with the provisions of this
Agreement which, in the opinion of such firm, are material, except for such
items of noncompliance as shall be set forth in such report.
Section 5.11. Access to Certain Documentation. The Servicer shall
permit the designated agents or representatives of each Noteholder, the Note
Insurer, the Collateral Agent and the Indenture Trustee (i) to examine and make
copies of and abstracts from all books, records and documents (including
computer tapes and disks) in the possession or under the control of the Servicer
relating to the Mortgage Loans and (ii) to visit the offices and properties of
the Servicer for the purpose of examining such materials and to discuss matters
relating to the Mortgage Loans and the Servicer's performance under this
Agreement with any of the officers or employees of the Servicer having knowledge
thereof and with the independent public accountants of the Servicer (and by this
provision the Servicer authorizes its accountants to discuss their respective
finances and affairs), all at such reasonable times, as often as may be
reasonably requested and without charge to such Noteholder, the Note Insurer,
the Collateral Agent or the Indenture Trustee.
Section 5.12. Maintenance of Fidelity Bond. The Servicer shall during
the term of its service as Servicer maintain in force a fidelity bond and errors
and omissions insurance in respect of its officers, employees or agents. Such
bond and insurance shall comply with the requirements from time to time of the
FNMA for Persons performing servicing for mortgage loans purchased by such
association.
Section 5.13. The Subservicers. The parties acknowledge that the
Servicer intends to appoint the Subservicers as the Servicer's agents for the
purpose of servicing on the Servicer's behalf such of the Mortgage Loans as were
originated in the States of New Jersey, Pennsylvania and New York. The Servicer
agrees to cause the Subservicers to service such Mortgage Loans in a manner
consistent with the Accepted Servicing Practices set forth in this Agreement,
and agrees that receipt by the Subservicers of any and all amounts which by the
terms hereof are required to be deposited in the Collection Account shall
constitute receipt thereof by the Servicer for all purposes hereof as of the
date so received by the Subservicers. Notwithstanding such designation of the
Subservicers, the Servicer agrees that it is, and it shall remain, fully
obligated under the terms hereof as Servicer with respect to all such Mortgage
Loans, and nothing herein shall relieve or release the Servicer from its
obligations to the other parties hereto to service such Mortgage Loans in the
manner provided in this Agreement.
Section 5.14. Reports to the Indenture Trustee; Collection Account
Statements. Not later than fifteen (15) days after each Payment 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
Payment Date, stating that all payments required by this Agreement to be made by
the Servicer on behalf of the Indenture Trustee have been made (or if any
required payment has not been made by the Servicer, specifying the nature and
status thereof) and showing, for the period covered by such statement, the
aggregate of deposits into and withdrawals from the Collection Account for each
category of deposit specified in Section 5.02 and each category of withdrawal
specified in Section 5.03 and the aggregate of deposits into the Collection
Account as specified in Section 6.01. Such statement shall also state the
aggregate unpaid principal balance of all the Mortgage Loans as of the close of
business on the last day of the month preceding the month in which such Payment
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)
Subject to Sections 5.15(b) and 5.15(c), the Unaffiliated Seller or any
Affiliate of the Unaffiliated Seller, in its sole discretion, shall have the
right to elect (by written notice sent to the Servicer, the Indenture Trustee
and the Note Insurer), but shall not be obligated, to purchase for its own
account from the Trust any Mortgage Loan which is ninety (90) days or more
Delinquent in the manner and at the Loan Purchase Price (except that the amount
described in clause (ii) of the definition of Loan Purchase Price shall in no
case be net of the Servicing Fee). The purchase price for any Mortgage Loan
purchased hereunder shall be deposited in the Collection Account and the
Collateral Agent, upon the Indenture Trustee's receipt of such deposit, shall
release or cause to be released to the purchaser of such Mortgage Loan the
related Indenture Trustee's Mortgage File and shall execute and deliver such
instruments of transfer or assignment prepared by the purchaser of such Mortgage
Loan, in each case without recourse, as shall be necessary to vest in the
purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto and
the purchaser of such Mortgage Loan shall succeed to all the Indenture Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The purchaser of such Mortgage Loan shall thereupon own such
Mortgage Loan, and all security and documents, free of any further obligation to
the Indenture Trustee, the Collateral Agent, the Note Insurer or the Noteholders
with respect thereto. The purchaser of such Mortgage Loan shall give written
notice to the Note Insurer of the means by which any Mortgage Loan purchased
pursuant to this Section 5.15 is ultimately disposed of.
(b) After the Unaffiliated Seller or an Affiliate of the Unaffiliated
Seller has repurchased any Mortgage Loans which are 90 days or more Delinquent
in an Aggregate Principal Balance equal to 1% of the Maximum Collateral Amount,
then notwithstanding the foregoing, unless the Note Insurer consents, any such
Unaffiliated Seller or Affiliate of the Unaffiliated Seller may only exercise
its option pursuant to this Section 5.15 with respect to the Mortgage Loan or
Mortgage Loans that have been Delinquent for the longest period at the time of
such repurchase. Any request by the Unaffiliated Seller or Affiliate to the Note
Insurer for consent to repurchase Mortgage Loans that are not the most
Delinquent shall be accompanied by a description of the Mortgage Loans that have
been Delinquent longer than the Mortgage Loan or Mortgage Loans the Unaffiliated
Seller or such Affiliate proposes to repurchase. If the Note Insurer fails to
respond to such request within ten (10) Business Days after receipt thereof, the
Unaffiliated Seller or such Affiliate may repurchase the Mortgage Loan or
Mortgage Loans proposed to be repurchased without the consent of, or any further
action by, the Note Insurer. Notice to the Note Insurer shall be delivered in
accordance with the terms of the Insurance and Indemnity Agreement.
(c) After the Unaffiliated Seller or an Affiliate of the Unaffiliated
Seller has repurchased any Mortgage Loans which are 90 days or more Delinquent
in an Aggregate Principal Balance equal to 5% of the Maximum Collateral Amount,
then notwithstanding the foregoing, unless the Note Insurer consents, any such
Unaffiliated Seller or Affiliate of the Unaffiliated Seller may not repurchase
such additional Mortgage Loans. Any request by the Unaffiliated Seller or
Affiliate to the Note Insurer for consent to repurchase Mortgage Loans that are
not the most Delinquent shall be accompanied by a description of the Mortgage
Loans that have been Delinquent longer than the Mortgage Loan or Mortgage Loans
the Unaffiliated Seller or such Affiliate proposes to repurchase. If the Note
Insurer fails to respond to such request within ten (10) Business Days after
receipt thereof, the Unaffiliated Seller or such Affiliate may repurchase the
Mortgage Loan or Mortgage Loans proposed to be repurchased without the consent
of, or any further action by, the Note Insurer. Notice to the Note Insurer shall
be delivered in accordance with the terms of the Insurance and Indemnity
Agreement.
Section 5.16. Reports to be Provided by the Servicer. (a) Two (2)
Business Days prior to each Servicer Payment Date, the Servicer shall deliver to
the Indenture Trustee a Servicer Remittance Report for such Payment Date,
setting forth the information required in the definition of "Indenture Trustee's
Remittance Report."
(b) On each Servicer Payment Date, the Servicer shall deliver to the
Indenture Trustee and the Note Insurer (via E-mail at xxxxxxxx@xxx.xxx) the
following information with respect to all Mortgage Loans as well as a break out
as to (x) consumer purpose and business purpose Mortgage Loans and (y) each
Mortgage Loan Group, in each case, as of the close of business on the last
Business Day of the prior calendar month (except as otherwise provided in clause
(v) below):
(i) the total number of Mortgage Loans and the Aggregate
Principal Balances thereof, together with the number, Aggregate
principal balances of such Mortgage Loans and the percentage (based on
the Aggregate Principal Balances of the Mortgage Loans) of the
Aggregate Principal Balances of such Mortgage Loans to the Aggregate
Principal Balance of all Mortgage Loans (A) 31-59 days Delinquent, (B)
60-89 days Delinquent and (C) 90 or more days Delinquent;
(ii) the number, Aggregate Principal Balances of all Mortgage
Loans and percentage (based on the Aggregate Principal Balances of the
Mortgage Loans) of the Aggregate Principal Balances of such Mortgage
Loans to the aggregate Principal Balance of all Mortgage Loans in
foreclosure proceedings and the number, Aggregate Principal Balances of
all Mortgage Loans and percentage (based on the Aggregate Principal
Balances of the Mortgage Loans) of any such Mortgage Loans also
included in any of the statistics described in the foregoing clause
(i);
(iii) the number, Aggregate Principal Balances of all Mortgage
Loans and percentage (based on the Aggregate Principal Balances of the
Mortgage Loans) of the Aggregate Principal Balances of such Mortgage
Loans to the Aggregate Principal Balance of all Mortgage Loans relating
to Mortgagors in bankruptcy proceedings and the number, Aggregate
Principal Balances of all Mortgage Loans and percentage (based on the
Aggregate Principal Balances of the Mortgage Loans) of any such
Mortgage Loans also included in any of the statistics described in the
foregoing clause (i);
(iv) the number, Aggregate Principal Balances of all Mortgage
Loans and percentage (based on the Aggregate Principal Balances of the
Mortgage Loans) of the Aggregate Principal Balances of such Mortgage
Loans to the Aggregate Principal Balance of all Mortgage Loans relating
to REO Properties and the number, Aggregate Principal Balances of all
Mortgage Loans and percentage (based on the Aggregate Principal
Balances of the Mortgage Loans) of any such Mortgage Loans also
included in any of the statistics described in the foregoing clause
(i);
(v) the weighted average Mortgage Interest Rate as of the Due
Date occurring in the Due Period related to such Payment Date;
(vi) the weighted average remaining term to stated maturity of
all Mortgage Loans;
(vii) the book value of any REO Property;
(viii) the Cumulative Loan Losses and the aggregate Cumulative
Loan Losses since the Closing Date; and
(ix) the total number of Mortgage Loans and the Pool Principal
Balance.
(c) In connection with the transfer of the Notes, the Indenture Trustee
on behalf of any Noteholder may request that the Servicer make available to any
prospective Noteholder annual audited financial statements of the Servicer for
one or more of the most recently completed five (5) fiscal years for which such
statements are publicly available, which request shall not be unreasonably
denied or unreasonably delayed. Such annual audited financial statements also
shall be made available to the Note Insurer upon request.
(d) The Servicer also agrees to make available on a reasonable basis to
the Note Insurer or any prospective Noteholder a knowledgeable financial or
accounting officer for the purpose of answering reasonable questions respecting
recent developments affecting the Servicer or the financial statements of the
Servicer and to permit the Note Insurer or any prospective Noteholder to inspect
the Servicer's servicing facilities during normal business hours for the purpose
of satisfying the Note Insurer or such prospective Noteholder that the Servicer
has the ability to service the Mortgage Loans in accordance with this Agreement.
Section 5.17. Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans. The Monthly Servicing Fee that the Servicer shall be
entitled to receive with respect to each Mortgage Loan and each Payment Date
shall be offset on such Payment Date by an amount equal to the Prepayment
Interest Shortfall with respect to such Mortgage Loan to the extent that it is
the subject of Principal Prepayments during the month preceding the month of
such Payment Date. The amount of any offset against the Monthly Servicing Fee
with respect to any Payment Date under this Section 5.17 shall be limited to the
Monthly Servicing Fee otherwise payable to the Servicer (without adjustment on
account of Prepayment Interest Shortfalls) with respect to such Mortgage Loan,
and the rights of the Noteholders to the offset of the aggregate Prepayment
Interest Shortfalls against the Monthly Servicing Fee shall not be cumulative.
Section 5.18. Periodic Advances; Special Advance. (a) If, on any
Servicer Payment Date, the Servicer determines that any Monthly Payments due on
the Due Date immediately preceding such Servicer Payment Date have not been
received as of the end of the related Due Period, the Servicer shall determine
the amount of any Periodic Advance required to be made with respect to the
related Payment Date. The Servicer shall, one (1) Business Day after such
Servicer Payment Date, deliver a magnetic tape or diskette to the Indenture
Trustee indicating the payment status of each Mortgage Loan as of such Servicer
Payment Date. The Servicer shall include in the amount to be deposited in the
Collection Account on such Servicer Payment 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 payment or withdrawal on or in
connection with Payment Dates in subsequent months. Any funds being held for
future payment to Noteholders and so used shall be replaced by the Servicer from
its own funds by deposit in the Collection Account on or before the Business Day
preceding any such future Servicer Payment Date to the extent that funds in the
Collection Account on such Servicer Payment Date shall be less than payments to
Noteholders required to be made on such date.
The Servicer shall designate on its records the specific Mortgage Loans
and related installments (or portions thereof) as to which such Periodic Advance
shall be deemed to have been made, such determination being conclusive for
purposes of withdrawals from the Collection Account pursuant to Section 5.03
hereof.
(b) In addition to the Periodic Advances, the Servicer shall make
special advances ("Special Advances") on the Servicer Payment Date occurring in
October 1999, of $359,892.86, with respect to interest on Mortgage Loans in Pool
I not having their first payment due until after September 1999 and $95,949.70
with respect to interest on Mortgage Loans in Pool II not having their first
payment due until after September 1999. The Special Advances shall be made
without regard to recoverability, and shall not be reimbursable. In no event
shall the Indenture Trustee, as successor Servicer, be liable for the payment of
the Special Advances.
On each Subsequent Transfer Date, the Servicer will make the Special
Advance set forth in the related subsequent Pledge Agreement.
Section 5.19. Indemnification; Third Party Claims. (a) The Servicer
agrees to indemnify and to hold each of the Trust, the Owner Trustee, the
Depositor, the Indenture Trustee, the Collateral Agent, the Unaffiliated Seller,
the Note Insurer 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. 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 Indenture Trustee shall reimburse the Servicer in accordance with
Section 5.08 hereof, out of collections on the Mortgage Loans for the Due
Period, for all amounts advanced by it pursuant to the preceding sentence except
to the extent that the claim relates directly to the failure of the Servicer to
service and administer the Mortgages in compliance with the terms of this
Agreement; provided, that the Servicer's indemnity hereunder shall not be in any
manner conditioned on the availability of funds for such reimbursement. The
obligations of the Servicer under this Section 5.19 arising prior to any
resignation or termination of the Servicer hereunder shall survive the
resignation or termination of the Servicer.
(b) The Indenture Trustee may, if necessary, reimburse the Servicer
from amounts otherwise distributable on the Trust Certificates for all amounts
advanced by it pursuant to Section 4.04(a)(ii) of the Unaffiliated Seller's
Agreement, except to the extent that the claim relates directly to the failure
of the Servicer, if it is the Unaffiliated Seller, or is an Affiliate of the
Unaffiliated Seller, to perform its obligations to service and administer the
Mortgages in compliance with the terms of the Unaffiliated Seller's Agreement
and this Agreement, or the failure of the Unaffiliated Seller to perform its
duties in compliance with the terms of this Agreement.
(c) The Indenture Trustee shall reimburse the Unaffiliated Seller from
amounts otherwise distributable on the Trust Certificates for all amounts
advanced by the Unaffiliated Seller pursuant to the second sentence of Section
4.04(a)(ii) of the Unaffiliated Seller's Agreement except when the relevant
claim relates directly to the failure of the Unaffiliated Seller to perform its
duties in compliance with the terms of the Unaffiliated Seller's Agreement.
Section 5.20. Maintenance of Corporate Existence and Licenses; Merger
or Consolidation of the Servicer. (a) The Servicer will keep in full effect its
existence, rights and franchises as a corporation, will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction
necessary to protect the validity and enforceability of this Agreement or any of
the Mortgage Loans and to perform its duties under this Agreement and will
otherwise operate its business so as to cause the representations and warranties
under Section 3.01 to be true and correct at all times under this Agreement.
(b) Any Person into which the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, or any Person succeeding to the business of
the Servicer, shall be an established mortgage loan servicing institution that
has a net worth of at least $15,000,000 and is a Permitted Transferee, and in
all events shall be the successor of the Servicer without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding. The Servicer shall send notice
of any such merger or consolidation to the Owner Trustee, the Indenture Trustee,
the Collateral Agent and the Note Insurer.
Section 5.21. Assignment of Agreement by Servicer; Servicer Not to
Resign. The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Owner Trustee, on behalf of the Trust, at the direction of the Trust
Certificateholders, the Depositor, the Servicer, the Unaffiliated Seller, the
Note Insurer, the Collateral Agent and the Indenture Trustee or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law and that such incapacity cannot be cured by the Servicer
without incurring, in the reasonable judgment of the Note Insurer, unreasonable
expense. Any such determination that the Servicer's duties hereunder are no
longer permissible under applicable law permitting the resignation of the
Servicer shall be evidenced by a written Opinion of Counsel (who may be counsel
for the Servicer) to such effect delivered to the Indenture Trustee, the
Collateral Agent, the Unaffiliated Seller, the Trust, the Depositor and the Note
Insurer. No such resignation shall become effective until the Indenture Trustee
or a successor appointed in accordance with the terms of this Agreement has
assumed the Servicer's responsibilities and obligations hereunder in accordance
with Section 7.02. The Servicer shall provide the Indenture Trustee, the
Collateral Agent, the Rating Agencies and the Note Insurer with 30 days' prior
written notice of its intention to resign pursuant to this Section 5.21.
Section 5.22. Periodic Filings with the Securities and Exchange
Commission; Additional Information. The Indenture Trustee shall prepare or cause
to be prepared for filing with the Commission (other than the initial Current
Report on Form 8-K to be filed by the Depositor in connection with the issuance
of the Notes) any and all reports, statements and information respecting the
Trust and/or the Notes required to be filed, and shall solicit any and all
proxies of the Noteholders whenever such proxies are required to be solicited,
pursuant to the Securities Exchange Act of 1934, as amended. The Depositor shall
promptly file, and exercise its reasonable best efforts to obtain a favorable
response to, no-action requests with, or other appropriate exemptive relief
from, the Commission seeking the usual and customary exemption from such
reporting requirements granted to issuers of securities similar to the Notes.
Fees and expenses incurred by the Indenture Trustee in connection with the
foregoing shall be reimbursed pursuant to Section 6.16 of the Indenture and
shall not be paid by the Trust.
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 Payment Account. On each Servicer Payment
Date, the Servicer shall cause to be deposited in the Payment Account, from
funds on deposit in the Collection Account, (a) an amount equal to the Servicer
Remittance Amount and (b) Net Foreclosure Profits, if any with respect to the
related Payment Date, minus any portion thereof payable to the Servicer pursuant
to Section 5.03. On each Servicer Payment Date, the Servicer shall also deposit
into the Payment Account any Periodic Advances with respect to the related
Payment Date calculated in accordance with Section 5.18 and any amounts required
to be deposited in connection with a Subsequent Mortgage Loan pursuant to
Section 2.14(b) of the Indenture; on the Servicer Payment Date occurring in
October 1999, the Servicer also will deposit the related Special Advance
pursuant to Section 5.18(b).
Section 6.02. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of all
money and other property payable to or receivable by the Indenture Trustee
pursuant to this Agreement, including (a) all payments due on the Mortgage Loans
in accordance with the respective terms and conditions of such Mortgage Loans
and required to be paid over to the Indenture Trustee by the Servicer or by any
Subservicer and (b) Insured Payments. The Indenture Trustee shall hold all such
money and property received by it, as part of the Trust Estate and shall apply
it as provided in the Indenture.
Section 6.03. Application of Principal and Interest. In the event that
Net Liquidation Proceeds on a Liquidated Mortgage Loan are less than the
Principal Balance of the related Mortgage Loan plus accrued interest thereon, or
any Mortgagor makes a partial payment of any Monthly Payment due on a Mortgage
Loan, such Net Liquidation Proceeds or partial payment shall be applied to
payment of the related Mortgage Note as provided therein, and if not so
provided, first to interest accrued at the Mortgage Interest Rate and then to
principal.
Section 6.04. Information Concerning the Mortgage Loans. No later than
12:00 noon Pennsylvania time on the fourth Business Day preceding each Payment
Date, the Servicer shall deliver to the Indenture Trustee a report in
computer-readable form containing such information as to each Mortgage Loan and
as to each Mortgage Loan Pool as of such Payment 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 Payment Date, the Servicer shall
remit to the Indenture Trustee (without right to reimbursement therefor) for
deposit into the related Payment Account, an amount equal to, for each Mortgage
Loan, the lesser of (a) the Prepayment Interest Shortfall for such Mortgage Loan
for the related Payment Date resulting from Principal Prepayments during the
related Due Period and (b) its Monthly Servicing Fees with respect to such
Mortgage Loan received in the related Due Period (the "Compensating Interest").
Section 6.06. Effect of Payments by the Note Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Notes which is made with moneys received
pursuant to the terms of the Note Insurance Policy shall not be considered
payment of the Notes from the Trust Estate. The Depositor, the Servicer, the
Trust, the Collateral Agent and the Indenture Trustee acknowledge and agree,
that without the need for any further action on the part of the Note Insurer,
the Depositor, the Servicer, the Trust, the Collateral Agent, the Indenture
Trustee or the Note Registrar (a) to the extent the Note Insurer makes payments,
directly or indirectly, on account of principal of or interest on the Notes to
the Holders of such Notes, the Note Insurer will be fully subrogated to, and
each Noteholder, the Servicer, the Depositor, the Trust, the Collateral Agent
and the Indenture Trustee hereby delegate and assign to the Note Insurer, to the
fullest extent permitted by law, the rights of such Holders to receive such
principal and interest from the Trust Estate, including, without limitation, any
amounts due to the Noteholders in respect of securities law violations arising
from the offer and sale of the Notes, and (b) the Note Insurer shall be paid
such amounts from the sources and in the manner provided herein for the payment
of such amounts and as provided in the Insurance Agreement. The Indenture
Trustee, the Collateral Agent and the Servicer shall cooperate in all respects
with any reasonable request by the Note Insurer for action to preserve or
enforce the Note Insurer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Holders as otherwise set
forth herein.
ARTICLE VII
SERVICER DEFAULT
Section 7.01. Servicer Events of Default. (a) The following events
shall each constitute a "Servicer Event of Default" hereunder:
(i) any failure by the Servicer to remit to the Indenture Trustee
any payment required to be made by the Servicer under the terms of this
Agreement (other than Servicing Advances covered by clause (ii) below),
which continues unremedied for one (1) Business Day after the date upon
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer and the Note Insurer by
the Indenture Trustee or to the Servicer and the Indenture Trustee by
the Note Insurer or Noteholders of Notes evidencing Percentage
Interests of at least 25%;
(ii) the failure by the Servicer to make any required Servicing
Advance, which failure continues unremedied for a period of thirty (30)
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Servicer by the
Indenture Trustee or to the Servicer and the Indenture Trustee by any
Noteholder or the Note Insurer;
(iii) any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Servicer contained in this Agreement, or
the failure of any representation and warranty made 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 ninety (90) 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 Payment Date the Rolling Six Month Delinquency
Rate exceeds 12.75% of the aggregate outstanding Principal Balance for
the Mortgage Loans;
(ix) if on any Payment Date, commencing in September 2000, the
Twelve Month Loss Amount exceeds 1.75% of the aggregate outstanding
Principal Balance for the Mortgage Loans, as of the close of business
on the first day of the twelfth preceding calendar month;
(x) if (a) on any Payment Date occurring before September 1,
2000, the aggregate Cumulative Loan Losses since the Initial Cut-Off
Date exceed 1.00% of the Original Pool Principal Balance, (b) on any
Payment Date on or after September 1, 2000 and before September 1,
2001, the aggregate Cumulative Loan Losses since the Initial Cut-Off
Date exceed 1.50% of the Original Pool Principal Balance, (c) on any
Payment Date on or after September 1, 2001 and before September 1,
2002, the aggregate Cumulative Loan Losses since the Initial Cut-Off
Date exceed 2.25% of the Original Pool Principal Balance, (d) on any
Payment Date on or after September 1, 2002 and before September 1,
2003, the aggregate Cumulative Loan Losses since the Initial Cut-Off
Date exceed 3.00% of the Original Pool Principal Balance, or (e) on any
Payment Date on or after September 1, 2003, the aggregate Cumulative
Loan Losses since the Initial Cut-Off Date exceed 3.75% of the Original
Pool Principal Balance;
(xi) the occurrence of an Event of Default under the Indenture;
or
(xii) a Servicer Extension Notice shall not have been delivered
as set forth in Section 8.04 hereof.
(b) So long as a Servicer Event of Default shall have occurred and not
have been remedied: (x) with respect solely to Section 7.01(a)(i), if such
payment is in respect of Periodic Advances or Compensating Interest owing by the
Servicer and such payment is not made by 12:00 noon New York time on the second
Business Day prior to the applicable Payment Date, the Indenture Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic and facsimile notice of such failure to a
Servicing Officer of the Servicer and to the Note Insurer and the Indenture
Trustee shall, with the consent of the Note Insurer, terminate all of the rights
and obligations of the Servicer under this Agreement, 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; (y) with
respect to that portion of Section 7.01(a)(i) not referred to in the preceding
clause (x) and with respect to clauses (ii), (iii), (iv), (v), (vi) and (vii) of
Section 7.01, the Indenture Trustee shall, but only at the direction of the Note
Insurer or the Majority Noteholders, by notice in writing to the Servicer and a
Responsible Officer of the Indenture Trustee and subject to the prior written
consent of the Note Insurer, in the case of any removal at the direction of the
Majority Noteholders, and in addition to whatever rights such Noteholders may
have at law or equity to damages, including injunctive relief and specific
performance, terminate all the rights and obligations of the Servicer under this
Agreement, except for the Servicer's indemnification obligations under Section
5.19, and in and to the Mortgage Loans and the proceeds thereof, as servicer;
and (z) with respect to clauses (viii)-(x) of Section 7.01(a), the Indenture
Trustee shall, but only at the direction of the Note Insurer, after notice in
writing to the Servicer and a Responsible Officer of the Indenture Trustee,
terminate all the rights and obligations of the Servicer under this Agreement,
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 its designee approved by the Note Insurer, and the Indenture Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, at the expense of the Servicer, any
and all documents and other instruments and do or cause to be done all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, including, but not limited to, the transfer and endorsement or
assignment of the Mortgage Loans and related documents. The Servicer agrees to
cooperate (and pay any related costs and expenses) with the Indenture Trustee in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Indenture Trustee,
or its designee, for administration by it of all amounts which shall at the time
be credited by the Servicer to the Collection Account or thereafter received
with respect to the Mortgage Loans. The Indenture Trustee shall promptly notify
the Note Insurer and the Rating Agencies of the occurrence of a Servicer Event
of Default.
Section 7.02. Indenture Trustee to Act; Appointment of Successor. (a)
On and after the time the Servicer receives a notice of termination pursuant to
Section 7.01 or fails to receive a Servicer Extension Notice pursuant to Section
8.04, or the Indenture Trustee receives the resignation of the Servicer
evidenced by an Opinion of Counsel pursuant to Section 5.21, or the Servicer is
removed as Servicer pursuant to this Article VII, in which event the Indenture
Trustee shall promptly notify the Rating Agencies, except as otherwise provided
in Section 7.01, the Indenture Trustee shall be the successor in all respects to
the Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof arising on or after the date of succession;
provided, however, that the Indenture Trustee shall not be liable for any
actions or the representations and warranties of any Servicer prior to it and
including, without limitation, the obligations of the Servicer set forth in
Sections 2.06 and 4.02 hereof. The Indenture Trustee, as successor Servicer,
shall be obligated to pay Compensating Interest pursuant to Section 6.05 in any
event and to make advances pursuant to Section 5.18 unless, and only to the
extent the Indenture Trustee determines reasonably and in good faith that such
advances would not be recoverable pursuant to Section 5.04, such determination
to be evidenced by a certification of a Responsible Officer of the Indenture
Trustee delivered to the Note Insurer.
(b) Notwithstanding the above, the Indenture Trustee may, if it shall
be unwilling to so act, or shall, if it is unable to so act or if the Majority
Noteholders with the consent of the Note Insurer or the Note Insurer so requests
in writing to the Indenture Trustee, appoint, pursuant to such direction of the
Majority Noteholders and Note Insurer or the Note Insurer, or if no such
direction is provided to the Indenture Trustee, pursuant to the provisions set
forth in Section 7.02(c), or petition a court of competent jurisdiction to
appoint, any established mortgage loan servicing institution acceptable to the
Note Insurer that has a net worth of not less than $15,000,000 as the successor
to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder.
(c) In the event the Indenture Trustee is the successor Servicer, it
shall be entitled to the same Servicing Compensation (including the Servicing
Fee as adjusted pursuant to the definition thereof) and other funds pursuant to
Section 5.08 hereof as the Servicer if the Servicer had continued to act as
servicer hereunder. In the event the Indenture Trustee is unable or unwilling to
act as successor Servicer, the Indenture Trustee shall solicit, by public
announcement, bids from housing and home finance institutions, banks and
mortgage servicing institutions meeting the qualifications set forth above. Such
public announcement shall specify that the successor servicer shall be entitled
to the full amount of the aggregate Servicing Fees hereunder as servicing
compensation, together with the other Servicing Compensation. Within thirty (30)
days after any such public announcement, the Indenture Trustee shall negotiate
and effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Indenture Trustee shall deduct from any sum received by the
Indenture Trustee from the successor to the Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
hereunder and the amount of any unreimbursed Servicing Advances and Periodic
Advances owed to the Indenture Trustee. After such deductions, the remainder of
such sum shall be paid by the Indenture Trustee to the Servicer at the time of
such sale, transfer and assignment to the Servicer's successor.
(d) The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The 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 Indenture Trustee and the Note Insurer shall have
consented thereto, and written notice of such proposed appointment shall have
been provided by the Indenture Trustee to the Note Insurer and to each
Noteholder. The Indenture Trustee shall not resign as Servicer until a successor
Servicer reasonably acceptable to the Note Insurer has been appointed. The Note
Insurer shall have the right to remove the Indenture Trustee as successor
Servicer under this Section 7.02 without cause, and the Indenture Trustee shall
appoint such other successor Servicer as directed by the Note Insurer.
(e) Pending appointment of a successor Servicer hereunder, the
Indenture Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Indenture Trustee may make
such arrangements for the compensation of such successor Servicer out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Servicer pursuant to Section 5.08, together with other Servicing Compensation.
The Servicer, the Indenture Trustee and such successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
Section 7.03. Waiver of Defaults. The Majority Noteholders may, on
behalf of all Noteholders, and subject to the consent of the Note Insurer, waive
any events permitting removal of the Servicer as servicer pursuant to this
Article VII; provided, however, that the Majority Noteholders may not waive a
default in making a required payment on a Note without the consent of the Holder
of such Note. Upon any waiver of a past default, such default shall cease to
exist, and any Servicer Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereto
except to the extent expressly so waived. Notice of any such waiver shall be
given by the Indenture Trustee to the Rating Agencies and the Note Insurer.
Section 7.04. Rights of the Note Insurer to Exercise Rights of the
Noteholders. By accepting its Note, each Noteholder agrees that unless a Note
Insurer Default exists, the Note Insurer shall be deemed to be the Noteholders
for all purposes (other than with respect to the receipt of payment on the
Notes) and shall have the right to exercise all rights of the Noteholders under
this Agreement and under the Notes without any further consent of the
Noteholders, including, without limitation:
(a) the right to require the Unaffiliated Seller to repurchase Mortgage
Loans pursuant to Sections 2.06 and 4.02 hereof to the extent set forth therein;
(b) the right to give notices of breach or to terminate the rights and
obligations of the Servicer as servicer pursuant to Section 7.01 hereof and to
consent to or direct waivers of Servicer defaults pursuant to Section 7.03
hereof;
(c) the right to direct the actions of the Indenture Trustee during the
continuance of a Servicer Event of Default pursuant to Sections 7.01 and 7.02
hereof;
(d) the right to institute proceedings against the Servicer pursuant to
Section 7.01 hereof;
(e) the right to remove the Indenture Trustee pursuant to Section 6.09
of the Indenture;
(f) the right to direct foreclosures upon the failure of the Servicer
to do so in accordance with the provisions of Section 5.06 of this Agreement;
and
(g) any rights or remedies expressly given the Majority Noteholders.
In addition, each Noteholder agrees that, subject to Section 10.02,
unless a Note Insurer Default exists, the rights specifically enumerated above
may only be exercised by the Noteholders with the prior written consent of the
Note Insurer.
Section 7.05. Indenture Trustee To Act Solely with Consent of the Note
Insurer. Unless a Note Insurer Default exists, the Indenture Trustee shall not,
without the Note Insurer's consent or unless directed by the Note Insurer:
(a) terminate the rights and obligations of the Servicer as Servicer
pursuant to Section 7.01 hereof;
(b) agree to any amendment pursuant to Section 10.03 hereof; or
(c) undertake any litigation.
The Note Insurer may, in writing and in its sole discretion renounce
all or any of its rights under Sections 7.04, 7.05 or 7.06 or any requirement
for the Note Insurer's consent for any period of time.
Section 7.06. Mortgage Loans, Trust Estate and Accounts Held for
Benefit of the Note Insurer. (a) The Indenture Trustee shall hold the Trust
Estate and the Indenture Trustee's Mortgage Files, for the benefit of the
Noteholders and the Note Insurer, and all references in this Agreement and in
the Notes to the benefit of Noteholders shall be deemed to include the Note
Insurer. The Indenture Trustee shall cooperate in all reasonable respects with
any reasonable request by the Note Insurer for action to preserve or enforce the
Note Insurer's rights or interests under this Agreement and the Notes unless, as
stated in an Opinion of Counsel addressed to the Indenture Trustee and the Note
Insurer, such action is adverse to the interests of the Noteholders or
diminishes the rights of the Noteholders or imposes additional burdens or
restrictions on the Noteholders.
(b) The Servicer hereby acknowledges and agrees that it shall service
the Mortgage Loans for the benefit of the Noteholders and for the benefit of the
Note Insurer, and all references in this Agreement to the benefit of or actions
on behalf of the Noteholders shall be deemed to include the Note Insurer.
Section 7.07. Note Insurer Default. Notwithstanding anything elsewhere
in this Agreement or in the Notes to the contrary, if a Note Insurer Default
exists, or if and to the extent the Note Insurer has delivered its written
renunciation of all of its rights under this Agreement, the provisions of this
Article VII and all other provisions of this Agreement which (a) permit the Note
Insurer to exercise rights of the Noteholders, (b) restrict the ability of the
Noteholders, the Servicer, the Collateral Agent or the Indenture Trustee to act
without the consent or approval of the Note Insurer, (c) provide that a
particular act or thing must be acceptable to the Note Insurer, (d) permit the
Note Insurer to direct (or otherwise to require) the actions of the Indenture
Trustee, the Collateral Agent, the Servicer or the Noteholders, (e) provide that
any action or omission taken with the consent, approval or authorization of the
Note Insurer shall be authorized hereunder or shall not subject the party taking
or omitting to take such action to any liability hereunder or (f) which have a
similar effect, shall be of no further force and effect and the Indenture
Trustee shall administer the Trust Estate and perform its obligations hereunder
solely for the benefit of the Holders of the Notes. Nothing in the foregoing
sentence, nor any action taken pursuant thereto or in compliance therewith,
shall be deemed to have released the Note Insurer from any obligation or
liability it may have to any party or to the Noteholders hereunder, under any
other agreement, instrument or document (including, without limitation, the Note
Insurance Policy) or under applicable law.
ARTICLE VIII
TERMINATION
Section 8.01. Termination. (a) Subject to Section 8.02, this Agreement
shall terminate upon notice to the Indenture Trustee of either: (i) the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due hereunder and the payment of all amounts due and
payable to the Note Insurer and the Indenture Trustee or (ii) mutual consent of
the Owner Trustee, on behalf of the Trust, at the direction of the Trust
Certificateholders, the Indenture Trustee, the Collateral Agent, the Servicer,
the Note Insurer and all Noteholders in writing.
(b) In addition, subject to Section 8.02, certain of the Trust
Certificateholders or the Servicer may, at their respective option and at their
respective 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 Payment 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 Payment Account, the Servicer shall send a final payment
notice promptly to each Noteholder in accordance with Section 8.01(d).
(d) Notice of any termination, specifying the Payment 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 mailed during the month of such final
payment before the Servicer Payment Date in such month, specifying (i) the
Payment 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 Payment 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 related Trust Certificateholders shall be entitled to all
unclaimed funds and other assets which remain subject hereto and the Indenture
Trustee upon transfer of such funds shall be discharged of any responsibility
for such funds and the Noteholders shall look only to the related Trust
Certificateholders for payment and not to the Note Insurer. Such funds shall
remain uninvested.
Section 8.02. Additional Termination Requirements. By their acceptance
of the Notes, the Holders thereof hereby agree to appoint the Servicer as their
attorney in fact to: (i) adopt such a plan of complete liquidation (and the
Noteholders hereby appoint the Indenture Trustee as their attorney in fact to
sign such plan) as appropriate or upon the written request of the Note Insurer
and (ii) to take such other action in connection therewith as may be reasonably
required to carry out such plan of complete liquidation all in accordance with
the terms hereof.
Section 8.03. Accounting Upon Termination of Servicer. Upon termination
of the Servicer, the Servicer shall, at its expense:
(a) deliver to the successor Servicer or, if none shall yet have been
appointed, to the Indenture Trustee, the funds in any Account;
(b) deliver to the successor Servicer or, if none shall yet have been
appointed, to the Indenture Trustee all Indenture Trustee's Mortgage Files and
related documents and statements held by it hereunder and a Mortgage Loan
portfolio computer tape;
(c) deliver to the successor Servicer or, if none shall yet have been
appointed, to the Indenture Trustee and, upon request, to the Noteholders a full
accounting of all funds, including a statement showing the Monthly Payments
collected by it and a statement of monies held in trust by it for the payments
or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to the successor Servicer and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer under this
Agreement.
Section 8.04. Retention and Termination of the Servicer. The Servicer
hereby covenants and agrees to act as Servicer under this Agreement for an
initial term commencing on the Closing Date and expiring on December 31, 1999
(the "Initial Term"). Thereafter, the Initial Term shall be extendible in the
sole discretion of the Note Insurer by written notice (each, a "Servicer
Extension Notice") of the Note Insurer (or the Indenture Trustee if revocable
written standing instructions of the Note Insurer have been previously delivered
to the Indenture Trustee), for any specified number of three (3) month terms to
the Servicer. Each such Servicer Extension Notice, if any, shall be delivered by
the Note Insurer (or the Indenture Trustee, as applicable,) to the other parties
to this Agreement. The Servicer hereby agrees that, as of the date hereof and
upon its receipt of any Servicer Extension Notice, the Servicer shall be bound
for the duration of the Initial Term and the term covered by any such Servicer
Extension Notice to act as the Servicer, subject to and in accordance with the
other provisions of this Agreement. The Servicer agrees that if, as of the
fifteenth day prior to the last day of any such servicing term, the Servicer
shall not have received a Servicer Extension Notice from the Note Insurer or
Indenture Trustee, as applicable, the Servicer shall, within five (5) days
thereafter, give written notice of such non-receipt to the Note Insurer and the
Indenture Trustee. The failure of the Note Insurer or the Indenture Trustee, as
applicable, to deliver a Servicer Extension Notice by the end of any such
three-month term shall result in the automatic termination of the Servicer.
ARTICLE IX
THE COLLATERAL AGENT
Section 9.01. Duties of the Collateral Agent. (a) The Collateral Agent,
prior to the occurrence of an Event of Default and after the curing of all
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. If an Event of
Default has occurred and has not been cured or waived, the Collateral Agent
shall exercise such of the rights and powers vested in it by this Agreement, and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) The Collateral Agent, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Collateral Agent which are specifically required to
be furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform on their face to the requirements of this
Agreement; provided, however, that the Collateral Agent shall not be responsible
for the accuracy or content of any resolution, certificate, statement, opinion,
report, document, order or other instrument furnished by any Person hereunder.
If any such instrument is found not to conform on its face to the requirements
of this Agreement, the Collateral Agent shall note it as such on the Initial
Certification or Final Certification delivered pursuant to Section 2.06(b).
(c) No provision of this Agreement shall be construed to relieve the
Collateral Agent from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the
duties and obligations of the Collateral Agent shall be determined
solely by the express provisions of this Agreement, the Collateral
Agent shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Collateral Agent and, in the absence of bad faith on the part of the
Collateral Agent, the Collateral Agent may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Collateral
Agent and conforming to the requirements of this Agreement;
(ii) the Collateral Agent shall not be personally liable for an
error of judgment made in good faith by a Responsible Officer or other
officers of the Collateral Agent, unless it shall be proved that the
Collateral Agent was negligent in ascertaining the pertinent facts;
(iii) the Collateral Agent shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with the direction of the Note Insurer or the
Indenture Trustee or with the consent of the Note Insurer or the
Indenture Trustee;
(iv) the Collateral Agent shall not be required to expend or risk
its own funds or otherwise incur financial liability for the
performance of any of its duties hereunder or the exercise of any of
its rights or powers if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it and none of the provisions
contained in this Agreement shall in any event require the Collateral
Agent to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer or the Indenture Trustee under
this Agreement; and
(v) subject to the other provisions of this Agreement and without
limiting the generality of this Section 9.01, the Collateral Agent
shall have no duty (A) to see to any recording, filing, or depositing
of this Agreement or any agreement referred to herein or any financing
statement or continuation statement evidencing a security interest, or
to see to the maintenance of any such recording or filing or depositing
or to any rerecording, refiling or redepositing of any thereof, (B) to
see to any insurance, (C) to see to the payment or discharge of any
tax, assessment, or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust, the Trust Estate, the Noteholders or
the Mortgage Loans, (D) to confirm or verify the contents of any
reports or certificates of any Person delivered to the Collateral Agent
pursuant to this Agreement believed by the Collateral Agent to be
genuine and to have been signed or presented by the proper party or
parties.
Section 9.02. Certain Matters Affecting the Collateral Agent. Except as
otherwise provided in Section 9.01 hereof:
(a) the Collateral Agent may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate, Opinion of
Counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) the Collateral Agent may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(c) the Collateral Agent shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute, conduct
or defend by litigation hereunder or in relation hereto at the request, order or
direction of the Note Insurer or any of the Noteholders, pursuant to the
provisions of this Agreement, unless such Noteholders or the Note Insurer, as
applicable, shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein by the Collateral Agent or thereby; nothing contained herein shall,
however, relieve the Collateral Agent of the obligation, upon the occurrence of
an Event of Default (which has not been cured), to exercise such of the rights
and powers vested in it by this Agreement, and to use the same degree of care
and skill in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;
(d) the Collateral Agent shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(e) prior to the occurrence of an Event of Default and after the curing
of all Events of Default which may have occurred, the Collateral Agent shall not
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Note Insurer or Holders of Class A Notes
evidencing Percentage Interests aggregating not less than 25%; provided,
however, that if the payment within a reasonable time to the Collateral Agent of
the costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Collateral Agent, not reasonably
assured to the Collateral Agent by the security afforded to it by the terms of
this Agreement, the Collateral Agent may require reasonable indemnity against
such expense or liability as a condition to taking any such action. The
reasonable expense of every such examination shall be paid by the Servicer or,
if paid by the Collateral Agent, shall be repaid by the Servicer upon demand
from the Servicer's own funds;
(f) the right of the Collateral Agent to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Collateral Agent shall not be answerable for anything other than its negligence
or willful misconduct in the performance of such act;
(g) the Collateral Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys.
Section 9.03. Collateral Agent Not Liable for Notes or Mortgage Loans.
(a) The recitals contained herein shall be taken as the statements of the Trust
and the Servicer, as the case may be, and the Collateral Agent assumes no
responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Mortgage Loan or related document. The Collateral Agent shall not be accountable
for the use or application of any funds paid to the Servicer in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Servicer. The Collateral Agent shall not be responsible for the legality or
validity of the Agreement or the validity, priority, perfection or sufficiency
of the security for the Notes issued or intended to be issued under the
Indenture.
Section 9.04. Collateral Agent May Own Notes. (a) The Collateral Agent
in its individual or any other capacity may become the owner or pledgor of Notes
with the same rights it would have if it were not Collateral Agent, and may
otherwise deal with the parties hereto.
Section 9.05. Collateral Agent's Fees and Expenses; Indemnity. (a) The
Collateral Agent acknowledges that in consideration of the performance of its
duties hereunder it is entitled to receive its fees and expenses from the
Servicer, as separately agreed between the Servicer and the Collateral Agent.
The Trust, the Depositor, the Indenture Trustee and the Note Insurer shall not
pay any of the Collateral Agent fees and expenses in connection with this
transaction. The Collateral Agent shall not be entitled to compensation for any
expense, disbursement or advance as may arise from its negligence or bad faith,
and the Collateral Agent shall have no lien on the Trust Estate for the payment
of its fees and expenses.
(b) The Collateral Agent and any director, officer, employee or agent
of the Collateral Agent shall be indemnified by the Servicer and held harmless
against any loss, liability, claim, damage or expense arising out of, or imposed
upon the Trust Estate or the Collateral Agent through the Servicer's acts or
omissions in violation of this Agreement, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence of
the Collateral Agent in the performance of its duties hereunder or by reason of
the Collateral Agent 's reckless disregard of obligations and duties hereunder.
The obligations of the Servicer under this Section 9.05 arising prior to any
resignation or termination of the Servicer hereunder shall survive termination
of the Servicer and payment of the Notes.
Section 9.06. Eligibility Requirements for Collateral Agent. The
Collateral Agent hereunder shall at all times be a banking entity (a) organized
and doing business under the laws of any state or the United States of America
subject to supervision or examination by federal or state authority, (b)
authorized under such laws to exercise corporate trust powers, including taking
title to the Trust Estate on behalf of the Indenture Trustee, for the benefit of
the Noteholders and the Note Insurer, (c) having a combined capital and surplus
of at least $50,000,000, (d) whose long-term deposits, if any, shall be rated at
least BBB- by S&P and Baa3 by Xxxxx'x (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 become
fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as Collateral
Agent herein. The predecessor Collateral Agent shall deliver to the successor
Collateral Agent all Indenture Trustee's Mortgage Files and related documents
and statements held by it hereunder, and the Servicer and the predecessor
Collateral Agent shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor Collateral Agent all such rights, powers, duties and
obligations. The cost of any such transfer to the successor Collateral Agent
shall be for the account of the Collateral Agent in the event of the resignation
of the Collateral Agent, and shall be for the account of the Servicer in the
event of the removal of the Collateral Agent. No successor Collateral Agent
shall accept appointment as provided in this Section 9.08 unless at the time of
such acceptance such successor Collateral Agent shall be eligible under the
provisions of Section 9.06. Upon acceptance of appointment by a successor
Collateral Agent as provided in this Section 9.08, the Servicer shall mail
notice of the succession of such Collateral Agent hereunder to all Noteholders
at their addresses as shown in the Note Register and to the Rating Agencies. If
the Servicer fails to mail such notice within ten (10) days after acceptance of
appointment by the successor Collateral Agent, the successor Collateral Agent
shall cause such notice to be mailed at the expense of the Servicer.
Section 9.09. Merger or Consolidation of Collateral Agent. Any Person
into which the Collateral Agent may be merged or converted or with which it may
be consolidated or any corporation or national banking association resulting
from any merger, conversion or consolidation to which the Collateral Agent shall
be a party, or any corporation or national banking association succeeding to the
business of the Collateral Agent, shall be the successor of the Collateral Agent
hereunder; provided, that such corporation or national banking association shall
be eligible under the provisions of Section 9.06, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Limitation on Liability. None of the Trust, the Owner
Trustee, the Depositor, the Servicer, the Collateral Agent, the Indenture
Trustee or any of the directors, officers, employees or agents of such Persons
shall be under any liability to the Trust, the Noteholders or the Note Insurer
for any action taken, or for refraining from the taking of any action, in good
faith pursuant to this Agreement, or for errors in judgment; provided, however,
that this provision shall not protect the Trust, the Owner Trustee, the
Depositor, the Servicer, the Collateral Agent, the Indenture Trustee or any such
Person against any breach of warranties or representations made herein 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.
Section 10.02. Acts of Noteholders. (a) Except as otherwise
specifically provided herein, whenever Noteholder action, consent or approval is
required under this Agreement, such action, consent or approval shall be deemed
to have been taken or given on behalf of, and shall be binding upon, all
Noteholders if the Majority Noteholders or the Note Insurer agrees to take such
action or give such consent or approval.
(b) The death or incapacity of any Noteholder shall not operate to
terminate this Agreement or the Trust, nor entitle such Noteholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(c) No Noteholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Notes, be construed
so as to constitute the Noteholders from time to time as partners or members of
an association; nor shall any Noteholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
Section 10.03. Amendment. (a) This Agreement may be amended from time
to time by the Owner Trustee, on behalf of the Trust, the Servicer, the
Depositor, the Collateral Agent and the Indenture Trustee by written agreement,
upon the prior written consent of the Note Insurer, without notice to or consent
of the Noteholders to cure any ambiguity, to correct or supplement any
provisions herein, to comply with any changes in the Code, or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by (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 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.
Section 10.04. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the properties subject to the Mortgages are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer at the Noteholders' expense on direction and at
the expense of Majority Noteholders requesting such recordation, but only when
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Noteholders or is
necessary for the administration or servicing of the Mortgage Loans.
Section 10.05. Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 10.06. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (i) in the case of the Servicer, the Subservicers 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, 0000 Xxxxxxxxxx Xxxx, 000 Xxxxxxxx Xxxx., Xxxxxxxxxx,
Xxxxxxxx 00000, Attention: Xxxxxxx Xxxxx, Executive Vice President; (iii) in the
case of the Trust, ABFS Mortgage Loan Trust 1999-3, c/o the Owner Trustee at its
Corporate Trust Office, Attention: Corporate Trust Administration; (iv) in the
case of the Collateral Agent, Chase Bank of Texas, N.A., at its Corporate Trust
Office, Attention: Document Custody Manager; (v) in the case of the Indenture
Trustee, x/x Xxx Xxxxx Xxxxxxxxx Bank, 000 X. 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000, Attention: Capital Markets Fiduciary Services, telephone (000) 000-0000,
telecopy (000) 000-0000; (vi) in the case of the Depositor or the Underwriter,
Prudential Securities Secured Financing Corporation or Prudential Securities
Incorporated, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Managing
Director- Asset Backed Finance Group; (vii) in the case of the Note Insurer,
Financial Security Assurance Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department (in each case in which notice or other
communication to the Note Insurer refers to an Event of Default, a Servicer
Event of Default or a claim on the Note Insurance Policy or with respect to
which failure on the part of the Note Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of each of the General
Counsel and the Head- Financial Guaranty Group, and shall be marked to indicate
"URGENT MATERIAL ENCLOSED"); (viii) in the case of Standard & Poor's Rating
Services, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 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,
and no amounts owed to the Note Insurer hereunder remain unpaid, the Note
Insurer's rights hereunder shall terminate.
Section 10.13. Third Party Beneficiary. The parties agree that each of
the Owner Trustee, the Unaffiliated Seller and the Note Insurer is intended and
shall have all rights of a third-party beneficiary of this Agreement.
Section 10.14. Intent of the Parties. It is the intent of the parties
hereto and Noteholders that, for federal income taxes, state and local income or
franchise taxes and other taxes imposed on or measured by income, the Notes be
treated as debt. The parties to this Agreement and the Holder of each Note, by
acceptance of its Note, and each Beneficial Owner thereof, agree to treat, and
to take no action inconsistent with the treatment of, the related Notes in
accordance with the preceding sentence for purposes of federal income taxes,
state and local income and franchise taxes and other taxes imposed on or
measured by income.
Section 10.15. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF NEW YORK.
(b) THE TRUST, THE SERVICER, THE 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]
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.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION, as Depositor
By:___________________________________
Name:
Title:
ABFS MORTGAGE LOAN TRUST 1999-3
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
By:___________________________________
Name:
Title:
CHASE BANK OF TEXAS, N.A., as
Collateral Agent
By:___________________________________
Name:
Title:
[Signature Page to Sale and Servicing Agreement]
SCHEDULE I
MORTGAGE LOAN SCHEDULE
[See Schedule I to Unaffiliated Seller's Agreement]
APPENDIX I
DEFINED TERMS
[See Appendix I to Indenture]
