SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 3, 1999
(Date of earliest event reported)
Commission File No. 333-61785
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV (as depositor under the Sale and
Servicing Agreement, dated as of April 1, 1999, relating to the Empire Funding
Home Loan Owner Trust 1999-1, Home Loan Asset Backed Notes, Series 1999-1)
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
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(Exact name of registrant as specified in its charter)
Delaware 06-1204982
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(State of Incorporation) (I.R.S. Employer Identification No.)
1285 Avenue of the Americas
New York, New York 10019
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(Address of principal executive offices) (Zip Code)
(212) 713-2000
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(Registrant's Telephone Number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
ITEM 5. Other Events
On May 3, 1999, Empire Funding Home Loan Owner Trust 1999-1 (the
"Owner Trust") issued the Home Loan Asset Backed Notes, Series 1999-1, Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class M-1, Class M-2 and Class
B-1 (the "Offered Notes"), having an aggregate original principal balance of
$233,750,000. The Offered Notes were issued pursuant to an Indenture, dated as
of April 1, 1999 (the "Indenture"), between Empire Funding Home Loan Owner Trust
1999-1 (the "Owner Trust") and U.S. Bank National Association ("U.S. Bank" and
in such capacity, the "Indenture Trustee"), a copy of which is filed as an
exhibit hereto. Home Loan Asset Backed Notes, Series 1999-1, Class B-2 having an
aggregate initial principal balance of $16,250,000 (the "Private Notes" and,
together with the Offered Notes, the "Notes"), were also issued pursuant to the
Indenture. The Owner Trust was formed by PaineWebber Mortgage Acceptance
Corporation IV, a Delaware corporation (the "Registrant"), pursuant to an Owner
Trust Agreement, dated as of April 1, 1999 (the "Owner Trust Agreement"), among
the Registrant, Empire Funding Corp. ("Empire"), Wilmington Trust Company (the
"Owner Trustee") and U.S. Bank, as paying agent (in such capacity, the "Paying
Agent"), a copy of which is filed as an exhibit hereto. The Notes are secured by
the assets of the Owner Trust, consisting of a grantor trust certificate (the
"Grantor Trust Certificate") evidencing 100% of the beneficial ownership
interests in Empire Funding Grantor Trust 1999-1 (the "Grantor Trust"). The
Grantor Trust was established pursuant to a Grantor Trust Agreement, dated as of
April 1, 1999 (the "Grantor Trust Agreement"), among the Registrant, U.S. Bank,
as grantor trustee (in such capacity, the "Grantor Trustee"), Empire, as
transferor and subservicer, ContiMortgage Corporation ("ContiMortgage"), as
transferor and servicer, and California Lending Group, Inc. d/b/a United Lending
Group ("ULG"), as transferor, a copy of which is filed as an exhibit hereto. The
assets of the Grantor Trust consist primarily of a pool (the "Pool") of
closed-end, fixed-rate home loans (the "Loans"), substantially all of which are
secured by second lien mortgages, deeds of trust or other similar security
instruments or unsecured. The Grantor Trust Certificate was sold by the
Registrant to the Owner Trust pursuant to a Sale and Servicing Agreement, dated
as of April 1, 1999 (the "Sale and Servicing Agreement"), among the Owner Trust,
as issuer, the Registrant, U.S. Bank, as Grantor Trustee and Indenture Trustee,
Empire, as subservicer and transferor, ULG, as transferor, ContiMortgage, as
transferor and servicer, Norwest Bank Minnesota, National Association, as master
servicer, and ContiFinancial Corporation, as guarantor, a copy of which is filed
as an exhibit hereto.
In addition, the Owner Trust, Empire and U.S. Bank, as administrator
of the Owner Trust, have entered into an Administration Agreement, dated as of
April 1, 1999 (the "Administration Agreement"), a copy of which is filed as an
exhibit hereto.
Interest on the Offered Notes will be paid on each Payment Date (as
defined in the Sale and Servicing Agreement). Monthly payments in reduction of
the principal balance of the Offered Notes will be allocated to the Offered
Notes in accordance with the priorities set forth in the Sale and Servicing
Agreement.
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<PAGE>
ITEM 7. Financial Statements and Exhibits
(c) Exhibits
Item 601(a)
of Regulation S-K
Exhibit No. Description
(EX-4.1) Indenture, dated as of April 1, 1999, between Empire Funding
Home Loan Owner Trust 1999-1 and U.S. Bank National
Association.
(EX-4.2) Sale and Servicing Agreement, dated as of April 1, 1999,
among PaineWebber Mortgage Acceptance Corporation IV, Empire
Funding Home Loan Owner Trust 1999-1, Empire Funding Corp.,
California Lending Group, Inc., d/b/a United Lending Group,
ContiMortgage Corporation, Norwest Bank Minnesota, National
Association, ContiFinancial Corporation and U.S. Bank
National Association.
(EX-99.1) Administration Agreement, dated as of April 1, 1999, among
Empire Funding Home Loan Owner Trust 1999-1, Empire Funding
Corp. and U.S. Bank National Association.
(EX-99.2) Owner Trust Agreement, dated as of April 1, 1999, among
PaineWebber Mortgage Acceptance Corporation IV, Empire
Funding Corp., Wilmington Trust Company and U.S. Bank
National Association.
(EX-99.3) Grantor Trust Agreement, dated as of April 1, 1999, among
PaineWebber Mortgage Acceptance Corporation IV, Empire
Funding Corp., ContiMortgage Corporation, California Lending
Group, Inc., d/b/a United Lending Group and U.S. Bank
National Association.
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<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
May 3, 1999
By: /s/ BARBARA J. DAWSON
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Name: Barbara J. Dawson
Title: Senior Vice President
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<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Paper (P) or
Exhibit No. Description Electronic(E)
<S> <C> <C>
(EX-4.1) Indenture, dated as of April 1, 1999, between Empire Funding Home E
Loan Owner Trust 1999-1 and U.S. Bank National Association.
(EX-4.2) Sale and Servicing Agreement, dated as of April 1, 1999, among E
PaineWebber Mortgage Acceptance Corporation IV, Empire Funding
Home Loan Owner Trust 1999-1, Empire Funding Corp., California
Lending Group, Inc., d/b/a United Lending Group, ContiMortgage
Corporation, Norwest Bank Minnesota, National Association,
ContiFinancial Corporation and U.S. Bank National Association.
(EX-99.1) Administration Agreement, dated as of April 1, 1999, among Empire E
Funding Home Loan Owner Trust 1999-1, Empire Funding Corp. and
U.S. Bank National Association.
(EX-99.2) Owner Trust Agreement, dated as of April 1, 1999, among E
PaineWebber Mortgage Acceptance Corporation IV, Empire Funding
Corp., Wilmington Trust Company and U.S. Bank National
Association.
(EX-99.3) Grantor Trust Agreement, dated as of April 1, 1999, among E
PaineWebber Mortgage Acceptance Corporation IV, Empire Funding
Corp., ContiMortgage Corporation, California Lending Group, Inc.,
d/b/a United Lending Group and U.S. Bank National Association.
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</TABLE>
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INDENTURE
between
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1,
as Issuer
and
U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
Dated as of April 1, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
Home Loan Asset Backed Notes,
Series 1999-1
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<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Definitions....................................................
Section 1.02 Incorporation by Reference of Trust Indenture Act..............
Section 1.03 Rules of Construction..........................................
ARTICLE II
THE NOTES
Section 2.01 Form...........................................................
Section 2.02 Execution, Authentication, Delivery and Dating.................
Section 2.03 Registration; Registration of Transfer and Exchange............
Section 2.04 Mutilated, Destroyed, Lost or Stolen Notes.....................
Section 2.05 Persons Deemed Note Owners.....................................
Section 2.06 Payment of Principal and/or Interest; Defaulted Interest.......
Section 2.07 Cancellation...................................................
Section 2.08 Conditions Precedent to the Authentication of the Notes........
Section 2.09 Release of Collateral..........................................
Section 2.10 Book-Entry Notes...............................................
Section 2.11 Notices to Clearing Agency.....................................
Section 2.12 Definitive Notes...............................................
Section 2.13 Tax Treatment..................................................
Section 2.14 Limitations on Transfer of the Class B-2 Notes.................
ARTICLE III
COVENANTS
Section 3.01 Payment of Principal and/or Interest...........................
Section 3.02 Maintenance of Office or Agency................................
Section 3.03 Money for Payments to Be Held in Trust.........................
Section 3.04 Existence......................................................
Section 3.05 Protection of Collateral.......................................
Section 3.06 Annual Opinions as to Collateral...............................
Section 3.07 Performance of Obligations.....................................
Section 3.08 Negative Covenants.............................................
Section 3.09 Annual Statement as to Compliance..............................
Section 3.10 Covenants of the Issuer........................................
Section 3.11 Restricted Payments............................................
Section 3.12 Treatment of Notes as Debt for Tax Purposes....................
Section 3.13 Notice of Events of Default....................................
Section 3.14 Further Instruments and Acts...................................
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01 Satisfaction and Discharge of Indenture........................
Section 4.02 Application of Trust Money.....................................
Section 4.03 Repayment of Moneys Held by Paying Agent.......................
ARTICLE V
REMEDIES
Section 5.01 Events of Default..............................................
Section 5.02 Acceleration of Maturity; Rescission and Annulment.............
Section 5.03 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee..................... ......................
Section 5.04 Remedies; Priorities...........................................
Section 5.05 Optional Preservation of the Collateral........................
Section 5.06 Limitation of Suits............................................
Section 5.07 Unconditional Rights of Noteholders to Receive Principal
and/or Interest...................... .......................
Section 5.08 Restoration of Rights and Remedies.............................
Section 5.09 Rights and Remedies Cumulative.................................
Section 5.10 Delay or Omission Not a Waiver.................................
Section 5.11 Control by Noteholders.........................................
Section 5.12 Waiver of Past Defaults........................................
Section 5.13 Undertaking for Costs..........................................
Section 5.14 Waiver of Stay or Extension Laws...............................
Section 5.15 Action on Notes................................................
Section 5.16 Performance and Enforcement of Certain Obligations.............
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01 Duties of Indenture Trustee....................................
Section 6.02 Rights of Indenture Trustee....................................
Section 6.03 Individual Rights of Indenture Trustee.........................
Section 6.04 Indenture Trustee's Disclaimer.................................
Section 6.05 Notices of Default.............................................
Section 6.06 Reports by Indenture Trustee to Holders........................
Section 6.07 Compensation and Indemnity.....................................
Section 6.08 Replacement of Indenture Trustee...............................
Section 6.09 Successor Indenture Trustee by Merger..........................
Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee............................. ........................
Section 6.11 Eligibility; Disqualification..................................
Section 6.12 Preferential Collection of Claims Against Issuer...............
Section 6.13 Waiver of Setoff...............................................
ARTICLE VII
NOTEHOLDERS'LISTS AND REPORTS
Section 7.01 Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders........................ .........................
Section 7.02 Preservation of Information; Communications to Noteholders.....
Section 7.03 Reports by Issuer..............................................
Section 7.04 Reports by Indenture Trustee...................................
Section 7.05 144A Information...............................................
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01 Collection of Money............................................
Section 8.02 Trust Accounts; Payments.......................................
Section 8.03 General Provisions Regarding Accounts..........................
Section 8.04 Servicer's Monthly Statements..................................
Section 8.05 Release of Collateral..........................................
Section 8.06 Opinion of Counsel.............................................
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01 Supplemental Indentures Without Consent of Noteholders.........
Section 9.02 Supplemental Indentures with Consent of Noteholders............
Section 9.03 Execution of Supplemental Indentures...........................
Section 9.04 Effect of Supplemental Indentures..............................
Section 9.05 Conformity with Trust Indenture Act............................
Section 9.06 Reference in Notes to Supplemental Indentures..................
Section 9.07 Amendments to Owner Trust Agreement............................
ARTICLE X
REDEMPTION OF NOTES
Section 10.01 Redemption.....................................................
Section 10.02 Form of Redemption Notice......................................
Section 10.03 Notes Payable on Redemption Date; Provision for Payment of
Indenture Trustee.................. .........................
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions, etc......................
Section 11.02 Form of Documents Delivered to Indenture Trustee...............
Section 11.03 Acts of Noteholders............................................
Section 11.04 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies............................... .....................
Section 11.05 Notices to Noteholders; Waiver.................................
Section 11.06 Conflict with Trust Indenture Act..............................
Section 11.07 Effect of Headings and Table of Contents.......................
Section 11.08 Successors and Assigns.........................................
Section 11.09 Separability...................................................
Section 11.10 Benefits of Indenture..........................................
Section 11.11 Legal Holidays.................................................
Section 11.12 GOVERNING LAW..................................................
Section 11.13 Counterparts...................................................
Section 11.14 Recording of Indenture.........................................
Section 11.15 Owner Trust Obligation.........................................
Section 11.16 No Petition....................................................
Section 11.17 Inspection.....................................................
EXHIBITS
EXHIBIT A - Forms of Notes
EXHIBIT B-1 - Form of Transferor Affidavit (144A)
EXHIBIT B-2 - Form of Transferee Affidavit (Accredited Investor)
EXHIBIT B-3 - Form of ERISA Transfer Certificate
EXHIBIT C - Form of Securities Legend
<PAGE>
This Indenture entered into effective April 1, 1999, between EMPIRE
FUNDING HOME LOAN OWNER TRUST 1999-1, a Delaware business trust, as Issuer (the
"ISSUER"), and U.S. BANK NATIONAL ASSOCIATION, as Indenture Trustee (the
"INDENTURE TRUSTEE"),
W I T N E S S E T H T H A T:
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In consideration of the mutual covenants herein contained, the Issuer
and the Indenture Trustee hereby agree as follows for the benefit of each of
them and for the equal and ratable benefit of the holders of the Issuer's Class
A-1 Floating Rate Home Loan Asset Backed Notes (the "CLASS A-1 NOTES"), Class
A-2 6.29% Home Loan Asset Backed Notes (the "CLASS A-2 NOTES"), Class A-3 6.44%
Home Loan Asset Backed Notes (the "CLASS A-3 NOTES"), Class A-4 6.82% Home Loan
Asset Backed Notes (the "CLASS A-4 NOTES"), Class A-5 7.38% Home Loan Asset
Backed Notes (the "CLASS A-5 NOTES" and, together with the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes, the "CLASS A NOTES"),
Class M-1 8.03% Home Loan Asset Backed Notes (the "CLASS M-1 NOTES"), Class M-2
9.00% Home Loan Asset Backed Notes (the "CLASS M-2 NOTES"), Class B-1 9.00% Home
Loan Asset Backed Notes (the "CLASS B-1 NOTES") and Class B-2 9.00% Home Loan
Asset Backed Notes (the "CLASS B-2 NOTES" and, together with the Class A Notes,
Class M-1 Notes, Class M-2 Notes and Class B-1 Notes, the "NOTES"):
GRANTING CLAUSE
Subject to the terms of this Indenture, the Issuer hereby Grants on
the Closing Date, to the Indenture Trustee, as Indenture Trustee for the benefit
of the Holders of the Notes, all of the Issuer's right, title and interest in
and to: (i) the Owner Trust Estate (as defined in the Sale and Servicing
Agreement); (ii) all right, title and interest of the Issuer in and to the Sale
and Servicing Agreement; (iii) all present and future claims, demands, causes of
action and choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the conversion
thereof, voluntary or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights
to payment of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing; (iv) all funds on deposit
from time to time in the Trust Accounts (including the Certificate Distribution
Account); and (v) all other property of the Owner Trust from time to time
(collectively, the "COLLATERAL").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, and to secure compliance with the provisions of this Indenture, all as
provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders
of the Notes, acknowledges such Grant, accepts the trusts hereunder and agrees
to perform its duties required in this Indenture to the best of its ability to
the end that the interests of the Holders of the Notes may adequately and
effectively be protected. The Indenture Trustee agrees and acknowledges that
possession of the Grantor Trust Certificate will be maintained by the Indenture
Trustee in St. Paul, Minnesota. The Indenture Trustee further agrees and
acknowledges that each other item of Collateral that is physically delivered to
the Indenture Trustee will be held by the Custodian on behalf of the Indenture
Trustee in St. Paul, Minnesota.
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS.
(a) Except as otherwise specified herein or as the context may
otherwise require, the following terms have the respective meanings set forth
below for all purposes of this Indenture.
"ACT" has the meaning specified in Section 11.03(a) hereof.
"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as
of April 1, 1999, among the Administrator, the Issuer and Empire Funding.
"ADMINISTRATOR" means U.S. Bank National Association, a national
banking association, or any successor Administrator under the Administration
Agreement.
"AFFILIATE" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"AUTHORIZED OFFICER" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter) and, so
long as the Administration Agreement is in effect, any Vice President or more
senior officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is identified on
the list of Authorized Officers delivered by the Administrator to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"BASIC DOCUMENTS" means the Certificate of Owner Trust, Certificate of
Grantor Trust, the Grantor Trust Agreement, the Owner Trust Agreement, this
Indenture, the Sale and Servicing Agreement, the Home Loan Purchase Agreements,
the Administration Agreement, the Custodial Agreement, the Note Depository
Agreement, the Notes and other documents and certificates delivered in
connection herewith or therewith.
"BOOK-ENTRY NOTES" means a beneficial interest in the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class M-1, Class M-2, Class B-1 or Class
B-2 Notes, ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 2.10 hereof.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday, or
(ii) a day on which banking institutions in the City of New York, in the city in
which the corporate trust office of the Indenture Trustee or Grantor Trustee is
located or in the city in which Empire Subservicer's or the Servicer's servicing
operations or the Master Servicer's master servicing operations are located and
are authorized or obligated by law or executive order to be closed.
"CERTIFICATE OF GRANTOR TRUST" means the certificate of trust of the
Grantor Trust substantially in the form of Exhibit A to the Grantor Trust
Agreement.
"CERTIFICATE OF OWNER TRUST" means the certificate of trust of the
Issuer substantially in the form of Exhibit C to the Owner Trust Agreement.
"CLASS A NOTES" means the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes and the Class A-5 Notes.
"CLASS A-1 NOTES", "CLASS A-2 NOTES", "CLASS A-3 NOTES", "CLASS A-4
NOTES", "CLASS A-5 NOTES", "CLASS B-1 NOTES", "CLASS B-2 NOTES", "CLASS M-1
NOTES" and "CLASS M-2 NOTES" shall each have the meaning assigned thereto in the
"WITNESSETH THAT" Clause of this Indenture.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for which from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING DATE" means May 3, 1999.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in the Granting Clause of this
Indenture.
"COMMISSION" means the Securities and Exchange Commission.
"CORPORATE TRUST OFFICE" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at date of execution of this Agreement is located at
180 East Fifth Street, St. Paul, Minnesota 55101; Attention: Structured Finance,
or at such other address as the Indenture Trustee may designate from time to
time by notice to the Noteholders and the Issuer, or the principal corporate
trust office of any successor Indenture Trustee at the address designated by
such successor Indenture Trustee by notice to the Noteholders and the Issuer.
"DCR" means Duff & Phelps Credit Rating Co. or any successor thereto.
"DEFAULT" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"DEFINITIVE NOTES" means any Class of Notes as set forth in Section
2.12 hereof.
"DEPOSITOR" shall mean PaineWebber Mortgage Acceptance Corporation IV,
a Delaware corporation, in its capacity as depositor under the Sale and
Servicing Agreement, or any successor in interest thereto.
"DEPOSITORY INSTITUTION" means any depository institution or trust
company, including the Indenture Trustee, that (a) is incorporated under the
laws of the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and (c) has
outstanding unsecured commercial paper or other short-term unsecured debt
obligations that are rated A-1 by S&P and DCR (or comparable ratings if S&P and
DCR are not the Rating Agencies).
"DUE PERIOD" means, with respect to any Payment Date and any Class of
Notes, the calendar month immediately preceding the month of such Payment Date.
"EVENT OF DEFAULT" has the meaning specified in Section 5.01 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXECUTIVE OFFICER" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"GRANTOR TRUST" means Empire Funding Grantor Trust 1999-1, formed
pursuant to the Grantor Trust Agreement.
"GRANTOR TRUST AGREEMENT" means the Trust Agreement dated as of April
1, 1999, among PaineWebber Mortgage Acceptance Corporation IV, as Depositor, the
Transferors, the Servicer and the Grantor Trustee.
"GRANTOR TRUST CERTIFICATE" means the trust certificate issued by the
Grantor Trust evidencing 100% of the beneficial ownership of the Grantor Trust.
"GRANTOR TRUSTEE" means U.S. Bank National Association, a national
banking association, as Grantor Trustee under the Grantor Trust Agreement, or
any successor Grantor Trustee hereunder.
"HIGHEST PRIORITY CLASSES NOTES" means, until the Class Principal
Balances of all Classes of Senior Notes are reduced to zero and all sums payable
to the Holders of the Senior Notes have been paid in full, the Senior Notes;
when the Class Principal Balances of all classes of Senior Notes have been
reduced to zero and all amounts payable to the Holders of the Senior Notes have
been paid in full, the Class M-1 Notes; when the Class Principal Balances of all
Classes of Senior Notes and Class M-1 Notes have been reduced to zero and all
sums payable to the Holders of the Senior Notes and Class M-1 Notes have been
paid in full, the Class M-2 Notes; when the Class Principal Balances of all
Classes of Senior Notes, Class M-1 Notes and Class M-2 Notes have been reduced
to zero and all sums payable to the Holders of the Senior Notes, Class M-1 Notes
and Class M-2 Notes have been paid in full, the Class B-1 Notes; when the Class
Principal Balances of all Classes of Senior Notes, Class M-1 Notes, Class M-2
Notes and Class B-1 Notes have been reduced to zero and all sums payable to the
Holders of the Notes, Class M-1 Notes, Class M-2 Notes and Class B-1 Notes have
been paid in full, the Class B-2 Notes.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is
registered on the Note Register.
"INDENTURE TRUSTEE" means U.S. Bank National Association, a national
banking association, as Indenture Trustee under this Indenture, or any successor
Indenture Trustee hereunder.
"INDEPENDENT" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Issuer, any other obligor on
the Notes, the Servicer, the Subservicer, the Master Servicer, the Depositor any
Transferor or any of their respective Affiliates, (b) does not have any direct
financial interest or any material indirect financial interest in the Issuer,
any such other obligor the Servicer, the Subservicer, the Master Servicer, the
Depositor, any Transferor or any of their respective Affiliates and (c) is not
connected with the Issuer, any such other obligor, the Servicer, the
Subservicer, the Master Servicer, the Depositor any Transferor or any of their
respective Affiliate or any officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions with respect to the
foregoing Persons.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of SECTION 11.01 hereof,
made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"ISSUER" or "OWNER TRUST" means Empire Funding Home Loan Owner Trust
1999-1 until a successor replaces it and, thereafter, means the successor and,
for purposes of any provision contained herein and required by the TIA, each
other obligor on the Notes.
"ISSUER ORDER" and "ISSUER REQUEST" mean a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"MAJORITY HIGHEST PRIORITY CLASSES NOTEHOLDERS" means on any date,
Holders of Highest Priority Classes Notes representing more than 50% of the
Voting Interests of the Highest Priority Classes Notes then Outstanding.
"MASTER SERVICER" means Norwest Bank Minnesota, National Association,
a national banking association.
"MATURITY DATE" means, with respect to each Class of Notes, the
applicable maturity date set forth below:
CLASS MATURITY DATE
----- -------------
A-1 March 25, 2009
A-2 September 25, 2011
A-3 April 25, 2013
A-4 November 25, 2019
A-5 May 25, 2030
M-1 May 25, 2030
M-2 May 25, 2030
B-1 May 25, 2030
B-2 May 25, 2030
"NON-PRIORITY CLASS NOTES" means Notes which are not Highest Priority
Classes Notes.
"NOTE" means a Class A-1 Note, Class A-2 Note, Class A-3 Note, Class
A-4 Note, Class A-5 Note, Class M-1 Note, Class M-2 Note, Class B-1 Note or
Class B-2 Note, as applicable.
"NOTE DEPOSITORY AGREEMENT" means the agreement to be entered into
among the Issuer, the Administrator, the Indenture Trustee and The Depository
Trust Company, as the initial Clearing Agency, relating to the Book-Entry Notes.
"NOTE INTEREST RATE" means, with respect to any Class of Notes, the
applicable rate per annum specified below (computed on the basis of a 360-day
year assumed to consist of twelve 30-day months, except that with respect to the
Class A-1 Notes, calculations of accrued interest shall be made on the basis of
a 360-day year and actual number of days elapsed in each Accrual Period):
Class A-1: Floating Rate (1) (2)
Class A-2: 6.29%(2)
Class A-3: 6.44%(2)
Class A-4: 6.82%(2)
Class A-5: 7.38%(2)
Class M-1: 8.03%(2)
Class M-2: 9.00%(2)
Class B-1: 9.00%(2)
Class B-2: 9.00%(2)
- ------------------------------
(1) Interest will accrue on the Class A-1 Notes during each Accrual Period at
a per annum interest rate equal to LIBOR for the related LIBOR
Determination Date plus 0.20%, subject to a maximum rate equal to 12.00%.
The Note Interest Rate applicable to the Class A-1 Notes for the initial
Accrual Period will be 5.112% per annum.
(2) Commencing on the first day of the month in which the Clean-up Call Date
occurs, the Note Interest Rate shall be increased by 0.50% per annum.
"NOTE OWNER" means, with respect to a Book-Entry Note, the Person that
is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"NOTE PERCENTAGE INTEREST": With respect to any Note of any Class, an
amount equal to the initial denomination of such Note divided by the Original
Class Principal Balance of the related Class of Notes.
"NOTE REGISTER" and "Note Registrar" have the respective meanings
specified in Section 2.03 hereof.
"OFFICER'S CERTIFICATE" means a certificate signed by any Authorized
Officer of the Issuer or the Administrator, under the circumstances described
in, and otherwise complying with, the applicable requirements of SECTION 11.01
hereof, and delivered to the Indenture Trustee. Unless otherwise specified, any
reference in this Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer or the Administrator.
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be an employee of
or counsel to the party required to provide such opinion or opinions and, in
each such case, who shall be satisfactory to the Indenture Trustee, and which
opinion or opinions shall be addressed to the Indenture Trustee, as Indenture
Trustee, and shall comply with any applicable requirements of SECTION 11.01
hereof and shall be in form and substance satisfactory to the Indenture Trustee.
"OUTSTANDING" means, with respect to any Note and as of the date of
determination, any Note theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has theretofore been deposited with the Indenture Trustee
or any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision for such notice
satisfactory to the Indenture Trustee has been made);
(iii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser; provided, however, that in determining
whether the Holders of the requisite Voting Interests of the Outstanding
Notes have given any request, demand, authorization, direction, notice,
consent or waiver hereunder or under any Basic Document, Notes owned by the
Issuer, any other obligor upon the Notes, any Transferor or any Affiliate
of any of the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that the Indenture Trustee
knows to be owned in such manner shall be disregarded. Notes owned in such
manner that have been pledged in good faith may be regarded as Outstanding
if the pledgee establishes to the satisfaction of the Indenture Trustee
that the pledgee has the right so to act with respect to such Notes and
that the pledgee is not the Issuer, any other obligor upon the Notes, any
Transferor or any Affiliate of any of the foregoing Persons; and
(iv) Notes for which the related Maturity Date has occurred.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all
Notes, or Class of Notes, as applicable, Outstanding at the date of
determination.
"OWNER TRUST AGREEMENT" means the Trust Agreement dated as of April 1,
1999, among PaineWebber Mortgage Acceptance Corporation IV, as Depositor, Empire
Funding, Wilmington Trust Company, as Owner Trustee and U.S. Bank National
Association, as Paying Agent.
"OWNER TRUSTEE" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, or any successor
Owner Trustee under the Trust Agreement.
"PAYING AGENT" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in SECTION
6.11 hereof and is authorized by the Issuer to make payments to and payments
from the Note Payment Account, including payment of principal of or interest on
the Notes on behalf of the Issuer.
"PAYMENT DATE" means the 25th day of any month or if such 25th day is
not a Business Day, the first Business Day immediately following such day,
commencing in May 1999.
"PERSON" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization, limited liability company, limited
liability partnership or government or any agency or political subdivision
thereof.
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under SECTION 2.04 hereof in lieu of a mutilated,
lost, destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.
"RATING AGENCY" means either or all of (i) S&P or (ii) DCR. If no such
organization or successor thereto is any longer in existence, "Rating Agency"
shall be a nationally recognized statistical rating organization or other
comparable Person rating the Notes.
"RATING AGENCY CONDITION" means, with respect to any applicable
action, that each Rating Agency shall have been given 10 days' prior notice
thereof (or such shorter period as is acceptable to each Rating Agency) and that
each of the Rating Agencies shall have notified the Depositor, the Servicer, the
Master Servicer and the Issuer in writing that such action will not result in a
reduction or withdrawal of the then current rating of the Notes.
"RECORD DATE" means, as to each Payment Date, the last Business Day of
the month immediately preceding the month in which such Payment Date occurs.
"REDEMPTION DATE" means in the case of a redemption of the Notes
pursuant to SECTION 10.01 hereof, the Payment Date specified by the Servicer or
the Issuer pursuant to such SECTION 10.01.
"REGISTERED HOLDER" means the Person in the name of which a Note is
registered on the Note Register on the applicable Record Date.
"RESIDUAL INTEREST CERTIFICATE" has the meaning assigned to such term
in SECTION 1.1 of the Owner Trust Agreement.
"RESPONSIBLE OFFICER" means, with respect to the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"S&P" means Standard and Poor's Ratings Services or any successor
thereto.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement
dated as of April 1, 1999, among the Issuer, PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, Empire Funding Corp., as Transferor and
Subservicer, California Lending Group, Inc., d/b/a United Lending Group, as
Transferor, ContiMortgage Corporation, as Transferor and Servicer, Norwest Bank
Minnesota, National Association, as Master Servicer, U.S. Bank National
Association, as Indenture Trustee and Grantor Trustee, and ContiFinancial
Corporation, as Guarantor.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICER" shall mean ContiMortgage Corporation, in its capacity as
servicer under the Sale and Servicing Agreement, and any Successor Servicer
thereunder.
"STATE" means any one of the States of the United States of America or
the District of Columbia.
"TRANSFEROR" means each of Empire Funding Corp., an Oklahoma
corporation, ContiMortgage Corporation, a Delaware corporation, and California
Lending Group, Inc., d/b/a United Lending Group, a California corporation.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939
as in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code as in effect in the relevant jurisdiction, as amended from time
to time.
"VOTING INTERESTS" means with respect to any Class of Notes, the
percentage equal to a fraction, the numerator of which is equal to the Class
Principal Balance of such Class of Notes and the denominator of which is equal
to the aggregate Class Principal Balances of all Classes of Notes Outstanding.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein have
the respective meanings set forth in the Sale and Servicing Agreement for all
purposes of this Indenture.
Section 1.02 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
(a) Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Notes.
"INDENTURE SECURITY HOLDER" means a Noteholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Indenture
Trustee.
"OBLIGOR" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
(b) All other TIA terms used in this Indenture that are defined in the
TIA, defined by TIA reference to another statute or defined by rule of the
Securities and Exchange Commission have the respective meanings assigned to them
by such definitions.
Section 1.03 RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect in the United States from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural
include the singular; and
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented (as provided in such agreements) and includes (in
the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person are
also to its permitted successors and assigns.
ARTICLE II
THE NOTES
Section 2.01 FORM. The Notes shall be designated as the "Empire
Funding Home Loan Owner Trust 1999-1 Asset Backed Notes, Series 1999-1". Each
Class of Notes shall be in substantially the form set forth in EXHIBIT A hereto,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the officers executing
such Notes, as evidenced by their execution thereof. Any portion of the text of
any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes are set forth in EXHIBIT A hereto. The terms of each Class of Notes
are part of the terms of this Indenture.
Section 2.02 EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Notes
shall be executed on behalf of the Issuer by an Authorized Officer of the Owner
Trustee or the Administrator. The signature of any such Authorized Officer on
the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Owner Trustee or the Administrator
shall bind the Issuer, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Notes or did not hold such offices at the date of such Notes.
Subject to the satisfaction of the conditions set forth in SECTION
2.08 hereof, the Indenture Trustee shall upon Issuer Order authenticate and
deliver the Classes of Notes for original issue in the following principal
amounts: Class A-1, $59,749,000; Class A-2, $35,032,000; Class A-3, $29,161,000;
Class A-4, $30,168,000; Class A-5, $15,890,000; Class M-1, $28,125,000; Class
M-2, $16,250,000; Class B-1, $19,375,000; Class B-2, $16,250,000. The aggregate
principal amount of such Classes of Notes outstanding at any time may not exceed
such respective amounts.
The Notes that are authenticated and delivered by the Indenture
Trustee to or upon the order of the Issuer on the Closing Date shall be dated
May 3, 1999. All other Notes that are authenticated after the Closing Date for
any other purpose under the Indenture shall be dated the date of their
authentication. Each Class of Notes shall be issuable as registered Notes in the
minimum denomination of $25,000 initial principal amount and integral multiples
of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
Section 2.03 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE. The
Issuer shall cause to be kept a register (the "NOTE REGISTER") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee initially shall be the "NOTE REGISTRAR" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in SECTION 3.02 hereof, the
Issuer shall execute, and the Indenture Trustee shall authenticate and the
Noteholder shall obtain from the Indenture Trustee, in the name of the
designated transferee or transferees, one or more new Notes of the same Class in
any authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, the Notes which the Noteholder making the exchange
is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agents' Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Exchange Act.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to SECTION 9.06 hereof not involving any transfer.
The preceding provisions of this SECTION 2.03 notwithstanding, the
Issuer shall not be required to make, and the Note Registrar need not register,
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to such
Note.
Section 2.04 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may reasonably be required by it to hold the Issuer and the
Indenture Trustee harmless, then, in the absence of notice to the Issuer, the
Note Registrar or the Indenture Trustee that such Note has been acquired by a
bona fide purchaser, an Authorized Officer of the Owner Trustee or the
Administrator on behalf of the Issuer shall execute, and upon its request the
Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note of the
same Class; provided, however, that if any such destroyed, lost or stolen Note,
but not a mutilated Note, shall have become or within seven days shall be due
and payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
which it was delivered or any Person taking such replacement Note from such
Person to which such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this SECTION 2.04, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this SECTION 2.04 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this SECTION 2.04 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.05 PERSONS DEEMED NOTE OWNERS. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in the name of
which any Note is registered (as of the day of determination) as the Note Owner
for the purpose of receiving payments of principal of and interest, if any, on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Indenture Trustee or any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 2.06 PAYMENT OF PRINCIPAL AND/OR INTEREST; DEFAULTED INTEREST.
(a) Each Class of Notes shall accrue interest at the related Note
Interest Rate, and such interest shall be payable on each Payment Date as
specified in EXHIBIT A hereto, subject to SECTION 3.01 hereof. With respect to
the Class A-1 Notes and each Payment Date other than the first Payment Date, the
Indenture Trustee shall determine LIBOR for each applicable Accrual Period on
the second LIBOR Business Day prior thereto. Any installment of interest or
principal, if any, payable on any Note that is punctually paid or duly provided
for by the Issuer on the applicable Payment Date shall be paid to the Person in
the name of which such Note (or one or more Predecessor Notes) is registered on
the Record Date by check mailed first-class postage prepaid to such Person's
address as it appears on the Note Register on such Record Date, except that,
unless Definitive Notes have been issued pursuant to SECTION 2.12 hereof, with
respect to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payment will be made
by wire transfer in immediately available funds to the account designated by
such nominee and except for the final installment of principal payable with
respect to such Note on a Payment Date or on the applicable Maturity Date for
such Class of Notes (and except for the Termination Price for any Note called
for redemption pursuant to SECTION 10.01) hereof, which shall be payable as
provided in SECTION 2.06(B) below. The funds represented by any such checks
returned undelivered shall be held in accordance with SECTION 3.03 hereof.
(b) The principal of each Note shall be payable in installments on
each Payment Date as provided in the forms of the Notes set forth in EXHIBIT A
hereto. Notwithstanding the foregoing, the entire unpaid principal amount of the
Notes together with the amount of any Loss Reimbursement Deficiency in respect
thereof of a Class of Notes shall be due and payable, if not previously paid, on
the earlier of (i) the applicable Maturity Date of such Class, (ii) the
Redemption Date or (iii) the date on which an Event of Default shall have
occurred and be continuing, if the Indenture Trustee or the Majority Highest
Priority Classes Noteholders shall have declared the Notes to be immediately due
and payable in the manner provided in SECTION 5.02 hereof.
All principal payments on each Class of Notes entitled thereto on each
Payment Date will be made on a pro rata basis among the Noteholders of record of
such Class Notes on the next preceding Record Date based on the Note Percentage
Interest represented by their respective Notes. The Indenture Trustee shall
notify the Person in the name of which a Note is registered at the close of
business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in SECTION 10.02 hereof.
Section 2.07 CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall promptly be cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall promptly be cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes canceled as provided in this SECTION 2.07, except as expressly
permitted by this Indenture. All canceled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it; provided, however, that such
Issuer Order is timely and the Notes have not been previously disposed of by the
Indenture Trustee.
Section 2.08 CONDITIONS PRECEDENT TO THE AUTHENTICATION OF THE NOTES.
The Notes may be authenticated by the Indenture Trustee, upon Issuer Request and
upon receipt by the Indenture Trustee of the following:
(a) An Issuer Order authorizing the execution and authentication of
such Notes by the Issuer.
(b) All of the items of Collateral which shall be delivered to the
Indenture Trustee or its designee.
(c) An executed counterpart of the Owner Trust Agreement.
(d) An Opinion of Counsel addressed to the Indenture Trustee to the
effect that:
(i) all conditions precedent to the authentication and delivery
of the Notes, as such conditions have been set forth in this Section
2.08, have been complied with;
(ii) the Owner Trustee has full power, authority and legal right
to execute, deliver and perform its obligations under the Owner Trust
Agreement and to consummate the transactions contemplated thereby;
(iii) the Issuer has been duly formed and is validly existing as
a business trust under the laws of the State of Delaware, 12 Del. C.
Section 3801 et seq., and has power and authority to execute, deliver,
issue and perform, as applicable, the Owner Trust Agreement and to
consummate the transactions contemplated thereby;
(iv) assuming due authorization, execution and delivery hereof by
the Indenture Trustee, the Indenture constitutes a legal, valid and
binding agreement of the Issuer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, receivership or other laws
relating to creditors' rights generally, and to general principles of
equity (regardless of whether enforcement is considered in a
Proceeding at law or in equity) and except that enforcement of rights
with respect to indemnification and contribution may be limited by
applicable law;
(v) upon due authorization, execution and delivery of this
Indenture by each party hereto, and due execution, authentication, and
delivery of the Notes, such Notes will be legal, valid and binding
obligations of the Issuer, enforceable against the Issuer in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium,
receivership or other laws relating to creditors' rights generally,
and to general principles of equity including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity), and will
be validly issued and outstanding and entitled to the benefits of this
Indenture.
(vi) this Indenture has been qualified under the Trust Indenture
Act of 1939, as amended;
(vii) on the Closing Date, the Issuer shall cause to be furnished
to the Indenture Trustee an Opinion of Counsel either stating that, in
the opinion of such counsel, this Indenture has been properly recorded
and filed so as to make effective the lien intended to be created
thereby, and reciting the details of such action, or stating that, in
the opinion of such counsel, no such action is necessary to make such
lien effective; and
(viii) any other matters as the Indenture Trustee may reasonably
request.
(e) An Officer's Certificate complying with the requirements of
Section 11.01 hereof and stating that:
(i) the Issuer is not in Default under this Indenture and the
issuance of the Notes applied for will not result in any breach of any
of the terms, conditions or provisions of, or constitute a default
under, the Owner Trust Agreement, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Issuer is a party
or by which it is bound, or any order of any court or administrative
agency entered in any Proceeding to which the Issuer is a party or by
which it may be bound or to which it may be subject, and that all
conditions precedent provided in this Indenture relating to the
authentication and delivery of the Notes applied for have been
complied with;
(ii) the Issuer is the owner of the Grantor Trust Certificate,
has not assigned any interest or participation in the Grantor Trust
Certificate (or, if any such interest or participation has been
assigned, it has been released) and has the right to Grant the Grantor
Trust Certificate to the Indenture Trustee;
(iii) the Issuer has Granted to the Indenture Trustee all of its
right, title and interest in and to the Collateral, and has delivered
or caused the same to be delivered to the Indenture Trustee;
(iv) attached thereto are true and correct copies of letters
signed by the Rating Agencies confirming that the Class A-1, Class
A-2, Class A-3, Class A-4 and Class A-5 Notes have been rated "AAA" by
S&P and DCR, the Class M-1 Notes have been rated "AA" by S&P and DCR,
the Class M-2 Notes have been rated "A" by S&P and DCR, the Class B-1
Notes have been rated "BBB-" by S&P and "BBB" by DCR, and the Class
B-2 Notes have been rated "BB" by S&P and DCR; and
(v) all conditions precedent provided for in this Indenture
relating to the authentication of the Notes have been complied with;
and
(f) A fair value certificate from Vitek Real Estate Industries Group,
Inc., as agent of the Trust, pursuant to Section 2(a)(xi) of the Administration
Agreement.
Section 2.09 RELEASE OF COLLATERAL. Except as otherwise provided in
SECTION 11.01 hereof and the terms of the Basic Documents, the Indenture Trustee
shall release property from the lien of this Indenture only upon receipt of an
Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel
and Independent Certificates in accordance with TIA Sections 314(c) and
314(d)(l) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
Section 2.10 BOOK-ENTRY NOTES. The Notes, when authorized by an Issuer
Order, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by or on behalf of the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the nominee
of the initial Clearing Agency, and no Note Owner will receive a definitive Note
representing such Note Owner's interest in such Note, except as provided in
SECTION 2.12 hereof. Unless and until definitive, fully registered Notes (the
"DEFINITIVE NOTES") have been issued to such Note Owners pursuant to SECTION
2.12 hereof:
(i) the provisions of this SECTION 2.10 shall be in full force
and effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the
sole Holder of the Notes, and shall have no obligation to the Note
Owners;
(iii) to the extent that the provisions of this SECTION 2.10
conflict with any other provisions of this Indenture, the provisions
of this SECTION 2.10 shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants pursuant to the Note Depository
Agreement. Unless and until Definitive Notes are issued pursuant to
SECTION 2.12 hereof, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Notes to such
Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Voting Interests of the
Outstanding Notes, the Clearing Agency shall be deemed to represent
such percentage only to the extent that it has received instructions
to such effect from Note Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in the Notes and has delivered such instructions
to the Indenture Trustee.
Section 2.11 NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to such Note Owners pursuant to
SECTION 2.12 hereof, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Clearing Agency and shall have no obligation to such Note Owners.
Section 2.12 DEFINITIVE NOTES.
(a) If (i) the Administrator advises the Indenture Trustee in writing
that the Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book-Entry Notes and the Administrator is
unable to locate a qualified successor, (ii) the Administrator at its option
advises the Indenture Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default, Owners of the Book-Entry Notes representing beneficial
interests aggregating at least a majority of the Voting Interests of the
Outstanding Notes advise the Clearing Agency in writing that the continuation of
a book-entry system through the Clearing Agency is no longer in the best
interests of such Note Owners, then the Clearing Agency shall notify all Note
Owners and the Indenture Trustee of the occurrence of such event and of the
availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Notes representing the
Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and each of them
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall
recognize the Holders of the Definitive Notes as Noteholders.
(b) Notwithstanding the foregoing, (i) Holders of the Class B-2 Notes
held as Book-Entry Notes, may transfer such Class B-2 Notes to transferees who
will hold such Class B-2 Notes as Definitive Notes and (ii) Holders of the Class
B-2 Notes held as Definitive Notes, may transfer the Class B-2 Notes to
transferees who will hold such Class B-2 Notes as Book-Entry Notes, if the
conditions set forth in this SECTION 2.12 are satisfied.
Any and all transfers from a Holder of a Class B-2 Book-Entry Note to
a transferee wishing to take delivery in the form of a Definitive Note will
require the transferee to take delivery subject to the restrictions on the
transfer of such Definitive Note described in the legend set forth on the face
of the Class B-2 Note substantially in the form of Exhibit C as attached hereto
(the "LEGEND"), and such transferee agrees that it will transfer such a Class
B-2 Note only as provided therein and herein. No such transfer shall be made and
the Indenture Trustee shall not register any such transfer unless such transfer
is made in accordance with SECTION 2.12(B) and SECTION 2.14.
Upon acceptance for exchange or transfer of a beneficial interest in a
Class B-2 Book-Entry Note for a Definitive Note as provided herein, the
Indenture Trustee shall endorse on (or cause the endorsement of) the schedule
affixed to the related Book-Entry Note (or on a continuation of such schedule
affixed to the such Book-Entry Note and made a part thereof) an appropriate
notation evidencing the date of such exchange or transfer and a decrease in the
principal balance, in the case of the Class B-2 Notes, of such Book-Entry Note
equal to the principal balance of such Definitive Note issued in exchange
therefor or upon transfer thereof. Unless determined otherwise by the Indenture
Trustee in accordance with applicable law, a Definitive Note issued upon
transfer of or exchange for a beneficial interest in a Class B-2 Book-Entry Note
shall bear the Legend.
If a Holder of a Class B-2 Definitive Note wishes at any time to
transfer such Definitive Note to a Person who wishes to take delivery thereof in
the form of a beneficial interest in the Book-Entry Note, such transfer may be
effected only in accordance with the applicable procedures of the Depository
Institution, and SECTION 2.12(B) and SECTION 2.14. Upon receipt by the Indenture
Trustee at the Corporate Trust Office of (1) the Class B-2 Definitive Note to be
transferred with an assignment and transfer, (2) written instructions given in
accordance with the applicable procedures from a participant directing the
Indenture Trustee to credit or cause to be credited to another specified
participant's account a beneficial interest in the Book-Entry Note, in an amount
equal to the principal balance of the Class B-2 Notes of such Definitive Note to
be so transferred, (3) a written order given in accordance with the applicable
procedures containing information regarding the account of the participant to be
credited with such beneficial interest, and (4) transfer documentation received
for a "Qualified Institutional Buyer" pursuant to SECTION 2.14, the Indenture
Trustee shall cancel such Definitive Note, execute and deliver a new Definitive
Note for the principal balance of the Class B-2 Notes of the Definitive Note not
so transferred, registered in the name of the Holder or the Holder's transferee
(as instructed by the Holder), and the Indenture Trustee shall instruct the
Depository Institution to increase the principal balance of the Book-Entry Note,
by the principal balance of the Definitive Note to be so transferred, and to
credit or cause to be credited to the account of the Person specified in such
instructions a corresponding principal balance of the Book-Entry Note.
Under no circumstances may an institutional "accredited investor"
within Regulation D of the Securities Act take delivery in the form of a
beneficial interest in a Class B-2 Book-Entry Note if such purchaser is not a
"qualified institutional buyer" as defined under Rule 144A under the Securities
Act.
An exchange of a beneficial interest in a Class B-2 Book-Entry Note
for a Definitive Note or Notes, an exchange of a Class B-2 Definitive Note or
Notes for a beneficial interest in the Book-Entry Note and exchange of a Class
B-2 Definitive Note or Notes for another Definitive Note or Notes (in each case,
whether or not such exchange is made in anticipation of subsequent transfer, and
in the case of the Book-Entry Note, so long as the Book-Entry Note remains
outstanding and is held by or on behalf of the Depository Institution), may be
made only in accordance with SECTION 2.12(B) and SECTION 2.14 and in accordance
with the rules of the Depository Institution.
Section 2.13 TAX TREATMENT. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that for all
purposes, including federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Collateral. The Issuer, by entering into this Indenture, and each
Noteholder, by its acceptance of a Note (and each Note Owner by its acceptance
of an interest in the applicable Book-Entry Note), agree to treat the Notes for
all purposes, including federal, state and local income, single business and
franchise tax purposes, as indebtedness of the Issuer.
Section 2.14 LIMITATIONS ON TRANSFER OF THE CLASS B-2 NOTES. The Class
B-2 Notes have not been and will not be registered under the Securities Act and
will not be listed on any exchange. No transfer of a Class B-2 Definitive Note
or exchange of a Class B-2 Definitive Note for a Class B-2 Book-Entry Note (or
vice versa) shall be made unless such transfer is made pursuant to an effective
registration statement under the Securities Act and any applicable state
securities laws or is exempt from the registration requirements under the
Securities Act and such state securities laws. In the event that a transfer of a
Class B-2 Note in Definitive Note form is to be made in reliance upon an
exemption from the Securities Act and state securities laws, in order to assure
compliance with the Securities Act and such laws, the prospective transferee
shall (A) in the event that the transfer is made in reliance upon Rule 144A
under the Securities Act, the Indenture Trustee shall require that the
transferor deliver a certification substantially in the form of Exhibit B-1
hereto, or (B) in the event that the transfer is made to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act that is not a "qualified institutional
buyer," the Indenture Trustee shall require that the transferee deliver a
certification substantially in the form of Exhibit B-2 hereto. In the event of a
transfer of a Class B-2 Note pursuant to clause (A) or (B) in the immediately
preceding sentence, the Indenture Trustee shall require that the transferee
deliver a certification substantially in the form of Exhibit B-3 hereto.
ARTICLE III
COVENANTS
Section 3.01 PAYMENT OF PRINCIPAL AND/OR INTEREST. The Issuer will
duly and punctually pay (or will cause to be paid duly and punctually) the
principal of and interest on the Notes in accordance with the terms of the Notes
and this Indenture. Without limiting the foregoing, subject to and in accordance
with SECTION 8.02(C) hereof, the Issuer will cause to be paid to the Noteholders
the Available Payment Amount from amounts on deposit in the Note Payment Account
on each Payment Date deposited therein pursuant to the Sale and Servicing
Agreement (i) for the benefit of the Class A-1 Notes, to the Class A-1
Noteholders, (ii) for the benefit of the Class A-2 Notes, to the Class A-2
Noteholders, (iii) for the benefit of the Class A-3 Notes, to the Class A-3
Noteholders, (iv) for the benefit of the Class A-4 Notes, to the Class A-4
Noteholders, (v) for the benefit of the Class A-5 Notes, to the Class A-5
Noteholders, (vi) for the benefit of the Class M-1 Notes, to the Class M-1
Noteholders, (vii) for the benefit of the Class M-2 Notes, to the Class M-2
Noteholders, (viii) for the benefit of the Class B-1 Notes, to the Class B-1
Noteholders and (ix) for the benefit of the Class B-2 Notes, to the Class B-2
Noteholders. Amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture. The Notes shall be non-recourse obligations of the Issuer and shall
be limited in right of payment to amounts available from the Collateral, as
provided in this Indenture. The Issuer shall not otherwise be liable for
payments on the Notes. If any other provision of this Indenture shall be deemed
to conflict with the provisions of this SECTION 3.01, the provisions of this
SECTION 3.01 shall control.
Section 3.02 MAINTENANCE OF OFFICE OR AGENCY. The Issuer will or will
cause the Administrator to maintain in the Borough of Manhattan in The City of
New York an office or agency where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Administrator to serve as its agent for the foregoing
purposes and to serve as Paying Agent with respect to the Notes and the
Certificates. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
Section 3.03 MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
SECTION 8.02(A) AND (B) hereof, all payments of amounts due and payable with
respect to any Notes that are to be made from amounts withdrawn from the Note
Payment Account pursuant to SECTION 8.02(C) hereof shall be made on behalf of
the Issuer by the Indenture Trustee or by the Paying Agent, and no amounts so
withdrawn from the Note Payment Account for payments of Notes shall be paid over
to the Issuer except as provided in this SECTION 3.03.
On or before the sixth Business Day preceding each Payment Date and
the Redemption Date, the Paying Agent shall deposit or cause to be deposited in
the Note Payment Account an aggregate sum sufficient to pay the amounts due on
such Payment Date or the Redemption Date under the Notes, such sum to be held in
trust for the benefit of the Persons entitled thereto, and (unless the Paying
Agent is the Indenture Trustee) shall promptly notify the Indenture Trustee of
its action or failure so to act.
Any Paying Agent shall be appointed by Issuer Order with written
notice thereof to the Indenture Trustee. Any Paying Agent appointed by the
Issuer shall be a Person which would be eligible to be Indenture Trustee
hereunder as provided in SECTION 6.11 hereof. The Issuer shall not appoint any
Paying Agent (other than the Indenture Trustee) which is not, at the time of
such appointment, a Depository Institution.
The Issuer will cause each Paying Agent other than the Administrator
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) of which it has actual
knowledge in the making of any payment required to be made with
respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be
met by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith; provided,
however, that with respect to withholding and reporting requirements
applicable to original issue discount (if any) on the Notes, the
Issuer shall have first provided the calculations pertaining thereto
to the Indenture Trustee.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds or
abandoned property, any money held by the Indenture Trustee or any Paying Agent
in trust for the payment of any amount due with respect to any Note and
remaining unclaimed for two years after such amount has become due and payable
shall be discharged from such trust and be paid to the Issuer on Issuer Request;
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Issuer for payment thereof (but only to the extent of the
amounts so paid to the Issuer), and all liability of the Indenture Trustee or
such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee or such Paying Agent, before being
required to make any such repayment, shall at the expense and direction of the
Issuer cause to be published, once in a newspaper of general circulation in The
City of New York customarily published in the English language on each Business
Day, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the Issuer.
The Indenture Trustee shall also adopt and employ, at the expense and direction
of the Issuer, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Holders
whose Notes have been called but have not been surrendered for redemption or
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying Agent,
at the last address of record for each such Holder).
Section 3.04 EXISTENCE.
(a) Subject to subparagraph (b) of this SECTION 3.04, the Issuer will
keep in full effect its existence, rights and franchises as a business trust
under the laws of the State of Delaware (unless it becomes, or any successor
Issuer hereunder is or becomes, organized under the laws of any other State or
of the United States of America, in which case the Issuer will keep in full
effect its existence, rights and franchises under the laws of such other
jurisdiction) and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Indenture, the Notes and the
Collateral.
(b) Any successor to the Owner Trustee appointed pursuant to SECTION
10.2 of the Owner Trust Agreement shall be the successor Owner Trustee under
this Indenture without the execution or filing of any paper, instrument or
further act to be done on the part of the parties hereto.
(c) Upon any consolidation or merger of or other succession to the
Owner Trustee, the Person succeeding to the Owner Trustee under the Owner Trust
Agreement may exercise every right and power of the Owner Trustee under this
Indenture with the same effect as if such Person had been named as the Owner
Trustee herein.
Section 3.05 PROTECTION OF COLLATERAL. The Issuer will from time to
time execute and deliver all such reasonable supplements and amendments hereto
and all such financing statements, continuation statements, instruments of
further assurance and other instruments, and will take such other action
necessary or advisable to:
(i) provide further assurance with respect to the Grant of all or
any portion of the Collateral;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(iii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iv) enforce any rights with respect to the Collateral; or
(v) preserve and defend title to the Collateral and the rights of
the Indenture Trustee and the Noteholders in such Collateral against
the claims of all persons and parties.
The Issuer hereby designates the Administrator, its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this SECTION 3.05.
Section 3.06 ANNUAL OPINIONS AS TO COLLATERAL. On or before July 15th
in each calendar year, beginning in 1999, the Issuer shall furnish to the
Indenture Trustee an Opinion of Counsel either stating that, in the opinion of
such counsel, such action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and with respect to the execution and filing
of any financing statements and continuation statements as is necessary to
maintain the lien and security interest created by this Indenture and reciting
the details of such action or stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security interest. Such
Opinion of Counsel shall also describe the recording, filing, re-recording and
refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture until July 15th of
the following calendar year.
Section 3.07 PERFORMANCE OF OBLIGATIONS.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any instrument
or agreement included in the Collateral or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the assistance of
other Persons (including, without limitation, the Administrator under the
Administration Agreement) to assist it in performing its duties under this
Indenture, and any performance of such duties by a Person identified to the
Indenture Trustee in an Officer's Certificate of the Issuer shall be deemed to
be action taken by the Issuer. Initially, the Issuer has contracted with the
Administrator to assist the Issuer in performing its duties under this
Indenture. The Administrator must at all times be the same Person as the
Indenture Trustee.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, in the Basic Documents
and in the instruments and agreements included in the Collateral, including but
not limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Sale and Servicing Agreement. Except as otherwise expressly provided
therein, the Issuer shall not waive, amend, modify, supplement or terminate any
Basic Document or any provision thereof without the consent of the Indenture
Trustee and the Holders of at least a majority of the Voting Interests of the
Outstanding Notes.
(d) If the Issuer shall have knowledge of the occurrence of an Event
of Default or Empire Subservicer Event of Default under the Sale and Servicing
Agreement, the Issuer shall promptly notify the Indenture Trustee, the Master
Servicer and the Rating Agencies thereof, and shall specify in such notice the
action, if any, the Issuer is taking with respect to such default. If such an
Event of Default shall arise from the failure of the Servicer to perform any of
its duties or obligations under the Sale and Servicing Agreement with respect to
the Home Loans, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without the
prior written consent of the Indenture Trustee, amend, modify, waive,
supplement, terminate or surrender, or agree to any amendment, modification,
supplement, termination, waiver or surrender of, the terms of any Collateral
(except to the extent otherwise provided in the Sale and Servicing Agreement) or
the Basic Documents, or waive timely performance or observance by the Servicer,
the Master Servicer, Empire Subservicer or the Depositor under the Sale and
Servicing Agreement; and (ii) that any such amendment shall not (A) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
payments that are required to be made for the benefit of the Noteholders or (B)
reduce the aforesaid percentage of the Outstanding Notes that is required to
consent to any such amendment, without the consent of the Holders the Voting
Interests of all Outstanding Notes. If any such amendment, modification,
supplement or waiver shall so be consented to by the Indenture Trustee, the
Issuer agrees, promptly following a request by the Indenture Trustee to do so,
to execute and deliver, in its own name and at its own expense, such agreements,
instruments, consents and other documents as the Indenture Trustee may deem
necessary or appropriate in the circumstances.
Section 3.08 NEGATIVE COVENANTS. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Sale
and Servicing Agreement, sell, transfer, exchange or otherwise dispose
of any of the properties or assets of the Issuer, including those
included in the Collateral, unless directed to do so by the Indenture
Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the
Collateral;
(iii) engage in any business or activity other than as permitted
by the Owner Trust Agreement or other than in connection with, or
relating to, the issuance of Notes pursuant to this Indenture, or
amend the Owner Trust Agreement as in effect on the Closing Date other
than in accordance with SECTION 11.1 thereof;
(iv) issue debt obligations under any other indenture;
(v) incur or assume any indebtedness or guaranty any indebtedness
of any Person, except for such indebtedness as may be incurred by the
Issuer in connection with the issuance of the Notes pursuant to this
Indenture;
(vi) dissolve or liquidate in whole or in part or merge or
consolidate with any other Person;
(vii) (A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations with respect
to the Notes under this Indenture except as may expressly be permitted
hereby, (B) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this Indenture)
to be created on or extend to or otherwise arise upon or burden the
Collateral or any part thereof or any interest therein or the proceeds
thereof (other than tax liens', mechanics' liens and other liens that
arise by operation of law, in each case on any of the Properties and
arising solely as a result of an action or omission of the related
Obligors) or (C) permit the lien of this Indenture not to constitute a
valid first priority security interest in the Collateral;
(viii) remove the Administrator without cause unless the Rating
Agency Condition shall have been satisfied in connection with such
removal; or
(ix) take any other action or fail to take any action which may
cause the Issuer to be taxable as (a) an association pursuant to
Section 7701 of the Code and the corresponding regulations or (b) as a
taxable mortgage pool pursuant to Section 7701(i) of the Code and the
corresponding regulations.
Section 3.09 ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will
deliver to the Indenture Trustee, within 120 days after the end of each fiscal
year of the Issuer (commencing in the fiscal year 1999), an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
(i) a review of the activities of the Issuer during such year and
of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a
default in its compliance with any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
Section 3.10 COVENANTS OF THE ISSUER. All covenants of the Issuer in
this Indenture are covenants of the Issuer and are not covenants of the Owner
Trustee. The Owner Trustee is, and any successor Owner Trustee under the Owner
Trust Agreement will be, entering into this Indenture solely as Owner Trustee
under the Owner Trust Agreement and not in its respective individual capacity,
and in no case whatsoever shall the Owner Trustee or any such successor Owner
Trustee be personally liable on, or for any loss in respect of, any of the
statements, representations, warranties or obligations of the Issuer hereunder,
as to all of which the parties hereto agree to look solely to the property of
the Issuer.
Section 3.11 RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any payment (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, to
the Owner Trustee or any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in or of
the Issuer or to the Servicer or Master Servicer, (ii) redeem, purchase, retire
or otherwise acquire for value any such ownership or equity interest or security
or (iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, payments to
the Servicer, the Master Servicer, the Indenture Trustee, the Grantor Trustee,
the Owner Trustee, the Noteholders and the holders of the Residual Interest
Certificate as contemplated by Section 8.02(c) hereof, and to the extent funds
are available for such purpose under, the Sale and Servicing Agreement, the
Grantor Trust Agreement or the Owner Trust Agreement. The Issuer will not,
directly or indirectly, make or cause to be made payments to or distributions
from the Collection Account in respect of the Grantor Trust Certificate except
in accordance with this Indenture and the Basic Documents.
Section 3.12 TREATMENT OF NOTES AS DEBT FOR TAX PURPOSES. The Issuer
shall, and shall cause the Administrator to, treat the Notes as indebtedness for
all purposes.
Section 3.13 NOTICE OF EVENTS OF DEFAULT. The Issuer shall give the
Indenture Trustee, the Master Servicer and the Rating Agencies prompt written
notice of each Event of Default hereunder, each default on the part of the
Servicer, the Empire Subservicer or any Transferor of its obligations under the
Sale and Servicing Agreement and each default on the part of a Transferor of
such Transferor's obligations under the related Home Loan Purchase Agreement.
Section
3.14 FURTHER INSTRUMENTS AND ACTS. Upon request of the Indenture
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01 SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes (except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) SECTIONS 3.03, 3.04, 3.05, 3.08
and 3.10 hereof, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under SECTION
6.07 hereof and the obligations of the Indenture Trustee under SECTION 4.02
hereof) and (vi) the rights of Noteholders as beneficiaries hereof with respect
to the property so deposited with the Indenture Trustee payable to all or any of
them), and the Indenture Trustee, on demand of and at the expense of the Issuer,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture with respect to the Notes, when all of the following have
occurred:
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i) Notes
that have been destroyed, lost or stolen and that have been replaced or
paid as provided in SECTION 2.04 hereof and (ii) Notes for the payment
of which money has theretofore been deposited in trust or segregated
and held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in SECTION 3.03 hereof) shall
have been delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
a. shall have become due and payable, or
b. will become due and payable within one year following the
Maturity Date applicable to the Class B-2 Notes, or
c. are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the
giving of notice of redemption by the Indenture Trustee in
the name, and at the expense, of the Issuer,
d. and the Issuer, in the case of clause a., b. or c. above, has
irrevocably deposited or caused irrevocably to be deposited
with the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not
theretofore delivered to the Indenture Trustee for
cancellation when due to the applicable Maturity Date of such
Class of Notes or the Redemption Date (if Notes shall have
been called for redemption pursuant to SECTION 10.01
hereof), as the case may be; and
(B) the latest of (a) 18 months after payment in full of all
outstanding obligations under the Notes, (b) the payment in full of all unpaid
Trust Fees and Expenses and (c) the date on which the Issuer has paid or caused
to be paid all other sums payable hereunder by the Issuer; and
(C) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of SECTION 11.01(A) hereof
and, subject to SECTION 11.02 hereof, each stating that all conditions precedent
herein provided for, relating to the satisfaction and discharge of this
Indenture with respect to the Notes, have been complied with.
Section 4.02 APPLICATION OF TRUST MONEY. All moneys deposited with the
Indenture Trustee pursuant to Sections 3.03 and 4.01 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal
and/or interest; but such moneys need not be segregated from other funds except
to the extent required herein or in the Sale and Servicing Agreement or required
by law.
Section 4.03 REPAYMENT OF MONEYS HELD BY PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to SECTION 3.03 hereof and thereupon such Paying Agent shall be released from
all further liability with respect to such moneys.
ARTICLE V
REMEDIES
Section 5.01 EVENTS OF DEFAULT.
(a) "EVENT OF DEFAULT," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) subject to Section 5.01(b) and notwithstanding that there may be
insufficient sums in the Note Payment Account for payment thereof on the
related Payment Date, default in the payment of any interest on any Note
when the same becomes due and payable, and continuance of such default for
a period of five (5) days (without regard to the amount of the Available
Collection Amount); or
(ii) subject to Section 5.01(b) and notwithstanding that there may be
insufficient sums in the Note Payment Account for payment thereof on the
related Payment Date, default in the payment of the principal of or any
installment of the principal of any Note (i) when the same becomes due and
payable or (ii) on the Maturity Date (without regard to the amount of the
Available Collection Amount); or
(iii) the existence of an unpaid Loss Reimbursement Deficiency in
respect of any Highest Priority Classes Notes; or
(iv) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere
in this Section specifically dealt with), or any representation or warranty
of the Issuer made in this Indenture, the Sale and Servicing Agreement or
in any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material respect
as of the time when the same shall have been made, and such default shall
continue or not be cured, or the circumstance or condition in respect of
which such misrepresentation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 30 days after there shall
have been given, by registered or certified mail, to the Issuer by the
Indenture Trustee, or to the Issuer and the Indenture Trustee by the
Holders of at least 25% of the Voting Interests of the Outstanding Notes, a
written notice specifying such default or incorrect representation or
warranty and requiring it to be remedied and stating that such notice is a
notice of Default hereunder; or
(v) default in the observance or performance of any covenant or
agreement of Empire Funding made in the Owner Trust Agreement or any of the
Transferors made in the Grantor Trust Agreement or any representation or
warranty of Empire Funding made in the Owner Trust Agreement or any of the
Transferors made in the Grantor Trust Agreement, proving to have been
incorrect in any material respect as of the time when the same shall have
been made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise cured,
for a period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee, or to the Issuer
and the Indenture Trustee by the Holders of at least 25% of the Voting
Interests of the Outstanding Notes, a written notice specifying such
Default or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a notice of Default hereunder; or
(vi) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Collateral in an involuntary case under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial part
of the Collateral, or ordering the winding-up or liquidation of the
Issuer's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(vii) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent
by the Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Issuer or for any substantial part of the Collateral, or the making
by the Issuer of any general assignment for the benefit of creditors, or
the failure by the Issuer generally to pay its debts as such debts become
due, or the taking of any action by the Issuer in furtherance of any of the
foregoing.
The Issuer shall deliver to the Indenture Trustee, within five days
after the occurrence thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clauses (iv) and (v) above, the status of
such event and what action the Issuer is taking or proposes to take with respect
thereto.
(b) Neither of the following shall constitute an Event of Default
under SECTION 5.01(A)(I): (i) the failure to pay the full amount of interest
payable pursuant to SECTION 5.01(D) of the Sale and Servicing Agreement to
Holders of any Non-Priority Class Notes, nor (ii) an application of Allocable
Loss Amounts pursuant to SECTION 5.04 of the Sale and Servicing Agreement to any
Non-Priority Class Notes, in each case prior to the Maturity Date of such
Non-Priority Class Notes. Until the Notes have been declared due and payable
upon an Event of Default, the holders of any Non-Priority Class may not request
the Indenture Trustee to take any action, other than the application of the
Available Collection Amount to principal and interest pursuant to Section 5.01
of the Sale and Servicing Agreement, and may not otherwise take or cause any
action to be taken to enforce the obligation of the Issuer to pay principal and
interest on such Non-Priority Class.
Section 5.02 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an
Event of Default should occur and be continuing, then and in every such case the
Indenture Trustee, at the direction or upon the prior written consent of the
Majority Highest Priority Classes Noteholders, may declare all the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such declaration the
unpaid principal amount of such Notes, together with accrued and unpaid interest
thereon, through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the moneys due has been
obtained by the Indenture Trustee as hereinafter in this ARTICLE V provided, the
Majority Highest Priority Classes Noteholders, by written notice to the Issuer
and the Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
1. all payments of principal of and/or interest on all Notes and
all other amounts that would then be due hereunder or upon
such Notes if the Event of Default giving rise to such
acceleration had not occurred; and
2. all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel;
and
(b) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been cured or
waived as provided in SECTION 5.12 hereof. No such rescission shall affect any
subsequent default or impair any right consequent thereto.
Section 5.03 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE.
(a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer will, upon demand of the Indenture Trustee,
pay to the Indenture Trustee, for the benefit of the Holders of the Notes, the
whole amount then due and payable on such Notes for principal and/or interest,
with interest upon the overdue principal and, to the extent payment at such rate
of interest shall be legally enforceable, upon overdue installments of interest
at the rate borne by the Notes and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee may, and shall at the direction of the
majority of the Holders of the Outstanding Notes, institute a Proceeding for the
collection of the sums so due and unpaid, and may prosecute such Proceeding to
judgment or final decree, and may enforce the same against the Issuer or other
obligor upon such Notes and collect in the manner provided by law out of the
property of the Issuer or other obligor upon such Notes, wherever situated, the
moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, in its discretion, and shall at the direction of the majority of
the Holders of the Outstanding Notes, as more particularly provided in SECTION
5.04 hereof, proceed to protect and enforce its rights and the rights of the
Noteholders by such appropriate Proceedings as the Indenture Trustee shall deem
most effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Indenture Trustee by this Indenture or by
law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Collateral, Proceedings under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and/or interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee, each predecessor
Indenture Trustee, and its agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Indenture Trustee,
except as a result of negligence or bad faith) and of the Noteholders
allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and the Indenture Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property; and any trustee,
receiver, liquidator, custodian or other similar official in any such
Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture
Trustee shall consent to the making of payments directly to such
Noteholders, to pay to the Indenture Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred and all advances
made by the Indenture Trustee and each predecessor Indenture Trustee except
as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents, attorneys and counsel, shall be
for the ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
Section 5.04 REMEDIES; PRIORITIES.
(a) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee may, and at the direction of a majority of the Holders of the
Outstanding Notes shall, do one or more of the following (subject to SECTION
5.05 hereof):
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Notes or under
this Indenture with respect thereto, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Issuer and any other
obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee or the Noteholders; and
(iv) sell the Collateral or any portion thereof or rights or interest
therein in a commercially reasonable manner, at one or more public or
private sales called and conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Collateral following an Event of Default, unless (A) the
Holders of 100% of the Voting Interests of the Outstanding Notes consent
thereto, (B) the proceeds of such sale or liquidation distributable to the
Noteholders are sufficient to discharge in full all amounts then due and
unpaid upon such Notes for principal and/or interest or (C) the Indenture
Trustee determines that the Collateral will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes
as they would have become due if the Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of Holders of
66-2/3% of the Voting Interests of the Outstanding Notes. In determining
such sufficiency or insufficiency with respect to clause (B) and (C) of
this subsection (a)(iv), the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting
firm of national reputation as to the feasibility of such proposed action
and as to the sufficiency of the Collateral for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant
to this ARTICLE V, it shall pay out the money or property in the following
order:
FIRST: to the Indenture Trustee for the Indenture Trustee Fee
then due and any costs or expenses incurred by it in connection with
the enforcement of the remedies provided for in this Article V and to
the Owner Trustee for the Owner Trustee Fee then due and to the
Grantor Trustee for the Grantor Trustee Fee then due;
SECOND: to the Master Servicer, any Master Servicing Compensation
due and payable under the Sale and Servicing Agreement;
THIRD: to Empire Subservicer, any Empire Subservicing Fee then
due and payable under the Sale and Servicing Agreement;
FOURTH: to the Servicer, any Servicing Compensation then due and
payable under the Sale and Servicing Agreement;
FIFTH: to each Custodian, such Custodian's applicable portion of
the Custodian Fee then due and unpaid;
SIXTH: to the Servicer for any amounts then due and payable as
the Servicing Advance Reimbursement Amount under the Sale and
Servicing Agreement;
SEVENTH: to the Noteholders for amounts due and unpaid on the
Notes for interest, pro rata among the Holders of each Class of Notes
for interest, according to the amounts due and payable and in the
order and priorities set forth in SECTIONS 5.01(D) the Sale and
Servicing Agreement, until the Class Principal Balance of each such
Class is reduced to zero;
EIGHTH: to the applicable Noteholders for amounts due and unpaid
on the Notes for principal, pro rata among the Holders of each such
Class of Notes, according to the amounts due and payable and in the
order and priorities set forth in SECTIONS 5.01(D) and (E) of the Sale
and Servicing Agreement, until the Class Principal Balance of each
such Class is reduced to zero;
NINTH: to the holders of the Residual Interest Certificates any
remaining amounts to be distributed pro rata.
The Indenture Trustee may fix a record date and payment date for any
payment to be made to the Noteholders pursuant to this Section. At least 15 days
before such record date, the Indenture Trustee shall mail to each Noteholder and
the Issuer a notice that states the record date, the payment date and the amount
to be paid.
Section 5.05 OPTIONAL PRESERVATION OF THE COLLATERAL. If the Notes
have been declared to be due and payable under SECTION 5.02 hereof following an
Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Collateral. It is the desire of the parties hereto
and the Noteholders that there be at all times sufficient funds for the payment
of principal of and interest on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Collateral. In determining whether to maintain possession of the
Collateral, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Collateral for such purpose.
Section 5.06 LIMITATION OF SUITS. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default; and:
(a) the Event of Default arises from the Servicer's failure to remit
payments when due; or
(b) the Holders of not less than 25% of the Voting Interests of the
Outstanding Highest Priority Classes Notes have made written request to the
Indenture Trustee to institute such Proceeding in respect of such Event of
Default in its own name as Indenture Trustee hereunder;
(i) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(ii) the Indenture Trustee for 30 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceeding; and
(iii) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 30-day period by the
Majority Highest Priority Classes Noteholders.
It is understood and intended that no one or more Holders of Notes
shall have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or preference
over any other Holders or to enforce any right under this Indenture, except in
the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a Majority Highest Priority Classes Noteholders, the
Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
Section 5.07 UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL
AND/OR INTEREST. Notwithstanding any other provisions in this Indenture, the
Holder of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the applicable Maturity Date thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
Section 5.08 RESTORATION OF RIGHTS AND REMEDIES. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
Section 5.09 RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.10 DELAY OR OMISSION NOT A WAIVER. No delay or omission of
the Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
Section 5.11 CONTROL BY NOTEHOLDERS. The Majority Highest Priority
Classes Noteholders shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee with
respect to the Notes or exercising any trust or power conferred on the Indenture
Trustee; provided, however, that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) subject to the express terms of SECTION 5.04 hereof, any direction
to the Indenture Trustee to sell or liquidate the Collateral shall be by Holders
of Notes representing not less than 100% of the Voting Interests of all Classes
of Notes Outstanding;
(c) if the conditions set forth in SECTION 5.05 hereof have been
satisfied and the Indenture Trustee elects to retain the Collateral pursuant to
such Section, then any direction to the Indenture Trustee by Holders of Notes
representing less than 100% of the Voting Interests of all Classes of Notes
Outstanding to sell or liquidate the Collateral shall be of no force and effect;
and
(d) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of the Noteholders set forth in this
SECTION 5.11, subject to SECTION 6.01 hereof, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
Section 5.12 WAIVER OF PAST DEFAULTS. The Majority Highest Priority
Classes Noteholders may waive any past Default or Event of Default and its
consequences, except a Default (a) in the payment of principal of or interest on
any of the Notes or (b) in respect of a covenant or provision hereof that cannot
be modified or amended without the consent of the Holder of each Note. In the
case of any such waiver, the Issuer, the Indenture Trustee and the Holders of
the Notes shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
Section 5.13 UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the Voting
Interests of the Outstanding Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
Section 5.14 WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.15 ACTION ON NOTES. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Collateral or
upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with SECTION 5.04(B) hereof.
Section 5.16 PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer shall take all such lawful action
as the Indenture Trustee may request to compel or secure the performance and
observance by each Transferor, the Servicer, the Empire Subservicer and the
Master Servicer, as applicable, of each of their obligations to the Issuer and
the Grantor Trustee under or in connection with the Sale and Servicing
Agreement, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer, as Grantor Trust Holder, under or in
connection with the Sale and Servicing Agreement and the Grantor Trust Agreement
to the extent and in the manner directed by the Indenture Trustee, including the
transmission of notices of default on the part of any Transferor, the Master
Servicer, Empire Subservicer or the Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance
by any Transferor, the Master Servicer, Empire Subservicer or the Servicer of
each of their obligations under the Sale and Servicing Agreement and the Grantor
Trust Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in writing
or by telephone, confirmed in writing promptly thereafter) of the Holders of
66-2/3% of the Highest Priority Classes Notes Outstanding shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer, as Grantor Trust
Holder, against each Transferor, Empire Subservicer, the Servicer or the Master
Servicer under or in connection with the Sale and Servicing Agreement and the
Grantor Trust Agreement, including the right or power to take any action to
compel or secure performance or observance by each Transferor, the Servicer,
Empire Subservicer or the Master Servicer as the case may be, of each of their
obligations to the Grantor Trustee thereunder and to give any consent, request,
notice, direction, approval, extension, or waiver under the Sale and Servicing
Agreement and the Grantor Trust Agreement, and any right of the Issuer to take
such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01 DUTIES OF INDENTURE TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, that the Indenture
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this SECTION 6.01;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to SECTION 5.11 hereof.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to PARAGRAPHS (A), (B), (C) AND (G) of this SECTION
6.01.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee shall be segregated
from other funds except to the extent permitted by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it; provided, however, that the Indenture Trustee shall
not refuse or fail to perform any of its duties hereunder solely as a result of
nonpayment of its normal fees and expenses and provided, further, that nothing
in this SECTION 6.01(G) shall be construed to limit the exercise by the
Indenture Trustee of any right or remedy permitted under this Indenture or
otherwise in the event of the Issuer's failure to pay the Indenture Trustee's
fees and expenses pursuant to SECTION 6.07 hereof. In determining that such
repayment or indemnity is not reasonably assured to it, the Indenture Trustee
must consider not only the likelihood of repayment or indemnity by or on behalf
of the Issuer but also the likelihood of repayment or indemnity from amounts
payable to it from the Collateral pursuant to SECTION 6.07 hereof.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(i) The Indenture Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any Event of Default (other than an Event
of Default pursuant to SECTION 5.01(A)(I) or (II) hereof) unless a Responsible
Officer of the Indenture Trustee shall have received written notice thereof or
otherwise shall have actual knowledge thereof. In the absence of receipt of
notice or such knowledge, the Indenture Trustee may conclusively assume that
there is no Event of Default.
Section 6.02 RIGHTS OF INDENTURE TRUSTEE.
(a) The Indenture Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper person. The
Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee so long as the Indenture Trustee
remains liable to the Issuer and the Noteholders for the performance of its
duties hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that such action or omission by the
Indenture Trustee does not constitute willful misconduct, negligence or bad
faith.
(e) The Indenture Trustee may, at the expense of the Transferors as
provided under Section 6.07, consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
Section 6.03 INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with SECTIONS 6.11 and 6.12 hereof.
Section 6.04 INDENTURE TRUSTEE'S DISCLAIMER. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, shall not be accountable for the
Issuer's use of the proceeds from the Notes, or responsible for any statement of
the Issuer in the Indenture or in any document issued in connection with the
sale of the Notes or in the Notes other than the Indenture Trustee's certificate
of authentication.
Section 6.05 NOTICES OF DEFAULT. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to each Noteholder notice of the Default within 90
days after it occurs. Except in the case of a Default in payment of principal of
or interest on any Note (including payments pursuant to the mandatory redemption
provisions of such Note), the Indenture Trustee may withhold the notice to
Noteholders if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of Noteholders.
Section 6.06 REPORTS BY INDENTURE TRUSTEE TO HOLDERS. The Indenture
Trustee shall deliver to each Noteholder such information as may be required to
enable such Holder to prepare its federal and state income tax returns. Section
6.07 COMPENSATION AND INDEMNITY. As compensation for its services
hereunder, the Indenture Trustee shall be entitled to receive, on each Payment
Date, the Indenture Trustee's Fee pursuant to SECTION 8.02(C) hereof (which
compensation shall not be limited by any law on compensation of a trustee of an
express trust) and shall be entitled to reimbursement by the Servicer for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Indenture Trustee's agents, counsel, accountants and experts and
Opinions of Counsel hereunder. The Issuer agrees to cause the Transferors, at
their expense, to indemnify the Indenture Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Indenture Trustee shall notify the Issuer, the Servicer and the
Master Servicer promptly of any claim for which it may seek indemnity. Failure
by the Indenture Trustee so to notify the Issuer, the Servicer and the Master
Servicer shall not relieve the Issuer of its obligations hereunder. The Issuer
shall or shall cause the Servicer to defend any such claim, and the Indenture
Trustee may have separate counsel reasonably acceptable to the Servicer and the
Issuer shall or shall cause the Servicer to pay the reasonable fees and expenses
of such counsel. Neither the Issuer, the Servicer nor the Master Servicer need
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own willful
misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this SECTION 6.07 shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of a Default specified in
SECTION 5.01(A)(VI) or (VII) hereof with respect to the Issuer, the expenses are
intended to constitute expenses of administration under Title 11 of the United
States Code or any other applicable federal or state bankruptcy, insolvency or
similar law.
Section 6.08 REPLACEMENT OF INDENTURE TRUSTEE. No resignation or
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this SECTION 6.08. The Indenture Trustee
may resign at any time by so notifying the Issuer. The Holders of a majority of
the Voting Interests of the Outstanding Notes may remove the Indenture Trustee
by so notifying the Indenture Trustee and may appoint a successor Indenture
Trustee subject to SECTION 6.11. The Issuer shall remove the Indenture Trustee
if:
(a) the Indenture Trustee fails to comply with SECTION 6.11 hereof;
(b) the Indenture Trustee is adjudged a bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer. Thereupon
the resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights, powers
and duties of the Indenture Trustee under this Indenture. The successor
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority of the Voting
Interests of Outstanding Notes may petition any court of competent jurisdiction
for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with SECTION 6.11 hereof, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this SECTION 6.08, the Issuer's and the Administrator's obligations under
SECTION 6.07 hereof shall continue for the benefit of the retiring Indenture
Trustee.
Section 6.09 SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided,
however, that such corporation or banking association shall otherwise be
qualified and eligible under SECTION 6.11 hereof. The Indenture Trustee shall
provide the Rating Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10 APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE INDENTURE
TRUSTEE.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the Noteholders,
such title to the Collateral, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Indenture Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under SECTION 6.11 hereof and no notice to Noteholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Collateral or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this ARTICLE VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, jointly with the Indenture
Trustee, subject to all the provisions of this Indenture, specifically including
every provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee. Every such
instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11 ELIGIBILITY; DISQUALIFICATION. The Indenture Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The Indenture
Trustee shall have a combined capital and surplus of at least $50,000,000 as set
forth in its most recent published annual report of condition. The Indenture
Trustee shall comply with TIA Section 310(b), including the optional provision
permitted by the second sentence of TIA Section 310(b)(9); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
Section 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee which has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
Section 6.13 WAIVER OF SETOFF. The Indenture Trustee hereby expressly
waives any and all rights of setoff that the Indenture Trustee may otherwise at
any time have under the applicable law with respect to any Trust Account and
agrees that amounts in the Trust Accounts shall at all times be held and applied
solely in accordance with the Basic Documents.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01 ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES
OF NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Holders of Notes as of such Record Date, (b) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than 10 days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
Section 7.02 PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in SECTION 7.01 hereof and the names and addresses of Holders of Notes received
by the Indenture Trustee in its capacity as Note Registrar. The Indenture
Trustee may destroy any list furnished to it as provided in such SECTION 7.01
upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
Section 7.03 REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) that the Issuer
may be required to file with the Commission pursuant to SECTION 13 OR
15(D) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with the rules and regulations prescribed from time to time
by the Commission such additional information, documents and reports
with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time by
such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA Section
313(c)) such summaries of any information, documents and reports
required to be filed by the Issuer pursuant to clauses (i) and (ii) of
this SECTION 7.03(A) and by rules and regulations prescribed from time
to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04 REPORTS BY INDENTURE TRUSTEE. If required by TIA Section
313(a), within 60 days after each March 1, beginning with March 1, 2000, the
Indenture Trustee shall mail to each Noteholder as required by TIA Section
313(c) a brief report dated as of such date that complies with TIA Section
313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each securities
exchange, if any, on which the Notes are listed. The Issuer shall notify the
Indenture Trustee if and when the Notes are listed on any securities exchange.
Section 7.05 144A INFORMATION. The Indenture Trustee shall provide to
any Holder of a Class B-2 Note and any prospective transferee designated by any
such Holder information regarding the Class B-2 Notes and the Home Loans and
such other information as shall be necessary to satisfy the condition to
eligibility set forth in Rule 144A(d)(4) under the Securities Act for transfer
of any such Note without registration thereof under the Securities Act pursuant
to the registration exemption provided by Rule 144A under the Securities Act.
Each Holder of a Class B-2 Note desiring to effect such a transfer shall, and
does hereby agree to, indemnify the Issuer, the Owner Trustee, the Indenture
Trustee and the Depositor against any liability that may result if the transfer
is not so exempt or is not made in accordance with federal and state securities
laws.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01 COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Collateral, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in ARTICLE V hereof.
Section 8.02 TRUST ACCOUNTS; PAYMENTS.
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee for the
benefit of the Noteholders, or on behalf of the Owner Trustee for the benefit of
the Securityholders, the Trust Accounts as provided in ARTICLE V of the Sale and
Servicing Agreement. The Indenture Trustee shall deposit amounts into each of
the Trust Accounts in accordance with the terms hereof, the Sale and Servicing
Agreement and the Servicer's Monthly Remittance Report.
(b) On the sixth Business Day prior to each Payment Date, so long as
the Issuer or its assignee is the Grantor Trust Holder, the Indenture Trustee
shall withdraw from the Collection Account, pursuant to SECTION 5.01(B)(2) of
the Sale and Servicing Agreement, as a distribution in respect of the Grantor
Trust Certificate, the Available Collection Amount and shall deposit such amount
into the Note Payment Account. On each Payment Date, to the extent funds are
available in the Note Payment Account, the Indenture Trustee shall either retain
funds in the Note Payment Account for payment on such day or make the
withdrawals from the Note Payment Account and deposits into the Certificate
Distribution Account for distribution on such Payment Date as required pursuant
to SECTION 5.01(C) of the Sale and Servicing Agreement.
(c) On each Payment Date and Redemption Date, to the extent funds are
available in the Note Payment Account, the Indenture Trustee shall make payments
from the amounts on deposit in the Note Payment Account as required pursuant to
Sections 5.01(c), 5.01(d) and 5.01(e) of the Sale and Servicing Agreement
(except as otherwise provided in SECTION 5.04(B) hereof).
(d) On each Payment Date and each Redemption Date, to the extent of
the interest of the Indenture Trustee in the Certificate Distribution Account
(as described in Section 5.03(a) of the Sale and Servicing Agreement), the
Indenture Trustee hereby authorizes the Owner Trustee or the Paying Agent, as
applicable, to make the distributions from the Certificate Distribution Account
as required pursuant to SECTIONS 5.01(D) AND (E) of the Sale and Servicing
Agreement.
Section 8.03 GENERAL PROVISIONS REGARDING ACCOUNTS.
(a) So long as no Default or Event of Default shall have occurred and
be continuing, all or a portion of the funds in the Trust Accounts shall be
invested in Permitted Investments and reinvested by the Indenture Trustee at the
direction of Empire Funding or, in the case of the Note Payment Account, the
Master Servicer in accordance with the provisions of ARTICLE V of the Sale and
Servicing Agreement. All income or other gain from investments of moneys
deposited in the Trust Accounts shall be deposited by the Indenture Trustee into
the Note Payment Account and any such income or gain in respect of the
Collection Account shall, on each Payment Date, be treated as a distribution in
respect of the Grantor Trust Certificate and shall be distributed to Empire
Subservicer, if acting as Subservicer, as part of the Empire Subservicing
Compensation, otherwise to the Servicer as part of the Servicing Compensation,
in each case pursuant to SECTION 5.01(C) of the Sale and Servicing Agreement and
any such income or gain in respect of the Note Payment Account shall, on each
Payment Date, be distributed to the Master Servicer as part of the Master
Servicing Compensation pursuant to SECTION 5.01(C) of the Sale and Servicing
Agreement. If any losses are realized in connection with any investment in the
Collection Account, Empire Subservicer, if acting as Subservicer, otherwise the
Servicer, in each case pursuant to SECTION 5.01(B)(I) of the Sale and Servicing
Agreement, shall deposit the amount of such losses into the Collection Account
immediately upon the realization of such loss. If any losses are realized in
connection with any investment in the Note Payment Account, the Master Servicer
shall remit to the Indenture Trustee the amount of such losses for deposit into
the Note Payment Account pursuant to SECTION 5.01(B)(II) of the Sale and
Servicing Agreement immediately upon the realization of such loss. An losses
realized with respect to investments in any other Trust Account (other than the
Collection Account and the Note Payment Account) shall be charged to such
account. The Issuer will not direct the Indenture Trustee to make any investment
of any funds or to sell any investment held in any of the Trust Accounts unless
the security interest Granted and perfected in such account will continue to be
perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any direction
to the Indenture Trustee to make any such investment or sale, if requested by
the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an
Opinion of Counsel, acceptable to the Indenture Trustee, to such effect.
(b) Subject to SECTION 6.01(C) hereof, the Indenture Trustee shall not
in any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with
their terms.
(c) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Indenture Trustee by 11:00
a.m. Eastern Time (or such other time as may be agreed by the Issuer and
Indenture Trustee) on any Business Day or (ii) a Default or Event of Default
shall have occurred and be continuing with respect to the Notes but the Notes
shall not have been declared due and payable pursuant to SECTION 5.02 hereof or
(iii) if such Notes shall have been declared due and payable following an Event
of Default, amounts collected or receivable from the Collateral are being
applied in accordance with SECTION 5.05 hereof as if there had not been such a
declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in one or more
Eligible Investments.
Section 8.04 SERVICER'S MONTHLY STATEMENTS. On each Payment Date, the
Indenture Trustee shall deliver the Servicer's Monthly Remittance Report (as
defined in the Sale and Servicing Agreement) with respect to such Payment Date
to DTC, the Depositor, the Noteholders, the Master Servicer and the Rating
Agencies.
Section 8.05 RELEASE OF COLLATERAL.
(a) Subject to Section 11.01 and the terms of the Basic Documents, the
Indenture Trustee may, and when required by the provisions of this Indenture
shall, execute instruments to release property from the lien of this Indenture,
or convey the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Indenture Trustee as
provided in this ARTICLE VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due to the Certificateholders pursuant to Section
5.02(b) of the Sale and Servicing Agreement and to the Master Servicer, to
Empire Subservicer, to the Servicer, to the Indenture Trustee, to the Owner
Trustee, to the Custodian, and to the Grantor Trustee, in each case, pursuant to
Section 5.01(c) of the Sale and Servicing Agreement, have been paid, release any
remaining portion of the Collateral that secured the Notes from the lien of this
Indenture and release to the Issuer or any other Person entitled thereto any
funds then on deposit in the Trust Accounts. The Indenture Trustee shall release
property from the lien of this Indenture pursuant to this SUBSECTION (B) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of SECTION 11.01 hereof.
Section 8.06 OPINION OF COUNSEL. The Indenture Trustee shall receive
at least seven days' prior notice when requested by the Issuer to take any
action pursuant to SECTION 8.05(A) hereof, accompanied by copies of any
instruments involved, and the Indenture Trustee may also require, as a condition
to such action, an Opinion of Counsel, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Collateral. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution
thereof), in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property
to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture that may be inconsistent with
any other provision herein or in any supplemental indenture or to make
any other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; provided,
however, that such action shall not adversely affect the interests of
the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI hereof; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior consent of the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by (i) an
Opinion of Counsel or (ii) satisfaction of the Rating Agency Condition,
adversely affect in any material respect the interests of any Noteholder.
Section 9.02 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior consent of the Rating Agencies, and with the consent of the Holders
of not less than a majority of the Voting Interests of the Outstanding Notes, by
Act of such Holders delivered to the Issuer and the Indenture Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the Class Principal Balance thereof, the
interest rate thereon or the Termination Price with respect thereto, change the
provisions of this Indenture relating to the application of collections on, or
the proceeds of the sale of, the Collateral to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or impair the
right to institute suit for the enforcement of the provisions of this Indenture
requiring the application of funds available therefor, as provided in ARTICLE V
hereof, to the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or after the
Redemption Date);
(b) reduce the percentage of the Voting Interests of the Outstanding
Notes, the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;
(c) modify or alter the provisions of the proviso to the definition of
the term "Outstanding" or "Voting Rights";
(d) reduce the percentage of the Voting Interests of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Collateral pursuant to SECTION 5.04 hereof;
(e) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional provisions of
this Indenture or the Basic Documents cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby;
(f) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or principal
due on any Note on any Payment Date (including the calculation of any of the
individual components of such calculation) or to affect the rights of the
Holders of Notes to the benefit of any provisions for the mandatory redemption
of the Notes contained herein; or
(g) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Collateral or,
except as otherwise permitted or contemplated herein, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the Holder of
any Note of the security provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
In connection with requesting the consent of the Noteholders pursuant
to this SECTION 9.02, the Indenture Trustee shall mail to the Holders of the
Notes to which such amendment or supplemental indenture relates a notice setting
forth in general terms the substance of such supplemental indenture. It shall
not be necessary for any Act of Noteholders under this SECTION 9.02 to approve
the particular form of any proposed supplemental indenture, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 9.03 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this ARTICLE IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to SECTIONS 6.01 and 6.02 hereof, shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Indenture Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
that affects the Indenture Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise.
Section 9.04 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance therewith
with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
Section 9.05 CONFORMITY WITH TRUST INDENTURE ACT. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
ARTICLE IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
Section 9.06 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this ARTICLE IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
Section 9.07 AMENDMENTS TO OWNER TRUST AGREEMENT.
Subject to Section 11.1 of the Owner Trust Agreement, the Indenture
Trustee shall, upon Issuer Order, consent to any proposed amendment to the Owner
Trust Agreement or an amendment to or waiver of any provision of any other
document relating to the Owner Trust Agreement, such consent to be given without
the necessity of obtaining the consent of the Holders of any Notes upon
satisfaction of the requirements under Section 11.1 of the Owner Trust
Agreement. Nothing in this Section shall be construed to require that any Person
obtain the consent of the Indenture Trustee to any amendment or waiver or any
provision of any document where the making of such amendment or the giving of
such waiver without obtaining the consent of the Indenture Trustee is not
prohibited by this Indenture or by the terms of the document that is the subject
of the proposed amendment or waiver.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01 REDEMPTION.
The Majority Residual Interestholders (as defined in the Owner Trust
Agreement) may, at their option, effect an early redemption of the Notes on any
Payment Date on or after the Payment Date on which the Pool Principal Balance
declines to 10% or less of the Original Pool Principal Balance. The Master
Servicer may, at its option, effect an early termination of the Notes on any
Payment Date on which the Pool Principal Balance declines to 5% or less of the
Original Pool Principal Balance. The Majority Residual Interestholders or the
Master Servicer, as applicable, shall effect such early termination in the
manner specified in and subject to the provisions of SECTION 11.02 of the Sale
and Servicing Agreement and SECTION 7.01 of the Grantor Trust Agreement.
The Servicer or the Issuer shall furnish the Rating Agencies notice of
any such redemption in accordance with SECTION 10.02 hereof.
Section 10.02 FORM OF REDEMPTION NOTICE. Notice of redemption under
Section 10.01 hereof shall be given by the Indenture Trustee by first-class
mail, postage prepaid, or by facsimile mailed or transmitted not later than 10
days prior to the applicable Redemption Date to each Holder of Notes, as of the
close of business on the Record Date preceding the applicable Redemption Date,
at such Holder's address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) that on the Redemption Date Noteholders shall receive the
Note Redemption Amount; and
(iii) the place where such Notes are to be surrendered for
payment of the Termination Price (which shall be the office or agency
of the Issuer to be maintained as provided in SECTION 3.02 hereof).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name of the Issuer and at the expense of the Servicer. Failure to
give to any Holder of any Note notice of redemption, or any defect therein,
shall not impair or affect the validity of the redemption of any other Note.
Section 10.03 NOTES PAYABLE ON REDEMPTION DATE; PROVISION FOR PAYMENT
OF INDENTURE TRUSTEE. The Notes to be redeemed shall, following notice of
redemption as required by SECTION 10.02 hereof (in the case of redemption
pursuant to SECTION 10.01) hereof, on the Redemption Date become due and payable
at the Note Redemption Amount and (unless the Issuer shall default in the
payment of the Note Redemption Amount) no interest shall accrue thereon for any
period after the date to which accrued interest is calculated for purposes of
calculating the Note Redemption Amount. The Issuer may not redeem the Notes
unless (i) all outstanding obligations under the Notes have been paid in full
and (ii) the Indenture Trustee has been paid all amounts to which it is entitled
hereunder.
ARTICLE XI
MISCELLANEOUS
Section 11.01 COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture (except with
respect to the Servicer's servicing activity in the ordinary course of its
business), the Issuer shall furnish to the Indenture Trustee (i) an Officer's
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with, (ii) an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate
or opinion has read or has caused to be read such
covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the
statements or opinions contained in such certificate
or opinion are based;
(3) a statement that, in the opinion of each such
signatory, such signatory has made such examination
or investigation as is necessary to enable such
signatory to express an informed opinion as to
whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each
such signatory, such condition or covenant has been
complied with.
(b) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in SECTION 11.01(A) hereof
or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
(c) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in SUBSECTION (B) above, the Issuer shall
also deliver to the Indenture Trustee an Independent Certificate as to the same
matters, if the fair value to the Issuer of the securities to be so deposited
and of all other such securities made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of the Issuer, as
set forth in the certificates delivered pursuant to SUBSECTION (B) above and
this SUBSECTION (C), is 10% or more of the Outstanding Amount of the Notes, but
such a certificate need not be furnished with respect to any securities so
deposited, if the fair value thereof to the Issuer as set forth in the related
Officer's Certificate is less than $25,000 or less than one percent of the
Outstanding Amount of the Notes.
(d) Whenever any property or securities are to be released from the
lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee
an Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such release)
of the property or securities proposed to be released and stating that in the
opinion of such person the proposed release will not impair the security under
this Indenture in contravention of the provisions hereof.
(e) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in SUBSECTION (D) above, the Issuer shall
also furnish to the Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property, other than securities released from the lien of this Indenture since
the commencement of the then-current calendar year, as set forth in the
certificates required by SUBSECTION (D) above and this SUBSECTION (E), equals
10% or more of the Outstanding Amount of the Notes, but such certificate need
not be furnished in the case of any release of property or securities if the
fair value thereof as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the then Outstanding Amount of the
Notes.
Section 11.02 FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Master Servicer, each Transferor, the
Issuer or the Administrator, stating that the information with respect to such
factual matters is in the possession of the Servicer, the Master Servicer, each
Transferor, the Issuer or the Administrator, unless such counsel knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in ARTICLE VI hereof.
Section 11.03 ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "ACT" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to SECTION 6.01 hereof)
conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this SECTION 11.03.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.04 NOTICES, ETC., TO INDENTURE TRUSTEE, ISSUER AND RATING
AGENCIES. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
shall be in writing and if such request, demand, authorization, direction,
notice, consent, waiver or act of Noteholders is to be made upon, given or
furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee at its
Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and
made, given, furnished or filed with the Issuer addressed to: Empire
Funding Home Loan Owner Trust 1999-1, in care of Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890, Attention: Emmett R. Harmon, or at any other address
previously furnished in writing to the Indenture Trustee by the Issuer
or the Administrator. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, to (i) in the case of
DCR, at the following address: Duff & Phelps Credit Rating Co., 55 East Monroe
Street, 38th Floor, Chicago, Illinois 60603 Attention: MBS Monitoring, and (ii)
in the case of S&P, 25 Broadway, 12th Floor, New York, New York 10004 Attention:
Residential Mortgage Group.
Notices required to be given to the Master Servicer by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally delivered
or mailed by certified mail, return receipt requested to the following address:
Norwest Bank, Minnesota, National Association, 11000 Broken Land Parkway,
Columbia, Maryland 21044-3562, Attention: Master Servicing Manager (Empire
Funding 1999-1).
Section 11.05 NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have duly been given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
Section 11.06 CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 11.07 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 11.08 SUCCESSORS AND ASSIGNS. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
Section 11.09 SEPARABILITY. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.10 BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person (other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Collateral) any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 11.11 LEGAL HOLIDAYS. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.12 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13 COUNTERPARTS. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.14 RECORDING OF INDENTURE. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at the expense of Empire Funding accompanied by an
Opinion of Counsel (which may be counsel to the Indenture Trustee or any other
counsel reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
Section 11.15 OWNER TRUST OBLIGATION. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or, except as expressly provided
for in ARTICLE VI hereof, under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Indenture
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director, employee or agent of the Indenture Trustee or the
Owner Trustee in its individual capacity, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual capacity,
except as any such Person may expressly have agreed (it being understood that
the Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Owner Trust Agreement.
Section 11.16 NO PETITION. The Indenture Trustee, by entering into
this Indenture, and each Noteholder, by accepting a Note, hereby covenant and
agree that they will not at any time institute against any Transferor, the
Servicer, the Master Servicer or the Issuer, or join in any institution against
any Transferor, the Servicer, the Master Servicer or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law, in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
Section 11.17 INSPECTION. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may reasonably be requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused
this Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
EMPIRE FUNDING HOME LOAN
OWNER TRUST 1999-1
By: Wilmington Trust Company
not in its individual capacity but
solely as Owner Trustee
By: __________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee
By: __________________________________
Name:
Title:
<PAGE>
STATE OF ___________
COUNTY OF __________
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared ___________________________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as
Owner Trustee on behalf of EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a
Delaware business trust, and that such person executed the same as the act of
said business trust for the purpose and consideration therein expressed, and in
the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of ______, 1999.
----------------------------------------------
Notary Public in and for the State of New York
My commission expires:
- -------------------------------
<PAGE>
STATE OF ___________
COUNTY OF __________
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared __________________________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of U.S.
BANK NATIONAL ASSOCIATION, a national banking association, and that such person
executed the same as the act of said corporation for the purpose and
consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ____ day of ______, 1999.
----------------------------------------------
Notary Public in and for the State of New York
(Seal)
My commission expires:
- ----------------------------
<PAGE>
EXHIBIT A
FORM OF NOTES
FORM OF NOTE
CLASS A-1 NOTE
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
EACH TRANSFEREE OF THIS NOTE OR A BENEFICIAL INTEREST HEREIN THAT IS A PLAN, OR
IS A PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, SHALL BE
DEEMED TO REPRESENT THAT THE RELEVANT CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT
LEAST ONE OF THE FOLLOWING PROHIBITED TRANSACTION CLASS EXEMPTIONS HAVE BEEN
SATISFIED: PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23 (RELATING TO
TRANSACTIONS EFFECTED BY AN "IN-HOUSE ASSET MANAGER"), PTCE 95-60 (RELATING TO
TRANSACTIONS INVOLVING INSURANCE COMPANY GENERAL ACCOUNTS), PTCE 91-38 (RELATING
TO TRANSACTIONS INVOLVING BANK COLLECTIVE INVESTMENT FUNDS), PTCE 90-1 (RELATING
TO TRANSACTIONS INVOLVING INSURANCE COMPANY POOLED SEPARATE ACCOUNTS) AND PTCE
84-14 (RELATING TO TRANSACTIONS EFFECTED BY A "QUALIFIED PROFESSIONAL ASSET
MANAGER").
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
$[------------]
No. [___] CUSIP NO. 291701 CW 8
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
CLASS A-1 FLOATING RATE ASSET BACKED NOTES
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of [____________________________]
([_______]) payable on each Payment Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is the initial
principal amount of this Class A-1 Note and the denominator of which is the
aggregate principal amount of all Class A-1 Notes by (ii) the aggregate amount,
if any payable from the Note Payment Account in respect of principal on the
Class A-1 Notes pursuant to SECTION 5.01(D) AND (E) of the Sale and Servicing
Agreement dated as of April 1, 1999; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of (i) the
applicable Maturity Date, (ii) the Termination Date, if any, pursuant to SECTION
11.01 of the Sale and Servicing Agreement or (iii) the date on which the
Majority Residual Interestholders or the Master Servicer, as applicable,
exercises its option to terminate the Issuer pursuant to SECTION 11.02 of the
Sale and Servicing Agreement or (iv) the date on which an Event of Default shall
have occurred and be continuing, if the Indenture Trustee at the direction of or
with the prior written consent of the Majority Highest Priority Classes
Noteholders has declared the Notes to be immediately due and payable in the
manner provided in SECTION 5.02 of the Indenture. Capitalized terms used but not
defined herein are defined either in Article I of the Indenture (the
"Indenture") dated as of April 1, 1999 between the Issuer and U.S. Bank National
Association, a national banking association, which also contains rules as to
construction that shall be applicable herein or in the Sale and Servicing
Agreement.
The Issuer will pay interest on this Note at a rate per annum equal
to LIBOR for the related LIBOR Determination Date plus 0.20%, subject to a
maximum rate equal to 12.0% on each Payment Date until the principal of this
Note is paid or made available for payment in full, on the principal amount of
this Note outstanding on the preceding Payment Date (after giving effect to all
payments of principal made on the preceding Payment Date); provided, however,
that commencing on the first day of the Accrual Period in which the Clean-up
Call Date occurs, the rate of interest payable on this Note shall be increased
by a per annum rate equal to 0.50%. "LIBOR" means, with respect to each Accrual
Period (other than the initial Accrual Period), the rate for United States
dollar deposits for one month that appears on the Telerate Screen Page 3750 as
of 11:00 a.m., London time, on the second LIBOR Business Day before the first
day of such Accrual Period. If such rate does not appear on such page (or such
other page as may replace that page on that service, or if such service is no
longer offered, such other service for displaying LIBOR or comparable rates as
may be reasonably selected by the Indenture Trustee), LIBOR for the applicable
Accrual Period will be the Reference Bank Rate. If no such quotations can be
obtained and no Reference Bank Rate is available, LIBOR will be LIBOR applicable
to the preceding Accrual Period. LIBOR for the initial Accrual Period will be
5.112% per annum. Interest on this Note will accrue for each Payment Date during
the period beginning on the Payment Date in the calendar month preceding the
month in which the related Payment Date occurs (or, in the case of the first
Payment Date, May 3, 1999) and ending on the day preceding the related Payment
Date (each, an "Accrual Period"). Interest will be computed on the basis of a
360-day year and the actual number of days elapsed in each Accrual Period. Such
principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date: ___________, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement
By:_________________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: _______________, 1999
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By:_________________________________________
Authorized Signatory
<PAGE>
[REVERSE OF CLASS A-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-1 Floating Rate Asset Backed Notes (herein called the
"Class A-1 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-1 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class A-5 Notes, Class M-1 Notes, Class M-2 Notes, Class B-1 Notes and
Class B-2 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class A-1 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the 25th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in May 1999.
As described on the face hereof, the entire unpaid principal amount
of this Note shall be due and payable on the earlier of the applicable Maturity
Date, the optional termination of the Issuer by the Majority Residual
Interestholders or by the Master Servicer pursuant to Section 11.02 of the Sale
and Servicing Agreement and the termination of the Sale and Servicing Agreement
pursuant to SECTION 11.01(A) thereof. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the
Indenture Trustee, at the direction or upon the prior written consent of the
Majority Highest Priority Classes Noteholders, has declared the Notes to be
immediately due and payable in the manner provided in SECTION 5.02 of the
Indenture. All principal payments on the Class A-1 Notes shall be made pro rata
to the holders of the Class A-1 Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in (St. Paul, Minnesota).
As provided in the Indenture and the Sale and Servicing Agreement,
the Class A-1 Notes may be redeemed (a) in whole, but not in part, at the option
of the holders of greater than 50% of the Residual Interest Certificates on any
Payment Date on and after the date on which the Pool Principal Balance is less
than 10% or (b) at the option of the Master Servicer on any Payment Date on or
after the date on which the Pool Principal Balance is less than 5% of the
Original Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the Issuer may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Owner Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing not
less than a majority of the Voting Interests of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: _______________________
*/
-----------------------------------------
Signature Guaranteed:
*/
-----------------------------------------
- -----------------
*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
FORM OF NOTE
CLASS A-2 NOTE
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
EACH TRANSFEREE OF THIS NOTE OR A BENEFICIAL INTEREST HEREIN THAT IS A PLAN, OR
IS A PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, SHALL BE
DEEMED TO REPRESENT THAT THE RELEVANT CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT
LEAST ONE OF THE FOLLOWING PROHIBITED TRANSACTION CLASS EXEMPTIONS HAVE BEEN
SATISFIED: PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23 (RELATING TO
TRANSACTIONS EFFECTED BY AN "IN-HOUSE ASSET MANAGER"), PTCE 95-60 (RELATING TO
TRANSACTIONS INVOLVING INSURANCE COMPANY GENERAL ACCOUNTS), PTCE 91-38 (RELATING
TO TRANSACTIONS INVOLVING BANK COLLECTIVE INVESTMENT FUNDS), PTCE 90-1 (RELATING
TO TRANSACTIONS INVOLVING INSURANCE COMPANY POOLED SEPARATE ACCOUNTS) AND PTCE
84-14 (RELATING TO TRANSACTIONS EFFECTED BY A "QUALIFIED PROFESSIONAL ASSET
MANAGER").
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
$[-----------]
No. [____]1 CUSIP NO. 291701 CX 6
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
CLASS A-2 6.29% ASSET BACKED NOTES
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of [_______________________] Dollars
($[___________]) payable on each Payment Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is the initial
principal amount of this Class A-2 Note and the denominator of which is the
aggregate principal amount of all Class A-2 Notes by (ii) the aggregate amount,
if any payable from the Note Payment Account in respect of principal on the
Class A-2 Notes pursuant to SECTION 5.01(D) AND (E) of the Sale and Servicing
Agreement dated as of April 1, 1999; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of (i) the
applicable Maturity Date, (ii) the Termination Date, if any, pursuant to SECTION
11.01 of the Sale and Servicing Agreement or (iii) the date on which the
Majority Residual Interestholders or Master Servicer exercises its option to
terminate the Issuer pursuant to SECTION 11.02 of the Sale and Servicing
Agreement or (iv) the date on which an Event of Default shall have occurred and
be continuing, if the Indenture Trustee at the direction of or with the prior
written consent of the Majority Highest Priority Classes Noteholders has
declared the Notes to be immediately due and payable in the manner provided in
SECTION 5.02 of the Indenture. Capitalized terms used but not defined herein are
defined either in Article I of the Indenture (the "Indenture") dated as of April
1, 1999 between the Issuer and U.S. Bank National Association, a national
banking association, which also contains rules as to construction that shall be
applicable herein or in the Sale and Servicing Agreement.
The Issuer will pay interest on this Note at the rate per annum
shown above on each Payment Date until the principal of this Note is paid or
made available for payment in full, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date); provided, however, that
commencing on the first day of the month in which the Clean-up Call Date occurs,
the rate of interest payable on this Note shall be increased by a per annum rate
equal to 0.50%. Interest on this Note will accrue for each Payment Date during
the calendar month preceding such Payment Date (each, an "Accrual Period");
provided, however, in the case of the first Payment Date, there will be no
Accrual Period and no interest will accrue on this Note and in the case of the
second Payment Date, the Accrual Period is the period commencing on May 3, 1999
and ending on May 31, 1999. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date: _____________, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement
By: ________________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: ______________, 1999
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By: ________________________________________
Authorized Signatory
<PAGE>
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-2 6.29% Asset Backed Notes (herein called the "Class
A-2 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-2 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class A-5 Notes, Class M-1 Notes, Class M-2 Notes, Class B-1 Notes and
Class B-2 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class A-2 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the 25th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in May 1999.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the applicable Maturity Date, the
optional termination of the Issuer by the Majority Residual Interestholders or
by the Master Servicer pursuant to SECTION 11.02 of the Sale and Servicing
Agreement and the termination of the Sale and Servicing Agreement pursuant to
SECTION 11.01(A) thereof. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing and the Indenture
Trustee, at the direction or upon the prior written consent of the Majority
Highest Priority Classes Noteholders has declared the Notes to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture. All
principal payments on the Class A-2 Notes shall be made pro rata to the holders
of the Class A-2 Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in (St. Paul, Minnesota).
As provided in the Indenture and the Sale and Servicing Agreement,
the Class A-2 Notes may be redeemed (a) in whole, but not in part, at the option
of the holders of greater than 50% of the Residual Interest Certificates on any
Payment Date on and after the date on which the Pool Principal Balance is less
than 10% or (b) at the option of the Master Servicer on any Payment Date on or
after the date on which the Pool Principal Balance is less than 5% of the
Original Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the Issuer may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Owner Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing not
less than a majority of the Voting Interests of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:________
*/
-----------------------------------------
Signature Guaranteed:
*/
-----------------------------------------
- -----------------
*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
FORM OF NOTE
CLASS A-3 NOTE
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
EACH TRANSFEREE OF THIS NOTE OR A BENEFICIAL INTEREST HEREIN THAT IS A PLAN, OR
IS A PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, SHALL BE
DEEMED TO REPRESENT THAT THE RELEVANT CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT
LEAST ONE OF THE FOLLOWING PROHIBITED TRANSACTION CLASS EXEMPTIONS HAVE BEEN
SATISFIED: PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23 (RELATING TO
TRANSACTIONS EFFECTED BY AN "IN-HOUSE ASSET MANAGER"), PTCE 95-60 (RELATING TO
TRANSACTIONS INVOLVING INSURANCE COMPANY GENERAL ACCOUNTS), PTCE 91-38 (RELATING
TO TRANSACTIONS INVOLVING BANK COLLECTIVE INVESTMENT FUNDS), PTCE 90-1 (RELATING
TO TRANSACTIONS INVOLVING INSURANCE COMPANY POOLED SEPARATE ACCOUNTS) AND PTCE
84-14 (RELATING TO TRANSACTIONS EFFECTED BY A "QUALIFIED PROFESSIONAL ASSET
MANAGER").
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
$[---------------]
No. [_____] CUSIP NO. 291701 CY 4
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
CLASS A-3 6.44% ASSET BACKED NOTES
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of [__________________________________]
Dollars ($[____________]) payable on each Payment Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is the
initial principal amount of this Class A-3 Note and the denominator of which is
the aggregate principal amount of all Class A-3 Notes by (ii) the aggregate
amount, if any payable from the Note Payment Account in respect of principal on
the Class A-3 Notes pursuant to SECTION 5.01(D) AND (E) of the Sale and
Servicing Agreement dated as of April 1, 1999; provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on the
earlier of (i) the applicable Maturity Date, (ii) the Termination Date, if any,
pursuant to SECTION 11.01 of the Sale and Servicing Agreement or (iii) the date
on which the Majority Residual Interestholders exercise their option to
terminate the Issuer pursuant to SECTION 11.02 of the Sale and Servicing
Agreement or (iv) the date on which an Event of Default shall have occurred and
be continuing, if the Indenture Trustee at the direction of or with the prior
written consent of the Majority Highest Priority Classes Noteholders has
declared the Notes to be immediately due and payable in the manner provided in
SECTION 5.02 of the Indenture. Capitalized terms used but not defined herein are
defined either in Article I of the Indenture (the "Indenture") dated as of April
1, 1999 between the Issuer and U.S. Bank National Association, a national
banking association, which also contains rules as to construction that shall be
applicable herein or in the Sale and Servicing Agreement.
The Issuer will pay interest on this Note at the rate per annum
shown above on each Payment Date until the principal of this Note is paid or
made available for payment in full, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date); provided, however, that
commencing on the first day of the month in which the Clean-up Call Date occurs,
the rate of interest payable on this Note shall be increased by a per annum rate
equal to 0.50%. Interest on this Note will accrue for each Payment Date during
the calendar month preceding such Payment Date (each, an "Accrual Period");
provided, however, in the case of the first Payment Date, there will be no
Accrual Period and no interest will accrue on this Note and in the case of the
second Payment Date, the Accrual Period is the period commencing on May 3, 1999
and ending on May 31, 1999. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date: ________________, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement
By:_______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: __________________, 1999
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By:_______________________________________
Authorized Signatory
<PAGE>
[REVERSE OF CLASS A-3 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-3 6.44% Asset Backed Notes (herein called the "Class
A-3 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-3 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class A-5 Notes, Class M-1 Notes, Class M-2 Notes, Class B-1 Notes and
Class B-2 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class A-3 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the 25th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in May 1999.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the applicable Maturity Date, the
optional termination of the Issuer by the Majority Residual Interestholders or
by the Master Servicer pursuant to SECTION 11.02 of the Sale and Servicing
Agreement and the termination of the Sale and Servicing Agreement pursuant to
Section 11.01(a) thereof. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing and the Indenture
Trustee, at the direction or upon the prior written consent of the Majority
Highest Priority Classes Noteholders has declared the Notes to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture. All
principal payments on the Class A-3 Notes shall be made pro rata to the holders
of the Class A-3 Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in (St. Paul, Minnesota).
As provided in the Indenture and the Sale and Servicing Agreement,
the Class A-3 Notes may be redeemed (a) in whole, but not in part, at the option
of the holders of greater than 50% of the Residual Interest Certificates on any
Payment Date on and after the date on which the Pool Principal Balance is less
than 10% or (b) at the option of the Master Servicer on any Payment Date on or
after the date on which the Pool Principal Balance is less than 5% of the
Original Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the Issuer may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Owner Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing not
less than a majority of the Voting Interests of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: ___________
*/
-----------------------------------------
Signature Guaranteed:
*/
-----------------------------------------
- -----------------
*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
FORM OF NOTE
CLASS A-4 NOTE
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
EACH TRANSFEREE OF THIS NOTE OR A BENEFICIAL INTEREST HEREIN THAT IS A PLAN, OR
IS A PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, SHALL BE
DEEMED TO REPRESENT THAT THE RELEVANT CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT
LEAST ONE OF THE FOLLOWING PROHIBITED TRANSACTION CLASS EXEMPTIONS HAVE BEEN
SATISFIED: PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23 (RELATING TO
TRANSACTIONS EFFECTED BY AN "IN-HOUSE ASSET MANAGER"), PTCE 95-60 (RELATING TO
TRANSACTIONS INVOLVING INSURANCE COMPANY GENERAL ACCOUNTS), PTCE 91-38 (RELATING
TO TRANSACTIONS INVOLVING BANK COLLECTIVE INVESTMENT FUNDS), PTCE 90-1 (RELATING
TO TRANSACTIONS INVOLVING INSURANCE COMPANY POOLED SEPARATE ACCOUNTS) AND PTCE
84-14 (RELATING TO TRANSACTIONS EFFECTED BY A "QUALIFIED PROFESSIONAL ASSET
MANAGER").
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
$[--------------]
No. [_____] CUSIP NO. 291701 CZ 1
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
CLASS A-4 6.82% ASSET BACKED NOTES
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of [____________________________] Dollars
($[____________]) payable on each Payment Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is the initial
principal amount of this Class A-4 Note and the denominator of which is the
aggregate principal amount of all Class A-4 Notes by (ii) the aggregate amount,
if any payable from the Note Payment Account in respect of principal on the
Class A-4 Notes pursuant to SECTION 5.01(D) AND (E) of the Sale and Servicing
Agreement dated as of April 1, 1999; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of (i) the
applicable Maturity Date, (ii) the Termination Date, if any, pursuant to SECTION
11.01 of the Sale and Servicing Agreement or (iii) the date on which the
Majority Residual Interestholders exercise their option to terminate the Issuer
pursuant to SECTION 11.02 of the Sale and Servicing Agreement or (iv) the date
on which an Event of Default shall have occurred and be continuing, if the
Indenture Trustee at the direction of or with the prior written consent of the
Majority Highest Priority Classes Noteholders has declared the Notes to be
immediately due and payable in the manner provided in SECTION 5.02 of the
Indenture. Capitalized terms used but not defined herein are defined either in
Article I of the Indenture (the "Indenture") dated as of April 1, 1999 between
the Issuer and U.S. Bank National Association, a national banking association,
which also contains rules as to construction that shall be applicable herein or
in the Sale and Servicing Agreement.
The Issuer will pay interest on this Note at the rate per annum
shown above on each Payment Date until the principal of this Note is paid or
made available for payment in full, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date); provided, however, that
commencing on the first day of the month in which the Clean-up Call Date occurs,
the rate of interest payable on this Note shall be increased by a per annum rate
equal to 0.50%. Interest on this Note will accrue for each Payment Date during
the calendar month preceding such Payment Date (each, an "Accrual Period");
provided, however, in the case of the first Payment Date, there will be no
Accrual Period and no interest will accrue on this Note and in the case of the
second Payment Date, the Accrual Period is the period commencing on May 3, 1999
and ending on May 31, 1999. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date: _____________, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement
By: ______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: ________________, 1999
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By:_______________________________________
Authorized Signatory
<PAGE>
[REVERSE OF CLASS A-4 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-4 6.82% Asset Backed Notes (herein called the "Class
A-4 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-4 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class A-5 Notes, Class M-1 Notes, Class M-2 Notes, Class B-1 Notes and
Class B-2 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class A-4 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the 25th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in May 1999.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the applicable Maturity Date, the
optional termination of the Issuer by the Majority Residual Interestholders or
by the Master Servicer pursuant to SECTION 11.02 of the Sale and Servicing
Agreement and the termination of the Sale and Servicing Agreement pursuant to
Section 11.01(a) thereof. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing and the Indenture
Trustee, at the direction or upon the prior written consent of the Majority
Highest Priority Classes Noteholders has declared the Notes to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture. All
principal payments on the Class A-4 Notes shall be made pro rata to the holders
of the Class A-4 Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in (St. Paul, Minnesota).
As provided in the Indenture and the Sale and Servicing Agreement,
the Class A-4 Notes may be redeemed (a) in whole, but not in part, at the option
of the holders of greater than 50% of the Residual Interest Certificates on any
Payment Date on and after the date on which the Pool Principal Balance is less
than 10% or (b) at the option of the Master Servicer on any Payment Date on or
after the date on which the Pool Principal Balance is less than 5% of the
Original Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the Issuer may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Owner Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing not
less than a majority of the Voting Interests of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:___________
*/
-----------------------------------------
Signature Guaranteed:
*/
-----------------------------------------
- -----------------
*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
FORM OF NOTE
CLASS A-5 NOTE
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
EACH TRANSFEREE OF THIS NOTE OR A BENEFICIAL INTEREST HEREIN THAT IS A PLAN, OR
IS A PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, SHALL BE
DEEMED TO REPRESENT THAT THE RELEVANT CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT
LEAST ONE OF THE FOLLOWING PROHIBITED TRANSACTION CLASS EXEMPTIONS HAVE BEEN
SATISFIED: PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23 (RELATING TO
TRANSACTIONS EFFECTED BY AN "IN-HOUSE ASSET MANAGER"), PTCE 95-60 (RELATING TO
TRANSACTIONS INVOLVING INSURANCE COMPANY GENERAL ACCOUNTS), PTCE 91-38 (RELATING
TO TRANSACTIONS INVOLVING BANK COLLECTIVE INVESTMENT FUNDS), PTCE 90-1 (RELATING
TO TRANSACTIONS INVOLVING INSURANCE COMPANY POOLED SEPARATE ACCOUNTS) AND PTCE
84-14 (RELATING TO TRANSACTIONS EFFECTED BY A "QUALIFIED PROFESSIONAL ASSET
MANAGER").
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
$[---------------]
No. [________] CUSIP NO. 291701 DA 5
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
CLASS A-5 7.38% ASSET BACKED NOTES
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of [_________________________________]
Dollars ($[______________]) payable on each Payment Date in an amount equal to
the result obtained by multiplying (i) a fraction the numerator of which is the
initial principal amount of this Class A-5 Note and the denominator of which is
the aggregate principal amount of all Class A-5 Notes by (ii) the aggregate
amount, if any payable from the Note Payment Account in respect of principal on
the Class A-5 Notes pursuant to SECTION 5.01(D) AND (E) of the Sale and
Servicing Agreement dated as of April 1, 1999; provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on the
earlier of (i) the applicable Maturity Date, (ii) the Termination Date, if any,
pursuant to SECTION 11.01 of the Sale and Servicing Agreement or (iii) the date
on which the Majority Residual Interestholders exercise their option to
terminate the Issuer pursuant to SECTION 11.02 of the Sale and Servicing
Agreement or (iv) the date on which an Event of Default shall have occurred and
be continuing, if the Indenture Trustee at the direction of or with the prior
written consent of the Majority Highest Priority Classes Noteholders has
declared the Notes to be immediately due and payable in the manner provided in
SECTION 5.02 of the Indenture. Capitalized terms used but not defined herein are
defined either in Article I of the Indenture (the "Indenture") dated as of April
1, 1999 between the Issuer and U.S. Bank National Association, a national
banking association, which also contains rules as to construction that shall be
applicable herein or in the Sale and Servicing Agreement.
The Issuer will pay interest on this Note at the rate per annum
shown above on each Payment Date until the principal of this Note is paid or
made available for payment in full, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date); provided, however, that
commencing on the first day of the month in which the Clean-up Call Date occurs,
the rate of interest payable on this Note shall be increased by a per annum rate
equal to 0.50%. Interest on this Note will accrue for each Payment Date during
the calendar month preceding such Payment Date (each, an "Accrual Period");
provided, however, in the case of the first Payment Date, there will be no
Accrual Period and no interest will accrue on this Note and in the case of the
second Payment Date, the Accrual Period is the period commencing on May 3, 1999
and ending on May 31, 1999. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date: _______________, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement
By: ______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: ________________, 1999
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By: ______________________________________
Authorized Signatory
<PAGE>
[REVERSE OF CLASS A-5 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-5 7.38% Asset Backed Notes (herein called the "Class
A-5 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-5 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class A-5 Notes, Class M-1 Notes, Class M-2 Notes, Class B-1 Notes and
Class B-2 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class A-5 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the 25th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in May 1999.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the applicable Maturity Date, the
optional termination of the Issuer by the Majority Residual Interestholders or
by the Master Servicer pursuant to Section 11.02 of the Sale and Servicing
Agreement and the termination of the Sale and Servicing Agreement pursuant to
Section 11.01(a) thereof. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing and the Indenture
Trustee, at the direction or upon the prior written consent of the Majority
Highest Priority Classes Noteholders has declared the Notes to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture. All
principal payments on the Class A-5 Notes shall be made pro rata to the holders
of the Class A-5 Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in (St. Paul, Minnesota).
As provided in the Indenture and the Sale and Servicing Agreement,
the Class A-5 Notes may be redeemed (a) in whole, but not in part, at the option
of the holders of greater than 50% of the Residual Interest Certificates on any
Payment Date on and after the date on which the Pool Principal Balance is less
than 10% or (b) at the option of the Master Servicer on any Payment Date on or
after the date on which the Pool Principal Balance is less than 5% of the
Original Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the Issuer may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Owner Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing not
less than a majority of the Voting Interests of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:__________
*/
-----------------------------------------
Signature Guaranteed:
*/
-----------------------------------------
- -----------------
*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
FORM OF NOTE
CLASS M-1 NOTE
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
EACH TRANSFEREE OF THIS NOTE OR A BENEFICIAL INTEREST HEREIN THAT IS A PLAN, OR
IS A PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, SHALL BE
DEEMED TO REPRESENT THAT THE RELEVANT CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT
LEAST ONE OF THE FOLLOWING PROHIBITED TRANSACTION CLASS EXEMPTIONS HAVE BEEN
SATISFIED: PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23 (RELATING TO
TRANSACTIONS EFFECTED BY AN "IN-HOUSE ASSET MANAGER"), PTCE 95-60 (RELATING TO
TRANSACTIONS INVOLVING INSURANCE COMPANY GENERAL ACCOUNTS), PTCE 91-38 (RELATING
TO TRANSACTIONS INVOLVING BANK COLLECTIVE INVESTMENT FUNDS), PTCE 90-1 (RELATING
TO TRANSACTIONS INVOLVING INSURANCE COMPANY POOLED SEPARATE ACCOUNTS) AND PTCE
84-14 (RELATING TO TRANSACTIONS EFFECTED BY A "QUALIFIED PROFESSIONAL ASSET
MANAGER").
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. IN
ADDITION, THE PRINCIPAL BALANCE OF THIS NOTE MAY BE REDUCED AS A RESULT OF THE
ALLOCATION OF ALLOCABLE LOSS AMOUNTS TO SUCH PRINCIPAL BALANCE, AS FURTHER SET
FORTH IN THE SALE AND SERVICING AGREEMENT REFERENCED HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
$[--------------]
No. [__________] CUSIP NO. 291701 DB 3
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
CLASS M-1 8.03% ASSET BACKED NOTES
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of [__________________________________]
Dollars ($[___________]) payable on each Payment Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is the
initial principal amount of this Class M-1 Note and the denominator of which is
the aggregate principal amount of all Class M-1 Notes by (ii) the aggregate
amount, if any payable from the Note Payment Account in respect of principal on
the Class M-1 Notes pursuant to SECTION 5.01(D) AND (E) of the Sale and
Servicing Agreement dated as of April 1, 1999; provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on the
earlier of (i) the applicable Maturity Date, (ii) the Termination Date, if any,
pursuant to SECTION 11.01 of the Sale and Servicing Agreement or (iii) the date
on which the Majority Residual Interestholders exercise their option to
terminate the Issuer pursuant to SECTION 11.02 of the Sale and Servicing
Agreement or (iv) the date on which an Event of Default shall have occurred and
be continuing, if the Indenture Trustee at the direction of or with the prior
written consent of the Majority Highest Priority Classes Noteholders has
declared the Notes to be immediately due and payable in the manner provided in
SECTION 5.02 of the Indenture. Capitalized terms used but not defined herein are
defined in either Article I of the Indenture (the "Indenture") dated as of April
1, 1999 between the Issuer and U.S. Bank National Association, a national
banking association, which also contains rules as to construction that shall be
applicable herein or in the Sale and Servicing Agreement.
The Issuer will pay interest on this Note at the rate per annum
shown above on each Payment Date until the principal of this Note is paid or
made available for payment in full, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date); provided, however, that
commencing on the first day of the month in which the Clean-up Call Date occurs,
the rate of interest payable on this Note shall be increased by a per annum rate
equal to 0.50%. Interest on this Note will accrue for each Payment Date during
the calendar month preceding such Payment Date (each, an "Accrual Period");
provided, however, in the case of the first Payment Date, there will be no
Accrual Period and no interest will accrue on this Note and in the case of the
second Payment Date, the Accrual Period is the period commencing on May 3, 1999
and ending on May 31, 1999. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date: _______________, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement
By: ______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: _________________, 1999
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By: ______________________________________
Authorized Signatory
<PAGE>
[REVERSE OF CLASS M-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class M-1 8.03% Asset Backed Notes (herein called the "Class
M-1 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class M-1 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class A-5 Notes, Class M-1 Notes, Class M-2 Notes, Class B-1 Notes and
Class B-2 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class M-1 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the 25th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in May 1999.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the applicable Maturity Date, the
optional termination of the Issuer by the Majority Residual Interestholders or
by the Master Servicer pursuant to Section 11.02 of the Sale and Servicing
Agreement and the Termination Date, if any, pursuant to Section 11.01 of the
Sale and Servicing Agreement. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing and the Indenture
Trustee, at the direction or upon the prior written consent of the Majority
Highest Priority Classes Noteholders has declared the Notes to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture. All
principal payments on the Class M-1 Notes shall be made pro rata to the holders
of the Class M-1 Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in (St. Paul, Minnesota).
As provided in the Indenture and the Sale and Servicing Agreement,
the Class M-1 Notes may be redeemed (a) in whole, but not in part, at the option
of the holders of greater than 50% of the Residual Interest Certificates on any
Payment Date on and after the date on which the Pool Principal Balance is less
than 10% or (b) at the option of the Master Servicer on any Payment Date on or
after the date on which the Pool Principal Balance is less than 5% of the
Original Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the Issuer may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Owner Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing not
less than a majority of the Voting Interests of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:__________
*/
-----------------------------------------
Signature Guaranteed:
*/
-----------------------------------------
- -----------------
*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
FORM OF NOTE
CLASS M-2 NOTE
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
EACH TRANSFEREE OF THIS NOTE OR A BENEFICIAL INTEREST HEREIN THAT IS A PLAN, OR
IS A PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, SHALL BE
DEEMED TO REPRESENT THAT THE RELEVANT CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT
LEAST ONE OF THE FOLLOWING PROHIBITED TRANSACTION CLASS EXEMPTIONS HAVE BEEN
SATISFIED: PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23 (RELATING TO
TRANSACTIONS EFFECTED BY AN "IN-HOUSE ASSET MANAGER"), PTCE 95-60 (RELATING TO
TRANSACTIONS INVOLVING INSURANCE COMPANY GENERAL ACCOUNTS), PTCE 91-38 (RELATING
TO TRANSACTIONS INVOLVING BANK COLLECTIVE INVESTMENT FUNDS), PTCE 90-1 (RELATING
TO TRANSACTIONS INVOLVING INSURANCE COMPANY POOLED SEPARATE ACCOUNTS) AND PTCE
84-14 (RELATING TO TRANSACTIONS EFFECTED BY A "QUALIFIED PROFESSIONAL ASSET
MANAGER").
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. IN
ADDITION, THE PRINCIPAL BALANCE OF THIS NOTE MAY BE REDUCED AS A RESULT OF THE
ALLOCATION OF ALLOCABLE LOSS AMOUNTS TO SUCH PRINCIPAL BALANCE, AS FURTHER SET
FORTH IN THE SALE AND SERVICING AGREEMENT REFERENCED HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
$[---------------]
No. [______] CUSIP NO. 291701 DC 1
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
CLASS M-2 9.00% ASSET BACKED NOTES
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of [_________________________] Dollars
($[____________]) payable on each Payment Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is the initial
principal amount of this Class M-2 Note and the denominator of which is the
aggregate principal amount of all Class M-2 Notes by (ii) the aggregate amount,
if any payable from the Note Payment Account in respect of principal on the
Class M-2 Notes pursuant to SECTION 5.01(D) AND (E) of the Sale and Servicing
Agreement dated as of April 1, 1999; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the earlier of (i) the
applicable Maturity Date, (ii) the Termination Date, if any, pursuant to SECTION
11.01 of the Sale and Servicing Agreement or (iii) the date on which the
Majority Residual Interestholders exercise their option to terminate the Issuer
pursuant to SECTION 11.02 of the Sale and Servicing Agreement or (iv) the date
on which an Event of Default shall have occurred and be continuing, if the
Indenture Trustee at the direction of or with the prior written consent of the
Majority Highest Priority Classes Noteholders has declared the Notes to be
immediately due and payable in the manner provided in SECTION 5.02 of the
Indenture. Capitalized terms used but not defined herein are defined either in
Article I of the Indenture (the "Indenture") dated as of April 1, 1999 between
the Issuer and U.S. Bank National Association, a national banking association,
which also contains rules as to construction that shall be applicable herein or
in the Sale and Servicing Agreement.
The Issuer will pay interest on this Note at the rate per annum
shown above on each Payment Date until the principal of this Note is paid or
made available for payment in full, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date); provided, however, that
commencing on the first day of the month in which the Clean-up Call Date occurs,
the rate of interest payable on this Note shall be increased by a per annum rate
equal to 0.50%. Interest on this Note will accrue for each Payment Date during
the calendar month preceding such Payment Date (each, an "Accrual Period");
provided, however, in the case of the first Payment Date, there will be no
Accrual Period and no interest will accrue on this Note and in the case of the
second Payment Date, the Accrual Period is the period commencing on May 3, 1999
and ending on May 31, 1999. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
This Note is issued on May 3, 1999, and based on its issue price of
97.35002%, including accrued interest, and a stated redemption price at maturity
equal to its initial principal balance, is issued with original issue discount
("OID") for federal income tax purposes. Assuming that this Note pays in
accordance with projected cash flows reflecting the prepayment assumption of
100% Prepayment Assumption (as defined in the Prospectus Supplement dated April
29, 1999 with respect to the offering of this Note) used to price this Note: (i)
the amount of OID as a percentage of the initial principal balance of this Note
is approximately 2.64998000%; and (ii) the annual yield to maturity of this
Note, compounded monthly, is approximately 9.39%.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date: _______________, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement
By: ______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: _________________, 1999
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By: ______________________________________
Authorized Signatory
<PAGE>
[REVERSE OF CLASS M-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class M-2 9.00% Asset Backed Notes (herein called the "Class
M-2 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class M-2 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class A-5 Notes, Class M-1 Notes, Class M-2 Notes, Class B-1 Notes and
Class B-2 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class M-2 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the 25th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in May 1999.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the applicable Maturity Date, the
optional termination of the Issuer by the Majority Residual Interestholders or
by the Master Servicer pursuant to Section 11.02 of the Sale and Servicing
Agreement and the termination of the Sale and Servicing Agreement pursuant to
Section 11.01(a) thereof. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing and the Indenture
Trustee, at the direction or upon the prior written consent of the Holders of
the Notes representing not less than a majority of the Outstanding Amount of the
Notes has declared the Notes to be immediately due and payable in the manner
provided in Section 5.02 of the Indenture. All principal payments on the Class
M-2 Notes shall be made pro rata to the holders of the Class M-2 Notes entitled
thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in (St. Paul, Minnesota).
As provided in the Indenture and the Sale and Servicing Agreement,
the Class M-2 Notes may be redeemed (a) in whole, but not in part, at the option
of the holders of greater than 50% of the Residual Interest Certificates on any
Payment Date on and after the date on which the Pool Principal Balance is less
than 10% or (b) at the option of the Master Servicer on any Payment Date on or
after the date on which the Pool Principal Balance is less than 5% of the
Original Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the Issuer may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Owner Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing not
less than a majority of the Voting Interests of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
*/
-----------------------------------------
Signature Guaranteed:
*/
-----------------------------------------
- -----------------
*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
FORM OF NOTE
CLASS B-1 NOTE
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
EACH TRANSFEREE OF THIS NOTE OR A BENEFICIAL INTEREST HEREIN THAT IS A PLAN, OR
IS A PERSON ACTING ON BEHALF OF OR INVESTING THE ASSETS OF A PLAN, SHALL BE
DEEMED TO REPRESENT THAT THE RELEVANT CONDITIONS FOR EXEMPTIVE RELIEF UNDER AT
LEAST ONE OF THE FOLLOWING PROHIBITED TRANSACTION CLASS EXEMPTIONS HAVE BEEN
SATISFIED: PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23 (RELATING TO
TRANSACTIONS EFFECTED BY AN "IN-HOUSE ASSET MANAGER"), PTCE 95-60 (RELATING TO
TRANSACTIONS INVOLVING INSURANCE COMPANY GENERAL ACCOUNTS), PTCE 91-38 (RELATING
TO TRANSACTIONS INVOLVING BANK COLLECTIVE INVESTMENT FUNDS), PTCE 90-1 (RELATING
TO TRANSACTIONS INVOLVING INSURANCE COMPANY POOLED SEPARATE ACCOUNTS) AND PTCE
84-14 (RELATING TO TRANSACTIONS EFFECTED BY A "QUALIFIED PROFESSIONAL ASSET
MANAGER").
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. IN
ADDITION, THE PRINCIPAL BALANCE OF THIS NOTE MAY BE REDUCED AS A RESULT OF THE
ALLOCATION OF ALLOCABLE LOSS AMOUNTS TO SUCH PRINCIPAL BALANCE, AS FURTHER SET
FORTH IN THE SALE AND SERVICING AGREEMENT REFERENCED HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
$[----------------]
No. [_________] CUSIP NO. 291701 DD 9
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
CLASS B-1 9.00% ASSET BACKED NOTES
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of [__________________________________]
Dollars ($[___________]) payable on each Payment Date in an amount equal to the
result obtained by multiplying (i) a fraction the numerator of which is the
initial principal amount of this Class B-1 Note and the denominator of which is
the aggregate principal amount of all Class B-1 Notes by (ii) the aggregate
amount, if any payable from the Note Payment Account in respect of principal on
the Class B-1 Notes pursuant to SECTION 5.01(D) AND (E) of the Sale and
Servicing Agreement dated as of April 1, 1999; provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on the
earlier of (i) the applicable Maturity Date, (ii) the Termination Date, if any,
pursuant to SECTION 11.01 of the Sale and Servicing Agreement or (iii) the date
on which the Majority Residual Interestholders exercise their option to
terminate the Issuer pursuant to SECTION 11.02 of the Sale and Servicing
Agreement or (iv) the date on which an Event of Default shall have occurred and
be continuing, if the Indenture Trustee at the direction of or with the prior
written consent of the Majority Highest Priority Classes Noteholders has
declared the Notes to be immediately due and payable in the manner provided in
SECTION 5.02 of the Indenture. Capitalized terms used but not defined herein are
defined either in Article I of the Indenture (the "Indenture") dated as of April
1, 1999 between the Issuer and U.S. Bank National Association, a national
banking association, which also contains rules as to construction that shall be
applicable herein or in the Sale and Servicing Agreement.
The Issuer will pay interest on this Note at the rate per annum
shown above on each Payment Date until the principal of this Note is paid or
made available for payment in full, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date); provided, however, that
commencing on the first day of the month in which the Clean-up Call Date occurs,
the rate of interest payable on this Note shall be increased by a per annum rate
equal to 0.50%. Interest on this Note will accrue for each Payment Date during
the calendar month preceding such Payment Date (each, an "Accrual Period");
provided, however, in the case of the first Payment Date, there will be no
Accrual Period and no interest will accrue on this Note and in the case of the
second Payment Date, the Accrual Period is the period commencing on May 3, 1999
and ending on May 31, 1999 (each, an "Accrual Period"). Interest will be
computed on the basis of a 360-day year of twelve 30-day months. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
This Note is issued on May 3, 1999, and based on its issue price of
73.83697%, including accrued interest, and a stated redemption price at maturity
equal to its initial principal balance, is issued with original issue discount
("OID") for federal income tax purposes. Assuming that this Note pays in
accordance with projected cash flows reflecting the prepayment assumption of
100% Prepayment Assumption (as defined in the Prospectus Supplement dated April
29, 1999 with respect to the offering of this Note) used to price this Note: (i)
the amount of OID as a percentage of the initial principal balance of this Note
is approximately 26.16303000%; and (ii) the annual yield to maturity of this
Note, compounded monthly, is approximately 14.83%.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date: _______________, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement
By: ______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: _____________________, 1999
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By: ______________________________________
Authorized Signatory
<PAGE>
[REVERSE OF CLASS B-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class B-1 9.00% Asset Backed Notes (herein called the "Class
B-1 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class B-1 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class B-1 Notes, Class A-3 Notes, Class A-4
Notes, Class A-5 Notes, Class M-1 Notes, Class M-2 Notes, Class B-1 Notes and
Class B-2 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class B-1 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the 25th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in May 1999.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the applicable Maturity Date, the
optional termination of the Issuer by the Majority Residual Interestholders or
by the Master Servicer pursuant to Section 11.02 of the Sale and Servicing
Agreement and the Termination Date, if any, pursuant to Section 11.01 of the
Sale and Servicing Agreement. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing and the Indenture
Trustee, at the direction or upon the prior written consent of the Majority
Highest Priority Classes Noteholders has declared the Notes to be immediately
due and payable in the manner provided in Section 5.02 of the Indenture. All
principal payments on the Class B-1 Notes shall be made pro rata to the holders
of the Class B-1 Notes entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in (St. Paul, Minnesota).
As provided in the Indenture and the Sale and Servicing Agreement,
the Class B-1 Notes may be redeemed (a) in whole, but not in part, at the option
of the holders of greater than 50% of the Residual Interest Certificates on any
Payment Date on and after the date on which the Pool Principal Balance is less
than 10% or (b) at the option of the Master Servicer on any Payment Date on or
after the date on which the Pool Principal Balance is less than 5% of the
Original Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the Issuer may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Owner Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing not
less than a majority of the Voting Interests of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
*/
-----------------------------------------
Signature Guaranteed:
*/
-----------------------------------------
- -----------------
*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
FORM OF NOTE
CLASS B-2 NOTE
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
ANY PERSON WHO PURCHASES THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN SHALL BE
DEEMED TO HAVE MADE, UPON SUCH PURCHASE, THE REPRESENTATIONS SET FORTH UNDER THE
HEADING "NOTICES TO INVESTORS" IN THE PRIVATE PLACEMENT MEMORANDUM DATED APRIL
29, 1999 FOR THE EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1 HOME LOAN ASSET
BACKED NOTES, SERIES 1999-1.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
1933 ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE 1933 ACT, IN EACH CASE IN COMPLIANCE WITH THE REQUIREMENTS OF
THE INDENTURE AND APPLICABLE STATE SECURITIES LAWS.
THIS NOTE MAY NOT BE TRANSFERRED UNLESS THE OWNER TRUSTEE HAS RECEIVED A
CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974. AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE OR ANY
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO ANY FEDERAL,
STATE OR , LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN"), OR ANY PERSON ACTING ON BEHALF
OF OR INVESTING THE ASSETS OF A PLAN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. IN
ADDITION, THE PRINCIPAL BALANCE OF THIS NOTE MAY BE REDUCED AS A RESULT OF THE
ALLOCATION OF ALLOCABLE LOSS AMOUNTS TO SUCH PRINCIPAL BALANCE, AS FURTHER SET
FORTH IN THE SALE AND SERVICING AGREEMENT REFERENCED HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
<PAGE>
Note Principal Amount. See Schedule Attached Hereto
No. [________] CUSIP NO. 291701 DE 7
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
CLASS B-2 9.00% ASSET BACKED NOTES
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum set forth on Schedule I attached hereto
payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is the initial principal
amount of this Class B-2 Note and the denominator of which is the aggregate
principal amount of all Class B-2 Notes by (ii) the aggregate amount, if any
payable from the Note Payment Account in respect of principal on the Class B-2
Notes pursuant to SECTION 5.01(D) AND (E) of the Sale and Servicing Agreement
dated as of April 1, 1999; provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the earlier of (i) the
applicable Maturity Date, (ii) the Termination Date, if any, pursuant to SECTION
11.01 of the Sale and Servicing Agreement or (iii) the date on which the
Majority Residual Interestholders exercise their option to terminate the Issuer
pursuant to Section 11.02 of the Sale and Servicing Agreement or (iv) the date
on which an Event of Default shall have occurred and be continuing, if the
Indenture Trustee at the direction of or with the prior written consent of the
Majority Highest Priority Classes Noteholders has declared the Notes to be
immediately due and payable in the manner provided in SECTION 5.02 of the
Indenture. Capitalized terms used but not defined herein are defined either in
Article I of the Indenture (the "Indenture") dated as of April 1, 1999 between
the Issuer and U.S. Bank National Association, a national banking association,
which also contains rules as to construction that shall be applicable herein or
in the Sale and Servicing Agreement.
The Issuer will pay interest on this Note at the rate per annum
shown above on each Payment Date until the principal of this Note is paid or
made available for payment in full, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date); provided, however, that
commencing on the first day of the Accrual Period in which the Clean-up Call
Date occurs, the rate of interest payable on this Note shall be increased by a
per annum rate equal to 0.50%. Interest on this Note will accrue for each
Payment Date during the calendar month preceding such Payment Date (each, an
"Accrual Period"); provided, however, in the case of the first Payment Date,
there will be no Accrual Period and no interest will accrue on this Note and in
the case of the second Payment Date, the Accrual Period is the period commencing
on May 3, 1999 and ending on May 31, 1999. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. Such principal of and interest
on this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
This Note is issued on May 3, 1999, and based on its issue price of
73.83697%, including accrued interest, and a stated redemption price at maturity
equal to its initial principal balance, is issued with original issue discount
("OID") for federal income tax purposes. Assuming that this Note pays in
accordance with projected cash flows reflecting the prepayment assumption of
100% Prepayment Assumption (as defined in the Private Placement Memorandum dated
April 29, 1999 with respect to the offering of the Class B-2 Notes) used to
price this Note: (i) the amount of OID as a percentage of the initial principal
balance of this Note is approximately 26.16303000%; and (ii) the annual yield to
maturity of this Note, compounded monthly, is approximately 14.83%.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer, as of the date set
forth below.
Date:________________, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement
By: ______________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: ________________, 1999
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By: ______________________________________
Authorized Signatory
<PAGE>
[REVERSE OF CLASS B-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class B-2 9.00% Asset Backed Notes (herein called the "Class
B-2 Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class B-2 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes, the Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class A-5 Notes, Class M-1 Notes, Class M-2 Notes, Class B-1 Notes and
Class B-2 Notes (collectively, the "Notes") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture.
Principal of the Class B-2 Notes will be payable on each Payment
Date in an amount described on the face hereof. "Payment Date" means the 25th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in May 1999.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the applicable Maturity Date, the
optional termination of the Issuer by the Majority Residual Interestholders or
by the Master Servicer pursuant to SECTION 11.02 of the Sale and Servicing
Agreement and the termination of the Sale and Servicing Agreement pursuant to
SECTION 11.01(A) thereof. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing and the Indenture
Trustee, at the direction or upon the prior written consent of the Holders of
the Notes representing not less than a majority of the Outstanding Amount of the
Notes has declared the Notes to be immediately due and payable in the manner
provided in SECTION 5.02 of the Indenture. All principal payments on the Class
B-2 Notes shall be made pro rata to the holders of the Class B-2 Notes entitled
thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not noted hereon. If funds are expected to be available,
as provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in (St. Paul, Minnesota).
As provided in the Indenture and the Sale and Servicing Agreement,
the Class B-2 Notes may be redeemed (a) in whole, but not in part, at the option
of the holders of greater than 50% of the Residual Interest Certificates on any
Payment Date on and after the date on which the Pool Principal Balance is less
than 10% or (b) at the option of the Master Servicer on any Payment Date on or
after the date on which the Pool Principal Balance is less than 5% of the
Original Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the Issuer may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Depositor or the Issuer, or join in any
institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Owner Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing not
less than a majority of the Voting Interests of the Outstanding Notes. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the Notes, on behalf of the
Holders of all the Notes, to waive compliance by the Issuer with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note (or
any one or more Predecessor Notes) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of the Issuer in its individual capacity,
the Owner Trustee in its individual capacity, any owner of a beneficial interest
in the Issuer, or any of their respective partners, beneficiaries, agents,
officers, directors, employees or successors or assigns shall be personally
liable for, nor shall recourse be had to any of them for, the payment of
principal of or interest on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications contained in the
Indenture. The Holder of this Note by its acceptance hereof agrees that, except
as expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
*/
-----------------------------------------
Signature Guaranteed:
*/
-----------------------------------------
- -----------------
*/NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE I
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AMOUNT DATE INITIAL
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$[____________] May 3, 1999
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<PAGE>
EXHIBIT B-1
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Empire Funding Home Loan Owner Trust 1999-1
ASSET-BACKED NOTES SERIES 1999-1
-------------------------------------------
Reference is hereby made to the Indenture dated as of April 1, 1999
(the "INDENTURE") between Empire Funding Home Loan Owner Trust 1999-1 (the
"TRUST") and U.S. Bank National Association, (the "INDENTURE TRUSTEE").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Sale and Servicing Agreement dated as of April 1, 1999 among the
Trust, Empire Funding Corp., California Lending Group, Inc. d/b/a United Lending
Group, ContiMortgage Corporation, PaineWebber Mortgage Acceptance Corporation IV
(the "DEPOSITOR"), U.S. Bank National Association, as Indenture Trustee, and
ContiFinancial Corporation.
The undersigned (the "TRANSFEROR") has requested a transfer of
$_________ initial Class Principal Balance of Class B-2 Notes to [insert name of
transferee].
In connection with such request, and in respect of such Class B-2
Notes, the Transferor hereby certifies that such Class B-2 Notes are being
transferred in accordance with (i) the transfer restrictions set forth in the
Indenture and the Class B-2 Notes and (ii) Rule 144A under the Securities Act of
1933, as amended to a purchaser that the Transferor reasonably believes is a
"qualified institutional buyer" within the meaning of Rule 144A purchasing for
its own account or for the account of a "qualified institutional buyer," which
purchaser is aware that the sale to it is being made in reliance upon Rule 144A,
in a transaction meeting the requirements of Rule 144A and in accordance with
any applicable securities laws of any state of the United States or any other
applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of PaineWebber Incorporated and the Depositor.
---------------------------------------------
[Name of Transferor]
By: ________________________________________
Name:
Title:
Dated: ________________
<PAGE>
EXHIBIT B-2
FORM OF PURCHASER'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTOR
-------------------------------
[Date]
Dear Sirs:
In connection with our proposed purchase of $_________________ initial Class
Principal Balance of Class B-2 Home Loan Asset Backed Notes, Series 1999-1 (the
"OFFERED NOTES") issued by Empire Funding Home Loan Owner Trust 1999-1 (the
"TRUST"), we confirm that:
(1) We have received a copy of the Private Placement Memorandum dated April
29, 1999 relating to the Offered Notes (the "PRIVATE PLACEMENT
MEMORANDUM"), and we understand that the Offered Notes have not been,
and will not be, registered under the Securities Act of 1933, as
amended (the "1933 ACT") or any state securities laws, and may not be
sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Offered Notes we will do
so only (A) pursuant to a registration statement which has been
declared effective under the 1933 Act, (B) for so long as the Offered
Notes are eligible for resale pursuant to Rule 144A under the 1933 Act,
to a Person we reasonably believe is a "qualified institutional buyer"
as defined in Rule 144A that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that
the transfer is being made in reliance on Rule 144A, (C) to an
institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the 1933 Act (an
"INSTITUTIONAL ACCREDITED INVESTOR") that is acquiring the Offered
Notes for its own account, or for the account of such an Institutional
Accredited Investor, for investment purposes and not with a view to, or
for offer or sale in connection with, any distribution in violation of
the 1933 Act, in each case in compliance with the requirements of the
Indenture dated as of April 1, 1999 between Empire Funding Home Loan
Owner Trust 1999-1 and U.S. Bank National Association, as Indenture
Trustee, and applicable state securities laws; and we further agree, in
the capacities stated above, to provide to any person purchasing any of
the Offered Notes from us a notice advising such purchaser that resales
of the Offered Notes are restricted as stated herein.
(2) We understand that, in connection with any proposed resale of any
Offered Notes to an Institutional Accredited Investor, we will be
required to furnish to the Indenture Trustee and the Depositor a
certification from such transferee in the form hereof to confirm that
the proposed sale is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the 1933
Act and applicable state securities laws. We further understand that
the Offered Notes purchased by us will bear a legend to the foregoing
effect.
(3) We are acquiring the Offered Notes for investment purposes and not with
a view to, or for offer or sale in connection with, any distribution in
violation of the 1933 Act. We have such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Offered Notes, and we and any
account for which we are acting are each able to bear the economic risk
of such investment.
(4) We are an Institutional Accredited Investor and we are acquiring the
Offered Notes purchased by us for our own account or for one or more
accounts (each of which is an Institutional Accredited Investor) as to
each of which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in order to make
our investment decision.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Private Placement Memorandum or,
if not defined therein, in the Indenture.
You and the Depositor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
---------------------------------------------
[Purchaser]
By: ________________________________________
Name:
Title:
<PAGE>
EXHIBIT B-3
[FORM OF ERISA TRANSFER CERTIFICATE]
--------------------------------
[Date]
Dear Sirs:
In connection with our proposed purchase of $_________________ initial Class
Principal Balance of Class B-2 Home Loan Asset Backed Notes, Series 1999-1 (the
"OFFERED NOTES") issued by Empire Funding Home Loan Owner Trust 1999-1 (the
"OWNER TRUST"), we confirm that:
1. The undersigned is the __________ of (the _________________
_________________________________________ "INVESTOR"), a [corporation duly
organized] and existing under the laws of _____________ on behalf of which he
_________ makes this affidavit.
2. The Investor is not an employee benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code or any governmental plan (as defined in Section 3(32)
of ERISA) subject to any federal, state or local law which is, to a material
extent, similar to the foregoing provisions of ERISA or the Code (each a "Plan")
nor a person acting on behalf of or investing the assets of such a Plan.
3. The Investor hereby acknowledges that under the terms of the
Indenture (the "Agreement") between Empire Funding Home Loan Owner Trust 1999-1
and U.S. Bank National Association, as paying agent, dated as of April 1, 1999,
no transfer of the Definitive Notes (as defined in the Agreement) shall be
permitted to be made to any person unless the Depositor and Owner Trustee have
received a certificate from such transferee in the form hereof.
[FOR TRANSFERS IN RELIANCE UPON RULE 144A]
4. The Investor is a "qualified institutional buyer" (as such term is
defined under Rule 144A under the Securities Act of 1933, as amended (the "1933
ACT"), and is acquiring the Offered Notes for its own account or as a fiduciary
or agent for others (which others also are "qualified institutional buyers").
The Investor is familiar with Rule 144A under the 1933 Act, and is aware that
the transferor of the Offered Notes and other parties intend to rely on the
statements made herein and the exemption from the registration requirements of
the 1933 Act provided by Rule 144A.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Private Placement Memorandum
dated April 29, 1999, related to the Offered Notes or, if not defined therein,
in the Indenture.
You and the Depositor are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
---------------------------------------------
[Purchaser]
By: ________________________________________
Name:
Title:
<PAGE>
EXHIBIT C
ANY PERSON WHO PURCHASES THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN SHALL BE
DEEMED TO HAVE MADE, UPON SUCH PURCHASE, THE REPRESENTATIONS SET FORTH UNDER THE
HEADING "NOTICES TO INVESTORS" IN THE PRIVATE PLACEMENT MEMORANDUM DATED APRIL
29, 1999 FOR THE EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1 HOME LOAN ASSET
BACKED NOTES, SERIES 1999-1.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) FOR SO LONG AS THIS NOTE IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
1933 ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE 1933 ACT, IN EACH CASE IN COMPLIANCE WITH THE REQUIREMENTS OF
THE INDENTURE AND APPLICABLE STATE SECURITIES LAWS.
THIS NOTE MAY NOT BE TRANSFERRED UNLESS THE OWNER TRUSTEE HAS RECEIVED A
CERTIFICATE FROM THE TRANSFEREE TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974. AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE OR ANY
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO ANY FEDERAL,
STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN"), OR ANY PERSON ACTING ON BEHALF
OF OR INVESTING THE ASSETS OF A PLAN.
===============================================================================
SALE AND SERVICING AGREEMENT
Dated as of April 1, 1999
among
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
(Issuer)
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
(Depositor)
EMPIRE FUNDING CORP.
(Transferor and Subservicer)
CALIFORNIA LENDING GROUP, INC., d/b/a
UNITED LENDING GROUP
(Transferor)
CONTIMORTGAGE CORPORATION
(Transferor and Servicer)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Master Servicer)
U.S. BANK NATIONAL ASSOCIATION
(Indenture Trustee and Grantor Trustee)
and
CONTIFINANCIAL CORPORATION
(Guarantor)
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
HOME LOAN ASSET BACKED NOTES
SERIES 1999-1
===============================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.01 Definitions...................................................
Section 1.02 Other Definitional Provisions.................................
ARTICLE II
CONVEYANCE OF THE GRANTOR TRUST CERTIFICATE
Section 2.01 Conveyance of the Grantor Trust Certificate...................
Section 2.02 Ownership and Possession of Grantor Trust Certificate.........
Section 2.03 Books and Records; Principal Place of Business................
Section 2.04 Delivery of Grantor Trust Certificate; Further Assurances.....
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Depositor...............
Section 3.02 Representations and Warranties of each Transferor.............
Section 3.03 Representations, Warranties and Covenants of the Servicer.....
Section 3.03A Representations, Warranties and Covenants of the Master
Servicer.....................................................
Section 3.03B Representations, Warranties and Covenants of Empire
Subservicer..................................................
Section 3.04 Representations and Warranties Regarding Individual Home
Loans........................................................
Section 3.05 Purchase and Substitution.....................................
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE HOME LOANS
Section 4.01 Duties of the Servicer........................................
Section 4.02 Appointment and Duties of the Master Servicer.................
Section 4.03 Fidelity Bond; Errors and Omissions Insurance.................
Section 4.04 Filing of Continuation Statements.............................
Section 4.05 Appointment of Empire Funding as Subservicer..................
Section 4.06 Subservicing..................................................
Section 4.07 Successor Servicers...........................................
Section 4.08 Collections from Insurance Policies...........................
Section 4.09 Reports to the Securities and Exchange Commission; 144A
Information..................................................
Section 4.10 Recovery from Defaulted Home Loans and Liquidated Home
Loans........................................................
Section 4.11 Title, Management and Disposition of Foreclosure Property.....
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01 Collection Account and Note Payment Account...................
Section 5.02 Certificate Distribution Account..............................
Section 5.03 Trust Accounts; Trust Account Property........................
Section 5.04 Allocation of Losses..........................................
ARTICLE VI
STATEMENTS AND REPORTS; WITHHOLDING
Section 6.01 Statements....................................................
Section 6.02 Withholding...................................................
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 Due-On-Sale; Due-on-Encumbrance...............................
Section 7.02 Release of Home Loan Files....................................
Section 7.03 Servicing Compensation........................................
Section 7.04 Statement as to Compliance and Financial Statements...........
Section 7.05 Independent Public Accountants' Servicing Report..............
Section 7.06 Right to Examine Servicer Records.............................
Section 7.07 Reports to the Indenture Trustee; Collection Account
Statements...................................................
Section 7.08 Financial Statements..........................................
ARTICLE VIII
(RESERVED)
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims...........................
Section 9.02 Merger or Consolidation of the Servicer.......................
Section 9.03 Limitation on Liability of the Servicer and Others............
Section 9.04 Servicer Not to Resign; Assignment............................
Section 9.05 Relationship of Servicer to the Grantor Trust and the
Grantor Trustee..............................................
Section 9.06 Servicer May Own Securities...................................
ARTICLE X
DEFAULT
Section 10.01 (a) Events of Default........................................
Section 10.02 Master Servicer to Act; Appointment of Successor..............
Section 10.03 Waiver of Defaults............................................
Section 10.04 Accounting Upon Termination of Servicer.......................
ARTICLE XI
TERMINATION
Section 11.01 Termination...................................................
Section 11.02 Optional Termination..........................................
Section 11.03 Notice of Termination.........................................
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Acts of Noteholders...........................................
Section 12.02 Amendment.....................................................
Section 12.03 Recordation of Agreement......................................
Section 12.04 Duration of Agreement.........................................
Section 12.05 Governing Law.................................................
Section 12.06 Notices.......................................................
Section 12.07 Severability of Provisions....................................
Section 12.08 No Partnership................................................
Section 12.09 Counterparts..................................................
Section 12.10 Successors and Assigns........................................
Section 12.11 Headings......................................................
Section 12.12 Actions of Securityholders....................................
Section 12.13 Reports to Rating Agencies....................................
Section 12.14 Holders of the Residual Interest Certificates.................
Section 12.15 Year 2000 Compliance..........................................
Section 12.16 Transferors to Indemnify Indenture Trustee and Owner
Trustee......................................................
EXHIBITS
EXHIBIT A Home Loan Schedule
EXHIBIT B Form of Servicer's Monthly Remittance Report to Trustee
EXHIBIT C Form of Loan Liquidation Report
EXHIBIT D Schedule of Exceptions to Representations and Warranties
EXHIBIT E Form of 10-K Report of Issuer
<PAGE>
This Sale and Servicing Agreement is entered into effective as of
April 1, 1999, among EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1, a Delaware
business trust (the "ISSUER" or the "OWNER TRUST"), PAINEWEBBER MORTGAGE
ACCEPTANCE CORPORATION IV, a Delaware corporation, as Depositor (the
"DEPOSITOR"), EMPIRE FUNDING CORP., an Oklahoma corporation ("EMPIRE FUNDING"),
as Transferor and Subservicer, California Lending Group, Inc., d/b/a United
Lending Group, a California corporation ("ULG"), as Transferor, ContiMortgage
Corporation, a Delaware corporation ("CONTIMORTGAGE"), as Transferor and
Servicer (in such capacity, the "SERVICER") (each of Empire Funding, ULG and
ContiMortgage, a "TRANSFEROR"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, as Master Servicer (the "MASTER SERVICER"), U.S.
BANK NATIONAL ASSOCIATION, a national banking association, as Indenture Trustee
on behalf of the Noteholders (in such capacity, the "INDENTURE TRUSTEE") and as
Grantor Trustee on behalf of the holder of the Grantor Trust Certificate (in
such capacity, the "GRANTOR TRUSTEE"), and ContiFinancial Corporation, a
Delaware corporation, as Guarantor (the "GUARANTOR").
W I T N E S S E T H:
In consideration of the mutual agreements herein contained, the
parties hereto hereby agree as follows for the benefit of each of them and for
the benefit of the holders of the Notes issued under the Indenture, the Residual
Interest Certificates issued under the Owner Trust Agreement and the Grantor
Trust Certificate issued under the Grantor Trust Agreement:
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations of interest described herein shall be made on the basis of a
360-day year consisting of twelve 30-day months, except that with respect to the
Class A-1 Notes, calculations of accrued interest shall be made on the basis of
a 360-day year and the actual number of days elapsed in each Accrual Period.
ACCEPTED SERVICING PROCEDURES: Servicing procedures that satisfy the
following: (a) meet at least the same standards the Servicer would follow in
exercising reasonable care in servicing mortgage loans such as the Home Loans
held for its own account; (b) comply with applicable state and federal law; (c)
comply with the provisions of the related Debt Instruments, Mortgages and
Manufactured Home Contracts; and (d) give due consideration to the accepted
standards of practice of prudent consumer loan servicers that service mortgage
loans comparable to the Home Loans and the reliance placed by the Grantor Trust
Holders, the Master Servicer and Securityholders on the Servicer for the
servicing of the Home Loans, but without regard to:
(i) any relationship that the Servicer, any Subservicer or any
Affiliate of the Servicer or any Subservicer may have with the related
Obligor;
(ii) the ownership of any Notes, the Grantor Trust Certificate or
the Residual Interest Certificates by the Servicer or any Affiliate of the
Servicer;
(iii) the Servicer's or any Subservicer's obligation to make
Servicing Advances; or
(iv) the Servicer's or any Subservicer's right to receive
compensation for its services hereunder with respect to any particular
transaction.
In determining whether to undertake certain servicing actions with
respect to one or more Defaulted Home Loans, the Servicer is expected to
consider the reasonable likelihood of (A) recovering an economically significant
amount attributable to the outstanding interest and principal owing on such Home
Loan as a result of such actions, in excess of (B) the costs and expenses to
obtain such recovery (including without limitation any Servicing Advances and,
if applicable, the outstanding indebtedness of all Superior Liens), and in
relation to (C) the expected timing of such recovery therefrom.
ACCRUAL PERIOD: With respect to the Class A-1 Notes, the period
beginning on the Payment Date in the calendar month preceding the month in which
the related Payment Date occurs (or, in the case of the first Payment Date, the
Closing Date) and ending on the day preceding the related Payment Date. With
respect to the other Classes of Notes, the calendar month preceding the month in
which the related Payment Date occurs (except that in the case of the first
Payment Date, there will be no Accrual Period for such other Classes of Notes
and in the case of the Payment Date occurring in June 1999, the Accrual Period
shall be the period commencing on the Closing Date and ending on the last day of
May 1999).
AFFILIATE: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, the term "control", when used with respect
to any specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have corresponding meanings.
AGREEMENT: This Sale and Servicing Agreement and all amendments
hereof and supplements hereto.
ALLOCABLE LOSS AMOUNT: With respect to each Payment Date, the
excess, if any, of (a) the aggregate of the Class Principal Balances of all
Classes of Notes (after giving effect to all payments on such Payment Date) over
(b) the Pool Principal Balance as of the end of the preceding Due Period.
ALLOCABLE LOSS AMOUNT PRIORITY: With respect to any Payment Date,
sequentially, to the Class B-2 Notes, the Class B-1 Notes, the Class M-2 Notes
and the Class M-1 Notes, in that order.
ASSIGNMENT OF MORTGAGE: With respect to each Home Loan secured by a
Mortgage, an assignment, notice of transfer or equivalent instrument sufficient
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect or record the sale of the related Home Loan which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering Mortgages secured by Mortgaged Properties located
in the same county, if permitted by law.
AVAILABLE COLLECTION AMOUNT: With respect to any Payment Date, as
determined by the Servicer or the Subservicer as of the related Determination
Date, an amount without duplication equal to the sum of: (i) all amounts
received on the Home Loans or required to be paid by the Servicer, the
Subservicer or each Transferor during the related Due Period (exclusive of
amounts not required to be deposited by the Servicer or the Subservicer in the
Collection Account pursuant to SECTION 5.01(B)(I) hereof and amounts permitted
to be withdrawn by the Indenture Trustee from the Collection Account pursuant to
SECTION 5.01(B)(III) hereof) as reduced by any portion thereof that may not be
withdrawn therefrom pursuant to an order of a United States bankruptcy court of
competent jurisdiction imposing a stay pursuant to section 362 of the United
States Bankruptcy Code; (ii) any and all income or gain from investments in the
Collection Account, Note Payment Account and Certificate Distribution Account;
(iii) upon exercise of optional termination of the Notes pursuant to SECTION
11.02 hereof, the Termination Price; and (iv) the Purchase Price paid for any
Home Loans purchased pursuant to SECTION 3.05 hereof prior to the related
Determination Date and the Substitution Adjustment to be deposited in the
Collection Account in connection with any substitution, in each case prior to
the related Determination Date.
AVAILABLE PAYMENT AMOUNT: With respect to any Payment Date, the
Available Collection Amount, minus the amount required to be paid from the Note
Payment Account pursuant to SECTION 5.01(C)(I).
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in the City of New York, in the city in which
the corporate trust office of the Indenture Trustee or Grantor Trustee is
located or in the city in which the Servicer's or Subservicer's servicing
operations or the Master Servicer's master servicing operations are located and
are authorized or obligated by law or executive order to be closed.
CERTIFICATE DISTRIBUTION ACCOUNT: The account designated as
such, established and maintained pursuant to SECTION 5.02 hereof.
CERTIFICATE REGISTER: The register established pursuant to
SECTION 3.4 of the Owner Trust Agreement.
CERTIFICATEHOLDER: A holder of a Residual Interest Certificate.
CLASS: With respect to the Notes, all Notes bearing the same
class designation.
CLASS A NOTES: Collectively the Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5 Notes.
CLASS A-1 NOTE, CLASS A-2 NOTE, CLASS A-3 NOTE, CLASS A-4 NOTE,
CLASS A-5 NOTE, CLASS M-1 NOTE, CLASS M-2 NOTE, CLASS B-1 NOTE AND CLASS B-2
NOTE: The respective meanings assigned thereto in the Indenture.
CLASS B-1 OPTIMAL PRINCIPAL BALANCE: With respect to any Payment
Date prior to the Stepdown Date, zero; and with respect to any other Payment
Date, the Pool Principal Balance as of the end of the related Due Period minus
the sum of (i) the aggregate Class Principal Balance of the Class A Notes and
the Mezzanine Notes (after taking into account any payments made on such Payment
Date in reduction of the Class Principal Balances of the Classes of Class A
Notes and Mezzanine Notes) and (ii) the greater of (x) the sum of (1) 13.00% of
the Pool Principal Balance as of the end of the related Due Period and (2) the
Overcollateralization Target Amount for such Payment Date (calculated without
giving effect to the provisos in the definition thereof) and (y) 0.50% of the
Original Pool Principal Balance; PROVIDED, HOWEVER, that such amount shall never
be less than zero or greater than the Original Class Principal Balance of the
Class B-1 Notes.
CLASS B-2 OPTIMAL PRINCIPAL BALANCE: With respect to any Payment
Date prior to the Stepdown Date, zero; and with respect to any other Payment
Date, the Pool Principal Balance as of the end of the related Due Period minus
the sum of (i) the aggregate Class Principal Balance of the Class A Notes, the
Mezzanine Notes and the Class B-1 Notes (after taking into account any payments
made on such Payment Date in reduction of the Class Principal Balances of the
Classes of Class A Notes, Mezzanine Notes and Class B-1 Notes) and (ii) the
Overcollateralization Target Amount for such Payment Date; PROVIDED, HOWEVER,
that such amount shall never be less than zero or greater than the Original
Class Principal Balance of the Class B-2 Notes.
CLASS FACTOR: With respect to each Class and any date of
determination, the then applicable Class Principal Balance of such Class divided
by the Original Class Principal Balance thereof.
CLASS M-1 OPTIMAL PRINCIPAL BALANCE: With respect to any Payment
Date prior to the Stepdown Date, zero; and with respect to any other Payment
Date, the Pool Principal Balance as of the end of the related Due Period minus
the sum of (i) the aggregate Class Principal Balance of the Class A Notes (after
taking into account payments made on such Payment Date in reduction of the Class
Principal Balances of the Classes of Class A Notes) and (ii) the greater of (x)
the sum of (1) 41.50% of the Pool Principal Balance as of the end of the related
Due Period and (2) the Overcollateralization Target Amount for such Payment Date
(calculated without giving effect to the provisos in the definition thereof) and
(y) 0.50% of the Original Pool Principal Balance; PROVIDED, HOWEVER, that such
amount shall never be less than zero or greater than the Original Class
Principal Balance of the Class M-1 Notes.
CLASS M-2 OPTIMAL PRINCIPAL BALANCE: With respect to any Payment
Date prior to the Stepdown Date, zero; with respect to any other Payment Date,
the Pool Principal Balance as of the end of the related Due Period minus the sum
of (i) the aggregate Class Principal Balance of the Class A Notes (after taking
into account any payments made on such Payment Date in reduction of the Class
Principal Balances of the Classes of Class A Notes) plus the Class Principal
Balance of the Class M-1 Notes (after taking into account any payments made on
such Payment Date in reduction of the Class Principal Balance of the Class M-1
Notes) and (ii) the greater of (x) the sum of (1) 28.50% of the Pool Principal
Balance as of the end of the related Due Period and (2) the
Overcollateralization Target Amount for such Payment Date (without giving effect
to the provisos in the definition thereof) and (y) 0.50% of the Original Pool
Principal Balance; PROVIDED, HOWEVER, that such amount shall never be less than
zero or greater than the Original Class Principal Balance of the Class M-2
Notes.
CLASS PRINCIPAL BALANCE: With respect to each Class of Notes and as
of any date of determination, the Original Class Principal Balance of such Class
reduced by the sum of (i) all amounts previously distributed in respect of
principal of such Class on all previous Payment Dates and (ii) with respect to
the Class M-1, Class M-2, Class B-1 and Class B-2 Notes, all Allocable Loss
Amounts applied in reduction of principal of such Classes on all previous
Payment Dates.
CLEAN-UP CALL DATE: The first Payment Date on which the Pool
Principal Balance declines to 10% or less of the Original Pool Principal
Balance.
CLOSING DATE: May 3, 1999.
CODE: The Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
COLLECTION ACCOUNT: The account designated as such, established
and maintained by the Servicer in the name of the Indenture Trustee, in
accordance with SECTION 5.01(A)(I) hereof.
COMBINATION LOAN: A loan, the proceeds of which were used by the
Obligor in combination to finance property improvements and for debt
consolidation, cash out refinancing or other purposes.
COMBINED LOAN-TO-VALUE RATIO: With respect to any Home Loan, the
fraction, expressed as a percentage, (a) the numerator of which is the principal
balance of such Home Loan at origination plus, in the case of a junior lien Home
Loan, the aggregate outstanding principal balance of each related Superior Lien
on the date of origination of such Home Loan, and (b) the denominator of which
is the value as determined pursuant to the applicable Transferor's underwriting
guidelines of the related Property at the time of origination of such Home Loan.
CONTIMORTGAGE: ContiMortgage Corporation, a Delaware corporation.
CONTIMORTGAGE HOME LOAN PURCHASE AGREEMENT: The Home Loan Purchase
Agreement, dated as of April 1, 1999, among ContiMortgage, the Guarantor and the
Depositor.
CONTIMORTGAGE INDEMNIFICATION AND CONTRIBUTION AGREEMENT: The
Indemnification and Contribution Agreement, dated April 29, 1999, among the
Depositor, PaineWebber Incorporated, Bear, Stearns & Co. Inc., ContiMortgage
and the Guarantor.
CREDIT SCORE: The credit evaluation scoring methodology
developed by Fair, Isaac and Company.
CUSTODIAL AGREEMENT: The custodial agreement dated as of April 1,
1999 by and among the Depositor, each Transferor, the Servicer, and U.S. Bank
National Association, a national banking association, as the custodian and the
Grantor Trustee, providing for the retention of the Grantor Trustee's Home Loan
Files by such custodian on behalf of the Grantor Trustee.
CUSTODIAN: Any custodian appointed by the Grantor Trustee
pursuant to a Custodial Agreement, which custodian shall not be affiliated
with the Servicer, any Transferor, any Subservicer or the Depositor. U.S.
Bank National Association, shall be the initial Custodian pursuant to the
terms of the Custodial Agreement.
CUSTODIAN FEE: If applicable, the annual fee payable to any
Custodian, calculated and payable monthly on each Payment Date pursuant to
SECTION 5.01(C)(I) hereof equal to the fee, if any, set forth in the Custodial
Agreement.
CUSTODIAN'S FINAL CERTIFICATION: As defined in SECTION 2.06(C)
of the Grantor Trust Agreement.
CUSTODIAN'S INITIAL CERTIFICATION: As defined in SECTION 2.06(A)
of the Grantor Trust Agreement.
CUSTODIAN'S UPDATED CERTIFICATION: As defined in SECTION 2.06(C)
of the Grantor Trust Agreement.
CUT-OFF DATE: The close of business on March 31, 1999 (or with
respect to any Home Loan originated or acquired by a Transferor after March 31,
1999, the date of origination or acquisition of such Home Loan).
DCR: Duff & Phelps Credit Rating Co.
DEBT CONSOLIDATION LOAN: A loan, the proceeds of which were
primarily used by the related Obligor for debt consolidation or cash out
refinance purposes or for purposes other than to finance property improvements.
DEBT INSTRUMENT: The note or other evidence of indebtedness
evidencing the indebtedness of an Obligor under a Home Loan.
DEFAULTED HOME LOAN: With respect to any date of determination, any
Home Loan, including, without limitation, any Liquidated Home Loan with respect
to which any of the following has occurred as of the end of the preceding Due
Period: (a) foreclosure or similar proceedings have been commenced; (b) any
portion of a Monthly Payment becomes 180 days past due by the related Obligor;
or (c) the Servicer or any Subservicer has determined in good faith and in
accordance with the Accepted Servicing Procedures that such Home Loan is in
default for a period in excess of 30 days or imminent default and that such
default or imminent default involves the nonpayment of any Monthly Payment or a
default which has or would have a material adverse affect on such Home Loan.
DEFECTIVE HOME LOAN: As defined in SECTION 3.05 hereof.
DELETED HOME LOAN: A Home Loan replaced or to be replaced by one
or more than one Qualified Substitute Home Loan.
DELINQUENT: A Home Loan is "Delinquent" if any Monthly Payment due
thereon is not made by the close of business on the day such Monthly Payment is
scheduled to be paid; PROVIDED, that such Home Loan shall not be "Delinquent" if
the Monthly Payment for such Home Loan has been modified pursuant to a Chapter
13 bankruptcy proceeding by the Obligor and such modified Monthly Payment due
thereon is made by the close of business on the day such modified Monthly
Payment is scheduled to be paid. A Home Loan is "30 days Delinquent" if such
Monthly Payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
Monthly Payment was due or, if there is no such corresponding day (e.g., as when
a 30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month. The
determination of whether a Home Loan is "60 days Delinquent," "90 days
Delinquent," etc., shall be made in like manner.
DELIVERY: When used with respect to Trust Account Property means the
delivery of such Trust Account Property in a manner that results in the
transferee having either the status of a perfected security interest free of any
adverse claims or a holder in due course in accordance with the following: (a)
in the case of "certificated securities" or "uncertificated securities" (in
either case as defined in Article 8 of the UCC), the applicable provisions of
Article 8 of the UCC, and in the case of "instruments," "accounts" or "general
intangibles" (in either case as defined in Article 9 of UCC), the applicable
provisions of Article 9 of the UCC; or (b) in the case of book entry securities
governed by Federal law, the applicable provisions of Federal law.
DENOMINATION: With respect to a Note, the portion of the Original
Class Principal Balance represented by such Note as specified on the face
thereof.
DEPOSITOR: PaineWebber Mortgage Acceptance Corporation IV, a
Delaware corporation, and any successor thereto.
DETERMINATION DATE: With respect to any Payment Date, the 14th
calendar day of the month in which such Payment Date occurs or if such day is
not a Business Day, the immediately preceding Business Day.
DUE DATE: With respect to a Monthly Payment, day of the month on
which such Monthly Payment is due from the Obligor on a Home Loan.
DUE PERIOD: With respect to any Determination Date or Payment Date,
the calendar month immediately preceding such Determination Date or Payment
Date, as the case may be.
ELIGIBLE ACCOUNT: At any time, an account which is any of the
following: (i) an account maintained with a depository institution (A) the
long-term debt obligations of which are at such time rated by each Rating Agency
in one of their two highest long-term rating categories or (B) the short-term
debt obligations of which are then rated by each Rating Agency in their highest
short-term rating category; (ii) an account the deposits in which are fully
insured by either the Bank Insurance Fund or the Savings Association Insurance
Fund of the FDIC; (iii) a trust account (which shall be a "SEGREGATED TRUST
ACCOUNT") maintained with the corporate trust department of a federal or state
chartered depository institution or trust company with trust powers and acting
in its fiduciary capacity for the benefit of the Indenture Trustee and the
Issuer, which depository institution or trust company shall have capital and
surplus of not less than $50,000,000; or (iv) an account that will not cause any
Rating Agency to downgrade or withdraw its then-current rating(s) assigned to
the Notes, as evidenced in writing by such Rating Agency. (Each reference in
this definition of "ELIGIBLE ACCOUNT" to the Rating Agency shall be construed as
a reference to S&P and DCR).
ELIGIBLE SERVICER: A Person that (i) has demonstrated the ability
professionally and competently to service a portfolio of mortgage loans similar
to the Home Loans and (ii) has a net worth calculated in accordance with GAAP of
at least $500,000.
EMPIRE FUNDING: Empire Funding Corp., an Oklahoma corporation.
EMPIRE HOME LOAN PURCHASE AGREEMENT: The Home Loan Purchase
Agreement, dated as of April 1, 1999, between Empire Funding and the Depositor.
EMPIRE INDEMNIFICATION AND CONTRIBUTION AGREEMENT: The
Indemnification and Contribution Agreement, dated April 29, 1999, among the
Depositor, PaineWebber Incorporated, Bear, Stearns & Co. Inc. and Empire
Funding.
EMPIRE PRIOR SECURITIZATIONS: The following series of transactions
in which Empire Funding sold home loans and Asset Backed Certificates or Home
Loan Asset Backed Notes were issued: (i) Empire Funding Home Loan REMIC Trust
1997-A Asset Backed Certificates, Series 1997-A; (ii) Empire Funding Home Loan
Owner Trust 1997-1 Home Loan Asset Backed Notes, Series 1997-1; (iii) Empire
Funding Home Loan Owner Trust 1997-2 Home Loan Asset Backed Notes, Series
1997-2; (iv) Empire Funding Home Loan Owner Trust 1997-3 Home Loan Asset Backed
Notes 1997-3; (v) Empire Funding Home Loan Owner Trust 1997-4 Home Loan Asset
Backed Notes 1997-4; (vi) Empire Funding Home Loan Owner Trust 1997-5 Home Loan
Asset Backed Notes 1997-5; (vii) Empire Funding Home Loan Owner Trust 1998-1
Home Loan Asset Backed Notes 1998-1; (viii) Empire Funding Home Loan Owner Trust
1998-2 Home Loan Asset Backed Notes 1998-2; and (ix) Empire Funding Home Loan
Owner Trust 1998-3 Home Loan Asset Backed Notes 1998-3.
EMPIRE SUBSERVICER: Empire Funding, in its capacity as Subservicer
hereunder.
EMPIRE SUBSERVICER EVENT OF DEFAULT: As described in Section 4.05(g)
hereof.
EMPIRE SUBSERVICING COMPENSATION: The Empire Subservicing Fee and
the other amounts to which Empire Subservicer, is entitled pursuant to SECTION
4.05(B) hereof.
EMPIRE SUBSERVICING FEE: As to each Home Loan (including any
Foreclosed Loan, but excluding any Liquidated Home Loan), the fee payable
monthly to Empire Funding, in its capacity as Subservicer pursuant to SECTION
4.05(B) hereunder, on each Payment Date, which shall be the product of the
Empire Subservicing Fee Rate and the Principal Balance of such Home Loan as of
the beginning of the immediately preceding Due Period, divided by 12.
EMPIRE SUBSERVICING FEE RATE: 0.4825% (48.25 basis points) for the
related Due Period; provided, however, if the Master Servicer Fee Rate is 0.080%
(8 basis points), the Empire Subservicing Fee shall be 0.46% (46 basis points).
EVENT OF DEFAULT: As described in SECTION 10.01 hereof.
EXCESS SPREAD: With respect to any Payment Date, the excess of (a)
the Available Payment Amount over (b) the Regular Payment Amount.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: Freddie Mac (f/k/a Federal Home Loan Mortgage Corporation)
and any successor thereto.
FIDELITY BOND: As described in SECTION 4.03 hereof.
FNMA: Fannie Mae (f/k/a Federal National Mortgage Association) and
any successor thereto.
FORECLOSED LOAN: As of any date of determination, any Home Loan that
has been discharged as a result of (i) the completion of repossession,
foreclosure or comparable proceedings; (ii) the Grantor Trustee's acceptance of
the deed or other evidence of title to any related Mortgaged Property in lieu of
foreclosure or other comparable proceeding; or (iii) the acquisition by the
Grantor Trustee of title to any related Property by operation of law.
FORECLOSURE PROPERTY: Any real or personal property securing a
Foreclosed Loan that has been acquired by the Servicer or any Subservicer
through foreclosure, deed in lieu of foreclosure or similar proceedings in
respect of the related Home Loan.
GAAP: Generally accepted accounting principles as in effect in the
United States.
GRANTOR TRUST: Empire Funding Grantor Trust 1999-1, formed pursuant
to the Grantor Trust Agreement.
GRANTOR TRUST AGREEMENT: The Grantor Trust Agreement dated as of
April 1, 1999, among PaineWebber Mortgage Acceptance Corporation IV, as
Depositor, the Transferors, the Servicer and the Grantor Trustee.
GRANTOR TRUST CERTIFICATE: The trust certificate issued by the
Grantor Trust evidencing an undivided beneficial ownership interest of 100% of
the Grantor Trust.
GRANTOR TRUST HOLDER: Any holder of the Grantor Trust Certificate.
GRANTOR TRUSTEE: U.S. Bank National Association, a national banking
association, as Grantor Trustee under the Grantor Trust Agreement, or any
successor Grantor Trustee hereunder.
GRANTOR TRUSTEE FEE: As to any Payment Date, $0.00.
GRANTOR TRUSTEE'S HOME LOAN FILE: As defined in SECTION 2.05(A) of
the Grantor Trust Agreement.
GUARANTOR: ContiFinancial Corporation, a Delaware corporation.
HOME LOAN: Any Debt Consolidation Loan, Combination Loan or
Manufactured Home Loan that is included in the Home Loan Pool. As applicable, a
Home Loan shall be deemed to refer to the related Debt Instrument, the Mortgage,
the Manufactured Home Contract and any related Foreclosure Property, and shall
include, among other items, all Monthly Payments with a Due Date on or after the
Cut-Off Date, except that the Transferors shall retain 80% of the interest
collected thereon during the first Due Period.
HOME LOAN FILE: As to each Home Loan, the Grantor Trustee's Home
Loan File and the Servicer's Home Loan File.
HOME LOAN INTEREST RATE: The fixed annual rate of interest borne by
a Debt Instrument, as shown on the related Home Loan Schedule as the same may be
modified by the Servicer in accordance with SECTION 4.01(C) or 4.10 hereof.
HOME LOAN POOL: The pool of Home Loans conveyed to the Grantor
Trustee pursuant to the Grantor Trust Agreement on the Closing Date, together
with the rights and obligations of a holder thereof, and the payments thereon
and proceeds therefrom received after the applicable Cut-Off Date, as identified
on the Home Loan Schedule annexed hereto as Exhibit A.
HOME LOAN PURCHASE AGREEMENTS: The ContiMortgage Home Loan Purchase
Agreement, the Empire Home Loan Purchase Agreement and the ULG Home Loan
Purchase Agreement.
HOME LOAN SCHEDULE: The schedule of Home Loans set forth on Exhibit
A attached hereto, as amended or supplemented from time to time specifying, with
respect to each Home Loan, the following information: (i) the applicable
Transferor and such Transferor's Home Loan number; (ii) the Obligor's name and
the street address; (iii) the current principal balance; (iv) the original
principal amount with respect to any Home Loan originated by the applicable
Transferor and the principal amount purchased by the applicable Transferor with
respect to a Home Loan acquired by such Transferor subsequent to its
origination; (v) any related Combined Loan-to-Value Ratio as of the date of the
origination of the related Home Loan; (vi) the paid through date; (vii) the Home
Loan Interest Rate; (viii) the final maturity date under the Debt Instrument;
(ix) the Monthly Payment; (x) the occupancy status of the Property, if any; (xi)
whether it is secured by a Mortgage or Manufactured Home Contract, if any, and
the lien priority thereof; (xii) the original term of the Debt Instrument;
(xiii) the Credit Score, if applicable; and (xiv) the debt to income ratio of
the related Obligor.
INDEMNIFICATION AND CONTRIBUTION AGREEMENTS: The Empire
Indemnification and Contribution Agreement, the ContiMortgage Indemnification
and Contribution Agreement and the ULG Indemnification and Contribution
Agreement.
INDENTURE: The Indenture, dated as of April 1, 1999, between the
Issuer and the Indenture Trustee.
INDENTURE TRUSTEE: U.S. Bank National Association, a national
banking association, as Indenture Trustee under the Indenture and this Agreement
acting on behalf of the Noteholders, or any successor indenture trustee under
the Indenture or this Agreement.
INDENTURE TRUSTEE FEE: As to any Payment Date, the greater of (a)
one-twelfth of the Indenture Trustee Fee Rate times the Pool Principal Balance
as of the opening of business on the first day of the calendar month preceding
the calendar month of such Payment Date (or, with respect to the first Payment
Date, the Original Pool Principal Balance) and (b) one-twelfth of $8,400.
INDENTURE TRUSTEE FEE RATE: 0.008% per annum.
INDEPENDENT: When used with respect to any specified Person, such
Person (i) is in fact independent of any Transferor, the Servicer, the
Subservicer, the Master Servicer, the Depositor or any of their respective
Affiliates, (ii) does not have any direct financial interest in, or any material
indirect financial interest in, any of the Transferors, the Subservicer, the
Servicer, the Master Servicer, the Depositor or any of their respective
Affiliates and (iii) is not connected with any of the Transferors, the Servicer,
the Master Servicer, the Subservicer, the Depositor or any of their respective
Affiliates, as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions; PROVIDED, HOWEVER, that a
Person shall not fail to be Independent of the Transferors, the Servicer, the
Master Servicer, the Subservicer, the Depositor or any of their respective
Affiliates merely because such Person is the beneficial owner of 1% or less of
any class of securities issued by any Transferor, the Master Servicer, the
Subservicer, the Servicer, the Depositor or any of their respective Affiliates,
as the case may be.
INDEPENDENT ACCOUNTANTS: A firm of nationally recognized certified
public accountants which is Independent.
INSURANCE POLICIES: With respect to any Property, any related
insurance policy.
INSURANCE PROCEEDS: With respect to any Property, all amounts
collected by the Grantor Trustee, the Servicer or the Subservicer in respect of
Insurance Policies (net of any expenses that are incurred by the Grantor
Trustee, the Servicer or the Subservicer in connection with the collection of
such proceeds and not otherwise reimbursed to the Grantor Trustee, the Servicer
or the Subservicer) and not required to be applied to the restoration of any
such Property or paid to the related Obligor.
LIBOR: With respect to each Accrual Period (other than the initial
Accrual Period) and each Class of LIBOR Notes, the rate for United States dollar
deposits for one month that appears on the Telerate Screen Page 3750 as of 11:00
a.m., London time, on the related LIBOR Determination Date. If such rate does
not appear on such page (or such other page as may replace that page on that
service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be reasonably selected by the
Indenture Trustee), LIBOR for the applicable Accrual Period will be the
Reference Bank Rate. If no such quotations can be obtained by the Indenture
Trustee and no Reference Bank Rate is available, LIBOR will be LIBOR applicable
to the preceding Accrual Period. LIBOR for the initial Accrual Period will be
4.912% per annum.
LIBOR BUSINESS DAY: Any day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
LIBOR DETERMINATION DATE: With respect to each Accrual Period (other
than the first Accrual Period), the second LIBOR Business Day before the first
day of such Accrual Period, as determined by the Indenture Trustee.
LIBOR NOTES: The Class A-1 Notes.
LIQUIDATED HOME LOAN: With respect to any date of determination, any
Foreclosure Property or any Home Loan in respect of which a Monthly Payment is
in excess of 30 days past due and as to which the Servicer or any Subservicer
has determined that all amounts which it reasonably and in good faith expects to
collect have been recovered from or on account of such Home Loan or the related
Foreclosure Property; PROVIDED, HOWEVER, that in any event any Home Loan or the
related Foreclosure Property shall be deemed uncollectible and therefore be a
Liquidated Home Loan upon the earliest to occur of: (i) the liquidation or
disposition of such Home Loan or the related Foreclosure Property; (ii) the
determination by the Servicer or the Subservicer in accordance with the Accepted
Servicing Procedures that there is no reasonable likelihood of (A) recovering an
economically significant amount in excess of (B) the costs and expenses to
obtain such recovery (including without limitation any Servicing Advances and,
if applicable, the outstanding indebtedness of all Superior Liens) and in
relation to (C) the expected timing of such recovery therefrom, or (iii) the
date on which any portion of a Monthly Payment on any Home Loan is in excess of
180 days past due.
LIQUIDATION PROCEEDS: With respect to a Liquidated Home Loan, any
cash amounts received in connection with the liquidation or disposition of such
Liquidated Home Loan, whether through trustee's sale, foreclosure sale or other
disposition, any cash amounts received in connection with the management of the
Foreclosure Properties from Foreclosed Home Loans and any other amounts required
to be deposited in the Collection Account pursuant to SECTION 5.01(B) hereof, in
each case other than Insurance Proceeds and Released Property Proceeds.
LOSS REIMBURSEMENT DEFICIENCY: With respect to any Payment Date and
the Class M-1 Notes, Class M-2 Notes, Class B-1 Notes or the Class B-2 Notes,
the amount of Allocable Loss Amounts applied to the reduction of the Class
Principal Balance of such Class and not reimbursed pursuant to SECTION 5.01
hereof as of such Payment Date plus interest accrued on the unreimbursed portion
thereof at the applicable Note Interest Rate through the end of the Accrual
Period immediately preceding such Payment Date; PROVIDED, HOWEVER, that no
interest shall accrue on any amount of such accrued and unpaid interest.
MAJORITY NOTEHOLDERS: Until such time as the sum of the Class
Principal Balances of all Classes of Notes has been reduced to zero, the holder
or holders of in excess of 50% of the Class Principal Balance of all Classes of
Notes.
MAJORITY RESIDUAL INTERESTHOLDERS: The holder or holders of more
than 50% of the Residual Interest Certificates.
MANUFACTURED HOME: The personal property encumbered by a lien or
security interest created pursuant to a Manufactured Home Contract which secures
the Debt Instrument evidencing a Home Loan, but excluding any such property
whereby the related encumbrance was created pursuant to a mortgage.
MANUFACTURED HOME CONTRACT: Any manufactured housing installment
sale contract or manufactured housing installment loan agreement whereby the
related security interest was not created pursuant to a mortgage, including,
without limitation, all related security interests or security instruments
creating a lien in accordance with applicable law to secure the Debt Instrument
which evidences a Home Loan.
MANUFACTURED HOME LOAN: A loan, the proceeds of which were used by
the Obligor primarily for the purposes of financing the acquisition or
refinancing of a Manufactured Home, but excluding any such loan whereby the
related security interest was created pursuant to a mortgage.
MASTER SERVICER: Norwest Bank Minnesota, National Association, a
national banking association, as Master Servicer hereunder, or any successor
Master Servicer hereunder.
MASTER SERVICER COMPENSATION: The Master Servicer Fee and other
amounts to which the Master Servicer is entitled pursuant to SECTION 4.02(A)
hereof.
MASTER SERVICER FEE: As to each Home Loan (including any Home Loan
that has been foreclosed and has become a Foreclosure Property, but excluding
any Liquidated Home Loan that had been liquidated prior to the beginning of the
preceding Due Period), the fee payable monthly to the Master Servicer on each
Payment Date, which shall equal the product of (a) one twelfth (1/12) of the
Master Servicer Fee Rate and (b) the Principal Balance of such Home Loan as of
the beginning of the immediately preceding Due Period.
MASTER SERVICER FEE RATE: 0.035% (3.5 basis points) for the related
Due Period; provided, however, in the event that the Master Servicer is not
appointed as the master servicer in all of the Empire Prior Securitizations (at
a fee rate of 0.020% (2.0 basis points) per annum) by August 31, 1999, the
Master Servicer Fee Rate shall be increased to 0.080% (8 basis points)
commencing with the Due Period beginning on September 1, 1999.
MATURITY DATE means, with respect to each Class of Notes, the
applicable maturity date set forth below:
CLASS MATURITY DATE
----- -------------
A-1 March 25, 2009
A-2 September 25, 2011
A-3 April 25, 2013
A-4 November 25, 2019
A-5 May 25, 2030
M-1 May 25, 2030
M-2 May 25, 2030
B-1 May 25, 2030
B-2 May 25, 2030
MEZZANINE NOTEHOLDERS' INTEREST CARRY-FORWARD AMOUNT: With respect
to any Payment Date, the excess, if any, of (A) the Mezzanine Noteholders'
Monthly Interest Payment Amount for the preceding Payment Date plus any
outstanding Mezzanine Noteholders' Interest Carry-Forward Amount for preceding
Payment Dates, over (B) the amount in respect of interest that is actually
deposited in the Note Payment Account on such preceding Payment Date net of the
Senior Noteholders' Interest Payment Amount for such preceding Payment Date; it
being understood that the interest of the Class M-1 Noteholders in the Mezzanine
Noteholders' Interest Carry-Forward Amount is senior to that of the Class M-2
Noteholders.
MEZZANINE NOTEHOLDERS' INTEREST PAYMENT AMOUNT: With respect to any
Payment Date, the sum of the Mezzanine Noteholders' Monthly Interest Payment
Amount for such Payment Date and the Mezzanine Noteholders' Interest
Carry-Forward Amount for such Payment Date.
MEZZANINE NOTEHOLDERS' MONTHLY INTEREST PAYMENT AMOUNT: With respect
to each Payment Date and the Classes of Mezzanine Notes, the interest accrued
during the related Accrual Period at the respective Note Interest Rates on the
respective Class Principal Balances of such Classes immediately preceding such
Payment Date (or, in the case of the first Payment Date, on the Closing Date)
after giving effect to all payments of principal to the holders of such Classes
of Notes on or prior to such preceding Payment Date.
MEZZANINE NOTES: The Class M-1 Notes and Class M-2 Notes.
MONTHLY CUT-OFF DATE: The last day of any calendar month and, with
respect to any Payment Date, the last day of the calendar month immediately
preceding such Payment Date.
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or
interest required to be made by an Obligor on the related Home Loan, as set
forth in the related Debt Instrument.
MORTGAGE: The mortgage, deed of trust or other security instrument
creating a lien in accordance with applicable law on a Mortgaged Property to
secure the Debt Instrument which evidences a Home Loan.
MORTGAGED PROPERTY: The real property encumbered by the Mortgage
which secures the Debt Instrument evidencing a Home Loan.
MULTIPLIER: The Multiplier will initially equal 1.7 and may from
time to time be permanently modified to a lesser amount (including zero) in the
event that the Issuer shall have delivered to the Indenture Trustee written
confirmation from each Rating Agency that the rating assigned by it to each
Class of Notes which it originally rated will not be downgraded or withdrawn as
a result of such reduction.
NET DELINQUENCY CALCULATION AMOUNT: With respect to any Payment
Date, the excess, if any, of (x) the product of the Multiplier and the Six-Month
Rolling Delinquency Average over (y) the aggregate of the amounts of Excess
Spread for the three preceding Payment Dates.
NET LIQUIDATION PROCEEDS: With respect to any Payment Date,
Liquidation Proceeds received during the related Due Period, net of any
reimbursements to the Servicer or Subservicer made from such amounts for the
following: (i) any unreimbursed Servicing Compensation or Empire Subservicing
Compensation; and (ii) Servicing Advances made and any other fees and expenses
paid in connection with the foreclosure, conservation and liquidation of the
related Liquidated Home Loan or Foreclosure Property pursuant to SECTIONS 4.10
or 4.11 hereof.
NET LOAN LOSSES: With respect to any Defaulted Home Loan that is
subject to a modification pursuant to SECTION 4.10 hereof or pursuant to a legal
proceeding (including a Chapter 13 bankruptcy proceeding), an amount equal to
the portion of the Principal Balance, if any, released in connection with such
modification.
NONRECOVERABLE SERVICING ADVANCE: With respect to any Defaulted Home
Loan or any Foreclosure Property, any Servicing Advance previously made and not
reimbursed from late or other fee collections, Liquidation Proceeds, Insurance
Proceeds or the Released Property Proceeds following the liquidation or
disposition of such Defaulted Home Loan or Foreclosure Property, as evidenced by
an Officer's Certificate delivered to the Indenture Trustee and the Master
Servicer.
NOTE: Any of the Senior Notes, the Mezzanine Notes or the
Subordinate Notes.
NOTE INTEREST RATE: With respect to each Class of Notes, the annual
rate of interest payable to the holders of such Class of Notes, as specified
below:
CLASS NOTE INTEREST RATE (1)
----- ----------------------
Class A-1 Floating Rate (2)
Class A-2 6.29%
Class A-3 6.44%
Class A-4 6.82%
Class A-5 7.38%
Class M-1 8.03%
Class M-2 9.00%
Class B-1 9.00%
Class B-2 9.00%
(1) Commencing on the first day of the Accrual Period in which the
Clean-up Call Date occurs, the Note Interest Rate shall be
increased by 0.50% per annum.
(2) Interest will accrue on the Class A-1 Notes during each
Accrual Period at a per annum interest rate equal to LIBOR for
the related LIBOR Determination Date plus 0.20% subject to a
maximum rate equal to 12.00%. The Note Interest Rate
applicable to the Class A-1 Notes for the initial Accrual
Period will be 5.112% per annum.
NOTE PAYMENT ACCOUNT: The Eligible Account established and
maintained pursuant to SECTION 5.01(A)(II) hereof.
NOTE PERCENTAGE INTEREST: With respect to any Note of any Class, an
amount equal to the initial denomination of such Note divided by the Original
Class Principal Balance of the related Class of Notes.
NOTE REDEMPTION AMOUNT: As of any date of determination, an amount
without duplication equal to the sum of (i) the then outstanding Class Principal
Balances of the Classes of Notes plus all accrued and unpaid interest thereon at
their applicable Note Interest Rates through the last day of the Accrual Period
relating to such Payment Date, (ii) any Trust Fees and Expenses due and unpaid
on such date and (iii) any Servicing Advance Reimbursement Amount.
NOTEHOLDER: A holder of a Note.
NOTEHOLDERS' INTEREST PAYMENT AMOUNT: The sum of the Senior
Noteholders' Interest Payment Amount, the Mezzanine Noteholders' Interest
Payment Amount and the Subordinate Noteholders' Interest Payment Amount.
OBLIGOR: Each obligor on a Debt Instrument.
OFFICER'S CERTIFICATE: A certificate delivered to the Indenture
Trustee, the Master Servicer, or the Issuer signed by the President or a Vice
President, an Assistant Vice President or other officer of the Depositor, the
Servicer, the Subservicer, the Master Servicer or any Transferor, in each case,
as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel (who is acceptable
to the Rating Agencies), who may be employed by any Transferor, the Servicer,
the Subservicer, the Master Servicer, the Depositor or any of their respective
Affiliates.
ORIGINAL CLASS PRINCIPAL BALANCE: With respect to the Classes of
Notes, as follows: Class A-1: $59,749,000; Class A-2: $35,032,000; Class A-3:
$29,161,000; Class A-4: $30,168,000; Class A-5: $15,890,000; Class M-1:
$28,125,000; Class M-2: $16,250,000; Class B-1: $19,375,000; and Class B-2:
$16,250,000.
ORIGINAL POOL PRINCIPAL BALANCE: $250,000,566.42 which is the Pool
Principal Balance as of the Cut-Off Date.
OUTSTANDING: As defined in the Indenture.
OVERCOLLATERALIZATION AMOUNT: With respect to any Payment Date, the
amount equal to the excess of (A) the Pool Principal Balance as of the end of
the related Due Period, over (B) the aggregate of the Class Principal Balances
of the Notes (after giving effect to the payments made on such date pursuant to
SECTION 5.01(D) hereof).
OVERCOLLATERALIZATION DEFICIENCY AMOUNT: With respect to any Payment
Date, the excess, if any, of the Overcollateralization Target Amount over the
Overcollateralization Amount (after giving effect to all prior payments on the
Classes of Notes and to any prior distribution on the Residual Interest
Certificates on such Payment Date pursuant to SECTION 5.01(D) hereof).
OVERCOLLATERALIZATION REDUCTION AMOUNT: With respect to any Payment
Date that occurs on or after the Stepdown Date, the lesser of (1) the excess, if
any, of (a) the Overcollateralization Amount (assuming principal payments on the
Notes on such Payment Date are equal to the Regular Principal Payment Amount
without deduction of this Overcollateralization Reduction Amount), over (b) the
Overcollateralization Target Amount, and (2) the Regular Principal Payment
Amount (as determined without the deduction of this Overcollateralization
Reduction Amount therefrom) on such Payment Date. Prior to the occurrence of a
Stepdown Date, the Overcollateralization Reduction Amount shall be zero.
OVERCOLLATERALIZATION TARGET AMOUNT: (I) With respect to any Payment
Date occurring prior to the Stepdown Date, an amount equal to the greater of (x)
3.50% of the Original Pool Principal Balance and (y) the Net Delinquency
Calculation Amount; and (II) with respect to any other Payment Date, an amount
equal to the greater of (x) 7.00% of the Pool Principal Balance as of the end of
the related Due Period and (y) the Net Delinquency Calculation Amount; PROVIDED,
HOWEVER, that the Overcollateralization Target Amount shall in no event be less
than 0.50% of the Original Pool Principal Balance or greater than the sum of the
aggregate Class Principal Balances of all Classes of Notes, PROVIDED, HOWEVER,
if the sum of the aggregate Class Principal Balances of all Classes of Notes is
less than 0.50% of the Original Pool Principal Balance, the
Overcollateralization Target Amount may be less than 0.50% of the Original Pool
Principal Balance but shall in no event be greater than the sum of the aggregate
Class Principal Balances of all Classes of Notes.
OWNER TRUST: The Issuer.
OWNER TRUST AGREEMENT: The Owner Trust Agreement dated as of April
1, 1999, among the Depositor, Empire Funding, the Owner Trustee and U.S. Bank
National Association.
OWNER TRUST ESTATE: The assets subject to this Agreement, the Owner
Trust Agreement and the Indenture and assigned to the Issuer, which assets
consist of: (i) the contribution of $1 referred to in SECTION 2.5 of the Owner
Trust Agreement, (ii) the Grantor Trust Certificate, (iii) all payments on and
distributions in respect of the Grantor Trust Certificate, (iv) such assets and
funds as are from time to time deposited in the Trust Accounts, including
amounts on deposit in such accounts which are invested in Permitted Investments,
and (v) all proceeds of every kind and nature whatsoever in respect of any or
all of the foregoing.
OWNER TRUSTEE: Wilmington Trust Company, as owner trustee under the
Owner Trust Agreement, and any successor owner trustee under the Owner Trust
Agreement.
OWNER TRUSTEE FEE: The annual fee of $4,000 in equal monthly
installments to Empire Subservicer, or, if Empire Subservicer is no longer the
Subservicer hereunder, the Servicer, which shall in turn pay such $4,000 to the
Owner Trustee on the Payment Date occurring in April each year during the term
of this Agreement commencing in April 2000; PROVIDED, HOWEVER, that the initial
Owner Trustee fee shall be paid by Empire Funding on the Closing Date.
OWNERSHIP INTEREST: As to any Note, any ownership or security
interest in such Note, including any interest in such Note as the holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.
PAYMENT DATE: The 25th day of any month or if such 25th day is not a
Business Day, the first Business Day immediately following such day, commencing
in May 1999.
PAYMENT STATEMENT: As defined in SECTION 6.01 hereof.
PERCENTAGE INTEREST: As defined in the Owner Trust Agreement.
PERMITTED INVESTMENTS: Each of the following:
(1) obligations of, or guaranteed as to principal and interest by,
the United States of America, FHLMC, FNMA or any agency or instrumentality of
the United States of America, the obligations of which are backed by the full
faith and credit of the United States of America;
(2) a repurchase agreement that satisfies the following criteria:
(A) it must be between the Indenture Trustee and either (x) primary dealers on
the Federal Reserve reporting dealer list which are rated one of the two highest
ratings for long-term unsecured debt obligations by each Rating Agency or (y)
banks rated in the highest categories for long-term unsecured debt obligations
by each Rating Agency; and (B) it must be in writing and include the following
terms: (a) the securities acceptable for transfer are either (i) direct U.S.
government obligations or (ii) obligations of a federal agency that are backed
by the full faith and credit of the U.S. government or by FNMA or FHLMC; (b) a
term no greater than 60 days for any repurchase transaction; (c) the collateral
must be delivered to the Indenture Trustee or a third party custodian acting as
agent for the Indenture Trustee by appropriate book entries and confirmation
statements, and must have been delivered before or simultaneously with payment
(i.e., perfection by possession of certificated securities); and (d) the
securities sold thereunder must be valued weekly, marked-to-market at current
market price plus accrued interest and the value of the collateral must be equal
to at least 104% of the amount of cash transferred by the Indenture Trustee
under the repurchase agreement and, if the value of the securities held as
collateral declines to an amount below 104% of the cash transferred by the
Indenture Trustee plus accrued interest (i.e., a margin call), then additional
cash and/or acceptable securities must be transferred to the Indenture Trustee
to satisfy such margin call; PROVIDED, HOWEVER, that if the securities used as
collateral are obligations of FNMA or FHLMC, then the value of the securities
held as collateral must equal at least 105% of the cash transferred by the
Indenture Trustee under such repurchase agreement;
(3) certificates of deposit, time deposits and bankers acceptances
of any United States depository institution or trust company incorporated under
the laws of the United States or any state, including the Indenture Trustee
which have an original term to maturity of not more than 365 days; PROVIDED,
HOWEVER, that the debt obligations of such depository institution or trust
company at the date of the acquisition thereof have been rated by each Rating
Agency in the highest long-term rating categories;
(4) deposits, including deposits with the Indenture Trustee, which
are fully insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC, as the case may be;
(5) commercial paper of any corporation incorporated under the laws
of the United States or any state thereof, including corporate Affiliates of the
Indenture Trustee, which at the date of acquisition is rated by each Rating
Agency in its highest short-term rating category and which has an original
maturity of not more than 365 days;
(6) debt obligations rated by each Rating Agency at the time at
which the investment is made in its highest long-term rating category which have
an original term to maturity of not more than 365 days (or those investments
specified in (3) above with depository institutions which have debt obligations
rated by each Rating Agency in the highest long-term rating categories);
(7) money market funds which are rated by each Rating Agency at the
time at which the investment is made in its highest long-term rating category
including any such money market funds for which the Master Servicer or any
affiliate of the Master Servicer acts as investment manager or advisor; provided
that any such money market funds which provide for demand withdrawals being
conclusively deemed to satisfy any maturity requirements for Permitted
Investments set forth in this Agreement; or
(8) any other demand, money market or time deposit obligation,
security or investment as may be acceptable to each Rating Agency at the time at
which the investment is made;
PROVIDED, HOWEVER, that no instrument described in the foregoing subparagraphs
shall evidence either the right to receive (a) only interest with respect to the
obligations underlying such instrument or (b) both principal and interest
payments derived from obligations underlying such instrument where the interest
and principal payments with respect to such instrument provide a yield to
maturity at par greater than 120% of the yield to maturity at par of the
underlying obligations; and PROVIDED, FURTHER, that no instrument described in
the foregoing subparagraphs may be purchased at a price greater than par if such
instrument may be prepaid or called at a price less than its purchase price
prior to stated maturity.
Each reference in this definition of "PERMITTED INVESTMENTS" to the
Rating Agency shall be construed, in the case of each subparagraph above
referring to each Rating Agency, as a reference to each of S&P and DCR.
PERSON: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, estate,
national banking association, unincorporated organization or government or any
agency or political subdivision thereof.
POOL PRINCIPAL BALANCE: With respect to any date of determination,
the aggregate Principal Balances of the Home Loans as of the end of the related
Due Period; PROVIDED, HOWEVER, that the Pool Principal Balance on any Payment
Date on which the Termination Price is to be paid to Noteholders will be deemed
to have been equal to zero as of such date.
PRINCIPAL BALANCE: With respect to any Home Loan or related
Foreclosure Property, (i) at the Cut-Off Date, the outstanding unpaid principal
balance of the Home Loan as of the Cut-Off Date and (ii) with respect to any
date of determination, the outstanding unpaid principal balance of the Home Loan
as of the last day of the preceding Due Period (after giving effect to all
payments received thereon and the allocation of any Net Loan Losses with respect
thereto which relates to such Due Period), without giving effect to amounts
received in respect of such Home Loan or related Foreclosure Property after such
Due Period; PROVIDED, HOWEVER, that any Liquidated Home Loan shall have a
Principal Balance of zero.
PRINCIPAL PREPAYMENT: With respect to any Home Loan and any Due
Period, any principal amount received on a Home Loan in excess of the principal
of the Monthly Payment due in such Due Period.
PRIVATE PLACEMENT MEMORANDUM: The Private Placement Memorandum
to be prepared in connection with the Class B-2 Notes.
PROPERTY: a Mortgaged Property or Manufactured Home.
PROPERTY STATES: Each state in which any Property securing a Home
Loan is located as set forth in the Home Loan Schedule.
PROSPECTUS: The Depositor's final Prospectus dated April 29, 1999 as
supplemented by the Prospectus Supplement dated April 29, 1999.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated April 29,
1999 prepared by the Depositor in connection with the issuance and sale of the
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class M-1, Class M-2 and
Class B-1 Notes.
PURCHASE PRICE: With respect to a Defective Home Loan, the Principal
Balance thereof as of the date of purchase, plus all accrued and unpaid interest
on such Defective Home Loan to and including the date of repurchase computed at
the applicable Home Loan Interest Rate, plus the amount of any unreimbursed
Servicing Advances made by the Servicer or any Subservicer with respect to such
Defective Home Loan (after deducting therefrom any amounts received in respect
of such repurchased Defective Home Loan and being held in the Collection Account
for future distribution to the extent such amounts represent recoveries of
principal not yet applied to reduce the related Principal Balance or interest
for the period from and after the date of repurchase).
QUALIFIED SUBSTITUTE HOME LOAN: A home loan or home loans
substituted for a Deleted Home Loan pursuant to SECTION 2.06 of the Grantor
Trust Agreement or SECTION 3.05 hereof, which (i) has or have an interest rate
or rates of (a) no lower than the Home Loan Interest Rate for the Deleted Home
Loan, and (b) not more than 2.0 percentage points greater than the Home Loan
Interest Rate for the Deleted Home Loan, (ii) matures or mature not more than
one year than, and not more than one year earlier, than the maturity date of
Deleted Home Loan, has a maturity date no later than April 30, 2029 and an
original term to maturity of less than or equal to 30 years, (iii) has or have a
principal balance or principal balances (after application of all payments
received on or prior to the date of substitution) equal to or less than the
Principal Balance or Balances of the Deleted Home Loan or Loans as of such date,
(iv) has a Credit Score not less than the Credit Score of the Deleted Home Loan,
(v) has or have a lien priority equal or superior to that of the Deleted Home
Loan or Loans, (vi) has or have a borrower or borrowers with a debt-to-income
ratio no higher than the debt-to-income ratio of the Obligor with respect to the
Deleted Loan, and (vii) complies or comply as of the date of substitution with
each representation and warranty set forth in SECTION 3.04 hereof and is or are
not more than 29 days delinquent as of the date of substitution for such Deleted
Home Loan or Loans. For purposes of determining whether multiple mortgage loans
proposed to be substituted for one or more Deleted Home Loans pursuant to
SECTION 2.06 of the Grantor Trust Agreement or SECTION 3.05 hereof are in fact
"Qualified Substitute Home Loans" as provided above, the criteria specified in
clauses (i), (ii) and (iii) above may be considered on an aggregate or weighted
average basis, rather than on a loan-by-loan basis (i.e., so long as the
weighted average Home Loan Interest Rate of any loans proposed to be substituted
is not less than the Home Loan Interest Rate for the designated Deleted Home
Loan or Loans and not more than two percentage points greater than the Home Loan
Interest Rate for the designated Deleted Home Loan or Loans, the requirements of
clause (i) above would be deemed satisfied).
RATING AGENCIES: S&P and DCR. If no such organization or successor
is any longer in existence, "RATING AGENCY" shall be a nationally recognized
statistical rating organization or other comparable person designated by the
Servicer, notice of which designation shall have been given to the Indenture
Trustee and the Issuer.
RATINGS: The ratings initially assigned to the Notes by the Rating
Agencies, as evidenced by letters from the Rating Agencies.
RECORD DATE: With respect to the first Payment Date, the Closing
Date. With respect to each other Payment Date, the close of business on the last
Business Day of the month immediately preceding the month in which such Payment
Date occurs.
REFERENCE BANK RATE: With respect to any Accrual Period, the
arithmetic mean (rounded upwards, if necessary, to the nearest one sixteenth of
a percent) of the offered rates for United States dollar deposits for one month
that are offered by the Reference Banks as of 11:00 a.m., New York City time, on
the second LIBOR Business Day prior to the first day of such Accrual Period to
prime banks in the London interbank market for a period of one month in amounts
approximately equal to the outstanding Class Principal Balance of the Class A-1
Notes, PROVIDED that at least two such Reference Banks provide such rate. If
fewer than two offered rates appear, the Reference Bank Rate will be arithmetic
mean of the rates quoted by one or more major banks in New York City, selected
by the Indenture Trustee, as of 11:00 a.m., New York City time, on such date for
loans in U.S. Dollars to leading European Banks for a period of one month in
amounts approximately equal to the outstanding Class Principal Balance of the
Class A-1 Notes. If no such quotation can be obtained, the Reference Bank Rate
will be the Reference Bank Rate applicable to the preceding Accrual Period.
REFERENCE BANKS: Three money center banks selected by the Indenture
Trustee.
REGULAR PAYMENT AMOUNT: With respect to any Payment Date, the lesser
of (a) the Available Payment Amount and (b) the sum of (i) the Noteholders'
Interest Payment Amount and (ii) the Regular Principal Payment Amount.
REGULAR PRINCIPAL PAYMENT AMOUNT: On each Payment Date, an amount
equal to the lesser of:
(A) the aggregate of the Class Principal Balances of the Classes of
Notes immediately prior to such Payment Date; and
(B) the sum of (i) each scheduled payment of principal collected by
the Servicer or the Subservicer in the related Due Period, (ii) all Principal
Prepayments applied by the Servicer or the Subservicer during such related Due
Period, (iii) the principal portion of all Net Liquidation Proceeds, Insurance
Proceeds and Released Property Proceeds received during the related Due Period,
(iv) that portion of the Purchase Price of any repurchased Home Loan which
represents principal received prior to the related Determination Date, (v) the
principal portion of any Substitution Adjustments required to be deposited in
the Collection Account as of the related Determination Date and (vi) on the
Payment Date on which the Issuer and the Grantor Trust are to be terminated
pursuant to SECTION 11.02 hereof, the Termination Price (net of any accrued and
unpaid interest, Trust Fees and Expenses due and unpaid on such date and
Servicing Advance Reimbursement Amount),
PROVIDED, HOWEVER, that if such Payment Date is on or after a Stepdown Date,
then with respect to the payment of principal to the Noteholders the foregoing
amount will be reduced by the Overcollateralization Reduction Amount, if any,
for such Payment Date (but not to an amount less than zero).
RELEASED PROPERTY PROCEEDS: With respect to any Home Loan, proceeds
received by the Servicer or the Subservicer in connection with (i) a taking of
an entire Property by exercise of the power of eminent domain or condemnation or
(ii) any release of part of the Property from the lien of the related Mortgage
or Manufactured Home Contract, as applicable, whether by partial condemnation,
sale or otherwise; which proceeds are not released to the Obligor in accordance
with applicable law, Accepted Servicing Procedures and this Agreement.
RESIDUAL INTEREST: The meaning assigned thereto in the Owner Trust
Agreement.
RESIDUAL INTEREST CERTIFICATE: The meaning assigned thereto in the
Owner Trust Agreement.
RESPONSIBLE OFFICER: When used with respect to the Indenture Trustee
or Grantor Trustee, any officer within the Corporate Trust Office of the
Indenture Trustee or Grantor Trustee, as the case may be, including any Vice
President, Assistant Vice President, Secretary, Assistant Secretary or any other
officer of the Indenture Trustee or Grantor Trustee, as the case may be,
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject. When used with respect to the
Issuer, any officer in the Corporate Trust Administration Department of the
Owner Trustee with direct responsibility for the administration of the Owner
Trust Agreement and this Agreement on behalf of the Issuer. When used with
respect to the Depositor, any Transferor, the Servicer, the Master Servicer, the
Subservicer or any Custodian, the President or any Vice President, Assistant
Vice President, or any Secretary or Assistant Secretary.
S&P: Standard and Poor's Ratings Services, a division of the
McGraw-Hill Companies, or any successor thereto.
SECURITIES: The Notes or Residual Interest Certificates.
SECURITYHOLDER: Any Noteholder or Certificateholder.
SENIOR NOTEHOLDERS' INTEREST CARRY-FORWARD AMOUNT: With respect to
any Payment Date, the excess, if any, of (A) the Senior Noteholders' Monthly
Interest Payment Amount for the preceding Payment Date plus any outstanding
Senior Noteholders' Interest Carry-Forward Amount for preceding Payment Dates,
over (B) the amount in respect of interest that is actually deposited in the
Note Payment Account on such preceding Payment Date.
SENIOR NOTEHOLDERS' INTEREST PAYMENT AMOUNT: With respect to any
Payment Date, the sum of the Senior Noteholders' Monthly Interest Payment Amount
for such Payment Date and the Senior Noteholders' Interest Carry-Forward Amount
for such Payment Date.
SENIOR NOTEHOLDERS' MONTHLY INTEREST PAYMENT AMOUNT: With respect to
each Payment Date and the Classes of Class A Notes, the interest accrued during
the related Accrual Period at the respective Note Interest Rates on the
respective Class Principal Balances of such Classes immediately preceding such
Payment Date (or, in the case of the first Payment Date, beginning on the
Closing Date) after giving effect to all payments of principal to the holders of
such Classes of Notes on or prior to such preceding Payment Date.
SENIOR NOTES: The Class A Notes.
SENIOR OPTIMAL PRINCIPAL BALANCE: With respect to any Payment Date
prior to the Stepdown Date, zero; with respect to any other Payment Date, an
amount equal to the Pool Principal Balance as of the end of the related Due
Period minus the greater of (a) the sum of (1) 64.00% of the Pool Principal
Balance as of the end of the related Due Period and (2) the
Overcollateralization Target Amount for such Payment Date (without giving effect
to the provisos in the definition thereof) and (b) 0.50% of the Original Pool
Principal Balance; PROVIDED, HOWEVER, that such amount shall never be less than
zero or greater than the sum of the Original Class Principal Balances of the
Senior Notes.
SERIES OR SERIES 1999-1: Empire Funding Home Loan Asset Backed
Notes, Series 1999-1.
SERVICER: ContiMortgage, in its capacity as the servicer hereunder,
or any successor appointed as herein provided.
SERVICER'S FISCAL YEAR: The fiscal year of ContiMortgage, which is
April 1st through March 31st of each year, or the fiscal year of any successor
Servicer.
SERVICER'S HOME LOAN FILES: In respect of each Home Loan, all
documents customarily included in the Servicer's loan file for the related type
of Home Loan as specifically set forth in SECTION 2.05(B) of the Grantor Trust
Agreement.
SERVICER'S MONTHLY REMITTANCE REPORT: A report prepared and computed
by the Servicer in substantially the form of Exhibit B attached hereto.
SERVICER TERMINATION EVENT: The termination of the Servicer pursuant
to SECTION 10.01 hereof or the resignation of the Servicer pursuant to SECTION
9.04 hereof.
SERVICING ADVANCE REIMBURSEMENT AMOUNT: Any Nonrecoverable Servicing
Advances and, with respect to any date of determination and with respect to the
receipt of proceeds from or the liquidation of a Home Loan for which any
Servicing Advances have been made, the amount of any such Servicing Advances
that have not been reimbursed as of such date.
SERVICING ADVANCES: Subject to SECTION 4.01(B) hereof, all
reasonable, customary and necessary "out of pocket" costs and expenses advanced
or paid by the Servicer or the Subservicer with respect to the Home Loans in
accordance with the performance by the Servicer or the Subservicer of its
servicing obligations hereunder, including, but not limited to, the costs and
expenses for (i) the preservation, restoration and protection of any related
Property, including without limitation advances in respect of real estate taxes
and assessments, (ii) any collection, enforcement or judicial proceedings,
including without limitation foreclosures, collections and liquidations pursuant
to SECTION 4.10 hereof, (iii) the conservation, management and sale or other
disposition of a Foreclosure Property pursuant to SECTION 4.11 hereof, (iv) the
preservation of the security for a Home Loan if any lienholder under a Superior
Lien has accelerated or intends to accelerate the obligations secured by such
Superior Lien pursuant to SECTION 4.10 hereof, and (v) the satisfaction,
cancellation, release or discharge of any Home Loan or any related Mortgage or
Manufactured Home Contract in accordance with this Agreement; PROVIDED, HOWEVER,
that such Servicing Advances (plus accrued interest thereon from the date of
such advance to the date of reimbursement and at the rate equal to the
Servicer's cost of funds) are reimbursable to the Servicer or the Subservicer
out of the expected late collections, Liquidation Proceeds, Insurance Proceeds
or Released Property Proceeds for the related Home Loan, Obligor or Property.
SERVICING COMPENSATION: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to SECTION 7.03 hereof.
SERVICING FEE: As to each Home Loan (including any Home Loan that
has been foreclosed and has become a Foreclosure Property, but excluding any
Liquidated Home Loan), the fee payable monthly to the Servicer on each Payment
Date, which shall be the product of the Servicing Fee Rate and the Principal
Balance of such Home Loan as of the beginning of the immediately preceding Due
Period, divided by 12. The Servicing Fee includes any servicing fees owed or
payable to any Subservicer (other than Empire Funding), which fees shall be paid
from the Servicing Fee.
SERVICING FEE RATE: If Empire Funding is the Subservicer pursuant to
SECTION 4.05, the Servicing Fee Rate shall equal (a) 0.4825% (48.25 basis
points) if the Master Servicer Fee Rate is 0.035% (3.5 basis points) or (b)
0.46% (46 basis points) if the Master Servicer Fee Rate is 0.080% (8 basis
points). If Empire Funding is not the Subservicer pursuant to SECTION 4.05, the
Servicing Fee Rate shall equal (a) 0.965% (96.5 basis points) if the Master
Servicer Fee Rate is 0.035% (3.5 basis points) or (b) 0.92% (92 basis points) if
the Master Servicer Fee Rate is 0.080% (8 basis points).
SERVICING OFFICER: Any officer of the Servicer, Master Servicer, or
Subservicer involved in, or responsible for, the administration and servicing of
the Home Loans whose name and specimen signature appears on a list of servicing
officers annexed to an Officer's Certificate furnished by the Servicer, the
Master Servicer or the Subservicer, respectively, to the Grantor Trustee, the
Master Servicer and the Indenture Trustee, on behalf of the Securityholders, as
such list may from time to time be amended.
SIX-MONTH ROLLING DELINQUENCY AVERAGE: With respect to any Payment
Date, the average for such Payment Date and the five preceding Payment Dates of
the respective ratios, expressed as a percentage, equal to (x) the aggregate
Principal Balances of all Home Loans that are 60 days or more Delinquent
(excluding any Liquidated Home Loans) as of the end of each of the related Due
Periods, divided by (y) the respective Pool Principal Balance as of the end of
such Due Period.
STEPDOWN DATE: The first Payment Date occurring after April 2002, as
to which the aggregate of the Class Principal Balances of the Class A Notes
after giving effect to payments of principal on such Payment Date will be able
to be reduced on such Payment Date (such determination to be made by the
Indenture Trustee prior to giving effect to payment of principal on such Payment
Date) to the excess of:
(I) the Pool Principal Balance as of the end of the related Due
Period over
(II) the greater of
(a) the sum of
(1) 64.00% of the Pool Principal Balance as of the
end of the related Due Period and
(2) the Overcollateralization Target Amount for such
Payment Date (such amount to be calculated (x)
without giving effect to the provisos in the
definition thereof and (y) pursuant only to clause
(II) of the definition thereof); and
(b) 0.50% of the Original Pool Principal Balance.
SUBORDINATE NOTEHOLDERS' INTEREST CARRY-FORWARD AMOUNT: With respect
to any Payment Date, the excess, if any, of (A) the Subordinate Noteholders'
Monthly Interest Payment Amount for the preceding Payment Date plus any
outstanding Subordinate Noteholders' Interest Carry-Forward Amount for preceding
Payment Dates, over (B) the amount in respect of interest that is actually
deposited in the Note Payment Account on such preceding Payment Date net of the
Senior Noteholders' Interest Payment Amount and the Mezzanine Noteholders'
Interest Payment Amount for such preceding Payment Date; it being understood
that the interest of the Class B-1 Noteholders in the Subordinate Noteholders'
Interest Carry-Forward Amount is senior to that of the Class B-2 Noteholders.
SUBORDINATE NOTEHOLDERS' INTEREST PAYMENT AMOUNT: With respect to
any Payment Date, the sum of the Subordinate Noteholders' Monthly Interest
Payment Amount for such Payment Date and the Subordinate Noteholders' Interest
Carry-Forward Amount for such Payment Date.
SUBORDINATE NOTEHOLDERS' MONTHLY INTEREST PAYMENT AMOUNT: With
respect to each Payment Date and the Classes of Subordinate Notes, the interest
accrued during the related Accrual Period at the respective Note Interest Rates
on the respective Class Principal Balances of such Classes immediately preceding
such Payment Date (or, in the case of the first Payment Date, on the Closing
Date) after giving effect to all payments of principal to the holders of such
Classes of Notes on or prior to such preceding Payment Date, and in the case of
the Class B-2 Notes, subject to reduction pursuant to SECTION 5.04(B).
SUBORDINATE NOTES: The Class B-1 Notes and Class B-2 Notes.
SUBSERVICER: Initially, Empire Funding. If Empire Funding shall no
longer be the Subservicer pursuant to SECTION 4.05, any Person with which the
Servicer has entered into a Subservicing Agreement and which is an Eligible
Servicer and satisfies any requirements set forth in SECTION 4.06(A) hereof in
respect of the qualifications of a Subservicer.
SUBSERVICING ACCOUNT: An account established by a Subservicer
pursuant to a Subservicing Agreement, which account must be an Eligible
Account.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer (other than Empire Subservicer) relating to subservicing and/or
administration of any or all Home Loans as provided in SECTION 4.06(A) hereof,
copies of which shall be made available, along with any modifications thereto,
to the Issuer, the Grantor Trustee, the Master Servicer and the Indenture
Trustee.
SUBSTITUTE COLLATERAL: Any Substitute Collateral as defined in
SECTION 4.10(C) hereof.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution
occurs pursuant to SECTIONS 2.06 of the Grantor Trust Agreement or SECTION 3.05
hereof, the amount, if any, by which (a) the sum of the aggregate principal
balance (after application of principal payments received on or before the date
of substitution) of any Qualified Substitute Home Loans as of the date of
substitution, plus any accrued and unpaid interest thereon to the date of
substitution, is less than (b) the sum of the aggregate of the Principal
Balances, together with accrued and unpaid interest thereon to the date of
substitution, of the related Deleted Home Loans.
SUPERIOR LIEN: With respect to any Home Loan which is secured by a
lien other than a first priority lien, the mortgage loan(s) having a superior
priority lien on the related Mortgaged Property.
TERMINATION PRICE: As of any date of determination, an amount
without duplication equal to the greater of (A) the Note Redemption Amount and
(B) the sum of (i) the Principal Balance of each Home Loan included in the
Grantor Trust as of the applicable Monthly Cut-Off Date; (ii) all unpaid
interest accrued on the Principal Balance of each such Home Loan at the related
Home Loan Interest Rate to such Monthly Cut-Off Date; and (iii) the aggregate
fair market value of each Foreclosure Property included in the Grantor Trust on
such Monthly Cut-Off Date, as determined by an Independent appraiser acceptable
to the Indenture Trustee as of a date not more than 30 days prior to such
Monthly Cut-Off Date.
TRANSACTION DOCUMENTS: The Custodial Agreement, the Home Loan
Purchase Agreements, the Indenture, this Agreement, the Grantor Trust Agreement,
the Owner Trust Agreement, the Administration Agreement and the Indemnification
and Contribution Agreements.
TRANSFEROR: Each of Empire Funding, ContiMortgage and ULG.
TREASURY REGULATIONS: Regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
TRUST: The Issuer.
TRUST ACCOUNT PROPERTY: The Trust Accounts, all amounts and
investments held from time to time in the Trust Accounts and all proceeds of the
foregoing.
TRUST ACCOUNTS: The Note Payment Account, the Certificate
Distribution Account, the Collection Account and any escrow or reserve account
established pursuant to SECTIONS 4.05 (K) OR 10.01(B) hereof.
TRUST FEES AND EXPENSES: As of each Payment Date, an amount equal to
the Master Servicer Compensation (which includes the Master Servicer Fee), the
Servicing Compensation (which includes the Servicing Fee), the Empire
Subservicing Compensation (which includes the Empire Subservicing Fee), the
Indenture Trustee Fee, the Grantor Trustee Fee, the Owner Trustee Fee and the
Custodian Fee, if any.
UCC: The Uniform Commercial Code as in effect in the State of New
York.
ULG: California Lending Group, Inc., d/b/a United Lending Group, a
California corporation.
ULG HOME LOAN PURCHASE AGREEMENT: The Home Loan Purchase Agreement,
dated as of April 1, 1999, between ULG, the Depositor and the Guarantor.
ULG INDEMNIFICATION AND CONTRIBUTION AGREEMENT: The Indemnification
and Contribution Agreement, dated as of April 29, 1999, among the Depositor,
PaineWebber Incorporated, Bear, Stearns & Co. Inc., ULG and the Guarantor.
UNDERWRITERS: PaineWebber Incorporated and Bear, Stearns & Co. Inc.
Section 1.02 OTHER DEFINITIONAL PROVISIONS. (a) Capitalized terms
used herein and not otherwise defined herein have the meanings assigned to them
in the Indenture and the Owner Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under GAAP. To the extent that the definitions of accounting terms
in this Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under GAAP, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF THE GRANTOR TRUST CERTIFICATE
Section 2.01 CONVEYANCE OF THE GRANTOR TRUST CERTIFICATE. (a) As of
the Closing Date, in consideration of the Issuer's delivery of the Notes and the
Residual Interest Certificates to the Depositor or its designee, upon the order
of the Depositor, the Depositor, as of the Closing Date and concurrently with
the execution and delivery hereof, does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse, but subject to the other
terms and provisions of this Agreement, all of the right, title and interest of
the Depositor in and to the Owner Trust Estate. The foregoing sale, transfer,
assignment, set over and conveyance does not, and is not intended to, result in
a creation or an assumption by the Issuer of any obligation of the Depositor,
any Transferor or any other person in connection with the Owner Trust Estate or
under any agreement or instrument relating thereto except as specifically set
forth herein.
(b) As of the Closing Date, the Issuer acknowledges the conveyance
to it of the Owner Trust Estate, including all right, title and interest of the
Depositor in and to the Owner Trust Estate, receipt of which is hereby
acknowledged by the Issuer. Concurrently with such delivery and in exchange
therefor, the Issuer has pledged the Owner Trust Estate to the Indenture Trustee
for the benefit of the Noteholders, and the Indenture Trustee, pursuant to the
written instructions of the Issuer, has executed and caused the Notes to be
authenticated and delivered to the Depositor or its designee, upon the order of
the Issuer. In addition, concurrently with such delivery and in exchange
therefor, the Owner Trustee, pursuant to the instructions of the Depositor, has
executed (not in its individual capacity, but solely as Owner Trustee on behalf
of the Issuer) and caused the Residual Interest Certificates to be authenticated
and delivered to the Depositor or its designee, upon the order of the Depositor.
Section 2.02 OWNERSHIP AND POSSESSION OF GRANTOR TRUST CERTIFICATE.
Upon the issuance of the Notes, the ownership of the Grantor Trust Certificate
shall be vested in the Indenture Trustee for the benefit of the Securityholders.
Section 2.03 BOOKS AND RECORDS; PRINCIPAL PLACE OF BUSINESS. The
sale of the Grantor Trust Certificate shall be reflected on the balance sheets
and other financial statements of the Depositor, as a sale of assets by the
Depositor under GAAP.
It is the intention of the parties hereto that the transfers and
assignments contemplated by this Agreement shall constitute a sale of the
Grantor Trust Certificate and the other property specified in SECTION 2.01(A)
hereof from the Depositor to the Issuer and such property shall not be property
of the Depositor. If the assignment and transfer of the Grantor Trust
Certificate and the other property specified in SECTION 2.01(A) hereof to the
Owner Trustee pursuant to this Agreement or the conveyance of the Grantor Trust
Certificate or any of such other property to the Owner Trustee is held or deemed
not to be a sale or is held or deemed to be a pledge of security for a loan, the
Depositor intends that the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement and that, in such event, (i)
the Depositor shall be deemed to have granted and does hereby grant to the Owner
Trustee a first priority security interest in the entire right, title and
interest of the Depositor in and to the Grantor Trust Certificate and all other
property conveyed to the Owner Trustee pursuant to SECTION 2.01 hereof and all
proceeds thereof and (ii) this Agreement shall constitute a security agreement
under applicable law. Within ten (10) days of the Closing Date, the Depositor
shall cause to be filed UCC-1 financing statements naming the Owner Trustee as
"secured parties" and describing the Grantor Trust Certificate being sold by the
Depositor to the Issuer with the office of the Secretary of State of the state
in which the Depositor is located.
Section 2.04 DELIVERY OF GRANTOR TRUST CERTIFICATE; FURTHER
ASSURANCES. (a) The Depositor shall, on the Closing Date, upon the order of the
Issuer, deliver or cause to be delivered, the Grantor Trust Certificate
registered in the name of U.S. Bank National Association, as Indenture Trustee,
to the Indenture Trustee for the benefit of the Noteholders.
(b) The Depositor shall execute and deliver all such other
instruments, documents and certificates and take all such other actions deemed
necessary by the Owner Trustee in connection with, or in furtherance of, the
transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS AND WARRANTIES OF THE Depositor. The
Depositor hereby represents and warrants to each Transferor, the Master
Servicer, the Servicer, Empire Subservicer, the Grantor Trustee, the Indenture
Trustee, the Owner Trustee and the Noteholders that as of the Closing Date:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has, and had at
all relevant times, full power to own its property, to carry on its business as
currently conducted, to enter into and perform its obligations under this
Agreement and to create the Owner Trust pursuant to the Owner Trust Agreement;
(b) The execution and delivery of this Agreement by the Depositor
and its performance of and compliance with the terms of this Agreement will not
violate the Depositor's certificate of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Depositor is a
party or which may be applicable to the Depositor or any of its assets;
(c) The Depositor has the full power and authority to enter into and
consummate the transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement and has duly executed
and delivered this Agreement. This Agreement, assuming due authorization,
execution and delivery by the Owner Trustee, the Indenture Trustee, the Grantor
Trustee, each Transferor, the Master Servicer, the Servicer, the Empire
Subservicer and the Guarantor constitutes a valid, legal and binding obligation
of the Depositor, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, 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) The Depositor is not in violation of, and the execution and
delivery of this Agreement by the Depositor and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction, which violation
would materially and adversely affect the condition (financial or otherwise) or
operations of the Depositor or its properties or materially and adversely affect
the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations
of, the Depositor currently pending with regard to which the Depositor has
received service of process and no action or proceeding against, or
investigation of, the Depositor is, to the knowledge of the Depositor,
threatened or otherwise pending before any court, administrative agency or other
tribunal that (A) if determined adversely, would prohibit its entering into this
Agreement or render the Notes invalid, (B) seek to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by this
Agreement or (C) if determined adversely, would prohibit or materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement or the Notes;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement or the Notes, or for the consummation of the transactions contemplated
by this Agreement, except for such consents, approvals, authorizations and
orders, if any, that have been obtained prior to the Closing Date;
(g) The Depositor is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution and
delivery of this Agreement or its obligations hereunder; no petition of
bankruptcy (or similar insolvency proceeding) has been filed by or against the
Depositor prior to the date hereof;
(h) The Depositor did not sell (i) the Home Loans to the Grantor
Trustee or (ii) the Grantor Trust Certificate to the Issuer, with any intent to
hinder, delay or defraud any of its creditors; the Depositor will not be
rendered insolvent as a result of the sale of the Home Loans to the Grantor
Trustee and the sale of the Grantor Trust Certificate to the Issuer;
(i) As of the Closing Date, the Depositor had good title to, and was
the sole beneficial owner of, the Grantor Trust Certificate and had good and
marketable title thereto, free and clear of any lien or options in favor of, or
claims of, any other Person, other than any such lien released simultaneously
with the sale contemplated herein, and, immediately upon each transfer and
assignment herein contemplated, the Depositor will have delivered to the Issuer
good title to, and the Issuer will be the sole beneficial owner of, the Grantor
Trust Certificate free and clear of any lien or options in favor of, or claims
of, any other Person;
(j) The Grantor Trust Certificate has been validly issued, and is
fully paid and non-assessable and not subject to preemptive rights, and the
Grantor Trust Certificate has been offered, issued and sold in compliance with
all applicable laws and (A) there are no outstanding rights, options, warrants
or agreements for the purchase from, or sale or issuance, in connection with the
Grantor Trust Certificate; (B) there are no agreements on the part of the
Depositor to issue, sell or distribute the Grantor Trust Certificate; and (C)
the Depositor has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any securities or any interest therein or to pay any dividend
or make any distribution in respect of the Grantor Trust Certificate;
(k) The Depositor acquired title to the Grantor Trust Certificate in
good faith, without notice of any adverse claim;
(l) No Officers' Certificate, statement, report or other document
prepared by the Depositor and furnished or to be furnished by it pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading; and
(m) The Depositor is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
Section 3.02 REPRESENTATIONS AND WARRANTIES OF EACH TRANSFEROR. Each
Transferor (unless otherwise indicated) hereby represents and warrants to the
Servicer, the Master Servicer, Empire Subservicer, the Indenture Trustee, the
Owner Trustee, the Grantor Trustee, the Noteholders, the other Transferors and
the Depositor that as of the Closing Date (except as otherwise specifically
provided herein):
(a) Such Transferor is a corporation licensed as a mortgage lender
duly organized, validly existing and in good standing under the laws of its
state of incorporation and has and had at all relevant times, full corporate
power to originate or purchase the Home Loans, to own its property, to carry on
its business as presently conducted and to enter into and perform its
obligations under the Transaction Documents to which it is a party;
(b) The execution and delivery of the Transaction Documents to which
such Transferor is a party and its performance of and compliance with the terms
of such Transaction Documents will not violate such Transferor's articles of
incorporation or by-laws or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in the
breach or acceleration of, any material contract, agreement or other instrument
to which such Transferor is a party or which may be applicable to such
Transferor or any of its assets;
(c) Such Transferor has the full power and authority to enter into
and consummate all transactions contemplated by the Transaction Documents to
which it is a party to be consummated by it, has duly authorized the execution,
delivery and performance of the Transaction Documents to which it is a party and
has duly executed and delivered such Transaction Documents. Such Transaction
Documents, assuming due authorization, execution and delivery by the other
parties thereto, constitute valid, legal and binding obligations of such
Transferor, enforceable against it in accordance with the terms hereof, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, 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) Such Transferor is not in violation of, and the execution and
delivery by such Transferor of the Transaction Documents to which it is a party
and its performance and compliance with the terms thereof will not constitute a
violation with respect to, any order or decree of any court or any order or
regulation of any federal, state, municipal or governmental agency having
jurisdiction, which violation would materially and adversely affect the
condition (financial or otherwise) or operations of such Transferor or its
properties or materially and adversely affect the performance of its duties
hereunder;
(e) There are no actions or proceedings against, or investigations
of, such Transferor currently pending with regard to which such Transferor has
received service of process and no action or proceeding against, or
investigation of, such Transferor is, to the knowledge of such Transferor,
threatened or otherwise pending, before any court, administrative agency or
other tribunal that (A) if determined adversely, would prohibit its entering
into the Transaction Documents to which it is a party or render the Notes
invalid, (B) seek to prevent the issuance of the Notes or the consummation of
any of the transactions contemplated by the Transaction Documents to which it is
a party or (C) if determined adversely, would prohibit or materially and
adversely affect the sale of the Home Loans to the Depositor, the performance by
such Transferor of its obligations under, or the validity or enforceability of,
the Transaction Documents to which it is a party or the Notes;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for: (1) the execution, delivery and
performance by such Transferor of, or compliance by such Transferor with, the
Transaction Documents to which it is a party, (2) the issuance of the Notes, (3)
the sale of the Home Loans under the applicable Home Loan Purchase Agreement or
(4) the consummation of the transactions required of it by the Transaction
Documents to which it is a party, except such as shall have been obtained before
the Closing Date;
(g) Such Transferor acquired title to the Home Loans in good faith,
without notice of any adverse claim;
(h) The collection practices used by such Transferor with respect to
the Home Loans have been, in all material respects, legal, proper, prudent and
customary in the servicing of loans of the same type as the Home Loans;
(i) No Officer's Certificate, statement, report or other document
prepared by such Transferor and furnished or to be furnished by it pursuant to
the Transaction Documents to which it is a party or in connection with the
transactions contemplated hereby or thereby contains any untrue statement of
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading;
(j) Such Transferor is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution and
delivery of the Transaction Documents to which it is a party or by the
performance of its obligations thereunder; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against such Transferor prior to the
date hereof;
(k) Empire Funding hereby represents and warrants that the
Prospectus Supplement does not contain an untrue statement of a material fact
and does not omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that Empire Funding makes no statement with
respect to (i) the statements set forth in the final two paragraphs of the cover
of the Prospectus Supplement; (ii) statements set forth under the following
captions: (A) "SUMMARY--Tax Status," "--ERISA Considerations," and "--Legal
Investments," (B) FEDERAL INCOME TAX CONSEQUENCES," (C) ERISA CONSIDERATIONS,"
(D) "LEGAL INVESTMENT MATTERS," (E) "UNDERWRITING" (except for the last
paragraph thereunder), (F) "LEGAL MATTERS", and (G) "THE MASTER SERVICER"; and
(iii) Conti Financial Information (as defined in the ContiMortgage
Indemnification and Contribution Agreement);
(l) ULG hereby represents and warrants that the ULG Information (as
that term is defined in the ULG Indemnification and Contribution Agreement)
contained in the Prospectus Supplement does not contain an untrue statement of a
material fact and does not omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(m) ContiMortgage hereby represents and warrants that the
ContiMortgage Information (as that term is defined in the ContiMortgage
Indemnification and Contribution Agreement) contained in the Prospectus
Supplement does not contain an untrue statement of a material fact and does not
omit to state a material act necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(n) Such Transferor has transferred the Home Loans without any
intent to hinder, delay or defraud any of its creditors;
(o) Empire Funding hereby represents and warrants that the Private
Placement Memorandum does not contain an untrue statement of a material fact and
does not omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that Empire Funding makes no statement with respect to (i)
the statements set forth in the first sentence of the second paragraph
immediately preceding the final paragraph of the cover of the Private Placement
Memorandum and (ii) the statements under the following captions: "DESCRIPTION OF
THE OFFERED NOTES," "FEDERAL INCOME TAX CONSEQUENCES," "ERISA CONSIDERATIONS,"
"LEGAL INVESTMENT CONSIDERATIONS" and "PLAN OF OFFERING";
(p) ULG hereby represents and warrants that the ULG Information (as
that term is defined in the ULG Indemnification and Contribution Agreement)
contained in the Private Placement Memorandum does not contain an untrue
statement of a material fact and does not omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(q) ContiMortgage hereby represents and warrants that the
ContiMortgage Information (as that term is defined in the ContiMortgage
Indemnification and Contribution Agreement) contained in the Private Placement
Memorandum does not contain an untrue statement of a material fact and does not
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(r) Such Transferor 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, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of such Transferor or its properties or might have consequences that
would materially and adversely affect its performance hereunder;
(s) Such Transferor received fair consideration and reasonably
equivalent value in exchange for the sale of its Home Loans to the Depositor and
will treat such sale of such Home Loans as a sale for accounting purposes;
(t) The sale of each Home Loan by such Transferor shall be reflected
on the balance sheet and other financial statements of such Transferor, as a
sale of assets by such Transferor, under GAAP;
(u) Such Transferor shall not solicit any refinancing of any of the
Home Loans; PROVIDED, HOWEVER, that this covenant shall not prevent or restrict
either (1) such Transferor from making general solicitations, by mail,
advertisement or otherwise of the general public or persons on a targeted list,
so long as the list was not generated from the Home Loan Schedule or (2) any
refinancing in connection with an Obligor's unsolicited request for refinancing;
and
(v) Such Transferor shall not sell, transfer, assign or otherwise
dispose of a customer or similar list comprised of the names of the Obligors
under the Home Loans to any third party.
It is understood and agreed that the representations and warranties
set forth in this SECTION 3.02 shall survive delivery of the respective Grantor
Trustee's Home Loan Files to the Custodian (as the agent of the Grantor Trustee)
and shall inure to the benefit of the Securityholders, the Depositor, the Master
Servicer, the Servicer, Empire Subservicer, the Indenture Trustee, the Owner
Trustee, the Grantor Trustee, the Grantor Trust and the Owner Trust. Upon
discovery by any of the Transferors, the Depositor, the Master Servicer, the
Servicer, Empire Subservicer, the Indenture Trustee, the Grantor Trustee or the
Owner Trustee of a breach of any of the foregoing representations and warranties
that materially and adversely affects the value of any Home Loan or the
interests of the Grantor Trust Holder therein, the party discovering such breach
shall give prompt written notice (but in no event later than two Business Days
following such discovery) to the other parties. The obligations of each
Transferor set forth in SECTION 3.05 hereof shall constitute the sole remedies
available hereunder to the Securityholders, the Depositor, Empire Subservicer,
the Master Servicer, the Servicer, the Indenture Trustee, the Grantor Trustee or
the Owner Trustee respecting a breach of the representations and warranties
contained in this SECTION 3.02.
Section 3.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SERVICER. The Servicer hereby represents and warrants to and covenants with the
Owner Trustee, the Indenture Trustee, the Grantor Trustee, the Noteholders, the
Depositor, Empire Subservicer, the Master Servicer and each Transferor that as
of the Closing Date or as of such date specifically provided herein:
(a) The Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is or will be
in compliance with the laws of each state in which any Property is located to
the extent necessary to perform its duties as Servicer hereunder and to ensure
the enforceability of each Home Loan in accordance with the terms of this
Agreement;
(b) The execution and delivery of this Agreement by the Servicer and
its performance of and compliance with the terms of this Agreement will not
violate the Servicer's articles of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Servicer is a
party or which may be applicable to the Servicer or any of its assets;
(c) The Servicer has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement and has duly executed
and delivered this Agreement. This Agreement, assuming due authorization,
execution and delivery by the Indenture Trustee, the Owner Trustee, the Grantor
Trustee, the Master Servicer, the Depositor, the Empire Subservicer and the
Guarantor constitutes a valid, legal and binding obligation of the Servicer,
enforceable against it in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, 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) The Servicer is not in violation of, and the execution and
delivery of this Agreement by the Servicer and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction, which violation
would materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or materially and adversely affect the performance of
its duties hereunder;
(e) There are no actions or proceedings against, or investigations
of, the Servicer currently pending with regard to which the Servicer has
received service of process and no action or proceeding against, or
investigation of, the Servicer is to the knowledge of the Servicer, threatened
or otherwise pending, before any court, administrative agency or other tribunal
that (A) if determined adversely, would prohibit its entering into this
Agreement or render the Notes invalid, (B) seek to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by this
Agreement or (C) if determined adversely, would prohibit or materially and
adversely affect the performance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement or the Notes;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer of, or compliance by the Servicer with, this
Agreement or the Notes, or for the consummation of the transactions contemplated
by this Agreement, except for such consents, approvals, authorizations and
orders, if any, that have been obtained prior to the Closing Date;
(g) The Servicer is duly licensed where required as a "Licensee" or
is otherwise authorized or qualified in each state in which it transacts
business and is not in default of such state's applicable licensing,
authorization or qualification laws, rules and regulations, except where the
failure to be so authorized or qualified or such default would not have a
material adverse effect on the ability of the Servicer to conduct its business
or perform its obligations hereunder;
(h) The Servicer is an Eligible Servicer and services mortgage loans
in accordance with Accepted Servicing Procedures;
(i) No Officer's Certificate, statement, report or other document
prepared by the Servicer and furnished or to be furnished by it pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading;
(j) The Servicer is solvent and will not be rendered insolvent as a
result of the performance of its obligations pursuant to this Agreement;
(k) With respect to any Mortgage or Manufactured Home Contract that
evidences a first lien on the related Property, the Servicer will cause to be
performed any and all acts required to be performed by the Servicer to preserve
the rights and remedies of the Grantor Trustee, the Owner Trustee and the
Indenture Trustee in any Insurance Policies applicable to the Home Loans
including, without limitation, in each case, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Grantor
Trustee, the Owner Trustee and the Indenture Trustee;
(l) The Servicer shall comply with, and shall service, or cause to
be serviced, each Home Loan, in accordance with the Accepted Servicing
Procedures;
(m) The Servicer agrees that, so long as it shall continue to serve
in the capacity contemplated under the terms of this Agreement, it shall remain
in good standing under the laws governing its creation and existence and
authorized or qualified to transact business under the laws of each state in
which it is necessary to perform its obligations under this Agreement or in
which the nature of its business requires such authorization or qualification;
it shall maintain all licenses, permits and other approvals required by any law
or regulations as may be necessary to perform its obligations under this
Agreement and to retain all rights to service the Loans; and it shall not
dissolve or otherwise dispose of all or substantially all of its assets;
(n) The Servicer shall not solicit any refinancing of any of the
Home Loans; PROVIDED, HOWEVER, that this covenant shall not prevent or restrict
either (1) the Servicer from making general solicitations, by mail,
advertisement or otherwise of the general public or persons on a targeted list,
so long as the list was not generated from the Home Loan Schedule or (2) any
refinancing in connection with an Obligor's unsolicited request for refinancing;
and
(o) The Servicer shall not sell, transfer, assign or otherwise
dispose of a customer or similar list comprised of the names of the Obligors
under the Home Loans to any third party.
It is understood and agreed that the representations, warranties and
covenants set forth in this SECTION 3.03 shall survive delivery of the
respective Grantor Trustee's Home Loan Files to the Indenture Trustee and shall
inure to the benefit of the Depositor, the Noteholders, the Owner Trustee, the
Grantor Trustee, Empire Subservicer, the Master Servicer, and the Indenture
Trustee. Upon discovery by any of the Transferors, the Depositor, the Master
Servicer, Empire Subservicer, the Indenture Trustee, the Grantor Trustee or the
Owner Trustee of a breach of any of the foregoing representations, warranties
and covenants that materially and adversely affects the value of any Home Loan
or the interests of such Person therein, the party discovering such breach shall
give prompt written notice (but in no event later than two Business Days
following such discovery) to the other parties.
Section 3.03A REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
MASTER SERVICER. The Master Servicer hereby represents and warrants to the
Servicer, Empire Subservicer, the Indenture Trustee, the Owner Trustee, the
Grantor Trustee, the Noteholders and the Depositor that as of the Closing Date
(except as otherwise specifically provided herein):
(a) The Master Servicer is a national banking association duly
organized, validly existing, and in good standing under the laws of the United
States of America and has, and had at all relevant times, full power to own its
property, to carry on its business as presently conducted and to enter into and
perform its obligations under this Agreement.
(b) The execution and delivery of this Agreement by the Master
Servicer and its performance of and compliance with the terms of this Agreement
will not violate the Master Servicer's articles of association or by-laws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach or acceleration of,
any material contract, agreement or other instrument to which the Master
Servicer is a party or which may be applicable to the Master Servicer or any of
its assets.
(c) The Master Servicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement to be
consummated by it, has duly authorized the execution, delivery and performance
of this Agreement and has duly executed and delivered this Agreement. This
Agreement, assuming due authorization, execution and delivery by the Owner
Trustee, the Indenture Trustee, the Grantor Trustee, the Servicer, each
Transferor, the Depositor, the Empire Subservicer and the Guarantor constitutes
a valid, legal and binding obligation of the Master Servicer, enforceable
against it in accordance with the terms hereof, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, receivership, 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) The Master Servicer is not in violation of, and the execution
and delivery of this Agreement by the Master Servicer and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction, which
violation would materially and adversely affect the condition (financial or
otherwise) or operations of the Master Servicer or its properties or materially
and adversely affect the performance of its duties hereunder.
(e) There are no actions or proceedings against, or investigations
of, the Master Servicer currently pending with regard to which the Master
Servicer has received service of process and no action or proceeding against, or
investigation of, the Master Servicer is, to the knowledge of the Master
Servicer, threatened or otherwise pending, before any court, administrative
agency or other tribunal that (i) if determined adversely, would prohibit its
entering into this Agreement or render the Notes invalid, (ii) seek to prevent
the issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or (iii) if determined adversely, would prohibit
or materially and adversely affect the sale of the Home Loans to the Depositor,
the performance by the Master Servicer of its obligations under, or the validity
or enforceability of, this Agreement or the Notes.
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for: (i) the execution, delivery and
performance by the Master Servicer of, or compliance by the Master Servicer
with, this Agreement or the Notes, or (ii) the consummation of the transactions
required of it by this Agreement, except such as shall have been obtained before
the Closing Date.
(g) No Officer's Certificate, statement, report or other document
prepared by the Master Servicer and furnished or to be furnished by it pursuant
to this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading.
(h) The statements set forth in the section of Prospectus Supplement
under the caption "THE MASTER SERVICER" do not contain an untrue statement of a
material fact and do not omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(i) The Master Servicer shall not solicit any refinancing of any of
the Home Loans; PROVIDED, HOWEVER, that this covenant shall not prevent or
restrict either (1) the Master Servicer from making general solicitations, by
mail, advertisement or otherwise of the general public or persons on a targeted
list, so long as the list was not generated from the Home Loan Schedule or (2)
any refinancing in connection with an Obligor's unsolicited request for
refinancing.
(j) The Master Servicer shall not sell, transfer, assign or
otherwise dispose of a customer or similar list comprised of the names of the
Obligors under the Home Loans to any third party.
It is understood and agreed that the representations, warranties and
covenants set forth in this SECTION 3.03A shall survive the execution and
delivery of the Agreement by the Master Servicer and shall inure to the benefit
of the Depositor, the Noteholders, the Owner Trustee, the Grantor Trustee, the
Servicer, Empire Subservicer, each Transferor and the Indenture Trustee. Upon
discovery by any of the Depositor, the Servicer, Empire Subservicer, any
Transferor, the Master Servicer, the Indenture Trustee, the Grantor Trustee or
the Owner Trustee of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the value of any
Home Loan or the interests of such Person therein, the party discovering such
breach shall give prompt written notice (but in no event later than two Business
Days following such discovery) to the other parties.
Section 3.03B REPRESENTATIONS, WARRANTIES AND COVENANTS OF EMPIRE
SUBSERVICER. Empire Subservicer hereby represents and warrants to and covenants
with the Owner Trustee, the Indenture Trustee, the Grantor Trustee, the
Noteholders, the Depositor, the Master Servicer, the Servicer and each
Transferor that as of the Closing Date or as of such date specifically provided
herein:
(a) Empire Subservicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oklahoma and is or
will be in compliance with the laws of each state in which any Property is
located to the extent necessary to perform its duties as Empire Subservicer
hereunder and to ensure the enforceability of each Home Loan in accordance with
the terms of this Agreement;
(b) The execution and delivery of this Agreement by Empire
Subservicer and its performance of and compliance with the terms of this
Agreement will not violate Empire Subservicer's articles of incorporation or
by-laws or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other instrument to which
Empire Subservicer is a party or which may be applicable to Empire Subservicer
or any of its assets;
(c) Empire Subservicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement and has
duly executed and delivered this Agreement. This Agreement, assuming due
authorization, execution and delivery by the Indenture Trustee, the Owner
Trustee, the Grantor Trustee, the Master Servicer, the Depositor, the Servicer
and the Guarantor constitutes a valid, legal and binding obligation of Empire
Subservicer, enforceable against it in accordance with the terms hereof, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, 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) Empire Subservicer is not in violation of, and the execution and
delivery of this Agreement by Empire Subservicer and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction, which
violation would materially and adversely affect the condition (financial or
otherwise) or operations of Empire Subservicer or materially and adversely
affect the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations
of, Empire Subservicer currently pending with regard to which Empire Subservicer
has received service of process and no action or proceeding against, or
investigation of, Empire Subservicer is to the knowledge of Empire Subservicer,
threatened or otherwise pending, before any court, administrative agency or
other tribunal that (A) if determined adversely, would prohibit its entering
into this Agreement or render the Notes invalid, (B) seek to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or (C) if determined adversely, would prohibit or
materially and adversely affect the performance by Empire Subservicer of its
obligations under, or the validity or enforceability of, this Agreement or the
Notes;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Empire Subservicer of, or compliance by Empire Subservicer with,
this Agreement or the Notes, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the Closing
Date;
(g) Empire Subservicer is duly licensed where required as a
"Licensee" or is otherwise authorized or qualified in each state in which it
transacts business and is not in default of such state's applicable licensing,
authorization or qualification laws, rules and regulations, except where the
failure to be so authorized or qualified or such default would not have a
material adverse effect on the ability of the Servicer to conduct its business
or perform its obligations hereunder;
(h) Empire Subservicer is an Eligible Servicer and services mortgage
loans in accordance with Accepted Servicing Procedures;
(i) No Officer's Certificate, statement, report or other document
prepared by Empire Subservicer and furnished or to be furnished by it pursuant
to this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading;
(j) Empire Subservicer is solvent and will not be rendered insolvent
as a result of the performance of its obligations pursuant to this Agreement;
(k) With respect to any Mortgage or Manufactured Home Contract that
evidences a first lien on the related Property, Empire Subservicer will cause to
be performed any and all acts required to be performed by the Servicer to
preserve the rights and remedies of the Grantor Trustee, the Owner Trustee and
the Indenture Trustee in any Insurance Policies applicable to the Home Loans
including, without limitation, in each case, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Grantor
Trustee, the Owner Trustee and the Indenture Trustee;
(l) Empire Subservicer shall comply with, and shall service, or
cause to be serviced, each Home Loan, in accordance with the Accepted Servicing
Procedures;
(m) Empire Subservicer agrees that, so long as it shall continue to
serve in the capacity contemplated under the terms of this Agreement, it shall
remain in good standing under the laws governing its creation and existence and
authorized or qualified to transact business under the laws of each state in
which it is necessary to perform its obligations under this Agreement or in
which the nature of its business requires such authorization or qualification;
it shall maintain all licenses, permits and other approvals required by any law
or regulations as may be necessary to perform its obligations under this
Agreement and to retain all rights to service the Loans; and it shall not
dissolve or otherwise dispose of all or substantially all of its assets;
(n) Empire Subservicer shall not solicit any refinancing of any of
the Home Loans; provided, however, that this covenant shall not prevent or
restrict either (1) Empire Subservicer from making general solicitations, by
mail, advertisement or otherwise of the general public or persons on a targeted
list, so long as the list was not generated from the Home Loan Schedule or (2)
any refinancing in connection with an Obligor's unsolicited request for
refinancing; and
(o) Empire Subservicer shall not sell, transfer, assign or otherwise
dispose of a customer or similar list comprised of the names of the Obligors
under the Home Loans to any third party.
It is understood and agreed that the representations, warranties and
covenants set forth in this SECTION 3.03B shall survive delivery of the
respective Grantor Trustee's Home Loan Files to the Indenture Trustee and shall
inure to the benefit of the Depositor, the Noteholders, the Owner Trustee, the
Grantor Trustee, the Master Servicer, the Servicer and the Indenture Trustee.
Upon discovery by any of the Transferors, the Depositor, the Master Servicer,
the Servicer, Empire Subservicer, the Indenture Trustee, the Grantor Trustee or
the Owner Trustee of a breach of any of the foregoing representations,
warranties and covenants that materially and adversely affects the value of any
Home Loan or the interests of such Person therein, the party discovering such
breach shall give prompt written notice (but in no event later than two Business
Days following such discovery) to the other parties.
Section 3.04 REPRESENTATIONS AND WARRANTIES REGARDING INDIVIDUAL
HOME LOANS. As of the Closing Date, except as otherwise expressly stated, each
Transferor hereby represents and warrants to each other Transferor, the
Depositor, the Issuer, the Servicer, Empire Subservicer, the Indenture Trustee,
the Grantor Trustee, the Owner Trustee, the Master Servicer and the Noteholders,
with respect to each Home Loan for which it is designated as the Transferor on
the Home Loan Schedule:
(a) LOAN INFORMATION. The information pertaining to each Home Loan
set forth in the Home Loan Schedule was true and correct in all material
respects as of the Cut-Off Date.
(b) PAYMENTS CURRENT; NO TRANSFEROR ADVANCES OR Payments. As of the
applicable Cut-Off Date, except for the Home Loans set forth on Exhibit D (such
delinquent Home Loans, the "INITIAL DELINQUENT LOANS") attached hereto, none of
the Home Loans was 30 or more days past due (without giving effect to any grace
period); such Transferor has not advanced funds, induced, solicited or knowingly
received any advance of funds from a party other than the Obligor, directly or
indirectly, for the payment of any amount required by any Home Loan and there is
no obligation on the part of such Transferor or any other party other than the
Obligor to make payments with respect to the Home Loan and the Obligor is not
entitled to any refund of any amounts paid or due to the lender pursuant to the
Debt Instrument or any related Mortgage or Manufactured Home Contract.
(c) NO WAIVER OR MODIFICATION. The terms of the Debt Instrument and
any related Mortgage or Manufactured Home Contract contain the entire agreement
of the parties thereto and have not been impaired, waived, altered or modified
in any respect, EXCEPT (i) with respect to the delinquency of an Initial
Delinquent Loan; (ii) by written instruments reflected in the related Grantor
Trustee's Home Loan File and recorded, if necessary, to maintain the lien
priority of the any related Mortgage or Manufactured Home Contract; or (iii) in
connection with an assumption agreement which assumption agreement is part of
the related Grantor Trustee's Home Loan File and the payment terms of which are
reflected in the related Home Loan Schedule, and to the extent required by the
applicable title insurance policy for any Mortgaged Property secured by a first
lien Mortgage at origination, the substance of any waiver, alteration or
modification has been approved by the applicable title insurer and its terms are
reflected in the related Home Loan Schedule. No Obligor has been released, in
whole or in part from the Debt Instrument and any related Mortgage or
Manufactured Home Contract.
(d) NO DEFENSES. The Debt Instrument and any related Mortgage or
Manufactured Home Contract are not subject to any set-off, claims, counterclaim
or defense, including the defense of usury or of fraud in the inducement, and
will not be so subject in the future with respect to any goods and services
provided under the Debt Instrument; and neither the operation of any of the
terms of the Debt Instrument and any related Mortgage or Manufactured Home
Contract, nor the exercise of any right thereunder, will render such Debt
Instrument or any such Mortgage or Manufactured Home Contract unenforceable, in
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto.
(e) COMPLIANCE WITH LAWS. Any and all requirements of any federal,
state or local law applicable to the Home Loan (including, without limitation,
any usury, truth-in-lending, real estate settlement procedures, consumer
protection, equal credit opportunity, environmental and any other law applicable
to the origination, servicing and collection practices with respect thereto)
have been complied with. With respect to each Home Loan that is a "mortgage" as
such term is defined in 15 U.S.C. 1602(aa) (the "RIEGLE ACT"), no Obligor has or
will have a claim or defense under the Riegle Act with respect to such Home
Loan. No fraud or misrepresentation was committed by any Person in connection
with the origination and servicing of such Home Loan.
(f) NO SATISFACTION OR RELEASE OF LIEN. No Debt Instrument or any
related Mortgage or Manufactured Home Contract has been satisfied, canceled,
rescinded or subordinated, in whole or part; and the applicable Transferor,
except as otherwise permitted by clause (c) of this SECTION 3.04, has not waived
the performance by the Obligor of any action, if the Obligor's failure to
perform such action would cause the Debt Instrument or Home Loan to be in
default; and, any related Property has not been released from the lien of any
related Mortgage or Manufactured Home Contract, in whole or in part, nor has any
instrument been executed that would effect any such satisfaction, subordination,
release, cancellation or rescission.
(g) VALID LIEN. Any related Mortgage is a valid, subsisting and
enforceable lien on any related Mortgaged Property, including the land and all
buildings on any such Mortgaged Property. Any related Manufactured Home Contract
creates a valid, subsisting and enforceable lien on any related Manufactured
Home.
(h) VALIDITY AND ENFORCEABILITY OF LOAN DOCUMENTS. The Debt
Instrument and any related Mortgage or Manufactured Home Contract (i) are
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights in general and by general principles of equity and
(ii) contain customary and enforceable provisions so as to render the rights and
remedies of the holder thereof adequate for the realization against any related
Mortgaged Property of the benefits of the security provided thereby, including,
(A) in the case of any related Mortgage designated as a deed of trust, by
trustee's sale, and (B) otherwise by judicial foreclosure. There are no
proceedings pending, or to the applicable Transferor's knowledge, threatened,
wherein the Obligor or any governmental agency has alleged that any Home Loan is
illegal or unenforceable.
(i) CAPACITY OF PARTIES. To the best of such Transferor's knowledge,
all parties to the Debt Instrument and any related Mortgage or Manufactured Home
Contract had legal capacity at the time to enter into the Home Loan and to
execute and deliver the Debt Instrument and any related Mortgage or Manufactured
Home Contract, and the Debt Instrument and any related Mortgage or Manufactured
Home Contract have been duly and properly executed by such parties.
(j) FULL DISBURSEMENT OF PROCEEDS. As of the applicable Cut-Off
Date, the proceeds of the Home Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements
applicable to the disbursement of proceeds set forth in the Home Loan documents
have been complied with; the Obligor is not entitled to any refund of any
amounts paid or due under the Debt Instrument or any related Mortgage or
Manufactured Home Contract.
(k) OWNERSHIP BY TRANSFEROR. Immediately prior to the sale, transfer
and assignment to the Depositor, such Transferor will have good and indefeasible
legal title to the Home Loan, the related Debt Instrument and any related
Mortgage or Manufactured Home Contract and the full right to transfer such Home
Loan, the related Debt Instrument and any related Mortgage or Manufactured Home
Contract, and such Transferor will have been the sole owner thereof, subject to
no liens, pledges, charges, mortgages, encumbrances or rights of others, except
for such liens as will be released simultaneously with the transfer and
assignment of the Home Loans to the Depositor (and the Grantor Trustee's Home
Loan File will contain no evidence inconsistent with the foregoing); and
immediately upon the sale, transfer and assignment contemplated by the Home Loan
Purchase Agreement, the Depositor will hold good and indefeasible legal title
to, and be the sole owner of each Home Loan, the related Debt Instrument and any
related Mortgage or Manufactured Home Contract, free of all liens, pledges,
charges, mortgages, encumbrances or rights of others.
(l) NO DEFAULTS. Except for the Initial Delinquent Loans, there is
no default, breach, violation or event of acceleration known to such Transferor
under the Home Loan, the related Debt Instrument and any related Mortgage or
Manufactured Home Contract and there is no event known to such Transferor which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration
thereunder and neither the applicable Transferor nor its predecessors have
waived any such default, breach, violation or event of acceleration.
(m) INTEREST, TERM AND AMORTIZATION. Each Home Loan is a fixed rate
loan; the Debt Instrument shall mature within not more than 30 years from the
date of origination of the Home Loan; the Debt Instrument is payable in
substantially equal Monthly Payments, with interest payable in arrears, and
(except as set forth on Exhibit D hereto) requires a Monthly Payment which is
sufficient to fully amortize the original principal balance over the original
term and to pay interest at the related Home Loan Interest Rate; interest on
each Home Loan is calculated on the basis of a 360-day year consisting of twelve
30-day months, and the Debt Instrument does not provide for any extension of the
original term.
(n) SECURITY. The related Debt Instrument is not and has not been
secured by any collateral except, the lien of any related Mortgage or
Manufactured Home Contract.
(o) DEED OF TRUST. If any related Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in any such Mortgage,
or a valid substitution of trustee has been recorded, and no extraordinary fees
or expenses are or will become payable to the trustee under the deed of trust,
except in connection with default proceedings and a trustee's sale after default
by the Obligor.
(p) VALUE AND MARKETABILITY. Such Transferor has no knowledge of any
circumstances or conditions not reflected in the representations set forth
herein, or in the Home Loan Schedule, or in the related Grantor Trustee's Home
Loan File with respect to any related Mortgage or Manufactured Home Contract,
related Property or the Obligor which could reasonably be expected to materially
and adversely affect the value of any such Property or the marketability of the
Home Loan or cause the Home Loan to become delinquent or otherwise be in
default.
(q) LOAN DOCUMENTS AND DELIVERY OF LOAN FILE. There exists a Home
Loan File relating to each Home Loan and such Home Loan File contains all of the
original or certified documentation listed in SECTION 2.04 hereof for such Home
Loan. Each Grantor Trustee's Home Loan File has been delivered to the applicable
Custodian and each Servicer's Home Loan File is being held in trust by the
Servicer for the benefit of, and as agent for, the Grantor Trust Holder and the
Grantor Trustee as their respective interest appear herein. Each document
included in the Home Loan File, which is required to be executed by the Obligor,
has been executed by the Obligor in the appropriate places. With respect to each
Home Loan, any related Assignment of Mortgage to the Grantor Trustee is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the related Mortgaged Property is located. All blanks on
any form required to be completed have been so completed.
(r) MORTGAGED PROPERTY. Any related Mortgaged Property is improved
by a residential dwelling and not a manufactured home or mobile home or the land
on which a manufactured home or mobile home has been placed, unless such
manufactured home or mobile home is treated as real estate under applicable law.
In the aggregate, no more than 1.0% of the Home Loans secured by Mortgaged
Properties (as calculated on the basis of the Original Pool Principal Balance)
are secured by manufactured homes or mobile homes.
(s) UNDERWRITING AND ORIGINATION. Each Home Loan (other than a
Manufactured Home Loan) was (i) underwritten or re-underwritten in accordance
with such Transferor's underwriting guidelines by such Transferor or another
lender that has been granted "delegated underwriting authority" by such
Transferor (EXCEPT for any Home Loans acquired through such Transferor's
portfolio acquisition program, which have been reviewed on a sample basis for
compliance with the originating seller's underwriting guidelines), (ii)
originated by such Transferor or through such Transferor's network of brokers,
dealers and correspondents (including Home Loans acquired by such
correspondents) or through such Transferor's portfolio acquisition program, and
(iii) originated no earlier than August 1996.
(t) FLOOD AND HAZARD INSURANCE. To the best of such Transferor's
knowledge, if any related Property securing any Home Loan is in an area
identified by the Federal Emergency Management Agency ("FEMA") as having special
flood hazards, unless the community in which the area is situated is not
participating in the National Flood Insurance Program and the regulations
thereunder or less than a year has passed since FEMA notification regarding such
hazards, a flood insurance policy is in effect with respect to any related
Property with a generally acceptable carrier which complies with section 102(a)
of the Flood Disaster Protection Act of 1968, as amended. With respect to each
Home Loan that is secured by a first lien priority Mortgage at origination or a
Manufactured Home Loan, all improvements upon any related Property securing a
Home Loan are insured by a generally acceptable insurer against loss by fire,
hazards of extended coverage and such other hazards as are customary in the area
where any such Property is located and such insurance policies satisfy the
applicable requirements of the Federal Housing Administration and conform to the
requirements of the FNMA Seller's Guide and FNMA Servicer's Guide, and such
Transferor has caused to be performed or shall cause to be performed within a
reasonable time following the Closing Date any and all acts required to preserve
the rights and remedies of the Servicer, on behalf of the Grantor Trustee, in
any such hazard insurance or flood insurance policies applicable to any such
Properties, including without limitation any necessary notifications of
insurers, assignments of policies or interests therein, and establishment of
co-insured, joint loss payee and mortgagee rights in favor of the Servicer, on
behalf of the Grantor Trustee.
(u) SUPERIOR LIEN. At the time of origination of the Home Loan, each
related Superior Lien, if any, was certified by the Obligor or verified by the
applicable Superior Lien lender as not being 30 or more days delinquent.
(v) LICENSING AND QUALIFICATION. To the best of such Transferor's
knowledge, each party which had any interest as an owner or servicer of the Home
Loan, whether as mortgagee, assignee, or servicer, is (or, during the period in
which they held and disposed of such interest, was) (i) in compliance with any
and all applicable licensing requirements of the laws of the state wherein any
related Property is located, and (ii) either (A) organized under the laws of
such state, or (B) authorized or qualified to do business in such state, or (C)
a federal savings and loan association or a national bank having principal
offices in such state, or (D) not doing business in such state.
(w) ASSUMPTION. Any related Mortgage or Manufactured Home Contract
contains an enforceable provision requiring the acceleration of the payment of
the unpaid principal balance in the event that the related Property is sold or
transferred without the consent of the mortgagee.
(x) NO HOMESTEAD OR RELIEF ACT. There is no homestead or other
exemption available to the mortgagor which would materially interfere with the
right to sell any related Mortgaged Property at a trustee's sale or the right to
foreclose any related Mortgage; no relief has been requested or allowed to the
Obligor under the Soldiers' and Sailors' Civil Relief Act of 1940.
(y) OWNERSHIP OF PROPERTY. The related Servicer's Home Loan File for
each Home Loan secured by a Property contains (i) a title document with respect
to such Home Loan reflecting that title to any related Property is vested at
least 50% in the related Obligor or (ii) with respect to any Home Loan secured
by a Mortgaged Property, a lease agreement with an attorney's opinion letter
with respect to such Home Loan reflecting that the leasehold in a ground lease
which is included as part of the Mortgaged Property is vested at least 50% in
the related Obligor.
(z) NO CONDEMNATION OR DAMAGE. To the best of such Transferor's
knowledge, each related Property (including each residential dwelling
improvement thereon) is free of damage which materially and adversely affects
the value thereof and there is no proceeding pending for the total or partial
condemnation of any such Property.
(aa) NO BULK TRANSFER OR ADVERSE SELECTION. The transfer, assignment
and conveyance of the Debt Instruments and the related Mortgages or Manufactured
Home Contracts by such Transferor to the Depositor were not subject to the bulk
transfer laws or any similar statutory provisions in effect in any applicable
jurisdiction; other than the Initial Delinquent Loans, no Home Loan was
adversely selected as to credit risk from the pool of home loans owned by such
Transferor.
(bb) NO CURRENT BANKRUPTCY. As of the applicable Cut-Off Date, no
Obligor is a debtor under proceedings under the United States Bankruptcy Code,
and no Obligor has defaulted in payments on a Home Loan after the filing of such
bankruptcy case, whether under a plan or reorganization or otherwise.
(cc) ENVIRONMENTAL COMPLIANCE. To the best of such Transferor's
knowledge, any related Property is free from any and all toxic and hazardous
substances and there exists no violation of any environmental law, rule or
regulation (whether local, state or federal) in respect of any such Property
which violation has or could have a material adverse effect on the market value
of such Property. Such Transferor has no knowledge of any pending action or
proceeding directly involving any related Property in which compliance with any
environmental law, rule or regulation is in issue; and, to such Transferor's
best knowledge, nothing further remains to be done to satisfy in full all
requirements of each such law, rule or regulation constituting a prerequisite to
the use and enjoyment of such Property.
(dd) NO TAXABLE MORTGAGE POOL. The Transferors collectively hereby
represent and warrant that with respect to all of the Home Loans, on the Closing
Date, 55% or more (by aggregate Principal Balance) of the Home Loans do not
constitute "real estate mortgages" for the purpose of Treasury Regulations
Section 301.7701(i). For this purpose, a Home Loan does not constitute a "real
estate mortgage" if:
(i) The Home Loan is not secured by an interest in real
property, or
(ii) The Home Loan is not an "obligation principally secured
by an interest in real property." For this purpose an "obligation is
principally secured by an interest in real property," if it satisfies
either test set out in paragraph (A) or paragraph (B) below.
(A) The 80-percent test. An obligation is principally
secured by an interest in real property if the fair market value of
the interest in real property securing the obligation (1) was at
least equal to 80 percent of the adjusted issue price of the
obligation at the time the obligation was originated (or, if later,
the time the obligation was significantly modified); or (2) is at
least equal to 80 percent of the adjusted issue price of the
obligation on the Closing Date. For purposes of this paragraph (A),
the fair market value of the real property interest must be first
reduced by the amount of any lien on the real property interest that
is senior to the obligation being tested, and must be further
reduced by a proportionate amount of any lien that is in parity with
the obligation being tested, in each case before the percentages set
forth in (A)(1) and (A)(2) are determined. The adjusted issue price
of an obligation is its issue price plus the amount of accrued
original issue discount, if any, as of the date of determination.
(B) Alternative test. An obligation is principally
secured by an interest in real property if substantially all of the
proceeds of the obligation were used to acquire or to improve or
protect an interest in real property that, at the origination date,
is the only security for the obligation. For purposes of this test,
loan guarantees made by the United States or any state (or any
political subdivision, agency, or instrumentality of the United
States or of any state), or other third party credit enhancement are
not viewed as additional security for a loan. An obligation is not
considered to be secured by property other than real property solely
because the obligor is personally liable on the obligation. For this
purpose only, substantially all of the proceeds of the obligations
means 66 2/3% or more of the gross proceeds.
(ee) CONSENT OF SUPERIOR LIEN. With respect to each Home Loan that
is not a first lien mortgage loan, either (i) no consent for the Home Loan was
required by the holder of the related Superior Lien or (ii) such consent has
been obtained and has been delivered to the Indenture Trustee.
(ff) LOAN TYPES; OWNER OCCUPIED PROPERTIES. Each Home Loan is a
Combination Loan, a Debt Consolidation Loan, a home equity loan or a Manufacture
Home Loan and at the time of its origination no Home Loan was secured by a
Mortgage or Manufactured Home Contract, as applicable, on a non-owner occupied
Property.
(gg) DEBT INSTRUMENT. Each Debt Instrument is comprised of an
original promissory note and each promissory note constitutes an "instrument" or
"chattel paper" for purposes of Article 9 of the UCC; each Debt Instrument has
been delivered to the Custodian.
(hh) NO ENCROACHMENT. To the best of such Transferor's knowledge,
all improvements which were considered in determining the appraised value of any
related Property lay wholly within the boundaries and building restriction lines
of any such Property and no improvements on adjoining properties encroach upon
any such Property. No improvement located on or being part of the Property is in
violation of any applicable zoning law or regulation.
(ii) ENFORCEMENT AGAINST ORIGINATOR. If the Home Loan was originated
by an entity (such entity, the "ORIGINATOR") other than such Transferor or an
affiliate of such Transferor, then the Grantor Trustee and the Indenture Trustee
may enforce any remedies for breach of representations and warranties made by
such Transferor with respect to such Home Loan.
(jj) NO BUYDOWN OR GPM LOANS. The Home Loan does not contain
provisions pursuant to which Monthly Payments are paid or partially paid with
funds deposited in any separate account established by such Transferor, the
Obligor or anyone on behalf of the Obligor, or paid by any source other than the
Obligor, nor does it contain any other similar provisions currently in effect
which may constitute a "buydown" provision. The Home Loan is not a graduated
payment Home Loan and the Home Loan does not have a shared appreciation or other
contingent interest feature.
(kk) NO TAX OR MECHANICS LIENS. With respect to any related
Property, at origination there were no liens against such Property for
delinquent taxes and there were no mechanics' or similar liens or claims which
had been filed for work, labor or material (and to such Transferor's knowledge,
no rights were outstanding which could have given rise to such liens) affecting
such Property, which were or may be liens prior to, or equal or coordinate with,
the lien of the related Mortgage or Manufactured Home Contract, as applicable.
(ll) CONFORMITY TO PROSPECTUS SUPPLEMENT AND PRIVATE PLACEMENT
MEMORANDUM. Each Home Loan conforms, and the Home Loans in the aggregate
conform, in all material respects to the applicable description thereof set
forth in the Prospectus Supplement and the Private Placement Memorandum. The
computer data, from which the Home Loans being acquired by the Issuer on the
Closing Date were selected, was made available to the accountants of such
Transferor who are providing the comfort letter to the Underwriters in
connection with information contained in the Prospectus Supplement and the
Private Placement Memorandum regarding the Home Loan Pool; and such data was
complete and accurate as of its date and with respect to its intended use and
includes a description of the same Home Loans that are included on the Home Loan
Schedule, including the Principal Balances thereof as of the Cut-Off Date.
(mm) MANUFACTURED HOME LOANS. Empire Funding hereby represents and
warrants that as of the Cut-Off Date, the Home Loan Pool includes 27
Manufactured Home Loans with an aggregate Principal Balance equal to
$780,672.25.
(nn) CURRENT SERVICING. Each Home Loan is being serviced by Empire
Subservicer.
(oo) NO TRANSFER TAXES. The sale, transfer, assignment and
conveyance of the Home Loans by such Transferor pursuant to the relevant Home
Loan Purchase Agreement is not subject to and will not result in any
governmental tax, fee or charge payable by such Transferor, the Depositor or the
Grantor Trustee to any federal, state or local government ("TAXES"), other than
any Taxes which have or will be paid by such Transferor as due. If such
Transferor receives notice of any Taxes arising out of the sale, transfer,
assignment and conveyance of the Home Loans, such Transferor shall pay all such
Taxes (It being understood that the Securityholders, the Grantor Trustee, and
the Indenture Trustee shall not have any obligation to pay such Taxes).
(pp) NO PRIOR DEFAULT. No Home Loan is due from an Obligor who has
defaulted under a previous loan in which such Transferor was lender thereunder
or acting as the servicer thereof at the time of such default.
(qq) FTC HOLDER REGULATIONS. With respect to each Home Loan that is
subject to the FTC regulation contained in 16 C.F.R. Part 433 (the "FTC HOLDER
REGULATION"), no Obligor has or will have a claim or defense with respect to
goods or services provided under the FTC Holder Regulation with respect to such
Home Loan.
(rr) REVIEW OF LOAN DOCUMENTS. Such Transferor has reviewed all of
the documents constituting the Home Loan File and has made such inquiries, as it
deems reasonable under the circumstances to make and confirm the accuracy of the
representations set forth herein.
(ss) MANUFACTURED HOMES. With respect to any Manufactured
Home Loan, Empire Funding hereby represents:
(i) VALID SECURITY INTEREST. The Manufactured Home Contract
relating to any Manufactured Home Loan, together with any related security
interest, creates a valid, subsisting and enforceable first-priority
security interest in favor of such Transferor in the Manufactured Home
covered thereby; such security interest has been assigned by the
Transferor to the Depositor, and upon the assignment by the Depositor to
the Grantor Trust, the Grantor Trust will have a valid and perfected
first-priority security interest in such Manufactured Home.
(ii) NOT REAL ESTATE. The related Manufactured Home is
personal property and is not considered or classified as part of the real
estate on which it is located under the laws of the jurisdiction in which
it is located and was personal property and was not considered or
classified as part of the real estate on which it was located under the
laws of the jurisdiction in which it was located at the time the
Manufactured Home Contract relating to the Manufactured Home Loan was
executed by the parties thereto, and such Manufactured Home is, to the
best of such Transferor's knowledge, free of damage and in good repair.
(iii) NOTATION OF SECURITY INTEREST. If the related
Manufactured Home is located in a state in which notation of a security
interest on the title document is required or permitted to perfect such
security interest, the title document shows, or, if a new or replacement
title document with respect to such Manufactured Home is being applied
for, such title document will be issued within 180 days and will show,
such Transferor as the holder of a first-priority security interest in
such Manufactured Home. If the related Manufactured Home is located in a
state in which the filing of a financing statement or the making of a
fixture filing under the UCC is required to perfect a security interest in
manufactured housing, such filings have been duly made and show the
Transferor as secured party. In each case, the Grantor Trust and the
Grantor Trustee have the same rights as the secured party of record would
have (if such secured party were still the owner of the Manufactured Home
Loan) against all Persons claiming an interest in such Manufactured Home.
(iv) Each Manufactured Home Loan was originated by Empire
Funding in conformity with guidelines that were generally consistent with
industry guidelines for similar loans at the time of origination.
Section 3.05 PURCHASE AND SUBSTITUTION. (a) REPURCHASE AND
SUBSTITUTION OF DEFECTIVE HOME LOANS. It is understood and agreed that the
representations and warranties set forth in SECTION 3.02 and SECTION 3.04 hereof
shall survive the conveyance of the Home Loans from each Transferor to the
Depositor and from the Depositor to the Grantor Trustee, the conveyance of the
Grantor Trust Certificate to the Issuer, the pledge of the Grantor Trust
Certificate to the Indenture Trustee and the delivery of the Notes to the
Noteholders. Upon discovery by the Depositor, the Master Servicer, the Servicer,
Empire Subservicer, any Transferor, any Custodian, the Issuer, the Indenture
Trustee, the Grantor Trustee, the Owner Trustee or any Securityholder of a
breach of any of the representations and warranties set forth in SECTION 3.02
and SECTION 3.04 which materially and adversely affects the value of the Home
Loans or the interests of the Grantor Trustee, the Owner Trustee or the
Indenture Trustee in the related Home Loan (notwithstanding that such
representation and warranty was made to the applicable Transferor's best
knowledge), the party discovering such breach shall give prompt written notice
to the others. The applicable Transferor shall within 60 days of the earlier of
its discovery or its receipt of notice of any breach of a representation or
warranty, including any breach of the representation and warranty set forth in
SECTION 3.04(DD) hereof regarding No Taxable Mortgage Pool as a result of an
aggregate of Home Loans which would not otherwise cause a breach of any other
representation or warranty, promptly cure such breach in all material respects.
If within 60 days after the earlier of the applicable Transferor's discovery of
such breach or the applicable Transferor's receiving notice thereof such breach
has not been remedied by such Transferor and such breach materially and
adversely affects the interests of the Grantor Trustee, the Owner Trustee or the
Indenture Trustee in, or the value of, the related Home Loan (the "DEFECTIVE
HOME LOAN"), such Transferor shall on or before the Determination Date next
succeeding the end of such 60-day period either (i) if no more than two years
have passed since the Closing Date, remove such Defective Home Loan from the
Grantor Trust (in which case it shall become a Deleted Home Loan) and substitute
one or more Qualified Substitute Home Loans in the manner and subject to the
conditions set forth in this SECTION 3.05 or (ii) purchase such Defective Home
Loan at a purchase price equal to the Purchase Price by depositing such Purchase
Price in the Collection Account. In the event of a breach of the representation
and warranty set forth in SECTION 3.04(DD), the Transferors shall repurchase the
fewest number of Home Loans sufficient (a) to cause the remaining Home Loans to
be in compliance with SECTION 3.04(DD) and (b) to cause each Transferor to
repurchase its approximate pro rata share of such repurchased Home Loans (based
on the relative aggregate principal balance of Home Loans sold by each
Transferor to the Depositor as of the Cut-Off Date). Such Transferor shall
provide the Master Servicer, the Servicer, Empire Subservicer, the Indenture
Trustee, the Grantor Trustee and the Owner Trustee with a certification of a
Responsible Officer on the Determination Date next succeeding the end of such
60-day period indicating whether such Transferor is purchasing the Defective
Home Loan or substituting in lieu of such Defective Home Loan a Qualified
Substitute Home Loan.
Any substitution of Home Loans pursuant to this SECTION 3.05(A)
shall be accompanied by payment by the applicable Transferor of the Substitution
Adjustment, if any, to be deposited in the Collection Account. For purposes of
calculating the Available Collection Amount for any Payment Date, amounts paid
by applicable Transferor pursuant to this SECTION 3.05 in connection with the
repurchase or substitution of any Defective Home Loan that are on deposit in the
Collection Account as of the Determination Date for such Payment Date shall be
deemed to have been paid during the related Due Period and shall be transferred
to the Note Payment Account as part of the Available Collection Amount to be
retained therein or transferred to the Certificate Distribution Account, if
applicable, pursuant to SECTION 5.01(C) hereof.
In addition to such cure, repurchase or substitution obligation, the
applicable Transferor shall indemnify the Issuer, the Depositor, the Servicer,
the Master Servicer, Empire Subservicer, the Indenture Trustee, the Grantor
Trustee and the Securityholders against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
and other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach by such
Transferor of any of it representations and warranties contained in SECTION 3.02
and SECTION 3.04.
The Guarantor hereby acknowledges that as a result of entering into
this Agreement and the consummation of the transactions contemplated hereby,
ContiMortgage and ULG, both of which are wholly-owned subsidiaries of the
Guarantor, stand to derive substantial benefits which will thereby benefit the
Guarantor. In consideration of the foregoing, and to induce the Issuer, the
Depositor, Empire Funding, the Master Servicer and the Indenture Trustee to
enter into this Agreement and the transactions contemplated hereby, the
Guarantor, for the benefit of the Issuer, the Grantor Trust and the Indenture
Trustee on behalf of the Noteholders, agrees that in the event of any failure
for any reason (including, without limitation, a bankruptcy or insolvency of
ContiMortgage or ULG), whether in whole or in part, of either ContiMortgage or
ULG to satisfy its obligations (after the expiration of any applicable cure
period) pursuant to this SECTION 3.05(A), and upon receipt of notice from any of
the Issuer, the Depositor, the Master Servicer, the Indenture Trustee or the
Servicer regarding such failure, the Guarantor will promptly perform such
obligations (including, without limitation, any obligation to indemnify pursuant
to the immediately preceding paragraph) in accordance with this SECTION 3.05(A)
and at the direction of the Indenture Trustee; PROVIDED, HOWEVER, that if either
of ContiMortgage or ULG has not effected either a cure, substitution or
repurchase with respect to a Defective Home Loan in accordance with the terms of
this SECTION 3.05(A), then on the Business Day following the Determination Date
next succeeding the end of the applicable 60-day period with respect to such
Defective Home Loan, the Guarantor shall have the obligation to repurchase such
Defective Home Loan at the Purchase Price, such repurchase to be effected on the
Business Day following receipt of notice from any of the Issuer, the Depositor,
the Master Servicer, the Indenture Trustee or the Servicer of such obligation
and otherwise in accordance with the procedures set forth in this SECTION
3.05(a).
(b) REPURCHASE OF DEFAULTED HOME LOANS. In addition to the preceding
repurchase obligations, each of the Transferors and the Servicer shall have the
option, exercisable in its sole discretion at any time, to repurchase from the
Grantor Trustee any Defaulted Home Loan (in which case such Defaulted Home Loan
shall become a Deleted Home Loan); PROVIDED, HOWEVER, that any such repurchase
of a Defaulted Home Loan pursuant to this Subsection shall be conducted in the
same manner as the repurchase of a Defective Home Loan pursuant to this SECTION
3.05.
(c) SUBSTITUTIONS. No Transferor may effect a substitution with
respect to a Defective Home Loan more than two years after the Closing Date. As
to any Deleted Home Loan for which the applicable Transferor substitutes a
Qualified Substitute Home Loan or Loans, such Transferor shall effect such
substitution by delivering to the Indenture Trustee, the Master Servicer, the
Servicer and Grantor Trustee (i) a certification executed by a Responsible
Officer of such Transferor to the effect that the Substitution Adjustment has
been credited to the Collection Account and (ii) the documents constituting the
Grantor Trustee's Home Loan File for such Qualified Substitute Home Loan or
Loans.
The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Home Loan or Loans after
the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Home Loans on or before the date of substitution will be
retained by the applicable Transferor. The Grantor Trustee will be entitled to
all payments received on the Deleted Home Loan on or before the date of
substitution and the applicable Transferor shall thereafter be entitled to
retain all amounts subsequently received in respect of such Deleted Home Loan.
The applicable Transferor shall give written notice to the Grantor Trustee, the
Master Servicer, Empire Subservicer, the Servicer (if the applicable Transferor
is not then acting as such), the Indenture Trustee and Owner Trustee that such
substitution has taken place and the Servicer shall amend the Home Loan Schedule
pursuant to Subsection (g) below. Upon such substitution, such Qualified
Substitute Home Loan or Loans shall be subject to the terms of this Agreement in
all respects, and the applicable Transferor shall be deemed to have made with
respect to such Qualified Substitute Home Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in SECTION
3.02 and SECTION 3.04 hereof. On the date of such substitution, the applicable
Transferor will deposit into the Collection Account an amount equal to the
related Substitution Adjustment, if any.
(d) REASSIGNMENT OF DEFECTIVE HOME LOANS. With respect to all
Defective Home Loans or other Home Loans repurchased by any Transferor pursuant
to this Agreement, upon the deposit of the Purchase Price therefor into the
Collection Account, the Grantor Trustee shall assign to the applicable
Transferor, without recourse, representation or warranty, all the Grantor
Trustee's right, title and interest in and to such Defective Home Loans or other
Home Loans, which right, title and interest were conveyed to the Grantor Trustee
pursuant to the Grantor Trust Agreement. The Grantor Trustee shall take any
actions as shall be reasonably requested by such Transferor to effect the
repurchase of any such Home Loans.
(e) SOLE REMEDIES AGAINST TRANSFEROR. It is understood and agreed
that the obligations of each Transferor to cure or to repurchase or substitute
any such Home Loan, and to indemnify for any breach of any representation or
warranty with respect thereto, pursuant to this SECTION 3.05 shall constitute
the sole remedies against each of them with respect to such breach of the
foregoing representations or warranties or the existence of the foregoing
conditions; PROVIDED, that, the Depositor shall be entitled to pursue any remedy
available against a Transferor pursuant to the Home Loan Purchase Agreements.
Any cause of action against any Transferor relating to or arising out of a
defect in a Grantor Trustee's Home Loan File as contemplated by SECTION 2.06 of
the Grantor Trust Agreement or against any Transferor relating to or arising out
of a breach of any representations and warranties made in SECTION 3.02 and
SECTION 3.04 hereof shall accrue as to any Home Loan upon (i) discovery of such
defect or breach by any party and notice thereof to the applicable Transferor or
notice thereof by the applicable Transferor to the Indenture Trustee, (ii)
failure by any such Transferor to cure such defect or breach or purchase or
substitute such Home Loan as specified above, and (iii) demand upon such
Transferor, as applicable, by the Grantor Trustee or the Grantor Trust Holder
for all amounts payable in respect of such Home Loan.
(f) NO DUTY TO INVESTIGATE. Neither the Depositor, the Grantor
Trustee, the Owner Trustee, the Master Servicer nor the Indenture Trustee shall
have any duty to conduct any affirmative investigation other than as
specifically set forth in this Agreement as to the occurrence of any condition
requiring the repurchase or substitution of any Home Loan pursuant to this
Section or the eligibility of any Home Loan for purposes of this Agreement.
(g) AMENDMENT OF HOME LOAN SCHEDULE. In connection with a repurchase
or substitution of any Home Loan pursuant to this SECTION 3.05, the Servicer
shall amend the Home Loan Schedule to reflect (i) the removal of the applicable
Deleted Home Loan from the terms of this Agreement, and (ii) if applicable, the
substitution of the applicable Qualified Substitute Home Loan. In connection
with its monthly reporting here under, the Servicer shall deliver a copy of the
amended Home Loan Schedule to the Master Servicer, the Grantor Trustee, the
Indenture Trustee and each Transferor who is not then acting as the Servicer.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE HOME LOANS
Section 4.01 DUTIES OF THE SERVICER.
(a) SERVICING STANDARD. The Servicer, as an independent contractor,
shall manage, service, administer and make collections on the Home Loans and
shall have full power and authority, acting alone, to do any and all things in
connection with such servicing and administration which the Servicer may deem
necessary or desirable and consistent with the terms of this Agreement and the
Accepted Servicing Procedures. Notwithstanding anything to the contrary
contained herein, the Servicer, in servicing and administering the Home Loans,
shall employ or cause to be employed procedures (including collection,
modification, foreclosure and liquidation procedures) that conform to the
Accepted Servicing Procedures. In performing its obligations hereunder the
Servicer shall at all times act in good faith and in a commercially reasonable
manner. The Servicer shall provide to the Obligors any reports and statements
that are required by applicable state or federal law. The Servicer has and shall
maintain the facilities, procedures and experienced personnel that are
reasonably necessary to comply with the servicing standard set forth in this
SECTION 4.01(A) and the duties of the Servicer set forth in this Agreement
relating to the servicing and administration of the Home Loans.
(b) SERVICING ADVANCES. In accordance with the preceding general
servicing standard, the Servicer, or any Subservicer on behalf of the Servicer,
shall make all Servicing Advances in connection with the servicing of each Home
Loan hereunder. Notwithstanding any provision to the contrary herein, neither
the Servicer nor any Subservicer on behalf of the Servicer shall have any
obligation to advance its own funds (i) for any delinquent scheduled payments of
principal and interest on any Home Loan, (ii) to cure, keep current or, in
connection with any proceeding against the related Property, satisfy the
indebtedness secured by any Superior Liens on such Property. No costs incurred
by the Servicer or any Subservicer in respect of Servicing Advances shall, for
the purposes of distributions in respect of the Grantor Trust Certificate to
Securityholders, be added to the amount owing under the related Home Loan.
Notwithstanding any obligation by the Servicer to make a Servicing Advance
hereunder with respect to a Home Loan, the Servicer shall make a Servicing
Advance for such Home Loan, if the Servicer, in good faith, determines there is
a reasonable likelihood of (i) recovering such Servicing Advance, together with
any expected future Servicing Advances and any prior Servicing Advances for such
Home Loan, and (ii) recovering an economically significant amount attributable
to the outstanding interest and principal owing on such Home Loan for the
benefit of the Securityholders in excess of the costs and expenses to obtain
such recovery, including without limitation any Servicing Advances therefor and,
if applicable, the outstanding indebtedness of all Superior Liens. Pursuant to
this Agreement the Servicer will be entitled to be reimbursed for any Servicing
Advances, plus any accrued interest thereon from the date of such advance to the
date of reimbursement and at the rate equal to the Servicer's cost of funds,
including any Nonrecoverable Servicing Advance pursuant to SECTION 5.01(C)
hereof.
(c) WAIVERS, MODIFICATIONS AND EXTENSIONS; Subordination. In
accordance with the servicing standard in SECTION 4.01(A), the Servicer shall
collect all payments called for under the terms and provisions of the Home
Loans. The Servicer in its discretion may waive or permit to be waived any
penalty interest or any other fee or charge which the Servicer would be entitled
to retain hereunder as servicing compensation and extend the Due Date on a Debt
Instrument for a period (with respect to each payment as to which the Due Date
is extended) not greater than 90 days after the initially scheduled Due Date for
such payment. Notwithstanding anything in this Agreement to the contrary, the
Servicer shall not permit any additional extension or modification with respect
to any Home Loan other than that permitted by the immediately preceding
sentence, unless the Home Loan is a Defaulted Home Loan. (See SECTION 4.10
hereof for a description of the recovery procedures for Defaulted Home Loans.)
The Servicer may in its discretion enter in subordination agreements with
respect to any Home Loan, PROVIDED that the Servicer determines, consistent with
this Agreement and the Accepted Servicing Procedures, that the entering into of
such subordination agreement is in the best interests of the Grantor Trust. The
Servicer may grant a waiver or enter into a subordination agreement with respect
to the refinancing of the indebtedness secured by a Superior Lien on the related
Property, PROVIDED that the Obligor is in a better financial or cash flow
position as a result of such refinancing, which may include a reduction in the
Obligor's scheduled monthly payment on the indebtedness secured by such Superior
Lien or the conversion of an adjustable rate loan into a new fixed rate loan.
The Servicer shall notify the Master Servicer, the Grantor Trustee and the
Indenture Trustee of any modification, waiver or amendment of any provision of
any Home Loan and the date thereof, and shall deliver to the applicable
Custodian for deposit in the related Grantor Trustee's Home Loan File, a true
and correct copy or, if available, an original of the agreement relating to such
modification, waiver or amendment promptly following the execution thereof.
(d) INSTRUMENTS OF SATISFACTION OR RELEASE. Without limiting the
generality of SECTION 4.01(C), the Servicer, in its own name or in the name of a
Subservicer, is hereby authorized and empowered, when the Servicer believes it
appropriate in its best judgment, to execute and deliver, on behalf of the
Grantor Trust Holder and the Grantor Trustee or any of them, and upon notice to
the Grantor Trustee, any and all instruments of satisfaction or cancellation or
of partial or full release or discharge, and all other comparable instruments
with respect to the Home Loans and the Properties and to institute foreclosure
proceedings or obtain a deed in lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Grantor Trustee and the Grantor Trust Holder,
subject to SECTION 4.10(F) hereof.
(e) POWERS OF ATTORNEY. The Grantor Trustee shall execute, at the
written direction of the Servicer, the Master Servicer or any Subservicer, any
limited or special powers of attorney and other documents reasonably acceptable
to the Grantor Trustee to enable the Servicer, the Master Servicer or any
Subservicer to carry out their servicing and administrative duties hereunder,
including, without limitation, limited or special powers of attorney with
respect to any Foreclosure Property, and the Grantor Trustee shall not be
accountable for the actions of the Servicer, the Master Servicer or any
Subservicers under such powers of attorney and shall be indemnified by such
parties with respect to such actions.
Section 4.02 APPOINTMENT AND DUTIES OF THE MASTER SERVICER.
(a) APPOINTMENT AND COMPENSATION OF MASTER SERVICER. The Issuer, the
Securityholders and the Indenture Trustee hereby assign and appoint the Master
Servicer to act as the Master Servicer for the Home Loans (including all of the
duties, obligations and rights of the Master Servicer) under this Agreement. The
Master Servicer hereby accepts its appointment as the Master Servicer hereunder.
The Master Servicer shall not consent to any material amendment, modification or
waiver of the servicing provisions of this Agreement, without the consent of the
Indenture Trustee.
As compensation for its services hereunder, the Master Servicer
shall be entitled to receive from the Note Payment Account the Master Servicer
Fee. In addition to the Master Servicer Fee, additional compensation
attributable to the investment earnings from the Note Payment Account shall be
part of the Master Servicer Compensation payable to the Master Servicer pursuant
to SECTION 5.01(C) hereof. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its Master Servicer duties and
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
(b) MASTER SERVICER ASSUMES SERVICING RESPONSIBILITY. If a Servicer
Termination Event occurs, then the Master Servicer shall be obligated (1) to
select a successor servicer subject to SECTION 4.07 hereof, that is reasonably
acceptable to the Indenture Trustee, or (2) to act as the successor servicer
hereunder.
(c) MONITORING OF SERVICING. The Master Servicer shall: (i) review
the servicing reports, loan level information or other relevant information
prepared by the Servicer and any Subservicer (including Empire Subservicer) (A)
to determine whether such reports are inaccurate or incomplete, in any material
respect, (B) to ascertain whether each of the Servicer and Empire Subservicer is
in compliance, in all material respects, with its duties and obligations with
respect to such reports under this Agreement and (C) in the event that any
servicing report is inaccurate or incomplete, to prepare and deliver an
exception report to the Indenture Trustee, the Grantor Trustee, the Servicer and
the Rating Agencies, which describes such inaccuracy or incompleteness; (ii)
otherwise monitor the performance by each of the Servicer and Empire Subservicer
of its duties and obligations hereunder and notify the Indenture Trustee, the
Grantor Trustee, and the Rating Agencies of any Event of Default of which it has
received notice or has actual knowledge; and (iii) be obligated to verify that
the Servicer or Empire Subservicer, as applicable, has or has caused to be
deposited all payments and proceeds required to be deposited into the Collection
Account pursuant to SECTION 5.01(B)(I) hereof. On the 19th calendar day of each
month (or the next Business Day, if the 19th is not a Business Day), the Master
Servicer shall provide the Indenture Trustee with an Officer's Certificate to
the effect that the Master Servicer has performed its obligations under this
Subsection 4.02(c) with respect to the servicing information for such month.
(d) SUCCESSOR SERVICER. The Master Servicer agrees that it shall at
all times be prepared, to perform the duties and obligations of the Servicer and
become the successor servicer (including, without limitation, the performance of
Empire Subservicer's duties hereunder, if required), if the Servicer fails to
perform its duties and obligations hereunder.
(e) SERVICER TERMINATION. At the direction of the Master Servicer or
the Majority Noteholders, the Indenture Trustee, on behalf of the Issuer and the
Securityholders, shall terminate the Servicer upon the occurrence and
continuance of an Event of Default pursuant to ARTICLE X hereof.
(f) SERVICER COOPERATION. The Servicer and Empire Subservicer shall
act, in a good faith and reasonable manner, to assist and cooperate with the
Master Servicer in performing its duties and obligations under this SECTION
4.02. On a monthly basis pursuant to SECTION 6.01 hereof, the Servicer, or if
Empire Subservicer is acting as Subservicer, Empire Subservicer, shall provide
the Master Servicer with its Servicer's Monthly Remittance Report in a
compatible computer readable format.
(g) RESIGNATION OF MASTER SERVICER. The Master Servicer may not
resign as Master Servicer hereunder unless (i) the Master Servicer obtains the
consent of the Majority Residual Interestholders and the Indenture Trustee and
obtains written confirmation from each Rating Agency that such resignation will
not cause a downgrade, withdrawal or qualification of the then current ratings
on the Notes or (ii) the Master Servicer determines that its duties hereunder
are no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it and cannot
be cured, PROVIDED that such determination shall be evidenced by an Opinion of
Counsel (which shall be Independent) to such effect delivered to the Grantor
Trustee and the Indenture Trustee. No resignation of the Master Servicer shall
become effective until a successor master servicer reasonably acceptable to the
Indenture Trustee shall have assumed the obligations of the Master Servicer
hereunder.
(h) LIMITATION ON LIABILITY OF MASTER SERVICER. Neither the Master
Servicer nor any director, officer, employee or agent of the Master Servicer
shall be under any liability to the Grantor Trustee, the Indenture Trustee, the
Servicer, the Noteholders or any other Person 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 Master Servicer or any such Person against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in its performance of its duties or by reason of reckless disregard
for its obligations and duties under this Agreement. The Master Servicer and any
director, officer, employee or agent of the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder.
Section 4.03 FIDELITY BOND; ERRORS AND OMISSIONS INSURANCE. The
Servicer shall maintain with a responsible company, and at its own expense, a
blanket fidelity bond and an errors and omissions insurance policy in such
amounts as required by, and satisfying any other requirements of, the Federal
Housing Administration and the FHLMC, with broad coverage on all officers,
employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the Home Loans ("SERVICER
EMPLOYEES"). Any such fidelity bond and errors and omissions insurance shall
protect and insure the Servicer against losses, including losses resulting from
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts
(including acts relating to the origination and servicing of loans of the same
type as the Home Loans) of such Servicer Employees. Such fidelity bond shall
also protect and insure the Servicer against losses in connection with the
release or satisfaction of a Home Loan without having obtained payment in full
of the indebtedness secured thereby. In the event of any loss of principal or
interest on a Home Loan for which reimbursement is received from the Servicer's
fidelity bond or errors and omissions insurance, the proceeds from any such
insurance will be deposited in the Collection Account. No provision of this
SECTION 4.03 requiring such fidelity bond and errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. Upon the request of the Master Servicer, the Grantor
Trustee or the Indenture Trustee, the Servicer shall deliver to the requesting
party a certified true copy of such fidelity bond and insurance policy.
Section 4.04 FILING OF CONTINUATION STATEMENTS. On or before the
fifth anniversary of the filing of any financing statements by the Transferors
and the Depositor, respectively, with respect to the assets conveyed to the
Grantor Trustee or to the Owner Trust, Empire Subservicer, or, if Empire
Subservicer is no longer the Subservicer hereunder, the Servicer shall prepare,
have executed by the necessary parties and file in the proper jurisdictions at
its expense, all financing and continuation statements necessary to maintain the
liens, security interests and priorities of such liens and security interests
that have been granted by the applicable Transferor and the Depositor,
respectively. Empire Subservicer, or, if Empire Subservicer is no longer the
Subservicer hereunder, the Servicer shall continue to file on or before each
fifth anniversary of the filing of any financing and continuation statements
such additional financing and continuation statements until the Owner Trust and
Grantor Trust have terminated pursuant to SECTION 9.1 of the Owner Trust
Agreement and SECTION 7.01 of the Grantor Trust Agreement, respectively. The
Indenture Trustee and Grantor Trustee agree to cooperate with Empire
Subservicer, or, if Empire Subservicer is no longer the Subservicer hereunder,
the Servicer in preparing, executing and filing such statements. The Indenture
Trustee and Grantor Trustee agree to notify Empire Subservicer, or, if Empire
Subservicer is no longer the Subservicer hereunder, the Servicer on the third
Payment Date prior to each such fifth anniversary of the requirement that they
file such financing and continuation statements. The filing of any such
statement shall not be construed as any indication of an intent of any party
contrary to the expressed intent set forth in SECTION 2.03 hereof and SECTION
2.04 of the Grantor Trust Agreement. If any Transferor or the Depositor has
ceased to do business whenever any such financing and continuation statements
must be filed or Empire Subservicer or the Servicer, as applicable, fail to file
any such financing statements or continuation statements at least one month
prior to the expiration thereof, each of the Transferors and the Depositor does
hereby make, constitute and appoint the Grantor Trustee its attorney-in-fact,
with full power and authority, to execute and file in its name and on its behalf
any such financing statements or continuation statements required under this
SECTION 4.04 relating to assets conveyed to the Grantor Trustee and the
Depositor does hereby make, constitute and appoint the Indenture Trustee its
attorney-in-fact, with full power and authority, to execute and file in its name
and on its behalf any such financing statements or continuation statements
required under this SECTION 4.04 relating to assets conveyed to the Owner Trust.
Section 4.05 APPOINTMENT OF EMPIRE FUNDING AS SUBSERVICER.
(A) APPOINTMENT. The Issuer, the Securityholders and the Indenture
Trustee hereby assign and appoint Empire Funding to act as Subservicer for the
Home Loans under this Agreement. As such, Empire Subservicer shall perform the
servicing and administration obligations required to be performed by the
Servicer with respect to the Home Loans under this Agreement. Empire Subservicer
hereby agrees to perform and be bound by all of the servicing and administration
obligations and entitled to all of the rights of the Servicer for the Home Loans
in accordance with this Agreement and the other Transaction Documents under
which it has responsibilities, except for those servicing and administration
rights and obligations of the Servicer set forth in this Agreement under SECTION
3.03 ("REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER"); SECTION 4.06
("SUBSERVICING"); SECTION 7.03 ("SERVICING COMPENSATION"); SECTION 9.01
("INDEMNIFICATION; THIRD PARTY CLAIMS"); SECTION 9.04 ("SERVICER NOT TO RESIGN;
ASSIGNMENT"); ARTICLE X ("DEFAULT"); ARTICLE XI ("TERMINATION"); and SECTION
12.02 ("AMENDMENT"), which shall be performed by or accrue to the benefit of (as
applicable) the Servicer. Solely for purposes of this SECTION 4.05 and the
performance of the servicing and administration obligations in this Agreement by
Empire Subservicer, all references to the "SERVICER" in the applicable
provisions in this Agreement relating to the servicing and administration of the
Home Loans (except for SECTION 4.06, ARTICLE XI; and SECTION 12.02), shall be
deemed to refer to Empire Subservicer, and all references to the Indenture
Trustee in the applicable provisions hereunder relating to the servicing and
administration of the Home Loans shall be deemed to refer to the Servicer as an
additional or co-trustee; PROVIDED that solely for purposes of this SECTION
4.05, the Servicer shall have the rights and authority granted to the Indenture
Trustee with respect to the Servicer, but shall not have the obligations and
duties of the Indenture Trustee under this Agreement. The provisions of SECTION
4.06 ("Subservicing") shall not apply to Empire Subservicer.
(b) COMPENSATION. As compensation for its services hereunder, Empire
Subservicer shall be entitled to receive the Empire Subservicing Fee (which
shall be an expense of the Grantor Trust). If Empire Funding is the Subservicer,
additional subservicing compensation that is otherwise payable to the Servicer
pursuant to SECTION 7.03 hereof in the form of assumption fees, two-thirds of
the prepayment penalties (the other one-third being payable to the Servicer
pursuant to SECTION 7.03 hereof), modification fees, and other administrative
fees, insufficient funds charges, amounts remitted pursuant to SECTION 7.01
hereof and late payment charges shall be payable to Empire Subservicer (and not
to the Servicer) as part of the Subservicing Compensation payable to Empire
Subservicer hereunder and shall be paid either by Empire Subservicer retaining
such additional servicing compensation prior to deposit in the Collection
Account pursuant to SECTION 5.01(B)(I) hereof or, if deposited in the Collection
Account, as part of the Subservicing Compensation withdrawn from the Note
Payment Account pursuant to SECTION 5.01(C)(I) hereof. In addition, if Empire
Subservicer is the Subservicer, additional subservicing compensation
attributable to the investment earnings from the Collection Account shall be
part of the Empire Subservicer Compensation payable to the Empire Subservicer
pursuant to SECTION 5.01(C)(I) hereof.
Empire Subservicer shall be required to pay all expenses incurred by
it in connection with its servicing activities hereunder and shall not be
entitled to reimbursement therefor except as specifically provided for herein.
(c) RESIGNATION. Empire Subservicer shall not resign from the
obligations and duties hereby imposed on it, except upon determination that the
duties of Empire Subservicer hereunder are no longer permissible under
applicable law. Any such determination permitting the resignation of Empire
Subservicer shall be evidenced by an Independent Opinion of Counsel to Empire
Subservicer to such effect, which Opinion of Counsel shall be at the expense of
Empire Subservicer and shall be delivered to the Servicer and the Master
Servicer.
(d) MERGER OR CONSOLIDATION OF EMPIRE SUBSERVICER. Any Person into
which Empire Subservicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which Empire
Subservicer shall be a party, or any Person succeeding to the business of Empire
Subservicer, shall be an Eligible Servicer and shall be the successor of Empire
Subservicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. Empire Subservicer shall send notice of any such
merger, conversion, consolidation or succession to the Servicer, the Master
Servicer, the Grantor Trustee and the Indenture Trustee.
(e) ASSIGNMENT. Empire Subservicer may not assign or transfer its
rights or obligations under this Agreement without the prior written consent of
the other parties hereto. Notwithstanding the preceding sentence, Empire
Subservicer in its sole judgment shall have the authority and right to delegate
specific servicing obligations hereunder to, including without limitation,
computer bureaus, credit bureaus, real estate tax service companies, real estate
brokers, or agents, attorneys, trustees and any other determined by Empire
Subservicer; PROVIDED that Empire Subservicer remains responsible for any such
action taken or not taken by such companies, agents, representatives throughout
the term of this Agreement.
(f) LOAN INFORMATION.
(i) MONTHLY REPORTING. Empire Subservicer shall provide the
Master Servicer and the Servicer with a copy of the "Servicer's Monthly
Remittance Report" or equivalent monthly servicing report required under
this Agreement at the same time such report is delivered to the Indenture
Trustee.
(ii) LOAN DATA TAPE. On the 15th calendar day of each month,
and if such day is not a Business Day, the next succeeding Business Day,
and no later than two (2) Business Days following any request by the
Servicer, Empire Subservicer shall deliver to the Servicer, the Indenture
Trustee, the Rating Agencies (if so requested), a certain financial market
publisher (which initially shall be Bloomberg, L.P.) and to the Master
Servicer, a computer tape in ASCII file format that includes the "loan
level" information with respect to the Home Loans as of the end of the
related Due Period for the loan data fields of Subservicer as reasonably
required by the Master Servicer from time to time; PROVIDED that Empire
Subservicer shall use its best efforts to furnish sufficient loan level
information that will enable the Servicer and the Master Servicer, or its
designee, to reconcile information provided by Empire Subservicer in the
Servicer's Monthly Remittance Report.
(iii) BOOKS AND RECORDS. Empire Subservicer shall maintain
appropriate books and records of information relating to the servicing and
administration of the Home Loans under this Agreement. Empire Subservicer
shall permit the examination and review its books and records in
accordance with SECTION 7.06 hereof.
(g) EMPIRE SUBSERVICER EVENTS OF DEFAULT. In case one or more of the
following shall occur (each an "EMPIRE SUBSERVICER EVENT OF DEFAULT") and be
continuing, that is to say:
(i) any failure by Empire Subservicer to deposit in the
Collection Account in accordance with SECTION 5.01(B) hereof any payments
in respect of the Home Loans received by Empire Subservicer no later than
the first Business Day following the day on which such payments were
received; or
(ii) failure by Empire Subservicer duly to observe or perform,
in any material respect, any other covenants, obligations or agreements of
Empire Subservicer as set forth in this Agreement, which failure continues
unremedied for a period of 30 days after the date on which written notice
of such failure, requiring the same to be remedied and stating that such
notice is a "Notice of Default" hereunder, shall have been given (a) to
Empire Subservicer by the Servicer, the Indenture Trustee, the Master
Servicer, the Grantor Trustee or the Issuer, or (b) to Empire Subservicer,
the Servicer, the Indenture Trustee, the Master Servicer, the Grantor
Trustee or the Issuer by the Majority Noteholders; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against Empire
Subservicer and such decree or order shall have remained in force,
undischarged or unstayed for a period of 60 days; or
(iv) Empire Subservicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or
relating to Empire Subservicer or of or relating to all or substantially
all of Empire Subservicer's property; or
(v) Empire Subservicer shall admit in writing its inability 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; or
(vi) the Majority Noteholders, the Master Servicer, the
Servicer or the Grantor Trust Holder shall determine, in its reasonable
judgment and based upon published reports (including wire services), which
it reasonably believes in good faith to be reliable, that:
(A) Empire Subservicer has experienced a material
adverse change in its business, assets, liabilities, operations,
condition (financial or otherwise) or prospects,
(B) Empire Subservicer or its parent has defaulted
on any of its material obligations,
(C) Empire Subservicer is no longer able to discharge
its duties under this Agreement, or
(D) Empire Subservicer has ceased to conduct its
business in the ordinary course,
PROVIDED, HOWEVER, that Empire Subservicer shall have five Business Days
from the receipt of any notice of default under this Subsection to cure
such Empire Subservicer Event of Default by providing the foregoing
parties with written assurances that, in a reasonable and good faith
manner, substantiate the financial and operational well-being of Empire
Subservicer and adequately refute the occurrence of a material adverse
change, including, without limitation, information, reports or written
assurances obtained from certain of its lenders, or
(vii) as of any Determination Date, the total Expected Loan
Loss Percentage (as defined below) exceeds (1) up to the fifth (5th)
anniversary of the March 31, 1999 Cut-Off Date, 22.0%, or (2) thereafter
33.0% (where the "EXPECTED LOAN LOSS PERCENTAGE" shall be the sum of (A)
the cumulative Net Loan Losses divided by the Original Pool Principal
Balance, plus (B) 25% of the aggregate Principal Balance of the Home Loans
which are then more than 30 but less than 60 days delinquent divided by
the Original Pool Principal Balance, plus (C) 50% of the aggregate
Principal Balance of the Home Loans which are then more than 60 but less
than 90 days delinquent divided by the Original Pool Principal Balance,
plus (D) 100% of the aggregate Principal Balance of the Home Loans which
are then more than 90 days delinquent divided by the Original Pool
Principal Balance);
then, and in each and every such case, so long as an Empire Subservicer Event of
Default shall not have been remedied, the Indenture Trustee, the Grantor
Trustee, the Master Servicer, the Servicer, the Grantor Trust Holder or the
Majority Noteholders, by notice in writing to Empire Subservicer may, in
addition to whatever rights such Person may have at law or in equity to damages,
including injunctive relief and specific performance, terminate all the rights
and obligations of Empire Subservicer under this Agreement and in and to the
Home Loans and the proceeds thereof, as Subservicer under this Agreement without
payment of any termination fee or penalty to Empire Subservicer.
(h) SERVICER TERMINATION OPTION. Except as otherwise specifically
set forth herein, the obligations and responsibilities of Empire Subservicer
shall terminate without payment of any termination fee or penalty at the
Servicer's option and upon ninety (90) days' prior written notice to Empire
Subservicer, on the fifth anniversary of this Agreement and, at the Servicer's
option and upon ninety (90) days' prior written notice to Empire Subservicer, on
each annual anniversary thereafter; provided, however, that the Servicer may
only terminate Empire Subservicer if (i) the Rating Agencies deliver to the
Indenture Trustee and the Master Servicer a written confirmation that the
Servicer is approved by the Rating Agencies and the Servicer assumes all the
authority, power and responsibility of Empire Subservicer hereunder or (ii) the
Servicer appoints another entity to act as Subservicer and the Rating Agencies
deliver to the Indenture Trustee and the Master Servicer a written confirmation
that such entity is approved by the Rating Agencies.
(i) SERVICER TO SUCCEED EMPIRE SUBSERVICER. On or after the receipt
by Empire Subservicer of written notice of any termination pursuant to SECTION
4.05(G) OR (H) or following Empire Subservicer's resignation pursuant to SECTION
4.05(C) above, all authority and power of Empire Subservicer under this
Agreement, shall pass to and be vested in the Servicer, and, without limitation,
the Servicer is hereby authorized and empowered, as attorney-in-fact or
otherwise, to execute and deliver, on behalf of and at the expense of Empire
Subservicer, any and all documents and other instruments and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Home Loans and related documents, or otherwise. Empire
Subservicer agrees promptly (and in any event no later than five Business Days
subsequent to such notice) to provide the Servicer with all documents and
records requested by it to enable it to assume the Subservicer's functions under
this Agreement, and to cooperate with the Servicer in effecting the termination
of Empire Subservicer's responsibilities and rights under this Agreement,
including, without limitation, the transfer within one Business Day to the
Servicer for administration by it of all cash amounts which at the time shall be
or should have been credited by Empire Subservicer to the Collection Account
held by or on behalf of Empire Subservicer, or thereafter received with respect
to the Home Loans serviced by the Empire Subservicer. Any amounts received by
Empire Subservicer with respect to the Home Loans after removal or resignation
of Empire Subservicer hereunder shall be remitted directly and promptly to the
Servicer.
(j) TERMINATION OR DEFAULT OF SERVICER. Notwithstanding anything in
this Agreement to the contrary, if the Servicer is removed or resigns in
accordance under this Agreement or is in default with respect to this Agreement,
Empire Subservicer may not be terminated as the Subservicer other than in
accordance with the provisions of this SECTION 4.05.
(k) REALLOCATION OF EMPIRE SUBSERVICING FEE. If an Empire
Subservicer Event of Default occurs and has not been remedied, then, until the
servicing of the Home Loans hereunder is transferred to the Servicer, the Empire
Subservicing Fee otherwise payable to Empire Subservicer hereunder shall be paid
as follows: (1) first, to Empire Subservicer an amount equal to the portion of
the Empire Subservicing Fee as calculated based on a fee rate of 0.25% (25 basis
points); (2) second, to the Indenture Trustee any remaining amount for the
deposit into an escrow or reserve account established pursuant to SECTION
10.01(B) hereof, until the balance of such account equals $100,000; and (3)
third, to Empire Subservicer any remaining amount. In connection with the
transfer of servicing to a successor servicer, amounts on deposit in such escrow
account shall be remitted pursuant to SECTION 10.02 hereof; provided, that any
amounts remaining in such escrow account after all payments have been made
pursuant to SECTION 10.02 hereof shall be paid to Empire Subservicer.
Empire Subservicer hereby grants to the Indenture Trustee a security
interest in all of Empire Subservicer's right, title and interest in, to and
under any escrow account established pursuant to SECTION 10.01(B) and all monies
deposited therein from time to time, as security for its obligations under this
Agreement; and this Agreement constitutes a security agreement under applicable
law.
(l) NOTICE AND APPROVAL. Any provision of this Agreement requiring
notice to be delivered to, or approval or consent to be received with respect
to, Empire Subservicer shall be rendered void by the termination or resignation
of Empire Subservicer hereunder, but such provision only to be rendered void to
the extent it relates to Empire Subservicer in its capacity as Subservicer.
(m) EMPIRE SUBSERVICER COOPERATION. Empire Subservicer shall act, in
a good faith and reasonable manner, to assist and cooperate with the Servicer in
performing Empire Subservicer's duties and obligations under this Agreement.
Section 4.06 SUBSERVICING.
(a) APPOINTMENT AND TERMINATION OF SUBSERVICERS. In the event Empire
Subservicer is not acting as Subservicer hereunder, the Servicer may enter into
Subservicing Agreements for any servicing and administration of Home Loans with
any institution that (i) is an Eligible Servicer; (ii) is approved by the Master
Servicer; and (iii) is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement. The
Servicer shall give prior written notice to the Master Servicer, the Grantor
Trustee and the Indenture Trustee of the appointment of any Subservicer. The
Servicer shall be entitled to terminate any Subservicing Agreement in accordance
with the terms and conditions of such Subservicing Agreement and to either
service the related Home Loans directly or enter into a Subservicing Agreement
with a successor subservicer which qualifies hereunder.
In the event of termination of any Subservicer, and unless a
successor Subservicer has otherwise been appointed, all servicing obligations of
such Subservicer shall be assumed simultaneously by the Servicer without any
additional act or deed on the part of such Subservicer or the Servicer, and the
Servicer shall service directly the related Home Loans.
Each Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Master Servicer or the Grantor
Trustee in the event that the Servicer shall, for any reason, no longer be the
Servicer. In no event shall any Subservicing Agreement require the Grantor
Trustee, as Successor Servicer, for any reason whatsoever to pay compensation to
a Subservicer in order to terminate such Subservicer.
(b) SERVICER LIABILITY. Notwithstanding any Subservicing Agreement
or the appointment of Empire Funding as Subservicer under SECTION 4.05, any of
the provisions of this Agreement relating to agreements or arrangements between
the Servicer and a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Servicer shall remain obligated and primarily
liable to the Master Servicer, the Grantor Trustee and the Grantor Trust Holder
for the servicing and administration of the Home Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Home Loans. For purposes of this Agreement, the Servicer shall be deemed to
have received payments on Home Loans when the Subservicer has actually received
such payments and, unless the context otherwise requires, references in this
Agreement to actions taken or to be taken by the Servicer in servicing the Home
Loans include actions taken or to be taken by a Subservicer on behalf of the
Servicer. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer by such Subservicer, and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
(c) ASSUMPTION BY SUCCESSOR SERVICER. In the event the Servicer
shall for any reason no longer be the Servicer (including by reason of an Event
of Default), the successor servicer, on behalf of the Grantor Trustee, the
Indenture Trustee, the Securityholders and the Grantor Trust Holder pursuant to
SECTION 4.07 hereof, shall thereupon assume all of the rights and obligations of
the Servicer under each Subservicing Agreement that the Servicer may have
entered into, unless the successor servicer elects to terminate any Subservicing
Agreement in accordance with its terms. Notwithstanding anything to the contrary
contained herein, in no event shall a successor servicer be entitled to
terminate Empire Subservicer solely as a result of the Servicer no longer acting
as such hereunder. The successor servicer shall be deemed to have assumed all of
the Servicer's interest therein and to have replaced the Servicer as a party to
each Subservicing Agreement to the same extent as if the Subservicing Agreements
had been assigned to the assuming party, except that the Servicer shall not
thereby be relieved of any liability or obligations under the Subservicing
Agreements which accrued prior to the transfer of servicing to the successor
servicer. The Servicer, at its expense and without right of reimbursement
therefor, shall, upon request of the successor servicer, deliver to the assuming
party all documents and records relating to each Subservicing Agreement and the
Home Loans then being serviced and an accounting of amounts collected and held
by it and otherwise use its best efforts to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party.
(d) ENFORCEMENT OF SUBSERVICING. As part of its servicing activities
hereunder, the Servicer, for the benefit of the Grantor Trustee, the Grantor
Trust Holder, the Indenture Trustee and the Securityholders, shall enforce the
obligations of each Subservicer under the related Subservicing Agreement. Such
enforcement, including, without limitation, the legal prosecution of claims and
the pursuit of other appropriate remedies, shall be in such form and carried out
to such an extent and at such time as the Servicer, in its good faith business
judgment, would require were it the owner of the related Home Loans. The
Servicer shall pay the costs of such enforcement at its own expense and shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement to the extent, if any, that such recovery exceeds all amounts due in
respect of the related Home Loan or (ii) from a specific recovery of costs,
expenses or attorneys' fees against the party against whom such enforcement is
directed.
(e) LIMITATIONS ON PARTIES. Any Subservicing Agreement that may be
entered into and any other transactions or services relating to the Home Loans
involving a Subservicer shall be deemed to be between the Subservicer and the
Servicer alone and none of the Master Servicer, the Grantor Trustee, the Owner
Trustee, the Indenture Trustee, the Securityholders or the Grantor Trust Holder
shall be deemed parties thereto or shall have any claims, rights, obligations,
duties or liabilities with respect to the Subservicer in its capacity as such,
except as set forth in SECTION 4.06(C).
(f) SUBSERVICING ACCOUNT. In those cases where a Subservicer
receives or collects any payments from a Home Loan, the Subservicer will be
required to establish and maintain one or more accounts (collectively, the
"SUBSERVICING ACCOUNT"). The Subservicing Account shall be an Eligible Account.
The Subservicer will be required to deposit into the Subservicing Account, no
later than the first Business Day after receipt, all proceeds of Home Loans
received by the Subservicer and remit such proceeds to the Servicer for deposit
in the Collection Account not later than the Business Day following receipt
thereof by the Subservicer. Notwithstanding anything in this Subsection to the
contrary, the Subservicer shall only be able to withdraw funds from the
Subservicing Account for the purpose of remitting such funds to the Servicer for
deposit into the Collection Account. The Servicer shall require the Subservicer
to cause any collection agent of the Subservicer to send a copy to the Servicer
of each statement of monthly payments collected by or on behalf of the
Subservicer within five Business Days after the end of every month, and the
Servicer shall compare the information provided in such reports with the
deposits made by the Subservicer into the Collection Account for the same
period. The Servicer shall be deemed to have received payments on the Home Loans
on the date on which the Subservicer has received such payments.
Section 4.07 SUCCESSOR SERVICERS. In the event that the Servicer is
terminated pursuant to SECTION 10.01 hereof, or resigns pursuant to SECTION 9.04
hereof or otherwise becomes unable to perform its obligations under this
Agreement, the Master Servicer or the Grantor Trustee, as applicable, will
become the successor servicer or will appoint a successor servicer in accordance
with the provisions of SECTION 10.02 hereof; PROVIDED, HOWEVER, that any
successor servicer, excluding the Master Servicer or the Grantor Trustee, as
applicable, shall satisfy the requirements of an Eligible Servicer and shall be
approved by the Rating Agencies.
Section 4.08 COLLECTIONS FROM INSURANCE POLICIES. Any Insurance
Proceeds collected by the Servicer under any Insurance Policies shall be paid
over or applied by the Servicer as follows:
(a) In the case of amounts received in respect of any Home Loan:
(i) for the restoration or repair of the affected Property, in
which event such amounts shall be released to the Obligor in accordance
with the terms of the related Debt Instrument, Mortgage or Manufactured
Home Contract, or
(ii) to the extent not so used, in reduction of the Principal
Balance of the related Home Loan, in which event such amounts shall be
deposited into the Collection Account pursuant to SECTION 5.01(B)(I)
hereof,
unless the related Debt Instrument, Mortgage or Manufactured Home Contract
require a different application, in which case such amounts shall be applied in
the manner provided therein; and
(b) Subject to SECTIONS 4.10 and 4.11(C) hereof, in the case of
amounts received in respect of any Foreclosure Property, for the restoration or
repair of such Foreclosure Property, unless the Servicer determines, consistent
with the servicing standard set forth in SECTION 4.01 hereof, that such
restoration or repair is not in the best economic interest of the Grantor Trust
Holder, in which event such amounts shall be deposited into the Collection
Account pursuant to SECTION 5.01(B)(I) hereof.
Section 4.09 REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION; 144A
INFORMATION. (a) The Indenture Trustee shall, on behalf of the Issuer, cause to
be filed with the Securities and Exchange Commission within 15 days after each
Payment Date all monthly Payment Statements on Form 8-K and annual reports on
Form 10-K in the form attached as EXHIBIT E or as otherwise required to be filed
under the provisions of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder. Upon
the request of the Indenture Trustee, each of the Servicer and each Transferor
shall cooperate with the Indenture Trustee in the preparation of any such report
and shall provide to the Indenture Trustee in a timely manner all such
information or documentation as the Indenture Trustee may reasonably request in
connection with the performance of its duties and obligations under this SECTION
4.09. The Indenture Trustee shall indemnify and hold harmless each of the Issuer
and the Depositor for any costs, expenses or liability arising as a result of
the failure of the Indenture Trustee to perform its duties and obligations under
this SECTION 4.09.
(b) The Servicer shall provide to the Indenture Trustee, if
requested, information regarding the Class B-2 Notes and the Home Loans and such
other information as the Indenture Trustee shall be required to deliver to any
holder of a Class B-2 Note and any prospective transferee designated by any such
holder to satisfy the condition of eligibility set forth in Rule 144A(d)(4)
under the Securities Act.
Section 4.10 RECOVERY FROM DEFAULTED HOME LOANS AND LIQUIDATED HOME
LOANS.
(a) GENERAL STANDARD. If any Home Loan becomes a Defaulted Home
Loan, then the Servicer, in accordance with the servicing standard in SECTION
4.01(A), shall take such action as it shall deem to be in the best interest of
the Grantor Trust Holder and Securityholders, including but not limited to (i)
repurchasing or substituting such Defaulted Home Loan pursuant to SECTION 3.05,
(ii) accepting short payoffs or short sales, (iii) entering into assumptions and
modifications, (iv) referring such Defaulted Home Loan to a collection agency or
attorney, or pursuing collection litigation or alternative court proceedings to
foreclosure actions, (v) selling such Defaulted Home Loan to another person,
(vi) foreclosing or proceeding against the Property securing such Defaulted Home
Loan, (vii) exercising any power of sale to the extent permitted by law, (viii)
obtain a deed in lieu of foreclosure, or (ix) otherwise acquiring possession of
or title to any Mortgaged Property or Manufactured Home, by operation of law or
otherwise. The Servicer shall be acting in the best interests of the Grantor
Trust Holder and Securityholders, when the Servicer, in accordance with the
Accepted Servicing Procedures, undertakes actions to collect a Defaulted Home
Loan that have a higher likelihood of a reasonable recovery within a shorter
time period, and foregoes taking actions that have a lower likelihood of a
larger recovery over a longer time period. If with respect to a Defaulted Home
Loan the Servicer decides not to proceed against the Property or Obligor, as
applicable, then the Servicer shall determine in accordance with the Accepted
Servicing Procedures that there is not a reasonable likelihood of (A) recovering
an economically significant amount attributable to the outstanding interest and
principal owing on such Home Loan as a result of such proceeding, in excess of
(B) the costs and expenses to obtain such recovery (including without limitation
any Servicing Advances and, if applicable, the outstanding indebtedness of all
Superior Liens), and in relation to (C) the expected timing of such recovery
therefrom. If the Servicer makes a determination not to proceed either against
the Property or the Obligor, then the Servicer shall give notice to such effect
to the Master Servicer, the Grantor Trustee and the Indenture Trustee.
In connection with the monthly reporting in SECTION 6.01(A) hereof,
the Servicer shall deliver to the Indenture Trustee and the Master Servicer a
report (in the form of EXHIBIT C attached hereto) (the "LOAN LIQUIDATION
REPORT"), which sets forth the liquidation information for each Home Loan that
became a Liquidated Home Loan during the preceding Due Period. In addition, on a
monthly basis, the Servicer shall provide a report to the Master Servicer that
summarizes the final actions of the Servicer taken during the preceding Due
Period with respect to any Home Loans pursuant to this Section.
Neither the Master Servicer, the Grantor Trustee, the Indenture
Trustee, the Issuer nor the Depositor shall have any responsibility or
obligation to review or verify any determination or approve any actions, made by
the Servicer pursuant to this SECTION 4.10.
(b) MODIFICATIONS OF DEFAULTED HOME LOANS. Notwithstanding SECTION
4.01(C) hereof, in accordance with SECTION 4.10(A), the Servicer may modify,
vary or waive the terms of any Defaulted Home Loan in a manner that, in the
Servicer's good faith judgement, would minimize the loss that might otherwise be
experienced with respect to such Defaulted Home Loan under the circumstances,
including without limitation the deferment or forgiveness of any principal or
interest payments due or to become due thereon; PROVIDED, HOWEVER, that no such
modification, variation or waiver of a Home Loan shall involve the execution by
the related Obligor of a new Debt Instrument. If a Defaulted Home Loan is
modified pursuant to this Section in a manner that releases a portion of the
Principal Balance thereof, then such released amount shall be included as "Net
Loan Losses" hereunder.
(c) SHORT SALES AND SUBSTITUTIONS OF COLLATERAL. In accordance with
the Accepted Servicing Procedures, the Servicer may permit an Obligor, who is
selling their Property that constitutes such Obligor's principal residence and
relocating to another location, to substitute as collateral for the related Home
Loan the Obligor's new single family residence in place of the Property being
sold or any other real or personal property of the Obligor, which may include an
interim substitution of personal property pending the Obligor's acquisition of a
new residence. Other than the pledge of any incident or ancillary personal
property in connection with the pledge of real property, any pledge of personal
property by an Obligor as for the related Home Loan pursuant to this Subsection
("SUBSTITUTE COLLATERAL") shall be limited to personal property consisting of
one or more of the following types: (1) a deposit account at any federally
insured depository institution; (2) a certificate of deposit or time deposit of
any federally insured depository institution; or (3) such other types of
personal property that have been approved by the Grantor Trustee, the Indenture
Trustee and each Rating Agency as a form of Substitute Collateral hereunder,
which may include an instrument (within the meaning of Section 9-105(1) of the
UCC) or a security (within the meaning of Section 8-102(1) of the UCC). Under
certain circumstances, if such Obligor has received net proceeds from the sale
of the prior residence that will not be applied to the purchase of the new
residence, then the Servicer, in its discretion, may require that such Obligor
either (i) make a partial prepayment in reduction of the principal balance of
the Home Loan, or (ii) place such funds into a depository account or certificate
of deposit as collateral for the related Home Loan. The Servicer shall undertake
all actions, as deemed necessary or appropriate by the Servicer to effectuate
the substitution of any real or personal property by an Obligor as collateral
for the related Home Loan pursuant to this Subsection and the release of the
then existing Property including all such actions to effectuate: (1) the
inclusion of the security interests in such Substitute Collateral as part of the
Grantor Trust Estate; (2) the delivery to the applicable Custodian for inclusion
in the related Grantor Trustee's Home Loan File of an appropriate security
agreement with respect to such Substitute Collateral (including a new Mortgage
or Manufactured Home Contract with respect to any real property being
substituted); (3) the delivery and pledge of the security interests in such
Substitute Collateral to the Grantor Trustee under the Grantor Trust Agreement,
including the delivery of any substitute Collateral consisting of primarily
personal property in the same manner as provided by the definition of "Delivery"
in SECTION 1.01 hereof; and (4) any other actions as reasonably requested by the
Grantor Trustee or Indenture Trustee to accomplish such substitution of
Substitute Collateral.
In addition, if an Obligor is selling their Property and the
circumstances relating to such sale involve compensating factors or a distressed
situation, in each case as determined solely by the Servicer, then in accordance
with the Accepted Servicing Procedures the Servicer may: (i) accept a partial
prepayment by the Obligor of the Principal Balance in consideration for a
release of the Property as security for the Home Loan, but with a continuation
of the Debt Instrument and the Home Loan on an unsecured basis (i.e., a "short
sale"); or (ii) accept a settlement involving a partial payment by the Obligor
in consideration for the termination of the Home Loan, the cancellation of the
Debt Instrument and the release of the Property (i.e., a "short pay-off").
(d) SALE AND CHARGE-OFF OF DEFAULTED HOME LOANS. In accordance with
SECTION 4.10(A) HEREOF, the Servicer, in its discretion, shall have the power
and authority to sell any Defaulted Home Loan or Liquidated Home Loan, on behalf
of the Grantor Trustee for the benefit of the Grantor Trust Holder and the
Securityholders, to one or more Persons in a manner that will be likely to
obtain a reasonable recovery of net proceeds therefrom under the circumstances.
Notwithstanding the preceding sentence, an Affiliate of the Servicer shall have
the right to purchase any Defaulted Home Loan, if at the time of such purchase
none of the original ratings assigned to the Notes by any Rating Agency have
been downgraded, or if a ratings downgrade has occurred each Rating Agency
consents to such purchase. The purchase price paid for any Defaulted Home Loan
sold to an Affiliate of the Servicer shall not be less than the price that, in
the reasonable judgment of the Servicer, would have been paid for such Defaulted
Home Loan by Person who is not an Affiliate of the Servicer. The Servicer shall
promptly deposit the Net Liquidation Proceeds, as applicable, from the sale of
any Defaulted Home Loans or Liquidated Home Loans into the Collection Account in
accordance with SECTION 5.01 hereof.
(e) DEFAULTED SUPERIOR LIENS. If the Servicer is notified that any
lienholder under a Superior Lien has accelerated or intends to accelerate the
obligations secured by such Superior Lien, or has declared or intends to declare
a default under the related mortgage or the promissory note secured thereby, or
has filed or intends to file an election to have any Property sold or
foreclosed, then, in accordance with the SECTION 4.10(A) hereof and on behalf of
the Grantor Trust and the Grantor Trustee, the Servicer shall take all
reasonable actions that are necessary to protect the interests of the Grantor
Trust Holder and/or to preserve the security of the related Home Loan. The
Servicer shall promptly notify the Grantor Trustee if it determines not to take
action with respect to such Superior Lien.
(f) FORECLOSURE ACTIONS. In accordance with the criteria for
proceeding against the Property set forth in SECTION 4.10(A) hereof, unless
otherwise prohibited by applicable law or court or administrative order, the
Servicer, on behalf of the Grantor Trust Holders, may, at any time, institute
foreclosure proceedings to the extent permitted by law, exercise any power of
sale to the extent permitted by law, obtain a deed in lieu of foreclosure, or
otherwise acquire possession of or title to the related Property, by operation
of law or otherwise. In accordance with SECTION 4.10(A) hereof, and (i) in the
case of any Mortgage or Manufactured Home Contract in a first lien position the
Servicer shall, or (ii) in the case of any Mortgage or Manufactured Home
Contract in a subordinate lien position the Servicer shall have the option to,
institute foreclosure proceedings, repossess, exercise any power of sale to the
extent permitted by law, obtain a deed in lieu of foreclosure or otherwise
acquire possession of or title to any Property, by operation of law or
otherwise; PROVIDED, HOWEVER, that in each case the Servicer shall have
determined there is a reasonable likelihood of (A) recovering an economically
significant amount attributable to the outstanding interest and principal owing
on such Home Loan as a result of such actions, in excess of (B) the costs and
expenses to obtain such recovery (including without limitation any Servicing
Advances and, if applicable, the outstanding indebtedness of all Superior
Liens), and in relation to (C) the expected timing of such recovery therefrom.
Prior to acquiring any Foreclosure Property, however, the Servicer
shall cause a review to be performed, in accordance with the Accepted Servicing
Procedures, on the related Property by a company such as Equifax, Inc. or
Toxicheck, and the scope of such review shall be limited to the review of public
records and documents for indications that such Property has on it, has under
it, or is near hazardous or toxic material or waste. If such review reveals that
the Property has on it, under it or is near hazardous or toxic material or waste
or reveals any other environmental problem, and the Servicer decides to proceed
with the acquisition of such Property, then the Servicer shall provide to the
Master Servicer, the Grantor Trustee and the Indenture Trustee an Officer's
Certificate with a copy of the related report that substantiates such decision.
Such Officer's Certificate shall provide that based on an analysis of all
available information in the report (including potential clean up costs and
liability claims) at the time it is the best judgment of the Responsible Officer
making such certification that such foreclosure shall increase Net Liquidation
Proceeds to the Grantor Trust. Upon the receipt of any such Officer's
Certificate, the Grantor Trustee, in its reasonable discretion, shall determine
whether to take title to such Property. The Grantor Trustee shall promptly
forward such report and Officer's Certificate to the Grantor Trust Holder.
(g) POWERS OF ATTORNEY. The Grantor Trustee shall furnish the
Servicer, within 5 days after request of the Servicer therefor, any powers of
attorney and other documents necessary and appropriate to carry out its duties
under SECTIONS 4.10 and 4.11 hereof, including any documents or powers of
attorney necessary to foreclose any Mortgage or Manufactured Home Contract. The
forms of any such powers or documents shall be appended to such requests.
(h) POST LIQUIDATION PROCEEDS. During any Due Period occurring after
a Home Loan becomes a Liquidated Home Loan, the Servicer shall deposit into the
Collection Account any Net Liquidation Proceeds received by it with respect to
such Liquidated Home Loan or the related Foreclosure Property.
Section 4.11 TITLE, MANAGEMENT AND DISPOSITION OF FORECLOSURE
PROPERTY.
(a) GENERAL STANDARD. If any Property is acquired in foreclosure or
by deed in lieu of foreclosure (a "FORECLOSURE PROPERTY") pursuant to SECTION
4.10, the deed or certificate of sale shall be taken in the name of the Grantor
Trustee for the benefit of the Grantor Trust Holder. The Servicer, or its
agents, shall manage, conserve, protect, operate, market, sell and liquidate
each Foreclosure Property for the Grantor Trustee and the Grantor Trust Holder
solely for the purpose of the prudent and prompt disposition and sale of such
Foreclosure Property in accordance with the Accepted Servicing Procedures. The
Servicer shall be responsible for all costs and expenses incurred by it with
respect to any Foreclosure Property; PROVIDED, HOWEVER, that such costs and
expenses will be recoverable as Servicing Advances by the Servicer as
contemplated herein.
(b) SALE OF FORECLOSURE PROPERTY. The Servicer may offer to sell to
any Person any Foreclosure Property, if and when the Servicer determines, in a
manner consistent with the Accepted Servicing Procedures, that such a sale would
be in the best interests of the Grantor Trust. The Servicer shall give the
Master Servicer, the Grantor Trustee and the Indenture Trustee notice of its
intention to sell any Foreclosure Property and shall accept the highest bid
received from any Person that is determined to be a fair price for such
Foreclosure Property by the Servicer, if the highest bidder is a Person other
than an Affiliate of the Servicer, or by an Independent appraiser retained by
the Servicer, if the highest bidder is an Affiliate of the Servicer. In the
absence of any bid determined to be fair as aforesaid, the Servicer shall offer
the affected Foreclosure Property for sale to any Person, other than an
Affiliate of the Servicer, in a commercially reasonable manner for a period of
not less than 10 or more than 30 days, and shall accept the highest cash bid
received therefor in excess of the highest bid previously submitted. If no such
bid is received, any Affiliate of the Servicer may resubmit its original bid and
the Servicer shall accept the highest outstanding cash bid, regardless of from
whom received. No Affiliate of the Servicer shall be obligated to submit a bid
to purchase any Foreclosure Property and, notwithstanding anything to the
contrary herein, neither the Grantor Trustee, the Owner Trustee or the Indenture
Trustee, in its individual capacity, nor any of its Affiliates may bid for or
purchase any Foreclosure Property pursuant hereto.
Subject to the provisions of SECTION 4.10 hereof, the Servicer shall
act on behalf of the Grantor Trustee in negotiating and taking any other action
necessary or appropriate in connection with the sale of any Foreclosure
Property, including the collection of all amounts payable in connection
therewith. Any sale of a Foreclosure Property shall be without recourse to the
Grantor Trustee, the Master Servicer, the Servicer or the Grantor Trust and, if
consummated in accordance with the terms of this Agreement, neither the Servicer
nor the Grantor Trustee shall have any liability to any Grantor Trust Holder,
the Master Servicer or any Securityholder with respect to the purchase price
therefor accepted by the Servicer or the Grantor Trustee.
(c) RESTORATION OF FORECLOSURE PROPERTY. If a Foreclosure Property
has suffered damage and the complete restoration of such property is not fully
reimbursable by the proceeds from any hazard insurance policies, then the
Servicer shall not be required to make any Servicing Advance for the restoration
of such Foreclosure Property, unless in the reasonable judgment of the Servicer,
as evidenced by an Officer's Certificate (which shall be delivered to the Master
Servicer), such restoration is likely to increase the net proceeds from the
liquidation of the related Home Loan after reimbursement for all Servicing
Advances. (See also SECTION 4.08 regarding collections from insurance policies.)
(d) CONTRACTING FOR OPERATION OF FORECLOSURE PROPERTY. In accordance
with the Accepted Servicing Procedures, the Servicer may contract with any
independent contractor for the operation, management, marketing or sale of any
Foreclosure Property; PROVIDED, HOWEVER, that the terms and conditions of any
such contract shall not be inconsistent with this Agreement; PROVIDED, FURTHER,
that none of the provisions of this SECTION 4.11 relating to any such contract
or to actions taken through any such independent contractor shall be deemed to
relieve the Servicer of any of its duties and obligations hereunder with respect
to the operation, management, marketing or sale of any such Foreclosure
Property. The Servicer shall be entitled to enter into any agreement with any
independent contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such independent
contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall not be liable for any fees owed by it
to any such independent contractor and any amounts so expended shall be deemed
Servicing Advances.
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01 COLLECTION ACCOUNT AND NOTE PAYMENT ACCOUNT.
(a) (i) ESTABLISHMENT OF COLLECTION ACCOUNT. The Servicer, for the
benefit of the Securityholders, the Indenture Trustee and the Grantor Trust
Holder, shall cause to be established and maintained in the name of the
Indenture Trustee one or more Collection Accounts (collectively, the "COLLECTION
ACCOUNT"), which shall be separate Eligible Accounts and may be
interest-bearing, and which shall be entitled "Collection Account, U.S. Bank
National Association, as Indenture Trustee, in trust for the Empire Funding Home
Loan Asset Backed Notes, Series 1999-1." The Collection Account may be
maintained with the Indenture Trustee or any other depository institution which
satisfies the requirements set forth in the definition of Eligible Account. The
creation of any Collection Account other than one maintained with the Indenture
Trustee shall be evidenced by a letter agreement between the Servicer and the
depository institution acceptable to the Indenture Trustee. A copy of such
letter agreement shall be furnished to the Indenture Trustee and, upon request
of any Grantor Trust Holder, to such Grantor Trust Holder. Funds in the
Collection Account shall be invested in accordance with SECTION 5.03 hereof.
The Collection Account shall be established, as of the Closing Date,
with the Indenture Trustee as an Eligible Account pursuant to the definition
thereof. The Collection Account may, upon written notice to the Grantor Trustee
and the Indenture Trustee, be transferred to a different depository institution
so long as such transfer is to an Eligible Account acceptable to the Indenture
Trustee.
(ii) ESTABLISHMENT OF NOTE PAYMENT ACCOUNT. No later than the
Closing Date, the Servicer, for the benefit of the Noteholders, shall
cause to be established and maintained with the Indenture Trustee one or
more Note Payment Accounts (collectively, the "NOTE PAYMENT ACCOUNT"),
which shall be separate Eligible Accounts and may be interest-bearing, and
which shall be entitled "Note Payment Account, U.S. Bank National
Association, as Indenture Trustee, in trust for the Empire Funding Home
Loan Asset Backed Notes, Series 1999-1." Funds in the Note Payment Account
shall be invested in accordance with SECTION 5.03 hereof.
(b) (i) DEPOSITS TO COLLECTION ACCOUNT. The Servicer shall use its
best efforts to deposit or cause to be deposited (without duplication), within
two (2) Business Days after receipt thereof, into the Collection Account and
retain therein in trust for the benefit of the Grantor Trust Holder:
(A) all payments of principal and interest on the Home
Loans collected after the Cut-Off Date, but excluding 80% of the
interest collected on each Home Loan during the first Due Period
which shall be retained by the Transferor that sold such Home Loan
to the Depositor;
(B) all Net Liquidation Proceeds pursuant to SECTION
4.11 hereof;
(C) all Insurance Proceeds;
(D) all Released Property Proceeds;
(E) any amounts payable in connection with the
repurchase of any Home Loan and the amount of any Substitution
Adjustment pursuant to SECTION 2.06 of the Grantor Trust Agreement
and SECTION 3.05 hereof;
(F) the deposit of the Termination Price under SECTION
11.01 hereof; and
(G) amounts received from Empire Subservicer or the
Servicer pursuant to SECTION 5.03(B) hereof in respect of losses on
funds held in the Collection Account.
The Servicer or Empire Subservicer, as applicable, shall be entitled
to retain and not deposit into the Collection Account any amounts received with
respect to a Home Loan that constitute additional servicing compensation
pursuant to SECTION 7.03 hereof or additional subservicing compensation pursuant
to SECTION 4.05(B) hereof, and such amounts retained by the Servicer or Empire
Subservicer during a Due Period shall be excluded from the calculation of the
Servicing Compensation or Empire Subservicing Compensation, as applicable, that
is distributable to the Servicer or Empire Subservicer, as applicable, from the
Note Payment Account on the next Payment Date following such Due Period.
(ii) DEPOSITS TO NOTE PAYMENT ACCOUNT.
(A) On the sixth (6th) Business Day prior to each
Payment Date, the Indenture Trustee (based on information provided
by the Servicer for such Payment Date) shall withdraw from the
Collection Account the Available Collection Amount as a distribution
in respect of the Grantor Trust Certificate pursuant to SECTION 5.01
of the Grantor Trust Agreement and deposit such into the Note
Payment Account for such Payment Date; and
(B) Amounts deposited by the Master Servicer pursuant to
SECTION 5.03(B) hereof on account of net losses sustained, if any,
by investments held therein.
(iii) WITHDRAWALS FROM COLLECTION ACCOUNT. The Indenture
Trustee, at the direction of the Servicer, shall also make the following
withdrawals from the Collection Account, in no particular order of
priority:
(A) to withdraw any amount not required to be deposited
in the Collection Account or deposited therein in error;
(B) to withdraw any Servicing Advance Reimbursement
Amounts; and
(C) to clear and terminate the Collection Account in
connection with the termination of this Agreement.
(c) WITHDRAWALS FROM NOTE PAYMENT ACCOUNT. To the extent funds are
available in the Note Payment Account, the Indenture Trustee (based on the
information provided by the Servicer contained in the Servicer's Monthly
Remittance Report for such Payment Date) shall make withdrawals therefrom by
9:00 a.m. (New York City time) on each Payment Date, for application in the
following order of priority:
(i) to distribute on such Payment Date the following amounts
related to such Payment Date pursuant to the Indenture in the following
order: (a) to the Master Servicer an amount equal to the Master Servicer
Compensation and all unpaid Master Servicer Compensation from prior
Payment Dates; (b) to Empire Funding (if Empire Funding is the Subservicer
for such Payment Date) an amount equal to the Empire Subservicer
Compensation (net of the sum of any amounts retained prior to deposit into
the Collection Account pursuant to subsection (b)(1) above) and all unpaid
Empire Subservicer Compensation from prior Payment Dates; (c) to the
Servicer, on behalf of the Grantor Trustee, an amount equal to the
Servicing Compensation (net of the sum of any amounts retained prior to
deposit into the Collection Account pursuant to subsection (b)(1) above)
and all unpaid Servicing Compensation from prior Payment Dates; (d) to the
Indenture Trustee, an amount equal to the Indenture Trustee Fee and all
unpaid Indenture Trustee Fees from prior Payment Dates; (e) to the Owner
Trustee, an amount equal to the Owner Trustee Fee and all unpaid Owner
Trustee Fees from prior Payment Dates; (f) to the Custodian on behalf of
the Grantor Trustee, an amount equal to the Custodian Fee, if any, and all
unpaid Custodian Fees from prior Payment Dates; and (g) to the Grantor
Trustee, an amount equal to the Grantor Trustee Fee, if any, and all
unpaid Grantor Trustee Fees from prior Payment Dates; and
(ii) subject to the priority of payments in Subsections
5.01(d) and (e) below, to deposit into the Certificate Distribution
Account the applicable portions of the Available Payment Amount
distributable in respect of the Residual Interest Certificates as
calculated pursuant to subsection (e) of this SECTION 5.01 on such Payment
Date.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee and the Servicer shall continue to maintain the Collection Account and
the Note Payment Account hereunder until the Class Principal Balance of each
Class of Notes has been reduced to zero.
(d) REGULAR PAYMENT AMOUNT WITHDRAWALS FROM NOTE PAYMENT ACCOUNT. On
each Payment Date, the Indenture Trustee (based on the information provided by
the Servicer contained in the Servicer's Monthly Remittance Report for such
Payment Date) shall distribute the Regular Payment Amount from the Note Payment
Account (in the case of all amounts distributable to Noteholders) and from the
Certificate Distribution Account (in the case of all amounts distributable to
Certificateholders), in the following order of priority:
(i) to the holders of the Senior Notes pro rata, their
respective portions of the Senior Noteholders Interest Payment Amount for
such Payment Date;
(ii) sequentially, to the holders of the Class M-1 and Class
M-2 Notes, in that order, their respective portions of the Mezzanine
Noteholders' Interest Payment Amount for such Payment Date;
(iii) sequentially, to the holders of the Class B-1 and Class
B-2 Notes, in that order, their respective portions of the Subordinate
Noteholders' Interest Payment Amount for such Payment Date;
(iv) (a) sequentially, to pay principal of the Class A-1,
Class A-2, Class A-3, Class A-4 and Class A-5 Notes, in that order, until
their respective Class Principal Balances are reduced to zero, the amount
necessary to reduce the aggregate Class Principal Balance of the Senior
Notes to the Senior Optimal Principal Balance for such Payment Date; (b)
PROVIDED, HOWEVER, that notwithstanding the payment priorities set forth
in clause (a) above, on each Payment Date occurring on or after the
reduction of the Class Principal Balances of the Class M-1 Notes, Class
M-2 Notes, Class B-1 Notes and Class B-2 Notes to zero through the
application of Allocable Loss Amounts, payments shall be made among the
then outstanding Senior A Notes pro rata based on their respective Class
Principal Balances and not in accordance with the priorities set forth in
clause (a) above;
(v) sequentially, to pay principal of the Class M-1 Notes and
Class M-2 Notes in that order, the amount necessary to reduce the Class
Principal Balances thereof to the Class M-1 Optimal Principal Balance and
the Class M-2 Optimal Principal Balance, respectively, for such Payment
Date;
(vi) sequentially, to pay principal of the Class B-1 and Class
B-2 Notes, in that order, the amount necessary to reduce the Class
Principal Balances thereof to the Class B-1 Optimal Principal Balance and
the Class B-2 Optimal Principal Balance, respectively, for such Payment
Date;
(vii) any remaining amount after the application of funds
pursuant to clauses (i)-(vi) above to be applied in the same manner as
Excess Spread as specified in subsection (e) below.
(e) EXCESS SPREAD WITHDRAWALS FROM NOTE PAYMENT ACCOUNT. On each
Payment Date, the Indenture Trustee (based on the information provided by the
Servicer contained in the Servicer's Monthly Remittance Report for such Payment
Date) shall distribute the Excess Spread in the following order of priority (in
each case after giving effect to all payments specified in SECTION 5.01(D)
hereof):
(i) in an amount up to the Overcollateralization Deficiency
Amount, if any, as follows:
(A) sequentially, to pay principal of the Class A-1,
Class A-2, Class A-3, Class A-4 Notes and Class A-5 Notes, in that
order, until their respective Class Principal Balances are reduced
to zero, the amount necessary to reduce the aggregate Class
Principal Balance of such Senior Notes to the Senior Optimal
Principal Balance for such Payment Date;
(B) sequentially, to pay principal of the Class M-1
Notes and Class M-2 Notes, in that order, until the respective Class
Principal Balances thereof have been reduced to the Class M-1
Optimal Principal Balance and Class M-2 Optimal Principal Balance,
respectively, for such Payment Date; and
(C) sequentially, to pay principal of the Class B-1
Notes and Class B-2 Notes, in that order, until the respective Class
Principal Balances thereof have been reduced to the Class B-1
Optimal Principal Balance and the Class B-2 Optimal Principal
Balance, respectively, for such Payment Date; and
(ii) sequentially, to the Class M-1 Notes, the Class M-2
Notes, Class B-1 Notes and the Class B-2 Notes, in that order, until their
respective Loss Reimbursement Deficiencies, if any, have been paid in full
(in the case of the Class M-1 Notes and Class M-2 Notes: first, to the
reimbursement of Allocable Loss Amounts until completely reimbursed and,
then, to any accrued interest thereon);
(iii) to pay any remaining amount (A) first, to the Servicer
or Empire Subservicer, as applicable, in an amount equal to any
outstanding Nonrecoverable Servicing Advances, and (B) then, for deposit
into the Certificate Distribution Account for payment to the holders of
the Residual Interest Certificates.
(f) All payments made on each Class of Notes on each Payment Date
will be made on a pro rata basis among the Noteholders of record of such Class
of Notes on the next preceding Record Date based on the Note Percentage Interest
represented by their respective Notes, without preference or priority of any
kind, and, except as otherwise provided in the next succeeding sentence, shall
be made by wire transfer of immediately available funds to the account of such
Noteholder, if such Noteholder shall own of record Notes in original
Denominations aggregating at least $250,000 and shall have so notified the
Indenture Trustee, and otherwise by check mailed to the address of such
Noteholder appearing in the Notes Register. The final payment on each Note will
be made in like manner, but only upon presentment and surrender of such Note at
the location specified in the notice to Noteholders of such final payment.
Section 5.02 CERTIFICATE DISTRIBUTION ACCOUNT.
(a) ESTABLISHMENT OF CERTIFICATE DISTRIBUTION ACCOUNT. No later than
the Closing Date, the Servicer, for the benefit of the Certificateholders, shall
cause to be established and maintained with the Indenture Trustee for the
benefit of the Owner Trustee, on behalf of the Issuer and the
Certificateholders, one or more Certificate Distribution Accounts (collectively,
the "CERTIFICATE DISTRIBUTION ACCOUNT"), which shall be separate Eligible
Accounts and may be interest-bearing, entitled "Certificate Distribution
Account, U.S. Bank National Association, as Indenture Trustee, in trust for the
Empire Funding Home Loan Owner Trust Series 1999-1." Funds in the Certificate
Distribution Account shall be invested in accordance with SECTION 5.03 hereof.
(b) DEPOSITS TO AND DISTRIBUTIONS FROM CERTIFICATE DISTRIBUTION
ACCOUNT. On each Payment Date the Indenture Trustee shall withdraw from the Note
Payment Account all amounts required to be deposited into the Certificate
Distribution Account with respect to such Payment Date pursuant to SECTION
5.01(C)(II) hereof and, on behalf of the Owner Trustee, shall deposit such
amounts into the Certificate Distribution Account. The Indenture Trustee shall
make payments of all remaining amounts on deposit in the Note Payment Account to
the holders of the Notes to the extent of amounts due and unpaid on the Notes
for principal thereof and interest thereon in accordance with SECTION 5.01(D)
and (E) hereof. The Indenture Trustee, on behalf of the Owner Trustee, shall
distribute all amounts on deposit in the Certificate Distribution Account to the
holders of the Residual Interest Certificates. The Indenture Trustee, on behalf
of the Owner Trustee, also shall withdraw from the Certificate Distribution
Account any amount not required to be deposited in the Certificate Distribution
Account or deposited therein in error.
(c) DISTRIBUTIONS ON THE RESIDUAL INTEREST CERTIFICATES. All
distributions made on the Residual Interest Certificates on each Payment Date
will be made pro rata among the holders of the Residual Interest Certificates of
record on the next preceding Record Date based on their Percentage Interest in
the Residual Interest Certificates, without preference or priority of any kind,
and, except as otherwise provided in the next succeeding sentence, shall be made
by wire transfer of immediately available funds to the account of each such
holder, if such holder shall own of record a Residual Interest Certificate in an
original denomination aggregating at least a 50% holding of the Residual
Interest Certificates and shall have so notified the Indenture Trustee at least
5 Business Days prior thereto, and otherwise by check mailed to the address of
such Residual Interest holder appearing in the Certificate Register. The final
distribution on each Residual Interest Certificate will be made in like manner,
but only upon presentment and surrender of such Residual Interest Certificate at
the location specified in the notice to holders of the Residual Interest
Certificates of such final distribution. Any amount distributed to the holders
of the Residual Interest Certificates on any Payment Date shall not be subject
to any claim or interest of holders of the other Classes of Notes.
Section 5.03 TRUST ACCOUNTS; TRUST ACCOUNT PROPERTY.
(a) CONTROL OF TRUST ACCOUNTS. Each of the Trust Accounts (or
interests therein) established hereunder has been pledged by the Issuer to the
Indenture Trustee under the Indenture and shall be subject to the lien of the
Indenture. In addition to the provisions hereunder, each of the Trust Accounts
shall also be established and maintained pursuant to the Indenture. Amounts
distributed from each Trust Account in accordance with the Indenture and this
Agreement shall be released from the lien of the Indenture upon such
distribution thereunder or hereunder. Subject to SECTIONS 5.01 and 5.02 hereof,
the Indenture Trustee shall possess all right, title and interest in and to all
funds on deposit from time to time in the Trust Accounts (other than the
Certificate Distribution Account) and in all proceeds thereof (including all
income thereon) and all such funds, investments, proceeds and income shall be
part of the Trust Account Property and the Owner Trust Estate. If, at any time,
any Trust Account ceases to be an Eligible Account, the Indenture Trustee (or
the Servicer on its behalf) shall, within ten Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) (i) establish a new Trust Account as an Eligible Account, (ii)
terminate the ineligible Trust Account, and (iii) transfer any cash and
investments from such ineligible Trust Account to such new Trust Account.
With respect to the Trust Accounts (other than the Certificate
Distribution Account), the Indenture Trustee agrees, by its acceptance hereof,
that each such Trust Account shall be subject to the sole and exclusive custody
and control of the Indenture Trustee for the benefit of the Securityholders and
the Issuer, as the case may be, and the Indenture Trustee shall have sole
signature and withdrawal authority with respect thereto.
In addition to this Agreement and the Indenture, the Certificate
Distribution Account established hereunder shall also be subject to and
established and maintained in accordance with the Owner Trust Agreement. Subject
to rights of the Indenture Trustee and the Noteholders hereunder and under the
Indenture, the Owner Trustee shall possess for the benefit of the
Certificateholders all right, title and interest in all funds on deposit from
time to time in the Certificate Distribution Account and in all proceeds thereof
(including all income thereon) and all such funds, investments, proceeds and
income shall be part of the Trust Account Property and the Owner Trust Estate.
Subject to the rights of the Indenture Trustee and the Noteholders, the Owner
Trustee agrees, by its acceptance hereof, that such Certificate Distribution
Account shall be subject to the sole and exclusive custody and control of the
Owner Trustee for the benefit of the Issuer and the parties entitled to payments
and distributions therefrom, including, without limitation, the
Certificateholders, and the Owner Trustee shall have sole signature and
withdrawal authority with respect to the Certificate Distribution Account.
Notwithstanding the preceding, the distribution of amounts from the Certificate
Distribution Account in accordance with SECTION 5.01(C)(II) hereof shall also be
made for the benefit of the Indenture Trustee (including without limitation with
respect to its duties under the Indenture and this Agreement relating to the
Owner Trust Estate), and the Indenture Trustee (in its capacity as Indenture
Trustee) shall have the right, but not the obligation, to take custody and
control of the Certificate Distribution Account and to cause the distribution of
amounts therefrom in the event that the Owner Trustee fails to distribute such
amounts in accordance with subsections (c) and (d) of SECTION 5.02.
In accordance with SECTIONS 5.01 and 5.02 hereof, the Servicer or
the Master Servicer shall have the power, revocable by the Indenture Trustee or
by the Owner Trustee with the consent of the Indenture Trustee, to instruct the
Indenture Trustee or Owner Trustee to make withdrawals and payments from the
Trust Accounts for the purpose of permitting the Servicer, the Master Servicer
or the Issuer to carry out their respective duties hereunder or permitting the
Indenture Trustee or Owner Trustee to carry out their respective duties herein
or under the Indenture, the Owner Trust Agreement or the Grantor Trust
Agreement, as applicable.
(b) (i) INVESTMENT OF FUNDS. So long as no Event of Default shall
have occurred and be continuing, the funds held in any Trust Account may
be invested by the Indenture Trustee (to the extent practicable and
consistent with any requirements of the Code) in Permitted Investments,
except that funds held in the Note Payment Account shall be invested in
Permitted Investments as directed by the Master Servicer and funds held in
the Collection Account shall be invested in Permitted Investments as
directed by Empire Subservicer, if it is acting as Subservicer, otherwise
the Servicer. Any directions for investment of funds in any Trust Account
shall be made in writing or by telephone or facsimile transmission
confirmed in writing. In any case, funds in any Trust Account must be
available for withdrawal without penalty, and any Permitted Investments
must mature or otherwise be available for withdrawal, not later than the
Business Day immediately preceding the Payment Date next following the
date of such investment (except that Permitted Investments representing
investments in the Indenture Trustee or the Master Servicer may mature on
the Payment Date) and shall not be sold or disposed of prior to its
maturity subject to subsection (b)(2) of this Section. All interest and
any other investment earnings on amounts or investments held in any Trust
Account shall be deposited into such Trust Account immediately upon
receipt by the Indenture Trustee. All Permitted Investments in which funds
in any Trust Account (other than the Certificate Distribution Account) are
invested must be held by or registered in the name of "U.S. Bank National
Association, as Indenture Trustee, in trust for the Empire Funding Home
Loan Asset Backed Notes, Series 1999-1." While the Indenture Trustee holds
the Certificate Distribution Account, on behalf of the Owner Trustee, all
Permitted Investments in which funds in the Certificate Distribution
Account are invested shall be held by or registered in the name of "U.S.
Bank National Association, on behalf of the Owner Trustee, in trust for
the Empire Funding Home Loan Asset Backed Notes, Series 1999-1."
(ii) INSUFFICIENCY AND LOSSES IN TRUST ACCOUNTS. If any
amounts are needed for disbursement from any Trust Account held by or on
behalf of the Indenture Trustee and sufficient uninvested funds are not
available to make such disbursement, the Indenture Trustee shall cause to
be sold or otherwise converted to cash a sufficient amount of the
investments in such Trust Account. The Indenture Trustee shall not be
liable for any investment loss or other charge resulting therefrom, unless
such loss or charge is caused by the failure of the Indenture Trustee or
Owner Trustee, respectively, to perform in accordance with this SECTION
5.03 hereof or the Indenture Trustee is the obligor under the Permitted
Investment and has defaulted thereon.
If any losses are realized in connection with any investment in any
Trust Account pursuant to this Agreement and the Indenture, then either Empire
Subservicer, if acting as Subservicer, pursuant to SECTION 5.01(B)(I) hereof,
otherwise the Servicer, in the case of the Collection Account, or the Master
Servicer pursuant to SECTION 5.01(C) hereof, in the case of the Note Payment
Account, shall deposit the amount of such losses (to the extent not offset by
income from other investments in such Trust Account) into such Trust Account
immediately upon the realization of such loss. All interest and any other
investment earnings on amounts held in any Trust Account (other than the Note
Payment Account and the Collection Account) shall be the income of the Issuer
(or, when there is a single beneficial owner of a Residual Interest Certificate,
such owner), and for federal and state income tax purposes the Issuer (or such
single beneficial owner) shall be the owner (or beneficial owner in the case of
the Collection Account).
(c) NO LIABILITY FOR LOSSES. Subject to Section 6.01 of the
Indenture, the Indenture Trustee shall not in any way be held liable by reason
of any insufficiency in any Trust Account held by the Indenture Trustee
resulting from any investment loss on any Permitted Investment included therein
(except to the extent that the Indenture Trustee is the obligor and has
defaulted thereon).
(d) DELIVERY OF TRUST ACCOUNT PROPERTY. With respect to the Trust
Account Property, the Indenture Trustee acknowledges and agrees that:
(i) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Accounts, subject to the
last sentence of subsection (a) of this SECTION 5.03; and each such
Eligible Account shall be subject to the sole and exclusive dominion,
custody and control of the Indenture Trustee; and, without limitation on
the foregoing, the Indenture Trustee shall have sole signature authority
with respect thereto;
(ii) any Trust Account Property described in clause (a) of the
definition of "Delivery" in SECTION 1.1 hereof shall be delivered to and
maintained by the Indenture Trustee in accordance with the definition of
"Delivery" in SECTION 1.1 hereof and shall be held, pending maturity or
disposition, solely by or on behalf of the Indenture Trustee; and
(iii) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered to and maintained by the Indenture Trustee
in accordance with paragraph (b) of the definition of "Delivery" in
SECTION 1.1 hereof.
Section 5.04 ALLOCATION OF LOSSES. (a) In the event that Net
Liquidation Proceeds, Insurance Proceeds or Released Property Proceeds on a
Liquidated Home Loan are less than the related Principal Balance plus accrued
interest thereon, or any Obligor makes a partial payment of any Monthly Payment
due on a Home Loan, such Net Liquidation Proceeds, Insurance Proceeds, Released
Property Proceeds or partial payment shall be applied to payment of the related
Debt Instrument, first, to interest accrued at the Home Loan Interest Rate and,
then, to principal.
(b) On any Payment Date, any Allocable Loss Amounts shall be applied
to the reduction of the Class Principal Balances of the Class B-2, the Class B-1
Notes, the Class M-1 Notes and Class M-2 Notes in accordance with the Allocable
Loss Amount Priority; PROVIDED HOWEVER, on the date on which the Class Principal
Balance of the Class B-2 Notes would be reduced to zero by the allocation of
losses on the Home Loans pursuant to this SECTION 5.04(B), such losses will be
applied to reduce the Subordinate Noteholders' Monthly Interest Payment Amount
with respect to the Class B-2 Notes to zero prior to the allocation of such
losses to the Class Principal Balance of the Class B-1 Notes.
ARTICLE VI
STATEMENTS AND REPORTS; WITHHOLDING
Section 6.01 STATEMENTS.
(a) No later than each Determination Date, the Servicer shall
deliver to the Indenture Trustee and the Master Servicer by facsimile, the
receipt and legibility of which shall be confirmed by telephone, and with hard
copy thereof to be delivered no later than one (1) Business Day after such
Determination Date, the Servicer's Monthly Remittance Report, setting forth the
date of such Report (day, month and year), the name of the Issuer (i.e., "Empire
Funding Home Loan Owner Trust 1999-1"), the Series designation of the Notes
(i.e., "Series 1999-1") and the date of this Agreement, all in substantially the
form set out in Exhibit B hereto. Furthermore, no later than each Determination
Date, the Servicer shall deliver to the Master Servicer and the Indenture
Trustee a magnetic tape or computer disk providing such information regarding
the Servicer's activities in servicing the Home Loans during the related Due
Period as the Indenture Trustee or the Master Servicer may reasonably require.
The Servicer also shall deliver any Loan Liquidation Reports pursuant to SECTION
4.10(A) hereof.
(b) On each Payment Date, Indenture Trustee shall distribute, based
on information provided by the Servicer, a monthly statement (the "PAYMENT
STATEMENT") to the Depositor, the Master Servicer, the Securityholders and the
Rating Agencies, stating the date of original issuance of the Notes (day, month
and year), the name of the Issuer (i.e., "Empire Funding Home Loan Owner Trust
1999-1"), the Series designation of the Notes (i.e., "Series 1999-1"), the date
of this Agreement and the following information:
(i) the Available Collection Amount, Available Payment
Amount, the Regular Payment Amount and the Excess Spread for the
related Payment Date;
(ii) the Class Principal Balance of each Class of Notes before
and after giving effect to payments made to the holders of such Notes on
such Payment Date, and the Pool Principal Balance as of the first and last
day of the related Due Period;
(iii) the Class Factor with respect to each Class of the Notes
then outstanding;
(iv) the amount of principal, if any, and interest to be
distributed to each Class of Notes on the related Payment Date;
(v) with respect to each Class of Notes, the Optimal
Principal Balance thereof;
(vi) the Overcollateralization Deficiency Amount or any
Overcollateralization Reduction Amount, and any amount to be distributed
to the Noteholders or the holders of the Residual Interest on such Payment
Date;
(vii) the Master Servicer Compensation, the Servicing
Compensation, the Empire Subservicing Compensation, the Indenture Trustee
Fee, the Grantor Trustee Fee, the Owner Trustee Fee and, the Custodian
Fee, if any, for such Payment Date;
(viii) the Overcollateralization Amount on such Payment Date,
the Overcollateralization Target Amount as of such Payment Date, the Net
Loan Losses incurred during the related Due Period, the cumulative Net
Loan Losses as of such Payment Date, the Allocable Loss Amount for such
Payment Date, the application of the Allocable Loss Amount Priority for
such Payment Date and any amounts of Loss Reimbursement Deficiency
reimbursed on such Payment Date;
(ix) the weighted average maturity of the Home Loans and the
weighted average Home Loan Interest Rate of the Home Loans;
(x) certain performance information, including, without
limitation, delinquency and foreclosure information with respect to the
Home Loans and 60-Day Delinquency Amounts (as defined in the definition of
"Six-Month Rolling Delinquency Average" in SECTION 1.01 hereof), as set
forth in the Servicer's Monthly Remittance Report;
(xi) the number of and aggregate Principal Balance of all Home
Loans in foreclosure proceedings and the percent of the aggregate
Principal Balances of such Home Loans to the aggregate Principal Balances
of all Home Loans, all as of the close of business on the last day of the
related Due Period;
(xii) the number of and the aggregate Principal Balance of the
Home Loans in bankruptcy proceedings and the percent of the aggregate
Principal Balances of such Home Loans to the aggregate Principal Balances
of all Home Loans, all as of the close of business on the last day of the
related Due Period;
(xiii) the number of Foreclosure Properties, the aggregate
Principal Balance of the related Home Loans, the book value of such
Foreclosure Properties and the percent of the aggregate Principal Balances
of such Home Loans to the aggregate Principal Balances of all Home Loans,
all as of the close of business on the last day of the related Due Period;
(xiv) during the related Due Period (and cumulatively, from
the Closing Date through the most current Due Period), the number and
aggregate Principal Balance of Home Loans for each of the following: (A)
that became Defaulted Home Loans, (B) that became Liquidated Home Loans,
(C) that became Deleted Home Loans pursuant to SECTION 3.05 hereof as a
result of such Deleted Home Loans being Defective Home Loans, and (D) that
became Deleted Home loans pursuant to SECTION 3.05 hereof as a result of
such Deleted Home Loans being Defaulted Home Loans or a Home Loan in
default or imminent default, including the foregoing amounts by loan type
(i.e., Combination Loans, or Debt Consolidation Loans);
(xv) the scheduled principal payments and the principal
prepayments received with respect to the Home Loans during the Due Period;
and
(xvi) the number and aggregate Principal Balance of Home Loans
that were 30, 60 or 90 days Delinquent as of the close of business on the
last day of the related Due Period.
In the case of information furnished to Securityholders pursuant to
subclause (b)(iv) of this SECTION 6.01, the amounts shall be expressed as a
dollar amount per Note with a $1,000 Denomination.
All reports prepared by the Indenture Trustee of the withdrawals
from and deposits in the Collection Account will be based in whole or in part
upon the information provided to the Indenture Trustee by the Servicer, and the
Indenture Trustee may fully rely upon and shall have no liability with respect
to such information provided by the Servicer.
(c) Within a reasonable period of time after the end of each
calendar year, the Indenture Trustee shall prepare and distribute to each Person
who at any time during the calendar year was a Noteholder such information as is
reasonably necessary to provide to such Person a statement containing the
information set forth in subclauses (b)(iv) of this SECTION 6.01, aggregated for
such calendar year or applicable portion thereof during which such Person was a
Noteholder.
(d) On each Payment Date, the Indenture Trustee shall forward to The
Depository Trust Company and to the holders of the Residual Interest
Certificates a copy of the Payment Statement in respect of such Payment Date and
a statement setting forth the amounts actually distributed to such holders of
the Residual Interest Certificates on such Payment Date, together with such
other information as the Indenture Trustee deems necessary or appropriate.
(e) Within a reasonable period of time after the end of each
calendar year, the Indenture Trustee shall prepare and distribute to each Person
who at any time during the calendar year was a holder of Residual Interest
Certificates, if requested in writing by such Person, a statement containing the
information provided pursuant to the previous paragraph aggregated for such
calendar year or applicable portion thereof during which such Person was a
holder of Residual Interest Certificates.
(f) The Indenture Trustee shall forward to each Noteholder and each
holder of a Residual Interest Certificate, during the term of this Agreement,
such periodic, special or other reports, including information tax returns or
reports required with respect to the Notes and the Residual Interest
Certificates, as shall be necessary, reasonable, or appropriate with respect to
the Noteholders or the holders of Residual Interest Certificates, or otherwise
with respect to the purposes of this Agreement, all such reports or information
in the case of the Residual Interest Certificates to be provided by and in
accordance with such applicable instructions and directions as the Majority
Residual Interestholders may reasonably require.
(g) Reports and computer tapes furnished by the Servicer and the
Indenture Trustee and the Master Servicer pursuant to this Agreement shall be
deemed confidential and of a proprietary nature and shall not be copied or
distributed except in connection with the purposes and requirements of this
Agreement. No Person entitled to receive copies of such reports or tapes shall
use the information therein for the purpose of soliciting the customers of the
Depositor or the Servicer or for any other purpose except as set forth in this
Agreement.
Section 6.02 WITHHOLDING. The Indenture Trustee shall comply with
all requirements of the Code, and applicable state and local laws, with respect
to the withholding from any payments made to any Noteholder of any applicable
withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith, giving due effect to any applicable
exemptions from such withholding and effective certifications or forms provided
by the recipient. Any amounts withheld pursuant to this SECTION 6.02 shall be
deemed to have been paid to the Noteholders for all purposes of this Agreement
or the Indenture.
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 DUE-ON-SALE; DUE-ON-ENCUMBRANCE.
(a) If any Home Loan contains a provision, in the nature of a
"due-on-sale" clause, which by its terms:
(i) provides that such Home Loan shall (or may at the related
lender's option) become due and payable upon the sale or other transfer of
an interest in any related Property; or
(ii) provides that such Home Loan may not be assumed without
the consent of the related lender in connection with any such sale or
other transfer,
then, for so long as such Home Loan is included in the Grantor Trust, the
Servicer, on behalf of the Grantor Trustee, shall exercise any right the Grantor
Trustee may have as the lender of record with respect to such Home Loan (x) to
accelerate the payments thereon or (y) to withhold its consent to any such sale
or other transfer, in a manner consistent with the Accepted Servicing Procedures
and subject to SECTION 4.10 or 7.01(C) hereof.
(b) If any Home Loan contains a provision in the nature of a
"due-on- encumbrance" clause, which by its terms:
(i) provides that such Home Loan shall (or may at the related
lender's option) become due and payable upon the creation of any lien or
other encumbrance on any related Property; or
(ii) requires the consent of the related lender to the
creation of any such lien or other encumbrance on any related Property,
then, for so long as such Home Loan is included in the Grantor Trust, the
Servicer, on behalf of the Grantor Trustee, shall exercise any right the Grantor
Trustee may have as the lender of record with respect to such Home Loan (x) to
accelerate the payments thereon or (y) to withhold its consent to the creation
of any such lien or other encumbrance, in a manner consistent with the Accepted
Servicing Standards and subject to SECTION 4.10 or 7.01(C) hereof.
(c) If a Home Loan does not contain a "due-on-sale" clause or such
clause is reasonably believed by the Servicer not to be enforceable under
applicable law, then the Servicer shall enter into an assumption and
modification agreement with the Person to whom any related Property has been or
is about to be conveyed, pursuant to which such person becomes liable under the
Debt Instrument and, unless prohibited by applicable law or the Home Loan
documents, the Obligor remains liable thereon. In accordance with the Accepted
Servicing Procedures, the Servicer shall have the authority to enter into a
substitution of liability agreement with such person, pursuant to which the
original Obligor is released from liability and such Person is substituted as
Obligor and becomes liable under the Debt Instrument. The Servicer shall notify
the Custodian and the Master Servicer that any such substitution or assumption
agreement has been completed by forwarding to the Custodian a true and correct
copy or, if available, an original of such substitution or assumption agreement,
which copy or original shall be added by the Custodian to the related Grantor
Trustee's Home Loan File. In connection with any assumption or substitution
agreement entered into pursuant to this SECTION 7.01(C) hereof, the Servicer
shall not change the Home Loan Interest Rate or the Monthly Payment, defer or
forgive the payment of principal or interest, reduce the outstanding principal
amount or extend the final maturity date on such Home Loan. Any fee collected by
the Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to the
Servicer as additional Servicing Compensation.
Notwithstanding the foregoing paragraph 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
Home Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
(d) Nothing in this SECTION 7.01 shall constitute a waiver of the
Grantor Trustee's right to receive notice of any assumption of a Home Loan, any
sale or other transfer of the related Property or the creation of any lien or
other encumbrance with respect to such Property.
Section 7.02 RELEASE OF HOME LOAN FILES.
(a) If with respect to any Home Loan:
(i) the outstanding Principal Balance of such Home Loan plus
all interest accrued thereon shall have been paid;
(ii) the Servicer shall have received, in escrow, payment in
full of such Home Loan in a manner customary for such purposes;
(iii) such Home Loan has become a Defective Loan and has been
repurchased or a Qualified Substitute Home Loan has been conveyed to the
Grantor Trustee pursuant to SECTION 3.05 hereof;
(iv) such Home Loan or the related Foreclosure Property has
been sold in connection with the termination of the Issuer and the Grantor
Trust pursuant to SECTION 11.01 hereof; or
(v) such Home Loan is a Defaulted Home Loan or a Liquidated
Home Loan that is liquidated or disposed of pursuant to SECTION 4.10
hereof or the related Foreclosure Property has been sold pursuant to
SECTION 4.11 hereof;
then in each such case, the Servicer shall deliver an Officer's Certificate to
the effect that the Servicer has complied with all of its obligations under this
Agreement with respect to such Home Loan and requesting that the Grantor Trustee
release to the Servicer the related Grantor Trustee's Home Loan File. Upon the
receipt of such Officer's Certificate, the Grantor Trustee shall, within five
Business Days or such shorter period as may be required by applicable law,
release, or cause the applicable Custodian to release (unless such Grantor
Trustee's Home Loan File has previously been released), the related Grantor
Trustee's Home Loan File to the Servicer and execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be necessary to vest ownership of such Home Loan in the Servicer or such other
Person as may be specified in such certificate, the forms of any such instrument
to be appended to such certificate.
(b) If a temporary release of the Grantor Trustee's Home Loan File
is necessary or appropriate for the servicing (which may include any
modification or foreclosure) of any Home Loan, then upon the request of the
Servicer pursuant to SECTION 3(B) of the Custodial Agreement the Grantor Trustee
shall release the related Grantor Trustee's Home Loan File (or any requested
portion thereof) to the Servicer.
Section 7.03 SERVICING COMPENSATION.
As compensation for its services hereunder, the Servicer shall be
entitled to receive from the Collection Account the Servicing Fee (which
Servicing Fee is an expense of the Grantor Trust), out of which the Servicer
shall pay any subservicing fees to any Subservicer (in the event Empire
Subservicer is not acting as Subservicer hereunder). Subject to SECTION 4.05(B),
additional servicing compensation in the form of assumption fees, prepayment
penalties, modification fees, and other administrative fees, insufficient funds
charges, amounts remitted pursuant to SECTION 7.01 hereof and late payment
charges shall be part of the Servicing Compensation payable to the Servicer
hereunder and shall be paid either by the Servicer retaining such additional
servicing compensation prior to deposit in the Collection Account pursuant to
SECTION 5.01(B)(I) hereof or, if deposited in the Collection Account, as part of
the Servicing Compensation withdrawn from the Note Payment Account pursuant to
SECTION 5.01(C)(I) hereof. In addition, if Empire Subservicer is not the
Subservicer, additional compensation attributable to the investment earnings
from the Collection Account shall be part of the Servicing Compensation payable
to the Servicer pursuant to SECTION 5.01(C)(I) hereof.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein. The Servicer
also agrees to pay pursuant to SECTION 10.02 hereof all reasonable costs and
expenses incurred by any successor servicer, the Master Servicer or the Grantor
Trustee in replacing the Servicer upon the resignation of the Servicer or
termination of the Servicer in the event of a default by the Servicer in the
performance of its duties under the terms and conditions of this Agreement,
including, without limitation, any costs or expenses associated with the
complete transfer of all servicing data and the completion, correction or
manipulation of such servicing data as may be required by the successor servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the successor servicer to service the Home Loans properly and
effectively.
Section 7.04 STATEMENT AS TO COMPLIANCE AND FINANCIAL STATEMENTS.
The Servicer and the Subservicer shall deliver to the Indenture Trustee, the
Grantor Trustee, the Depositor, the Master Servicer and the Rating Agencies not
later than 90 days following the end of each fiscal year of the Servicer
(beginning in 1999), an Officer's Certificate stating that (i) a review of the
activities of the Servicer or the Subservicer, as applicable, during the
preceding year and of performance under this Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based on
such review, the Servicer or the Subservicer, as applicable, has fulfilled all
of its 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 and what action
the Servicer or Subservicer, as applicable, proposes to take with respect
thereto.
Contemporaneously with the submission of the Officer's Certificate
required by the preceding paragraph, the Servicer shall deliver to the Indenture
Trustee, the Master Servicer and the Grantor Trustee a copy of its annual
audited financial statements prepared in the ordinary course of business. The
Servicer shall, upon the request of the Depositor, deliver to such party any
unaudited quarterly financial statements of the Servicer.
The Servicer shall also furnish and certify to the requesting party
such other information as to (i) its organization, activities and personnel
relating to the performance of the obligations of the Servicer hereunder, (ii)
its financial condition, (iii) the Home Loans and (iv) the performance of the
obligations of any Subservicer under the related Subservicing Agreement, in each
case as the Indenture Trustee, the Grantor Trustee, the Master Servicer or the
Depositor may reasonably request from time to time.
Section 7.05 INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT. Not
later than 90 days following the end of each fiscal year of the Servicer or,
Empire Subservicer if it is acting as Subservicer (beginning with fiscal year
1999), the Servicer or Empire Subservicer, as applicable, at the expense of
each, shall cause any nationally recognized firm of Independent Certified Public
Accountants (which may also render other services to the Servicer) to furnish a
statement to the Indenture Trustee, the Grantor Trustee, the Rating Agencies,
the Master Servicer and the Depositor to the effect that such firm has examined
certain documents and records relating to the servicing of the Home Loans under
this Agreement or of mortgage loans under pooling or sale and servicing
agreements (including the Home Loans and this Agreement) substantially similar
to one another (such statement to have attached thereto a schedule setting forth
the pooling or sale and servicing agreements covered thereby) and that, on the
basis of such examination conducted substantially in compliance with the Uniform
Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC, such firm confirms that such servicing has been
conducted in compliance with such pooling or sale and servicing agreements
except for such significant exceptions or errors in records that, in the opinion
of such firm, the Uniform Single Attestation Program for Mortgage Bankers or the
Attestation Program for Mortgages serviced for FHLMC requires it to report, each
of which errors and omissions shall be specified in such statement. In rendering
such statement, such firm may rely, as to matters relating to direct servicing
of mortgage loans by Subservicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FHLMC (rendered within one year of such statement) of independent public
accountants with respect to the related Subservicer.
Section 7.06 RIGHT TO EXAMINE SERVICER RECORDS. Each Securityholder,
Grantor Trust Holder, the Indenture Trustee, the Grantor Trustee, the Owner
Trustee, Depositor, the Master Servicer and each of their respective agents
shall have the right upon reasonable prior notice, during normal business hours
and as often as reasonably required, to examine, audit and copy, at the expense
of the Person making such examination, any and all of the books, records or
other information of the Servicer (including without limitation any
Subservicer), whether held by the Servicer or by another on behalf of the
Servicer, which may be relevant to the performance or observance by the Servicer
of the terms, covenants or conditions of this Agreement. In the case of the
supervisory agents and examiners of the Issuer, the Indenture Trustee, the
Grantor Trustee, the Owner Trustee, the Grantor Trust Holder, the Master
Servicer and the Securityholders, access to the documentation regarding the Home
Loans required by applicable state and federal regulations shall be afforded
without charge but only upon reasonable request and during normal business hours
at the offices of the Servicer designated by it.
The Servicer also agrees to make available on a reasonable basis to
the Depositor, the Securityholders or any prospective Securityholder 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 Depositor, the
Securityholders and any prospective Securityholder to inspect the Servicer's
servicing facilities during normal business hours for the purpose of satisfying
the Depositor, the Securityholders and such prospective Securityholder that the
Servicer has the ability to service the Home Loans in accordance with this
Agreement.
Each Securityholder, Grantor Trust Holder, the Indenture Trustee,
the Grantor Trustee, the Master Servicer and the Owner Trustee agree that any
information obtained pursuant to the terms of this Agreement shall be held
confidential.
Section 7.07 REPORTS TO THE INDENTURE TRUSTEE; COLLECTION ACCOUNT
STATEMENTS. If the Collection Account is not maintained with the Indenture
Trustee, then not later than 25 days after each Record Date, the Servicer shall
forward to the Indenture Trustee and the Master Servicer, a statement, certified
by a Servicing Officer, setting forth the status of the Collection Account as of
the close of business on the preceding Record Date and showing, for the period
covered by such statement, the aggregate of deposits into the Collection Account
for each category of deposit specified in SECTION 5.01(B)(I) hereof, the
aggregate of withdrawals from the Collection Account for each category of
withdrawal specified in SECTION 5.01(B)(II) and (III) hereof, in each case, for
the related Due Period.
Section 7.08 FINANCIAL STATEMENTS. The Servicer understands that, in
connection with the transfer of the Notes, Noteholders may request that the
Servicer make available to the Noteholders and to prospective Noteholders annual
audited financial statements of the Servicer for one or more of the most
recently completed five fiscal years for which such statements are available,
which request shall not be unreasonably denied.
ARTICLE VIII
(RESERVED)
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer shall indemnify each Transferor, the Owner Trustee,
the Issuer, the Grantor Trust, the Depositor, the Grantor Trustee, the Master
Servicer and the Indenture Trustee (each an "INDEMNIFIED PARTY") and hold
harmless each of them against any and all claims, losses, damages, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and
other costs and expenses resulting from any claim, demand, defense or assertion
based on or grounded upon, or resulting from, a breach of any of the Servicer's
representations and warranties and covenants contained in this Agreement or in
any way relating to the failure of the Servicer to perform its duties and
service the Home Loans in compliance with the terms of this Agreement.
(b) The Empire Subservicer shall indemnify each Transferor, the
Owner Trustee, the Issuer, the Grantor Trust, the Depositor, the Grantor
Trustee, the Master Servicer, the Servicer and the Indenture Trustee (each an
"INDEMNIFIED PARTY") and hold harmless each of them against any and all claims,
losses, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of any of the Empire Subservicer's representations and warranties and
covenants contained in this Agreement or in any way relating to the failure of
the Empire Subservicer to perform its duties and service the Home Loans in
compliance with the terms of this Agreement.
(c) Each Transferor, the Depositor, the Grantor Trustee, the Owner
Trustee, the Master Servicer or the Indenture Trustee, as the case may be, shall
promptly notify the Servicer if a claim is made by a third party with respect to
a breach of any of the Servicer's representations and warranties and covenants
contained in this Agreement or in any way relating to the failure of the
Servicer to perform its duties and service the Home Loans in compliance with the
terms of this Agreement. The Servicer shall promptly notify the Indenture
Trustee, the Grantor Trustee, the Owner Trustee, the Master Servicer and the
Depositor of any claim of which it has been notified pursuant to this SECTION
9.01 by a Person other than the Depositor, and, in any event, shall promptly
notify the Depositor of its intended course of action with respect to any claim.
(d) The Servicer shall be entitled to participate in and, upon
notice to the Indemnified Party, assume the defense of any such action or claim
in reasonable cooperation with, and with the reasonable cooperation of, the
Indemnified Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to the counsel of the Servicer, but the
fees and expenses of such counsel will be at the expense of such Indemnified
Party, unless (i) the employment of counsel by the Indemnified Party at its
expense has been authorized in writing by the Servicer, (ii) the Servicer has
not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, or
(iii) the named parties to any such action or proceeding (including any
impleaded parties) include both the Servicer and one or more Indemnified
Parties, and the Indemnified Parties shall have been advised by counsel that
there may be one or more legal defenses available to them which are different
from or additional to those available to the Servicer. The Servicer shall not be
liable for any settlement of any such claim or action unless the Servicer shall
have consented thereto or be in default on its obligations hereunder. Any
failure by an Indemnified Party to comply with the provisions of this SECTION
9.01 shall relieve the Servicer of liability only if such failure is materially
prejudicial to the position of the Servicer and then only to the extent of such
prejudice.
(e) The provisions of this Section 9.01 shall survive the
replacement of the Servicer pursuant to a Servicer Termination Event; provided,
that no successor servicer shall be liable for (or required to indemnify any
party for) any act or omission of any predecessor servicer. None of the
Transferors, the Depositor, the Servicer, the Master Servicer or any of the
directors, officers, employees or agents of the Transferors, the Depositor, the
Master Servicer or the Servicer, or members or Affiliates of the Depositor shall
be under any liability to the Issuer, the Securityholders or any other Person
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 any Transferor, the Depositor, the
Servicer, the Master Servicer or any such person against the remedies provided
herein for the breach of any warranties, representations or covenants made
herein, or against any specific liability imposed on any Transferor, the
Depositor, the Master Servicer or the Servicer herein, or against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of the duties of the Servicer, the Master
Servicer, the Depositor or any Transferor, as the case may be, or by reason of
reckless disregard of the obligations and duties of the Servicer, the Master
Servicer, the Depositor or any Transferor, as the case may be, hereunder. Each
Transferor, the Depositor, the Servicer, the Master Servicer and any director,
officer, employee or agent of each Transferor, the Depositor or the Servicer, or
any member or Affiliate of the Depositor may rely in good faith on any document
of any kind which, prima facie, is properly executed and submitted by any Person
respecting any matters arising hereunder.
Section 9.02 MERGER OR CONSOLIDATION OF THE SERVICER.
The Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and will obtain and preserve its authorization or
qualification to do business as a foreign corporation and maintain, or cause an
affiliate previously approved by the Master Servicer to maintain, such other
licenses and permits in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Home Loans and to perform its
duties under this Agreement; PROVIDED, HOWEVER, that the Servicer may merge or
consolidate with any other corporation upon the satisfaction of the conditions
set forth in the following paragraph.
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 Eligible Servicer and shall be the successor of the
Servicer, as applicable hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding. The Servicer shall send notice of any such merger,
conversion, consolidation or succession to the Indenture Trustee, the Grantor
Trustee, the Master Servicer and the Issuer.
Section 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
The Servicer and any director, officer, employee or agent of the
Servicer may rely on any document of any kind which it in good faith reasonably
believes to be genuine and to have been adopted or signed by the proper
authorities respecting any matters arising hereunder. Subject to the terms of
SECTION 9.01 hereof, the Servicer shall have no obligation to appear with
respect to, prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Home Loans in accordance with this Agreement.
Section 9.04 SERVICER NOT TO RESIGN; ASSIGNMENT.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) with the consent of the Grantor Trustee, the Master
Servicer and the Indenture Trustee or (b) upon determination that its duties
hereunder are no longer permissible under applicable law. Any such determination
pursuant to clause (b) of the preceding sentence permitting the resignation of
the Servicer shall be evidenced by an independent opinion of counsel to such
effect delivered (at the expense of the Servicer) to the Grantor Trustee, the
Master Servicer and the Indenture Trustee. No resignation of the Servicer shall
become effective until the Master Servicer, the Grantor Trustee or a successor
servicer, appointed pursuant to the provisions of SECTION 10.02 hereof and
satisfying the requirements of SECTION 4.07 hereof with respect to the
qualifications of a successor servicer, shall have assumed the Servicer's
responsibilities, duties, liabilities (other than those liabilities arising
prior to the appointment of such successor) and obligations under this
Agreement.
Except as expressly provided herein, the Servicer shall not assign
or transfer any of its rights, benefits or privileges hereunder to any other
Person, or delegate to or subcontract with, or authorize or appoint any other
Person to perform any of the duties, covenants or obligations to be performed by
the Servicer hereunder and any agreement, instrument or act purporting to effect
any such assignment, transfer, delegation or appointment shall be void.
Pursuant to SECTION 10.02 hereof, the Servicer agrees to cooperate
with any successor servicer and the Master Servicer in effecting the transfer of
the Servicer's servicing responsibilities and rights hereunder pursuant to the
first paragraph of this SECTION 9.04, including, without limitation, the
transfer to such successor of all relevant records and documents (including any
Home Loan Files in the possession of the Servicer) and all amounts received with
respect to the Home Loans and not otherwise permitted to be retained by the
Servicer pursuant to this Agreement. In addition, the Servicer, at its sole cost
and expense, shall prepare, execute and deliver any and all documents and
instruments to the successor servicer including all Home Loan Files in its
possession and do or accomplish all other acts necessary or appropriate to
effect such termination and transfer of servicing responsibilities.
Section 9.05 RELATIONSHIP OF SERVICER TO THE GRANTOR TRUST AND THE
GRANTOR TRUSTEE. The relationship of the Servicer (and of any successor to the
Servicer as servicer under this Agreement) to the Grantor Trust and the Grantor
Trustee under this Agreement is intended by the parties hereto to be that of an
independent contractor and not of a joint venturer, agent or partner of the
Issuer or the Indenture Trustee.
Section 9.06 SERVICER MAY OWN SECURITIES. Each of the Servicer and
any Affiliate of the Servicer may in its individual or any other capacity become
the owner or pledgee of Securities with the same rights as it would have if it
were not the Servicer or an Affiliate thereof except as otherwise specifically
provided herein. Securities so owned by or pledged to the Servicer or such
Affiliate shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority, or distinction as among all of the
Securities; PROVIDED, HOWEVER, that any Securities owned by the Servicer or any
Affiliate thereof, during the time such Securities are owned by them, shall be
without voting rights for any purpose set forth in this Agreement. The Servicer
shall notify the Indenture Trustee promptly after it or any of its Affiliates
becomes the owner or pledgee of a Security.
ARTICLE X
DEFAULT
Section 10.01 (a) EVENTS OF DEFAULT. In case one or more of the
following Events of Default by the Servicer shall occur and be continuing, that
is to say:
(i) any failure by the Servicer to deposit in the Collection
Account in accordance with SECTION 5.01(B) hereof any payments in respect
of the Home Loans received by the Servicer no later than the second
Business Day following the day on which such payments were received; or
(ii) failure by the Servicer duly to observe or perform, in
any material respect, any other covenants, obligations or agreements of
the Servicer as set forth in this Agreement, which failure continues
unremedied for a period of 30 days after the date on which written notice
of such failure, requiring the same to be remedied and stating that such
notice is a "Notice of Default" hereunder, shall have been given (a) to
the Servicer by the Indenture Trustee, the Master Servicer, the Grantor
Trustee or the Issuer, or (b) to the Servicer, the Indenture Trustee, the
Master Servicer, the Grantor Trustee or the Issuer by the Majority
Noteholders; PROVIDED, HOWEVER, if an event set forth in this clause (b)
is caused solely by Empire Subservicer, it shall not be an Event of
Default unless the Servicer fails to cure such Event of Default within 30
days of the occurrence thereof; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force, undischarged or
unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all of
the Servicer's property; or
(v) the Servicer shall admit in writing its inability 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; or
(vi) the Majority Noteholders, the Master Servicer or the
Grantor Trust Holder shall determine, in their or its reasonable judgment
and based upon published reports (including wire services), which they or
it reasonably believes in good faith to be reliable, that:
(A) the Servicer has experienced a material adverse
change in its business, assets, liabilities, operations, condition
(financial or otherwise) or prospects,
(B) the Servicer has defaulted on any of its
material obligations,
(C) the Servicer is no longer able to discharge its
duties under this Agreement, or
(D) the Servicer has ceased to conduct its business
in the ordinary course,
PROVIDED, HOWEVER, that the Servicer shall have five Business Days from the
receipt of any notice of default under this Subsection to cure such Event of
Default by providing the foregoing parties with written assurances that, in a
reasonable and good faith manner, substantiate the financial and operational
well-being of the Servicer and adequately refute the occurrence of a material
adverse change, including, without limitation, information, reports or written
assurances obtained from certain of its lenders; or
(vii) as of any Determination Date, the total Expected Loan
Loss Percentage (as defined below) exceeds (1) up to the fifth (5th)
anniversary of the March 31, 1999 Cut-Off Date, 22.0%, or (2) thereafter
33.0% (where the "EXPECTED LOAN LOSS PERCENTAGE" shall be the sum of (A)
the cumulative Net Loan Losses divided by the Original Pool Principal
Balance, plus (B) 25% of the aggregate Principal Balance of the Home Loans
which are then more than 30 but less than 60 days delinquent divided by
the Original Pool Principal Balance, plus (C) 50% of the aggregate
Principal Balance of the Home Loans which are then more than 60 but less
than 90 days delinquent divided by the Original Pool Principal Balance,
plus (D) 100% of the aggregate Principal Balance of the Home Loans which
are then more than 90 days delinquent divided by the Original Pool
Principal Balance); PROVIDED, HOWEVER, if an event set forth in this
clause (vii) occurs while Empire Funding is the Subservicer, it shall not
be an Event of Default unless the Servicer fails to cure such Event of
Default within 90 days after the occurrence thereof;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Indenture Trustee, the Grantor Trustee, the Master
Servicer, the Grantor Trust Holder or the Majority Noteholders, by notice in
writing to the Servicer (and to the Indenture Trustee and the Master Servicer,
if notice is given by the Majority Noteholders) may, in addition to whatever
rights such Person may have at law or in equity to damages, including injunctive
relief and specific performance, terminate all the rights and obligations of the
Servicer under this Agreement and in and to the Home Loans and the proceeds
thereof, as Servicer under this Agreement. Upon receipt by the Servicer of such
written notice, and the appointment of and acceptance of appointment by a
successor servicer, all authority, power, obligations and responsibilities of
the Servicer under this Agreement, whether with respect to the Home Loans or
otherwise, shall pass to, be transferred to, and be vested in either: (i) a
successor servicer selected by the Master Servicer and reasonably acceptable to
the Indenture Trustee; (ii) the Master Servicer, if a successor servicer cannot
be retained in a timely manner; or (iii) the Grantor Trustee, if the Master
Servicer cannot act as the successor servicer, as evidenced by an Opinion of
Counsel to such effect that is delivered by the Master Servicer, at its expense,
to the Grantor Trustee and the Indenture Trustee. Notwithstanding anything to
the contrary contained herein, in no event shall any such succession impair,
modify or terminate any of the rights of Empire Subservicer hereunder.
Upon the termination of the Servicer and transfer to a successor,
the successor servicer, the Master Servicer or the Grantor Trustee, as
applicable, is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, 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 Home Loans
and related documents. The Servicer agrees to cooperate with the successor
servicer in effecting the termination of the Servicer's responsibilities and
rights hereunder, including, without limitation, the transfer to the successor
servicer for administration by it of all amounts which shall at the time be
credited by the Servicer to each Collection Account or thereafter received with
respect to the Home Loans.
(b) REALLOCATION OF SERVICING FEE AND ESTABLISHMENT OF ESCROW
ACCOUNT. Upon the occurrence of a Servicer Termination Event, then, until the
servicing of the Home Loans hereunder is transferred to a successor servicer,
the Master Servicer or the Grantor Trustee, as applicable, the Servicing Fee
otherwise payable to the Servicer hereunder shall be paid as follows: (1) first,
to the Servicer (A) if Empire Subservicer is acting as Subservicer hereunder, an
amount equal to the portion of the Servicing Fee otherwise payable to the
Servicer based on a fee rate of 0.25% (25 basis points) or (B) if Empire
Subservicer is not acting as Subservicer hereunder, an amount equal to the
portion of the Servicing Fee as calculated based on a fee rate of 0.4825% (48.25
basis points); (2) second, to the Indenture Trustee any remaining amount for the
deposit into an escrow or reserve account for the transfer of servicing for the
Home Loans, until the balance of such account equals $350,000; and (3) third, to
the Servicer any remaining amount. Such escrow or reserve account shall be an
Eligible Account and a Trust Account, and, except as otherwise provided herein,
such account shall be established and maintained by the Indenture Trustee in a
manner that is consistent with the Collection Account hereunder. In connection
with the transfer of servicing to a successor servicer, amounts on deposit in
such escrow account shall be remitted pursuant to Section 10.02 hereof;
provided, that any amounts remaining in such escrow account after all payments
have been made pursuant to Section 10.02 hereof shall be paid to the terminated
Servicer.
The Servicer hereby grants to the Indenture Trustee a security
interest in all of the Servicer's right, title and interest in, to and under any
escrow account established pursuant to this SECTION 10.01(B) and all monies
deposited therein from time to time, as security for its obligations under this
Agreement; and this Agreement constitutes a security agreement under applicable
law.
Section 10.02 MASTER SERVICER TO ACT; APPOINTMENT OF Successor.
(a) APPOINTMENT OF SUCCESSOR. On and after the date of a Servicer
Termination Event (including a Servicer termination pursuant to SECTION 10.01
hereof, or a resignation of the Servicer as evidenced by an Opinion of Counsel
or accompanied by the consents required by SECTION 9.04 hereof, or a removal
pursuant to this Article X), then, subject to SECTION 4.07 hereof, the Master
Servicer, within 60 days of the occurrence of such Servicer Termination Event,
shall appoint a successor servicer to 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; PROVIDED, HOWEVER, that the successor
servicer shall not be liable for any actions of any servicer prior to it. If a
successor servicer cannot be retained in a timely manner, then the Master
Servicer shall act as the successor servicer, or if the Master Servicer cannot
act as the successor servicer (as evidenced by an Opinion of Counsel delivered
by the Master Servicer to the Grantor Trustee and the Indenture Trustee), then
the Grantor Trustee shall act as successor servicer. Notwithstanding the
foregoing, the parties hereto agree that the Master Servicer, in its capacity as
successor servicer, immediately will assume all of the obligations of the
Servicer to make Servicing Advances and the Master Servicer will assume the
other duties of the Servicer as soon as practicable, but in no event later than
60 days after a Servicer Termination Event. If the Master Servicer or the
Grantor Trustee, as applicable, assumes the responsibilities of the Servicer
pursuant to this SECTION 10.02, then the Master Servicer or the Grantor Trustee,
as applicable, will make reasonable efforts consistent with applicable law to
become licensed, qualified and in good standing in each Property State the laws
of which require licensing or qualification in order to perform its obligations
as Servicer hereunder or, alternatively, shall retain an agent that is so
licensed, qualified and in good standing in any such Property State.
Notwithstanding the foregoing, the Master Servicer, in its capacity as successor
Servicer shall not be responsible for the lack of information and/or documents
that it cannot obtain through reasonable efforts.
If the Master Servicer or the Grantor Trustee, as applicable, serves
as successor servicer, then the Master Servicer or the Grantor Trustee, as
applicable, in such capacity shall not be liable for any servicing of the Home
Loans prior to its date of appointment and shall not be subject to any
obligations to repurchase any Home Loans. The successor servicer shall be
obligated to make Servicing Advances hereunder.
Any successor servicer, the Master Servicer or the Grantor Trustee
shall be reimbursed for all reasonable costs and expenses incurred in connection
with the appointment of the successor servicer and the replacement of the
Servicer following a Servicer Termination Event hereunder, which reimbursement
shall be paid (1) first, by the Indenture Trustee to the extent that funds are
available in the escrow account established pursuant to SECTION 10.01(B) hereof,
and (2) second, by the Servicer pursuant to SECTION 7.03 hereof, to the extent
of any unpaid reimbursement.
(b) SUCCESSOR SERVICER COMPENSATION. The compensation of any
successor servicer (including, without limitation, the Grantor Trustee) so
appointed shall be the Servicing Fee, together with other Servicing Compensation
provided for herein. As compensation therefor, the successor servicer appointed
pursuant to the following paragraph, shall be entitled to all funds relating to
the Home Loans which the Servicer would have been entitled to receive from the
Note Payment Account pursuant to SECTION 5.01(C) hereof as if the Servicer had
continued to act as servicer hereunder, together with any other Servicing
Compensation.
(c) TERMINATION FEE TO PRIOR SERVICER. In the event the Grantor
Trustee or the Master Servicer is required to solicit bids to appoint a
successor servicer, the Grantor Trustee or the Master Servicer, as applicable,
shall solicit, by public announcement, bids from Eligible Servicers. Such public
announcement shall specify that the successor servicer shall be entitled to the
full amount of the Servicing Fee and Servicing Compensation provided for herein.
The Grantor Trustee or the Master Servicer, as applicable, shall deduct from any
sum received by the Grantor Trustee or the Master Servicer, as applicable, from
the successor servicer to the Servicer in respect of the sale, transfer and
assignment of the servicing rights for the Home Loans the sum of (i) all costs
and expenses of any public announcement and of any sale, transfer and assignment
of such servicing rights, (ii) the amount of any unpaid Servicing Fees and
unreimbursed Servicing Advances made by the Grantor Trustee or the Master
Servicer, as applicable, and (iii) all costs and expenses of the Grantor Trustee
or the Master Servicer, as applicable, incurred in connection with the
appointment of the successor servicer. After such deductions, the remainder of
such sum shall be paid by the Grantor Trustee or the Master Servicer, as
applicable, to the Servicer at the time of such sale, transfer and assignment to
the Servicer's successor. Except as provided in this Section 10.02(c), the
Servicer shall not be entitled to any other termination fee, if it is terminated
pursuant to Section 10.01 hereof but shall be entitled to any accrued and unpaid
Servicing Compensation to the date of termination.
(d) COOPERATION OF PRIOR SERVICER WITH SUCCESSION. The Master
Servicer, the Grantor Trustee, any Custodian, the Servicer and any such
successor servicer shall take such action, consistent with this Agreement, as
shall be necessary to effect any such succession. Any collections received by
the Servicer after removal or resignation shall be endorsed by it to the Grantor
Trustee or the Indenture Trustee, as assignee of the Grantor Trust Certificate,
and remitted directly to the Grantor Trustee or the Indenture Trustee or, at the
direction of the Grantor Trustee or the Indenture Trustee, to the successor
servicer. The Servicer agrees to cooperate with the Master Servicer, the Grantor
Trustee and any successor servicer, as applicable, in effecting the termination
of the Servicer's servicing responsibilities and rights hereunder and shall
promptly provide the Master Servicer, the Grantor Trustee or such successor
servicer, as applicable, 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 Grantor Trustee or the Indenture Trustee, as assignee of the
Grantor Trust Certificate, or such successor servicer, as applicable, all
amounts which then have been or should have been deposited in any Trust Account
maintained by the Servicer or which are thereafter received with respect to the
Home Loans.
(e) EFFECTIVENESS OF APPOINTMENT. Neither the Master Servicer, the
Grantor Trustee nor any other successor servicer, as applicable, shall be held
liable by reason of any failure to make, or any delay in making, any payment or
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it or (ii) restrictions imposed by any regulatory authority having jurisdiction
over the Servicer hereunder. No appointment of a successor to the Servicer
hereunder shall be effective until (A) the Depositor, the Grantor Trust Holder
and the Master Servicer shall have consented thereto, EXCEPT in the case of the
appointment of the Master Servicer or the Grantor Trustee as successor to the
Servicer (when no consent shall be required), and (B) written notice of such
proposed appointment shall have been provided by the Master Servicer or the
Grantor Trustee, as applicable, to the Indenture Trustee, each Grantor Trust
Holder, the Owner Trustee and the Depositor.
Pending appointment of a successor to the Servicer hereunder, the
Master Servicer or the Grantor Trustee, as applicable, shall act as servicer
hereunder as provided herein. In connection with such appointment and
assumption, the Master Servicer or the Grantor Trustee, as applicable, may make
such arrangements for the compensation of such successor servicer out of
payments on the Home Loans as it and such successor servicer shall agree;
PROVIDED, HOWEVER, that no such compensation shall be in excess of that
permitted the Servicer pursuant to SECTION 7.03 hereof, together with other
Servicing Compensation as provided herein.
Section 10.03 WAIVER OF DEFAULTS.
The Majority Noteholders, on behalf of all Noteholders and with the
prior consent of the Master Servicer, may waive any events permitting removal of
the Servicer as servicer pursuant to this Article X; PROVIDED, HOWEVER, that the
Majority Noteholders may not waive a default in making a required payment on a
Note or distribution on a Residual Interest Certificate without the consent of
the related Noteholder or holder of the Residual Interest Certificate. Upon any
waiver of a past default, such default shall cease to exist and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 10.04 ACCOUNTING UPON TERMINATION OF SERVICER.
Upon termination of the Servicer under this Article X, the Servicer
shall, at its own expense:
(a) deliver to its successor or, if none shall yet have been
appointed, to the Indenture Trustee the funds in any Trust Account maintained by
the Servicer;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Master Servicer or the Grantor Trustee, as applicable, all
Home Loan Files and related documents and statements held by it hereunder and a
Home Loan portfolio computer tape and other necessary data for the servicing of
the Home Loans hereunder in compatible computer readable format;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Master Servicer, the Grantor Trustee, the Indenture Trustee,
the Grantor Trust Holder and the Securityholders 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 payments or charges with respect to
the Home Loans;
(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 Home Loans to its successor and to more fully and definitively
vest in such successor all rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer under this Agreement; and
(e) make available on a reasonable basis Servicing Officers and
other servicing personnel for the purpose of facilitating the transfer of
servicing hereunder to the successor servicer.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
This Agreement shall terminate upon notice to the Indenture Trustee
of either: (a) the later of (i) the satisfaction and discharge of the Indenture
and the provisions thereof or (ii) the disposition of all funds with respect to
the last Home Loan and the remittance of all funds due hereunder and the payment
of all amounts due and payable to the Servicer, the Indenture Trustee, the
Grantor Trustee, the Owner Trustee, the Issuer, the Master Servicer and any
Custodian; or (b) the mutual consent of the Servicer, Empire Subservicer (so
long as it is acting as Subservicer hereunder), the Master Servicer, the
Depositor, each Transferor and all Securityholders in writing.
Section 11.02 OPTIONAL TERMINATION. On or after any Payment Date on
which the Pool Principal Balance declines to 10% or less of the Original Pool
Principal Balance, then the Majority Residual Interestholders may, at their
option, effect an early termination of the Issuer and the Grantor Trust. On or
after any Payment Date on which the Pool Principal Balance declines to 5% or
less of the Original Pool Principal Balance, then the Master Servicer may, at
its option, effect an early termination of the Issuer and the Grantor Trust. The
Majority Residual Interestholders or the Master Servicer, as applicable, shall
effect such early termination by providing prior notice thereof to the Indenture
Trustee, the Grantor Trustee, the Master Servicer, and Owner Trustee and by
purchasing all of the Home Loans from the Grantor Trustee at a purchase price,
payable in cash, equal to or greater than the Termination Price. The expense of
any Independent appraiser required under this SECTION 11.02 shall be a
nonreimbursable expense of Majority Residual Interestholders or the Master
Servicer, as applicable.
Any such early termination by the Majority Residual Interestholders
or the Master Servicer shall be accomplished by depositing into the Collection
Account on the third Business Day prior to the Payment Date on which the
purchase is to occur the amount of the Termination Price to be paid. The
Termination Price and any amounts then on deposit in the Collection Account
(other than any amounts not required to have been deposited therein pursuant to
SECTION 5.01(B)(I) hereof and any amounts withdrawable therefrom by the
Indenture Trustee pursuant to SECTION 5.01(B)(III) hereof) shall be transferred
to the Note Payment Account pursuant to SECTION 5.01(B)(II) hereof as a
terminating distribution in respect of the Grantor Trust Certificate pursuant to
SECTION 5.01 of the Grantor Trust Agreement for payment to Noteholders on the
succeeding Payment Date; and any amounts received with respect to the Home Loans
and Foreclosure Properties subsequent to the Due Period immediately preceding
such final Payment Date shall belong to the purchaser thereof. For purposes of
calculating the Available Payment Amount for such final Payment Date, amounts
transferred to the Note Payment Account immediately preceding such final Payment
Date shall in all cases be deemed to have been received during the related Due
Period, and amounts so transferred shall be applied pursuant to SECTION 5.01(D)
and (E) hereof.
Section 11.03 NOTICE OF TERMINATION. Notice of termination of this
Agreement or of early redemption and termination of the Issuer and the Grantor
Trust shall be sent (i) by the Indenture Trustee to the Noteholders in
accordance with section 10.02 of the Indenture, (ii) by the Owner Trustee to the
Certificateholders in accordance with section 9.1(d) of the Owner Trust
Agreement, and (iii) by the Grantor Trustee to the Grantor Trust Holder in
accordance with SECTION 7.02 of the Grantor Trust Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 ACTS OF NOTEHOLDERS.
Except as otherwise specifically provided herein, whenever action,
consent or approval of the Securityholders 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 Securityholders if the Majority
Securityholders agree to take such action or give such consent or approval.
Section 12.02 AMENDMENT.
(a) This Agreement may be amended from time to time by the
Depositor, the Servicer, the Master Servicer, Empire Subservicer (so long as it
is acting as Subservicer hereunder), if the Subservicer hereunder, the
Transferors, the Indenture Trustee, the Guarantor, the Grantor Trustee and the
Issuer by written agreement with notice thereof to the Securityholders, without
the consent of any of the Securityholders, to cure any error or ambiguity, to
correct or supplement any provisions hereof which may be defective or
inconsistent with any other provisions hereof or to add any other provisions
with respect to matters or questions arising under this Agreement; PROVIDED,
HOWEVER, that such action will not adversely affect in any material respect the
interests of the Securityholders. An amendment described above shall be deemed
not to adversely affect in any material respect the interests of the
Securityholders if either (i) an Opinion of Counsel is obtained to such effect
or (ii) the party requesting the amendment obtains a letter from each of the
Rating Agencies confirming that the amendment, if made, would not result in the
downgrading or withdrawal of the rating then assigned by the respective Rating
Agency to any Class of Notes then outstanding.
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Master Servicer, Empire Subservicer (so long as it
is acting as Subservicer hereunder), if the Subservicer hereunder, the
Transferors, the Indenture Trustee, the Guarantor, the Grantor Trustee and the
Issuer by written agreement, with the prior written consent of the Majority
Noteholders, 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 Securityholders; PROVIDED, HOWEVER, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
collections of payments on Home Loans or distributions which are required to be
made on any Security, without the consent of the holders of 100% of each Class
of Notes affected thereby, (ii) adversely affect in any material respect the
interests of the holders of any Class of Notes in any manner other than as
described in clause (i), without the consent of the holders of 100% of such
Class of Notes, or (iii) reduce the percentage of any Class of Notes, the
consent of which is required for any such amendment, without the consent of the
holders of 100% of such Class of Notes.
(c) It shall not be necessary for the consent of Noteholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the
Issuer, the Grantor Trustee and the Indenture Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement. The Issuer, the Grantor
Trustee and the Indenture Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Issuer's own rights, duties or immunities
of the Issuer, the Grantor Trustee or the Indenture Trustee, as the case may be,
under this Agreement.
Section 12.03 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
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 of the Majority Noteholders 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 Home Loans.
Section 12.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until
terminated as herein provided.
Section 12.05 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 12.06 NOTICES.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by overnight mail, certified mail or registered mail, postage prepaid,
to: (i) in the case of the Depositor, PaineWebber Mortgage Acceptance
Corporation IV, 1285 Avenue of the Americas, New York, New York 10019,
Attention: John Fearey, Esq., or such other addresses as may hereafter be
furnished to the Securityholders and the other parties hereto in writing by the
Depositor; (ii) in the case of the Issuer, at Empire Funding Home Loan Owner
Trust 1999-1, c/o Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration, or such other address as may hereafter be furnished to the
Securityholders and the other parties hereto; (iii) in the case of Empire
Funding, Empire Funding Corp., 9737 Great Hills Trail, Austin, Texas 78759,
Attention: Richard N. Steed or such other address as may hereafter be furnished
to the Securityholders and the other parties hereto in writing by Empire
Funding; (iv) in the case of ContiMortgage, 338 South Warminster Road, Hatboro,
Pennsylvania 19040, Attention: Chief Counsel; (v) in the case of ULG, United
Lending Group, 3351 Michelson Drive, Suite 100, Irvine, CA 92612, Attention:
Chief Counsel; (vi) in the case of the Indenture Trustee and Grantor Trustee,
U.S. Bank National Association, 180 East Fifth Street, St. Paul, Minnesota
55101; Attention: Structured Finance/Empire Funding 1999-1; (vii) in the case of
the Master Servicer, Norwest Bank Minnesota, National Association, 11000 Broken
Land Parkway, Columbia, Maryland 21044-3562, Attention: Master Servicing Manager
(Empire Funding Series 1999-1); (viii) in the case of the Guarantor,
ContiFinancial Corporation, 277 Park Avenue, New York, NY 10172, Attention:
Chief Counsel, and (ix) in the case of the Securityholders, as set forth in the
applicable 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 Securityholders shall be effective upon mailing or personal delivery.
Section 12.07 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 12.08 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create any
partnership or joint venture between the parties hereto and the services of each
of Empire Subservicer and the Servicer shall be rendered as an independent
contractor.
Section 12.09 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 12.10 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
Servicer, each Transferor, the Depositor, the Indenture Trustee, the Grantor
Trustee, the Issuer, the Noteholders, the Master Servicer and the Grantor Trust
Holder and their respective successors and permitted assigns.
Section 12.11 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 12.12 ACTIONS OF SECURITYHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Securityholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders in person or by agent
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Depositor, the Servicer, Empire Subservicer (so long as it is
acting as Subservicer hereunder) or the Issuer. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Depositor, the Servicer
and the Issuer if made in the manner provided in this SECTION 12.12.
(b) The fact and date of the execution by any Securityholder of any
such instrument or writing may be proved in any reasonable manner which the
Depositor, the Servicer or the Issuer deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Securityholder shall bind every holder of every
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Depositor, the Servicer, the Indenture Trustee or the Issuer in reliance
thereon, whether or not notation of such action is made upon such Security.
(d) The Depositor, the Servicer, the Indenture Trustee or the Issuer
may require additional proof of any matter referred to in this SECTION 12.12 as
it shall deem necessary.
Section 12.13 REPORTS TO RATING AGENCIES. (a) The Indenture
Trustee shall provide to each Rating Agency copies of statements, reports and
notices, to the extent received or prepared in connection herewith, as
follows:
(i) copies of amendments to this Agreement;
(ii) notice of any substitution or repurchase of any Home
Loans;
(iii) notice of any termination, replacement, succession,
merger or consolidation of the Servicer, the Master Servicer, Empire
Subservicer, any Custodian or the Issuer;
(iv) notice of final payment on the Notes;
(v) notice of any Event of Default;
(vi) copies of the annual independent accountants' report
delivered pursuant to SECTION 7.05 hereof, and copies of any compliance
reports delivered by the Servicer including under SECTION 7.04 hereof; and
(vii) copies of any Payment Date Statement pursuant to SECTION
6.01(B) hereof.
(b) With respect to the requirement of the Indenture Trustee to
provide statements, reports and notices to the Rating Agencies, such statements,
reports and notices shall be delivered to the Rating Agencies at the following
addresses: (i) if to S&P, 25 Broadway, New York, New York, 10004, Attention:
Residential Mortgage Group; and (ii) if to Duff & Phelps, 55 East Monroe Street,
38th Floor, Chicago, Illinois 60603, Attention: MBS Monitoring.
Section 12.14 HOLDERS OF THE RESIDUAL INTEREST CERTIFICATES. (a) Any
sums to be distributed or otherwise paid hereunder or under the Owner Trust
Agreement to the holders of the Residual Interest Certificates shall be paid to
such holders pro rata based on their percentage holdings in the Residual
Interest;
(b) Where any act or event hereunder is expressed to be subject to
the consent or approval of the holders of the Residual Interest Certificates,
such consent or approval shall be capable of being given by the holder or
holders of not less than 51% of the Residual Interest in aggregate.
Section 12.15 YEAR 2000 COMPLIANCE. Each of the Master Servicer, the
Servicer, the Empire Subservicer and the Indenture Trustee certify that they
shall (i) implement modifications to their respective existing computer systems
to the extent required to cause them to be year 2000 ready or (ii) acquire
computer systems that are year 2000 ready in each case prior to January 1, 2000.
Section 12.16 TRANSFERORS TO INDEMNIFY INDENTURE TRUSTEE AND OWNER
TRUSTEE. Each Transferor agrees to indemnify (i) the Indenture Trustee pursuant
to Section 6.07 of the Indenture and (ii) the Owner Trustee pursuant to Section
8.2 of the Owner Trust Agreement.
[SIGNATURE PAGES FOLLOW]
<PAGE>
IN WITNESS WHEREOF, the Issuer, the Depositor, each Transferor, the
Servicer, the Master Servicer, the Grantor Trustee and the Indenture Trustee
have caused their names to be signed by their respective officers thereunto duly
authorized, as of the day and year first above written, to this Sale and
Servicing Agreement.
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1,
By: Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee
By: ___________________________________
Name:
Title:
PAINEWEBBER MORTGAGE ACCEPTANCE
CORPORATION IV, as Depositor
By: ___________________________________
Name:
Title:
EMPIRE FUNDING CORP., as Transferor
and Subservicer
By: ___________________________________
Name:
Title:
CALIFORNIA LENDING GROUP, INC., d/b/a
UNITED LENDING GROUP,
as Transferor
By: ___________________________________
Name:
Title:
CONTIMORTGAGE CORPORATION,
as Transferor and Servicer
By: ___________________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Master Servicer
By: ___________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION, as
Indenture Trustee and Grantor
Trustee
By: ___________________________________
Name:
Title:
CONTIFINANCIAL CORPORATION, as
Guarantor
By: ___________________________________
Name:
Title:
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this _____
day of _______, 1999 personally appeared _______________, known to me to be a
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said WILMINGTON TRUST
COMPANY, not in its individual capacity but in its capacity as Owner Trustee of
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1 as Issuer, and that she executed the
same as the act of such corporation for the purpose and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF WILMINGTON TRUST COMPANY, this the
____ day of _______, 1999.
_______________________________________
Notary Public, State of _______________
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of _______, 1999 personally appeared _______________________, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said PAINEWEBBER
MORTGAGE ACCEPTANCE CORPORATION IV, as the Depositor, and that he/she executed
the same as the act of such corporation for the purposes and consideration
therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF EMPIRE FUNDING CORP., this the ____
day of ________, 1999.
_______________________________________
Notary Public, State of _______________
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as the Indenture Trustee and
Grantor Trustee, and that she executed the same as the act of such entity for
the purposes and consideration therein expressed, and in the capacity therein
stated.
GIVEN UNDER MY HAND AND SEAL OF U.S. BANK NATIONAL ASSOCIATION,
this the __ day of ______, 1999.
_______________________________________
Notary Public, State of _______________
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said EMPIRE FUNDING CORP.,
as the Transferor and the Subservicer, and that she executed the same as the act
of such entity for the purposes and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF EMPIRE FUNDING CORP., this the __
day of ______, 1999.
_______________________________________
Notary Public, State of _______________
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said CALIFORNIA LENDING
GROUP, INC., d/b/a UNITED LENDING GROUP, as Transferor, and that she executed
the same as the act of such entity for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF CALIFORNIA LENDING GROUP, INC.,
d/b/a UNITED LENDING GROUP, this the __ day of ______ , 1999.
_______________________________________
Notary Public, State of _______________
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said CONTIMORTGAGE
CORPORATION, as Transferor and Servicer, and that she executed the same as the
act of such entity for the purposes and consideration therein expressed, and in
the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF CONTIMORTGAGE CORPORATION, this the
__ day of ______, 1999.
_______________________________________
Notary Public, State of _______________
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as the Master Servicer, and that she executed the same as
the act of such entity for the purposes and consideration therein expressed, and
in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, this the __ day of ______, 1999.
_______________________________________
Notary Public, State of _______________
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
BEFORE ME, the undersigned authority, a Notary Public, on this __
day of ______, 1999 personally appeared ____________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said CONTIFINANCIAL
CORPORATION, as Guarantor, and that she executed the same as the act of such
entity for the purposes and consideration therein expressed, and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL OF CONTIFINANCIAL CORPORATION, this the
__ day of ______, 1999.
_______________________________________
Notary Public, State of _______________
<PAGE>
EXHIBIT A
HOME LOAN SCHEDULE
INFORMATION IS ON FILE WITH THE DEPOSITOR AT
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
1285 AVENUE OF THE AMERICAS
NEW YORK, NY 10019
<PAGE>
EXHIBIT B
Form of Servicer's Monthly Remittance Report to Indenture Trustee
Servicer Monthly Activity Report Empire Funding Corp.
Empire Funding Home Loan Owner Trust 1998-3 Report Date:
Home Loan Asset Backed Notes, Series 1998-3 Report Period:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
LOAN ACTIVITY INTEREST PRINCIPAL TOTALS
------------ ------------- ----------
<S> <C> <C> <C>
Aggregate Beginning UPB 0.00
============
Loans- Repurchased 0.00
Scheduled Payments Collected 0.00 0.00 0.00
Unscheduled Payments Collected
Curtailments 0.00 0.00
Pay-offs 0.00 0.00 0.00
Prepayments 0.00 0.00 0.00
Delinquencies 0.00 0.00 0.00
Other 0.00 0.00 0.00
----------- ------------ ----------
Total Funds Collected 0.00 0.00 0.00
----------- ------------ ----------
Principal Losses 0.00
Beginning Balance of New Liquidated Loans 0.00
Aggregate Ending Balance 0.00
===========
- -----------------------------------------------------------------------------------------------
POOL SUMMARY
Beginning Period
Weighted Average Coupon 0.000%
------------
Weighted Average Maturity 0
------------
Remaining Number of Loans 0
------------
Ending Period
Weighted Average Coupon 0.000%
------------
Weighted Average Remaining Term 0
------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Remaining Number of Loans 0
------------
FUNDS DEPOSITED
Total P & I Funds Collected 0.00
------------
Total P & I Funds Collected on Liquidated Loans 0.00
------------
Total Collection Funds Deposited 0.00
============
Total Repurchased Funds Deposited 0.00
------------
Servicing Fees Due Empire Funding Corporation 0.00
------------
</TABLE>
- --------------------------------------------------------------------------------
DELINQUENCY AND FORECLOSURE INFORMATION
# of Accounts % Amount %
------------- ------ ---------- ------
30-59 Days Delinquent 0 0.000% 0.00 0.000%
60-89 Days Delinquent 0 0.000% 0.00 0.000%
90 or more Days Delinquent 0 0.000% 0.00 0.000%
Bankruptcy Filed 0 0.000% 0.00 0.000%
Real Estate Owned 0 0.000% 0.00 0.000%
Loans in Foreclosure 0 0.000% 0.00 0.000%
NET LOSS INFORMATION
Current Collection Period
Net Losses (Gains) 0.00
Write Off Mortgage Loans 0.00
Gross Principal Losses on Write Off Loans 0.00
Write Off Proceeds 0.00
Write Off Expenses 0.00
Cumulative
Net Losses (Gains) 0.00
Write Off Mortgage Loans 0.00
Gross Principal Losses on Write Off Loans 0.00
Write Off Proceeds 0.00
Write Off Expenses 0.00
<PAGE>
EXHIBIT C
Form of Loan Liquidation Report
Customer Name:
Account No.:
Original Principal Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off) __________
Date last paid __________
a. Foreclosure
Date of Foreclosure __________
Date of REO __________
Date of REO Disposition __________
Property Sale Price/Estimated Market Value at disposition $ __________
b. Settlement (short pay-off and collection actions)
Date of Settlement Payment __________
c. Defaulted Loan Sale
Date of Sale __________
d. Charge-off or Bankruptcy
Date of Charge-off or Bankruptcy Discharge __________
2. Liquidation Proceeds
Principal Prepayment $ __________
Property Sale Proceeds $ __________
Insurance Proceeds $ __________
Settlement Payment Loan Sale Proceeds $ __________
Other (Itemize) $ __________
Total Proceeds $ __________
3. Liquidation Expenses
Servicing Advances $ __________
Servicing Fees $ __________
Other Servicing Compensation $ __________
Collection Agent or Attorney's Fees $ __________
Total Advances $ __________
4. Net Liquidation Proceeds $ __________
(Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $ __________
6. Loss, if any (Item 5 minus Item 4) $ __________
<PAGE>
EXHIBIT D
SCHEDULE OF EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
1. Exceptions to Representation and Warranty 3.04(b) - The following Home
Loans are 30 or more days past due as of the Cut-Off Date:
PRINCIPAL BALANCE
HOME LOAN NUMBER AS OF CUT-OFF DATE TRANSFEROR
- ---------------- ------------------ ----------
1000279 $19,882.72 Empire Funding
1000401 21,113.43 Empire Funding
1001051 43,771.89 Empire Funding
2424026 33,105.70 Empire Funding
2465124 24,859.38 Empire Funding
2554836 19,523.75 Empire Funding
2677806 18,016.52 Empire Funding
2709104 20,129.58 Empire Funding
2728370 49,429.61 Empire Funding
2892405 16,301.33 Empire Funding
2915634 44,055.10 Empire Funding
2964171 24,132.34 Empire Funding
2986671 13,144.32 Empire Funding
3083659 22,529.49 Empire Funding
3095177 20,602.49 Empire Funding
3103986 38,171.96 Empire Funding
3129217 42,877.81 Empire Funding
3143139 29,539.87 Empire Funding
3144291 29,897.03 Empire Funding
3166651 39,636.06 Empire Funding
3241513 42,062.02 Empire Funding
3673431 16,722.52 Empire Funding
3834330 52,902.99 Empire Funding
3891992 19,782.84 Empire Funding
3958752 16,981.50 Empire Funding
4160516 27,302.46 Empire Funding
4493925 34,666.60 Empire Funding
4521583 17,847.21 Empire Funding
4549849 29,910.64 Empire Funding
4578861 23,921.78 Empire Funding
4600453 14,766.80 Empire Funding
4622224 14,678.15 Empire Funding
4660370 12,967.52 Empire Funding
4694888 34,913.36 Empire Funding
4695164 16,801.57 Empire Funding
4763839 29,795.25 Empire Funding
4764062 24,592.19 Empire Funding
4766113 34,276.78 Empire Funding
4774131 22,945.72 Empire Funding
4776371 24,031.05 Empire Funding
4776497 32,918.80 Empire Funding
4788448 22,587.26 Empire Funding
4788554 34,904.77 Empire Funding
4788901 33,509.46 Empire Funding
4788910 37,394.22 Empire Funding
4790131 44,852.88 Empire Funding
4790471 24,333.61 Empire Funding
4790667 15,661.28 Empire Funding
4790694 27,160.91 Empire Funding
4790701 21,940.34 Empire Funding
4791023 16,926.31 Empire Funding
4815962 42,293.63 Empire Funding
4820340 34,880.18 Empire Funding
4824827 34,624.18 Empire Funding
4859898 34,595.38 Empire Funding
4887929 44,442.27 Empire Funding
4893244 45,842.46 Empire Funding
4893878 33,990.48 Empire Funding
4918263 30,629.63 Empire Funding
4936555 24,921.45 Empire Funding
4937714 26,911.46 Empire Funding
4938045 19,786.69 Empire Funding
4954277 34,634.21 Empire Funding
4998140 29,958.73 Empire Funding
5021068 35,327.75 Empire Funding
5025803 32,663.15 Empire Funding
5029337 24,782.10 Empire Funding
5041563 14,968.11 Empire Funding
5054353 34,907.55 Empire Funding
5115644 64,915.62 Empire Funding
5121245 20,515.17 Empire Funding
5139012 21,866.43 Empire Funding
5141884 20,979.40 Empire Funding
5161512 34,909.77 Empire Funding
5176855 30,637.53 Empire Funding
4522626 26,889.29 Empire Funding
4580910 34,875.11 Empire Funding
3195813 37,257.85 Empire Funding
4657801 69,502.99 Empire Funding
4581866 21,423.17 Empire Funding
0006626121 38,657.01 ContiMortgage
0006798904 31,507.14 ContiMortgage
0007091119 56,683.55 ContiMortgage
0007107907 34,899.50 ContiMortgage
0005711734 44,838.14 ContiMortgage
9800005962 29,872.36 ContiMortgage
9800007691 29,753.68 ContiMortgage
9800008565 24,940.82 ContiMortgage
9800009213 34,731.31 ContiMortgage
9800009643 24,970.02 ContiMortgage
9800010726 14,764.48 ContiMortgage
9800011083 34,896.84 ContiMortgage
9800011484 29,893.86 ContiMortgage
9800002005 34,394.85 ContiMortgage
2. Exception to Representation and Warranty 3.04(m) - The following Home
Loans do not require a Monthly Payment which is sufficient to fully
amortize the original principal balance over the original term and to pay
interest at the related Home Loan Interest Rate:
PRINCIPAL BALANCE
HOME LOAN NUMBER AS OF CUT-OFF DATE TRANSFEROR
- ---------------- ------------------ ----------
9700027276 $33,426.31 ContiMortgage
9800001613 43,479.14 ContiMortgage
9800007372 26,707.53 ContiMortgage
9800010057 34,450.15 ContiMortgage
9800007389 14,927.86 ContiMortgage
<PAGE>
EXHIBIT E
FORM OF 10-K REPORT OF ISSUER
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
(Mark One)
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended DECEMBER 31, [ ]
__________________________ or
[ ] Transition Report Pursuant to Section 13 or 15d of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________
Commission file Number 333-61785
PaineWebber Mortgage Acceptance Corporation IV
(Exact name of registrant as specified in its charter)
Delaware 06-1204982
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1285 Avenue of the Americas,
New York, NY 10019
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 713-2000
Securities registered pursuant to Section 12(b) of the Act
NONE
Securities registered pursuant to Section 12(g) of the Act
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
[x] Yes [ ] No
<PAGE>
PART I
Item 2. Properties
Not applicable on reliance of Relief Letters
Item 3. Legal Proceedings
There were no legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of the Security Holders.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder matters
There were [ ] participants in the DTC system holding positions in the
Cede certificates.
The following were Noteholders and Certificateholders of record as of
the end of the reporting year.
Empire Funding Home Loan Owner Trust 1999-1:
Class A-1 Cede & Co.
Class A-2 Cede & Co.
Class A-3 Cede & Co.
Class A-4 Cede & Co.
Class A-5 Cede & Co.
Class M-1 Cede & Co.
Class M-2 Cede & Co.
Class B-1 Cede & Co.
Class B-2 Cede & Co.
There is no established public trading market for the notes.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures: Information required by Item 304 of Reg. S-K.
There were no changes in and/or disagreements with Accountants on
Accounting and Financial Disclosures.
<PAGE>
PART IV
Item 12. Security Ownership of Certain Beneficial Owners and Management
The Notes are represented by one or more notes registered in the name of
Cede & Co., the nominee of The Depository Trust Company. An investor
holding Notes is not entitled to receive a certificate representing such
Note, except in limited circumstances. Accordingly, Cede & Co. is the
sole holder of Notes, which it holds on behalf of brokers, dealers,
banks and other participants in the DTC system. Such participants may
hold Notes for their own accounts or for the accounts of their
customers.
The address of Cede & Co. is:
Cede & Co.
c/o The Depository Trust Company
Seven Hanover Square
New York, New York 10004
Item 13. Certain Relationships and Related Transactions
There has not been, and there is not currently proposed, any
transactions or series of transactions, to which any of the Trust, the
Registrant, the Trustee or the Servicer is a party with any Noteholder
who, to the knowledge of the Registrant and Servicer, owns of record or
beneficially more than five percent of the Notes.
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
(a) 1. Not Applicable
2. Not Applicable
3. Exhibits
99.1 Annual Summary Statement
99.2 Annual Statement as to Compliance
99.3 Annual Independent Public Accountant's Servicing Report
(b ) Reports on Form 8-K
The Registrant has filed Current Reports on Form 8-K with the Securities
and Exchange Commission dated [ ].
(c) See (a) 3 above
(d) Not Applicable
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange A
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Empire Funding Home Loan Owner Trust 1999-1
/s/ _________________________
Vice President
U.S. Bank Trust National Association
Date [ ]
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
99.1 Annual Summary Statement
99.2 Annual Statement of Compliance
99.3 Report of Independent Accountants
<PAGE>
EXHIBIT 99.1 - Summary of Aggregate Amounts or End of Year Amounts for
the period ending December 31, [ ]
Empire Funding Home Loan Owner Trust 1999-1
<PAGE>
SUMMARY OF AGGREGATE AMOUNTS OR END OF YEAR AMOUNTS
Beginning Pool Balance
Ending Pool Balance
Principal Collections
Interest Collections
Defaulted Loans Balance
Servicer Fees
Owner Trustee Fees
Trustee Fees
60 Day Delinquent Amount
SIX MONTH ROLLING DELINQUENCY AVERAGE
CERTIFICATE BALANCE INTEREST PRINCIPAL
Class A-1
Class A-2
Class A-3
Class A-4
Class A-5
Class M-1
Class M-2
Class B-1
Class B-2
<PAGE>
Exhibit 99.2 - Servicer's Annual Statement of Compliance To be
supplied upon receipt by the Trustee
Exhibit 99.3 - Report of Independent Auditors
To be supplied upon receipt by the Trustee
================================================================================
ADMINISTRATION AGREEMENT
dated as of April 1, 1999
among
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
(the "ISSUER"),
U.S. BANK NATIONAL ASSOCIATION,
(the "ADMINISTRATOR")
and
EMPIRE FUNDING CORP.
(the "COMPANY")
Home Loan Asset Backed Notes, Series 1999-1
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Section 1. DUTIES OF THE ADMINISTRATOR.....................................2
Section 2. DUTIES OF THE COMPANY WITH RESPECT TO THE INDENTURE.............4
Section 3. RECORDS.........................................................6
Section 4. COMPENSATION....................................................6
Section 5. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER............6
Section 6. INDEPENDENCE OF THE ADMINISTRATOR...............................6
Section 7. NO JOINT VENTURE................................................6
Section 8. OTHER ACTIVITIES OF ADMINISTRATOR AND SERVICER..................7
Section 9. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR.....7
Section 10. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL OF THE
ADMINISTRATOR............................... .................8
Section 11. NOTICES.........................................................8
Section 12. AMENDMENTS.....................................................10
Section 13. SUCCESSOR AND ASSIGNS..........................................10
Section 14. GOVERNING LAW..................................................11
Section 15. HEADINGS.......................................................11
Section 16. COUNTERPARTS...................................................11
Section 17. SEVERABILITY...................................................11
Section 18. NOT APPLICABLE TO U.S. BANK IN OTHER CAPACITIES................11
Section 19. LIMITATION OF LIABILITY OF OWNER TRUSTEE.......................11
Section 20. BENEFIT OF AGREEMENT...........................................12
Section 21. BANKRUPTCY MATTERS.............................................12
Section 22. CAPITALIZED TERMS..............................................12
-i-
<PAGE>
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT dated as of April 1, 1999, among EMPIRE
FUNDING HOME LOAN OWNER TRUST 1999-1, a Delaware business trust, as Issuer (the
"ISSUER"), U.S. BANK NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity but solely as Administrator ("U.S. BANK" and in such
capacity, the "ADMINISTRATOR") and EMPIRE FUNDING CORP., an Oklahoma
corporation, as the Company (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Issuer is a business trust (the "OWNER TRUST") under the
Delaware Business Trust Act (12 Del. C. Section 3801 et seq.) created by a Trust
Agreement relating to the Owner Trust dated as of April 1, 1999 (the "OWNER
TRUST AGREEMENT"), among PaineWebber Mortgage Acceptance Corporation IV, as
depositor (the "DEPOSITOR"), Wilmington Trust Company, as Owner Trustee, U.S.
Bank, as Paying Agent (in such capacity, the "PAYING AGENT") and the Company;
WHEREAS, the Issuer will issue Home Loan Asset Backed Notes (the
"NOTES"), Series 1999-1;
WHEREAS, the Notes will be secured by certain collateral, as more
particularly set forth in the Indenture dated as of April 1, 1999 (the
"INDENTURE"), between the Issuer and U.S. Bank, as Indenture Trustee (in such
capacity, the "INDENTURE TRUSTEE");
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes, including (i) a Sale and Servicing Agreement
dated as of April 1, 1999 (the "SALE AND SERVICING Agreement"), among the
Issuer, ContiMortgage Corporation, ("CONTIMORTGAGE"), as transferor and servicer
(in such capacity, the "SERVICER"), the Company, as transferor and subservicer,
California Lending Group, Inc., d/b/a United Lending Group ("ULG"), as
transferor (each of ContiMortgage, the Company and ULG, in such capacity, a
"TRANSFEROR"), Norwest Bank Minnesota, National Association (the "MASTER
SERVICER"), the Depositor, U.S. Bank, as Indenture Trustee and grantor trustee
(in such capacity the "GRANTOR TRUSTEE") and ContiFinancial, as the guarantor,
(ii) a Grantor Trust Agreement dated as of April 1, 1999 (the "GRANTOR TRUST
AGREEMENT"), among the Depositor, the Grantor Trustee and the Transferors, (iii)
the Letter of Representations, among the Issuer, the Indenture Trustee and The
Depository Trust Company relating to the Notes (the "NOTE DEPOSITORY
AGREEMENT"), (iv) the Indenture and (v) the Owner Trust Agreement (the Sale and
Servicing Agreement, the Note Depository Agreement, the Grantor Trust Agreement,
the Indenture and the Owner Trust Agreement being hereinafter referred to
collectively as the "RELATED AGREEMENTS");
WHEREAS, pursuant to the Related Agreements, the Issuer is required to
perform certain duties in connection with the Notes and the collateral therefor
pledged pursuant to the Indenture (the "COLLATERAL");
<PAGE>
WHEREAS, the Issuer desires to have the Administrator and the Company,
respectively, perform certain of the duties of the Issuer referred to in the
preceding clause, and to provide such additional services consistent with the
terms of this Agreement and the Related Agreements as the Issuer may from time
to time request; and
WHEREAS, the Administrator and the Company have the capacity to
provide the respective services required hereby and are willing to perform such
services for the Issuer on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
Section 1. DUTIES OF THE ADMINISTRATOR.
(a) Duties with Respect to the Note Depository Agreement, the Sale and
Servicing Agreement, the Insurance Agreement and the Indenture.
(i) The Administrator agrees to perform all of the duties of the
Issuer under the Note Depository Agreement and those duties set forth
herein. In addition, the Administrator shall consult with the Owner
Trustee regarding the duties of the Issuer under the Sale and
Servicing Agreement, the Indenture and the Note Depository Agreement.
The Administrator shall notify the Owner Trustee when action is
necessary to comply with the Issuer's duties under the Sale and
Servicing Agreement, the Indenture and the Note Depository Agreement.
In addition to the foregoing, the Administrator shall take all
appropriate action that is the duty of the Issuer to take with respect
to the following matters under the Sale and Servicing Agreement and
the Indenture (parenthetical section references are to sections of the
Indenture):
(A) the preparation of the Notes and the execution of the
Notes upon their issuance and upon the registration of any
transfer or exchange of the Notes (SECTIONS 2.02 AND 2.03);
(B) the duty to cause the Note Register to be kept and to
give the Indenture Trustee notice of any appointment of a new
Note Registrar and the location, or change in location, of the
Note Register (SECTION 2.03);
(C) the notification of Noteholders of the final principal
payment on the Notes or of the redemption of the Notes or the
duty to cause the Indenture Trustee to provide such notification
(SECTIONS 2.06(B) AND 10.02);
(D) performing the function of the Issuer with respect to
the cancellation of the Notes (SECTION 2.07);
(E) the preparation of or obtaining of the documents and
instruments required for authentication of the Notes and delivery
of the same to the Indenture Trustee (SECTION 2.08);
-2-
<PAGE>
(F) the maintenance of an office in the City of St. Paul,
Minnesota, for registration of transfer or exchange of Notes
(SECTION 3.02);
(G) the delivery to the Indenture Trustee, the Master
Servicer and the Rating Agencies of prompt written notice of each
Event of Default under the Indenture (SECTION 3.13);
(H) the duty to act as Paying Agent for the Issuer and the
duty to cause newly appointed Paying Agents, if any, to deliver
to the Indenture Trustee the instrument specified in the
Indenture regarding funds held in trust (SECTION 3.03);
(I) directing the Indenture Trustee to deposit moneys with
Paying Agents, if any, other than the Indenture Trustee (SECTION
3.03);
(J) notifying the Indenture Trustee, the Master Servicer and
the Rating Agencies of the occurrence of an Event of Default
under the Sale and Servicing Agreement by the Servicer or any
Transferor and, if such an Event of Default arises from the
failure of the Servicer or the applicable Transferor to perform
any of their respective duties under the Sale and Servicing
Agreement, the taking of all reasonable steps available to remedy
such failure (SECTION 3.07(D));
(K) monitoring the Issuer's obligations as to the
satisfaction and discharge of the Indenture (SECTION 4.01);
(L) opening one or more accounts in the Owner Trust's name
(SECTION 8.02);
(M) notifying the Rating Agencies of a redemption of the
Notes and the duty to cause the Majority Residual Interestholders
to deposit the Termination Price into the Collection Account
pursuant to the Sale and Servicing Agreement (SECTION 10.01);
(N) providing the Indenture Trustee with calculations
pertaining to original issue discount, if any, on the Notes and,
if applicable, the accrual of market discount or the amortization
of premium on the Notes to the extent the Administrator has
received from the Servicer sufficient information to calculate
such amounts (SECTION 3.03);
(O) the preparation and filing of all documents and reports
by the Issuer on Forms 8-K and 10-K as required under the
Exchange Act, the rules and regulations of the Commission
thereunder and the TIA (SECTION 7.03);
(P) filing Internal Revenue Service Form 8811 within 30 days
of the Closing Date, designating the officer of the Indenture
Trustee that Noteholders may contact for original issue discount
information with respect to the Notes, and updating such Form at
the time or times required by the Code; and
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(Q) executing and delivering any financing statement,
continuation statement or other instrument necessary or required
pursuant to Section 3.05 of the Indenture (SECTION 3.05).
(ii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be
responsible for performance of the duties of the Owner Trustee set
forth in the Owner Trust Agreement with respect to, among other
things, accounting and reports to Owners, and the Administrator shall
be responsible for the performance of the tax duties set forth in (i)
SECTIONS 5.2(C) and (ii) 5.5 of the Owner Trust Agreement upon receipt
of the Opinion of Counsel specified in SECTION 5.5 of the Owner Trust
Agreement stating that it is necessary to perform such tax duties;
PROVIDED, HOWEVER, that the Owner Trustee shall retain responsibility
for the distribution of the Schedule K-1's necessary to enable each
Owner to prepare its federal and state income tax returns; PROVIDED
FURTHER, that the Indenture Trustee shall receive written notification
if there shall be two or more beneficial owners of the Owner Trust.
(b) (i) The Administrator shall perform the duties of the
Administrator specified in SECTION 10.2 of the Owner Trust Agreement
required to be performed in connection with the resignation or removal
of the Owner Trustee, and any other duties expressly required to be
performed by the Administrator under the Owner Trust Agreement.
(ii) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Administrator may enter
into transactions with or otherwise deal with any of its affiliates;
PROVIDED, HOWEVER, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer
and shall be, in the Administrator's opinion, no less favorable to the
Issuer than would be available from unaffiliated parties.
Section 2. DUTIES OF THE COMPANY WITH RESPECT TO THE INDENTURE.
(a) The Company shall take all appropriate action that is the duty of
the Issuer to take with respect to the following matters under the Indenture
(parenthetical section references are to sections of the Indenture):
(i) preparing, obtaining or filing of the instruments, opinions
and certificates and other documents required for the release of
Collateral (SECTION 2.09);
(ii) preparation and execution of all supplements, amendments,
financing statements, continuation statements, instruments of further
assurance and other instruments, in accordance with SECTION 3.05 of
the Indenture, necessary to protect the Owner Trust Estate (SECTION
3.05);
(iii) the annual delivery of Opinions of Counsel, in accordance
with SECTION 3.06 of the Indenture, as to the Owner Trust Estate, and
the annual delivery of the Officers' Certificate and certain other
statements, in accordance with SECTION 3.09 of the Indenture, as to
compliance with the Indenture (SECTIONS 3.06 AND 3.09);
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(iv) monitoring the Issuer's compliance with its negative
covenants (SECTION 3.08) and the compliance of the Servicer with
certain of its obligations under the Sale and Servicing Agreement
(SECTION 3.07);
(v) compliance with any directive of the Indenture Trustee with
respect to the sale of the Owner Trust Estate in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing under the Indenture (SECTION 5.04);
(vi) appointing a successor Indenture Trustee pursuant to SECTION
6.08 of the Indenture (SECTION 6.08);
(vii) causing one or more accounts to be opened in the Owner
Trust's name and preparing Issuer Orders, Officers' Certificates and
Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Trust Accounts (SECTIONS
8.02 AND 8.03);
(viii) preparing an Issuer Request and Officers' Certificate and
obtaining an Opinion of Counsel and Independent Certificates, if
necessary, for the release of the Owner Trust Estate as defined in the
Indenture (SECTIONS 8.05 AND 8.06);
(ix) preparing Issuer Orders and obtaining of Opinions of Counsel
with respect to any proposed amendment of the Owner Trust Agreement or
amendment to or waiver of any provision of any other document relating
to the Owner Trust Agreement pursuant to SECTION 9.07 of the Indenture
(SECTION 9.07);
(x) notifying the Rating Agencies or the Master Servicer upon the
failure of the Indenture Trustee to give such notification, of the
information required pursuant to SECTION 11.04 of the Indenture
(SECTION 11.04); and (xi) where applicable, the preparation and
delivery on behalf of the Issuer, certificates of fair value of the
Collateral.
(b) The Company will indemnify the Owner Trustee and its agents for,
and hold them harmless against, any losses, liability or expense incurred
without gross negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Owner Trust Agreement, including the reasonable costs and
expenses of defending themselves against any claim or liability in connection
with the exercise or performance of any of their powers or duties under the
Owner Trust Agreement.
(i) ADDITIONAL DUTIES. In addition to the duties of the Company
set forth above, the Company shall prepare for execution by the Issuer
or shall cause the preparation by other appropriate persons of all
such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer to prepare, file or
deliver pursuant to the Related Agreements, and at the request of the
Owner Trustee shall take all appropriate action that it is the duty of
the Issuer to take pursuant to the
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Related Agreements. Subject to SECTION 5 hereof and in accordance with
the directions of the Owner Trustee, the Company shall administer,
perform or supervise the performance of such other activities in
connection with the Collateral (including the Related Agreements) as
are not covered by any of the foregoing provisions and as are
expressly requested by the Owner Trustee and are reasonably within the
capability of the Company.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding
tax is imposed on the Owner Trust's payments (or allocations of
income) to an Owner as contemplated in SECTION 5.2(C) of the Owner
Trust Agreement. Any such notice shall specify the amount of any
withholding tax required to be withheld by the Owner Trustee pursuant
to such provision.
Section 3. RECORDS.
The Administrator shall maintain appropriate books of account and
records relating to services performed hereunder, which books of account and
records shall be accessible for inspection by the Issuer, the Master Servicer,
the Servicer and the Company at any time during normal business hours.
Section 4. COMPENSATION.
The Administrator will perform the duties and provide the services
called for under SECTION 1 hereof without any separate compensation therefor for
so long as the Indenture and the Sale and Servicing Agreement remain in effect,
and thereafter for such compensation as shall be agreed upon among the
Administrator, the Owner Trustee and the Company.
Section 5. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER.
The Administrator shall furnish to the Issuer from time to time such
additional information regarding the Collateral as the Issuer shall reasonably
request.
Section 6. INDEPENDENCE OF THE ADMINISTRATOR.
For all purposes of this Agreement, the Administrator shall be an
independent contractor and shall not be subject to the supervision of the Issuer
or the Owner Trustee with respect to the manner in which it accomplishes the
performance of its obligations hereunder. Unless expressly authorized by the
Issuer, the Administrator shall have no authority to act for or represent the
Issuer or the Owner Trustee in any way and shall not otherwise be deemed an
agent of the Issuer or the Owner Trustee.
Section 7. NO JOINT VENTURE.
Nothing contained in this Agreement (i) shall constitute the
Administrator or the Servicer, respectively, and either the Issuer or the Owner
Trustee as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any
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of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
Section 8. OTHER ACTIVITIES OF ADMINISTRATOR AND SERVICER.
Nothing herein shall prevent the Administrator, the Company or their
respective Affiliates from engaging in other businesses or, in its sole
discretion, from acting in a similar capacity as an administrator for any other
person or entity even though such person or entity may engage in business
activities similar to those of the Issuer or the Owner Trustee.
Section 9. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF
ADMINISTRATOR.
(a) This Agreement shall continue in force until the termination of
the Owner Trust Agreement in accordance with its terms, upon
which event this Agreement shall automatically terminate.
(b) Subject to SECTION 9(E) hereof, the Administrator or the Company
may resign their respective duties hereunder by providing the
Issuer with at least 60 days' prior written notice.
(c) Subject to SECTION 9(E) hereof, the Issuer may remove the
Administrator without cause by providing the Administrator with
at least 60 days' prior written notice.
(d) Subject to SECTION 9(E) hereof, the Issuer may remove the
Administrator immediately upon written notice of termination from
the Issuer to the Administrator if any of the following events
occurs:
(i) the Administrator defaults in the performance of any of its duties
under this Agreement and, after notice of such default, does not cure such
default within ten days (or, if such default cannot be cured in such time,
does not give within ten days such assurance of cure as shall be reasonably
satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises enters a decree or
order for relief, and such decree or order shall not have been vacated
within 60 days, in respect of the Administrator in any involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appoints a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for the Administrator
or any substantial part of its property or orders the winding-up or
liquidation of its affairs; or
(iii) the Administrator commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, consents to the entry of an order for relief in an involuntary case
under any such law, consents to the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator or similar official for the
Administrator or any substantial part of its property, consents to the
taking of possession by any such official of any substantial part
7
<PAGE>
of its property, makes any general assignment for the benefit of
creditors or fails generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in clause
(ii) or clause (iii) of this SECTION 9(D) shall occur, it shall give written
notice thereof to the Issuer and the Indenture Trustee within seven days after
the happening of such event.
(e) No resignation or removal of the Administrator or the Company,
respectively, pursuant to this SECTION 9(D) shall be effective
until (i) a successor Administrator or Company, as the case may
be, shall have been appointed by the Issuer and (ii) such
successor Administrator or Company shall have agreed in writing
to be bound by the terms of this Agreement in the same manner as
the Administrator or Company is bound hereunder.
(f) The appointment of any successor Administrator shall be effective
only after satisfaction of the Rating Agency Condition with
respect to the proposed appointment.
(g) Subject to SECTION 9(E) AND (F) hereof, the Administrator
acknowledges that upon the appointment of a successor Indenture
Trustee pursuant to SECTION 6.08 of the Indenture, the
Administrator shall immediately resign and such successor
Indenture Trustee shall automatically become the Administrator
under this Agreement. Any such successor Indenture Trustee shall
be required to agree to assume the duties of the Administrator
under the terms and conditions of this Agreement in its
acceptance of appointment as successor Indenture Trustee.
(h) The Company's appointment hereunder will terminate automatically
on the Company's resignation or removal as Subservicer under the
Sale and Servicing Agreement.
Section 10. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL OF THE
ADMINISTRATOR.
Promptly upon the effective date of termination of this Agreement
pursuant to SECTION 9(A) or the resignation or removal of the Administrator
pursuant to SECTION 9(B) OR (C), respectively, the Administrator shall be
entitled to be paid all reimbursable expenses accruing to it to the date of such
termination, resignation or removal. The Administrator shall forthwith upon such
termination pursuant to SECTION 9(A) deliver to the Issuer all property and
documents of or relating to the Collateral then in the custody of the
Administrator and, in the event of the resignation or removal of the
Administrator pursuant to SECTION 9(B), (C) OR (D), the Administrator shall
cooperate with the Issuer and take all reasonable steps requested to assist the
Issuer in making an orderly transfer of the duties of the Administrator.
Section 11. NOTICES.
Any notice, report or other communication given hereunder shall be in
writing and addressed as follows:
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(a) if to the Issuer, to
Empire Funding Home Loan Owner Trust 1999-1
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
with a copy to the Company at
Empire Funding Corp.
9737 Great Hills Trail
Austin, Texas 78759
Attention: Richard N. Steed
(b) if to the Administrator, to
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Structured Finance/Empire Funding 1999-1
ContiMortgage Corporation
338 South Warminster Road
Hatboro, Pennsylvania 19040
(d) if to the Master Servicer, to
Norwest Bank Minnesota, National Association
11000 Broken Land Parkway
Columbia, Maryland 21044-3562
Attention: Master Servicing Manager
(Empire Funding 1999-1)
with a copy to:
Norwest Bank Minnesota, National Association
625 Marquette Avenue, MS0070
Minneapolis, MN 55479-0070
Attention: Mortgage Document Custody
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand delivered
to the address of such party as provided above.
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Section 12. AMENDMENTS.
This Agreement may be amended from time to time by a written amendment
duly executed and delivered by the Issuer, the Administrator and the Company,
with the prior written consent of the Owner Trustee without the consent of the
Noteholders, for the purpose of curing any error or ambiguity, correcting or
supplementing any provisions hereof which may be defective or inconsistent with
any other provisions hereof or 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 such
amendment will not materially and adversely affect the interest of any
Noteholder. An amendment described above shall be deemed not to adversely affect
in any material respects the interests of any Noteholder if either (i) an
Opinion of Counsel is obtained to such effect or (ii) the party requesting the
amendment satisfies the Rating Agency Condition with respect to such amendment.
This Agreement may also be amended by the Issuer, the Administrator and the
Company with the prior written consent of the Owner Trustee and the holders of
Notes evidencing at least a majority of the Outstanding Amount of the Notes, 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 may (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments in respect of the Home Loans or payments that are
required to be made for the benefit of Noteholders or (ii) reduce the aforesaid
percentages of the holders of Notes which are required to consent to any such
amendment, in the case of either clause (i) or clause (ii) hereof, without the
consent of the holders of all the Outstanding Notes. Notwithstanding the
foregoing, the Administrator may not amend this Agreement without the permission
of the Company, which permission shall not be withheld unreasonably.
Section 13. SUCCESSOR AND ASSIGNS.
This Agreement may not be assigned by the Administrator unless such
assignment is previously consented to in writing by the Owner Trustee and the
Company, subject to the satisfaction of the Rating Agency Condition in respect
thereof. An assignment with such consent and satisfaction, if accepted by the
assignee, shall bind the assignee hereunder in the same manner as the
Administrator is bound hereunder. Notwithstanding the foregoing, this Agreement
may be assigned by the Administrator without the consent of the Owner Trustee or
the Servicer to a corporation or other organization that is a successor (by
merger, consolidation or purchase of assets) to the Administrator; provided,
however, that such successor organization executes and delivers to the Issuer,
the Owner Trustee and the Company an agreement in which such corporation or
other organization agrees to be bound hereunder by the terms of said assignment
in the same manner as the Administrator is bound hereunder. Subject to the
foregoing, this Agreement shall bind any successors or assigns of the parties
hereto.
Section 14. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE
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PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 15. HEADINGS.
The section headings hereof have been inserted for convenience of
reference only and shall not be construed to affect the meaning, construction or
effect of this Agreement.
Section 16. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which when so
executed shall together constitute but one and the same agreement.
Section 17. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 18. NOT APPLICABLE TO U.S. BANK IN OTHER CAPACITIES.
Nothing in this Agreement shall affect any obligation that U.S. Bank
may have in any other capacity.
Section 19. LIMITATION OF LIABILITY OF OWNER TRUSTEE.
Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of ARTICLES VI, VII AND VIII of the
Owner Trust Agreement.
Section 20. BENEFIT OF AGREEMENT.
It is expressly agreed that in performing its duties under this
Agreement, the Administrator will act for the benefit of holders of the Notes as
well as for the benefit of the Owner Trust, and that such obligations on the
part of the Administrator shall be enforceable at the insistence of the
Indenture Trustee and the Owner Trust.
Section 21. BANKRUPTCY MATTERS.
No party to this Agreement shall take any action to cause the Owner
Trust to dissolve in whole or in part or file a voluntary petition or otherwise
initiate proceedings to have
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the Owner Trust adjudicated bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against the Owner Trust, or file a
petition seeking or consenting to reorganization or relief of the Owner Trust as
debtor under any applicable federal or state law relating to bankruptcy,
insolvency or other relief for debtors with respect to the Owner Trust; or seek
or consent to the appointment of any trustee, receiver, conservator, assignee,
sequestrator, custodian, liquidator (or other similar official) of the Owner
Trust or of all or any substantial part of the properties and assets of the
Owner Trust, or cause the Owner Trust to make any general assignment for the
benefit of creditors of the Owner Trust or take any action in furtherance of any
of the above actions.
Section 22. CAPITALIZED TERMS.
Capitalized terms used and not defined herein have the meanings
assigned to them in the Indenture. Capitalized terms used and not defined herein
or in the Indenture have the meanings assigned to them in the Sale and Servicing
Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1,
By: Wilmington Trust Company,
not in its individual capacity
but solely as Owner Trustee,
By: ______________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION, not in its
individual capacity but solely as Administrator,
By: ____________________________________________
Name:
Title:
EMPIRE FUNDING CORP.,
as the Company
By: ____________________________________________
Name:
Title:
================================================================================
OWNER TRUST AGREEMENT
among
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV,
as Depositor,
EMPIRE FUNDING CORP.,
as the Company,
WILMINGTON TRUST COMPANY,
as Owner Trustee
U.S. BANK NATIONAL ASSOCIATION,
as Paying Agent
Dated as of April 1, 1999
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
Home Loan Asset Backed Notes, Series 1999-1
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1 Capitalized Terms............................................
SECTION 1.2 Other Definitional Provisions................................
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.........................................................
SECTION 2.2 Office.......................................................
SECTION 2.3 Purposes and Powers..........................................
SECTION 2.4 Appointment of Owner Trustee.................................
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate...........
SECTION 2.6 Declaration of Trust.........................................
SECTION 2.7 Title to Trust Property......................................
SECTION 2.8 Situs of Trust...............................................
SECTION 2.9 Representations and Warranties of the Depositor and the
Company; Covenant of the Company...........................
ARTICLE III
RESIDUAL INTEREST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1 Initial Ownership............................................
SECTION 3.2 The Residual Interest Certificates...........................
SECTION 3.3 Execution, Authentication and Delivery of Residual Interest
Certificates.................. ............................
SECTION 3.4 Registration of Transfer and Exchange of Residual Interest
Certificates................... ...........................
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Residual Interest
Certificates...................... ........................
SECTION 3.6 Persons Deemed Owners........................................
SECTION 3.7 Access to List of Owners'Names and Addresses.................
SECTION 3.8 Maintenance of Office or Agency..............................
SECTION 3.9 Appointment of Paying Agent..................................
SECTION 3.10 Restrictions on Transfer of Residual Interest Certificates...
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Owners with Respect to Certain Matters;
Covenants........................ .........................
SECTION 4.2 Action by Owners with Respect to Certain Matters.............
SECTION 4.3 Action by Owners with Respect to Bankruptcy..................
SECTION 4.4 Restrictions on Owners'Power.................................
SECTION 4.5 Majority Control.............................................
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 Establishment of Trust Account...............................
SECTION 5.2 Application Of Trust Funds...................................
SECTION 5.3 Method of Payment............................................
SECTION 5.4 Segregation of Moneys; No Interest...........................
SECTION 5.5 Accounting and Reports to the Certificateholder, Owners,
the Internal Revenue Service and Others....................
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1 General Authority............................................
SECTION 6.2 General Duties...............................................
SECTION 6.3 Action upon Instruction......................................
SECTION 6.4 No Duties Except as Specified in this Agreement, the Basic
Documents or in Instructions...............................
SECTION 6.5 No Action Except Under Specified Documents or Instructions...
SECTION 6.6 Restrictions.................................................
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 Acceptance of Trusts and Duties..............................
SECTION 7.2 Furnishing of Documents......................................
SECTION 7.3 Representations and Warranties...............................
SECTION 7.4 Reliance; Advice of Counsel..................................
SECTION 7.5 Not Acting in Individual Capacity............................
SECTION 7.6 Owner Trustee Not Liable for Residual Interest Certificates
or Home Loans................ .............................
SECTION 7.7 Owner Trustee May Own Residual Interest Certificates and
Notes........................... ..........................
SECTION 7.8 Licenses.....................................................
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE AND PAYING AGENT
SECTION 8.1 Fees and Expenses............................................
SECTION 8.2 Indemnification..............................................
SECTION 8.3 Payments to the Owner Trustee and Paying Agent...............
ARTICLE IX
TERMINATION OF OWNER TRUST AGREEMENT
SECTION 9.1 Termination of Owner Trust Agreement.........................
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 Eligibility Requirements for Owner Trustee...................
SECTION 10.2 Resignation or Removal of Owner Trustee......................
SECTION 10.3 Successor Owner Trustee......................................
SECTION 10.4 Merger or Consolidation of Owner Trustee.....................
SECTION 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee....
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Supplements and Amendments...................................
SECTION 11.2 No Legal Title to Owner Trust Estate in Owners...............
SECTION 11.3 Limitations on Rights of Others..............................
SECTION 11.4 Notices......................................................
SECTION 11.5 Severability.................................................
SECTION 11.6 Separate Counterparts........................................
SECTION 11.7 Successors and Assigns.......................................
SECTION 11.8 No Petition..................................................
SECTION 11.9 No Recourse..................................................
SECTION 11.10 Headings.....................................................
SECTION 11.11 GOVERNING LAW................................................
SECTION 11.12 Residual Interest Transfer Restrictions......................
EXHIBIT A Form of Residual Interest Certificate
EXHIBIT B Form of Certificate of Trust
<PAGE>
THIS OWNER TRUST AGREEMENT, dated as of April 1, 1999, among
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV, a Delaware corporation, as
Depositor (the "DEPOSITOR"), EMPIRE FUNDING CORP., an Oklahoma corporation (the
"COMPANY"), WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Owner
Trustee (the "OWNER TRUSTEE") and U.S. BANK NATIONAL ASSOCIATION, a national
banking association (the "PAYING AGENT").
WITNESSETH:
In consideration of the mutual agreements and covenants herein
contained, the Depositor, the Company, the Paying Agent and the Owner Trustee
hereby agree for the benefit of each of them and the holders of the Residual
Interest Certificates as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CAPITALIZED TERMS. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"ADMINISTRATION AGREEMENT" shall mean the Administration Agreement,
dated as of April 1, 1999 among the Issuer, the Company, as the Company, and
U.S. Bank National Association, as Administrator, as the same may be amended
from time to time.
"ADMINISTRATOR" shall mean U.S. Bank National Association, or any
successor in interest thereto, in its capacity as Administrator under the
Administration Agreement.
"AGREEMENT" shall mean this Owner Trust Agreement, as the same may be
amended and supplemented from time to time.
"BASIC DOCUMENTS" shall mean the Certificate of Owner Trust,
Certificate of Grantor Trust, this Agreement, the Grantor Trust Agreement, the
Indenture, the Sale and Servicing Agreement, the Administration Agreement, the
Custodial Agreement, the Note Depository Agreement, the Notes, the Home Loan
Purchase Agreements and other documents and certificates delivered in connection
herewith or therewith.
"BENEFIT PLAN INVESTOR" shall have the meaning assigned to such term
in SECTION 3.10(B).
"BUSINESS TRUST STATUTE" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from
time to time.
"CERTIFICATE DISTRIBUTION ACCOUNT" shall have the meaning assigned to
such term in SECTION 5.1.
"CERTIFICATE OF TRUST" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" shall mean the
register mentioned and the registrar appointed pursuant to SECTION 3.4.
"CERTIFICATEHOLDER" or "HOLDER" shall mean a Person in whose name a
Residual Interest Certificate is registered.
"CORPORATE TRUST OFFICE" shall mean, with respect to the Trust, the
principal corporate trust office of the Trust located at Empire Funding Home
Loan Owner Trust, c/o Wilmington Trust Co., Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration; or at such other address in the State of Delaware as the Owner
Trustee may designate by notice to the Owners and the Company, or the principal
corporate trust office of any successor Owner Trustee (the address (which shall
be in the State of Delaware) of which the successor owner trustee will notify
the Owners and the Company).
"DEFINITIVE CERTIFICATE" means a certificated form of security that
represents a Residual Interest Certificate.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXPENSES" shall have the meaning assigned to such term in SECTION
8.2.
"INDENTURE" shall mean the Indenture, dated as of April 1, 1999, by
and between the Issuer and the Indenture Trustee, as the same may be amended or
supplemented from time to time.
"INDENTURE TRUSTEE" means U.S. Bank National Association, as Indenture
Trustee under the Indenture.
"ISSUER" shall mean Empire Funding Home Loan Owner Trust 1999-1, the
Delaware business trust created pursuant to this Agreement.
"MAJORITY RESIDUAL INTERESTHOLDERS" shall mean the Holders of more
than an aggregate 50% Percentage Interest of the Residual Interest.
"MASTER SERVICER" shall mean Norwest Bank Minnesota, National
Association, a national banking association, or any successor in interest
thereto.
"OWNER" shall mean each holder of a Residual Interest Certificate.
"OWNER TRUSTEE" shall mean Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor owner trustee hereunder.
"PAYING AGENT" shall mean the Indenture Trustee or any successor in
interest thereto or any other paying agent or co-paying agent appointed pursuant
to SECTION 3.9 hereunder and authorized by the Issuer to make payments to and
distributions from the Certificate Distribution Account.
"PERCENTAGE INTEREST" shall mean with respect to each Residual
Interest Certificate, the percentage portion of all of the Residual Interest
evidenced thereby as stated on the face of such Residual Interest Certificate.
"PROSPECTIVE OWNER" shall have the meaning set forth in SECTION
3.10(A).
"RATING AGENCY CONDITION" means, with respect to any action to which a
Rating Agency Condition applies, that each Rating Agency shall have been given
10 days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Depositor, the Servicer, the Master Servicer, the Owner Trustee and the Issuer
in writing that such action will not result in a reduction, withdrawal or
qualification of the then current rating of the Notes.
"RECORD DATE" shall mean as to each Payment Date the last Business Day
of the month immediately preceding the month in which such Payment Date occurs.
"RESIDUAL INTEREST" shall mean the right to receive distributions of
Excess Spread, if any, and certain other funds, if any, on each Payment Date,
pursuant to Section 5.2 of this Agreement, Sections 5.01(c), 5.01(e)(iii) and
5.02(c) of the Sale and Servicing Agreement and Section 5.04(b) of the
Indenture.
"RESIDUAL INTEREST CERTIFICATE" shall mean a certificate substantially
in the form attached as EXHIBIT A hereto and evidencing the Residual Interest.
"RESIDUAL INTERESTHOLDER" shall mean any Holder of a Percentage
Interest of the Residual Interest.
"SALE AND SERVICING AGREEMENT" shall mean the Sale and Servicing
Agreement dated as of the date hereof, among the Owner Trust as Issuer,
PaineWebber Mortgage Acceptance Corporation IV, as Depositor, U.S. Bank National
Association, as Indenture Trustee and Grantor Trustee, ContiMortgage
Corporation, as Transferor and Servicer, the Company, as Transferor and
Subservicer, California Lending Group, Inc., d/b/a United Lending Group, as
Transferor, Norwest Bank Minnesota, National Association, as Master Servicer,
and ContiFinancial Corporation, as Guarantor, as the same may be amended or
supplemented from time to time.
"SECRETARY OF STATE" shall mean the Secretary of State of the State of
Delaware.
"TRUST" shall mean the trust established by this Agreement.
"U.S. PERSON" shall mean a citizen or resident of the United States, a
corporation or partnership (except as provided in applicable Treasury
regulations) created or organized in or under the laws of the United States, any
state or the District of Columbia, including any entity treated as a corporation
or partnership for federal income tax purposes, or any political subdivision
thereof, an estate that is subject to United States federal income tax
regardless of the source of its income, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more such U.S. Persons have authority to control all
substantial decisions of the trust (or, to the extent provided in Treasury
regulations, certain trusts in existence on August 20, 1996 which are eligible
to be treated as U.S. Persons).
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
ORGANIZATION
SECTION 2.1 NAME. The Trust created hereby shall be known as "Empire
Funding Home Loan Owner Trust 1999-1", in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.2 OFFICE. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Owners and the
Company.
SECTION 2.3 PURPOSES AND POWERS. (a) The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and to sell such
Notes;
(ii) with the proceeds of the sale of the Notes, to pay the
organizational, start-up and transactional expenses of the Trust and
to pay the balance to the Depositor and the Company, as their
interests may appear pursuant to the Sale and Servicing Agreement;
(iii) to purchase, hold, assign, grant, transfer, pledge,
mortgage and convey the Owner Trust Estate pursuant to the Indenture
and to hold, manage and distribute to the Owners pursuant to the terms
of the Sale and Servicing Agreement any portion of the Owner Trust
Estate released from the lien of, and remitted to the Trust pursuant
to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith;
(vi) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Owners and the Noteholders; and
(vii) to issue the Residual Interest Certificates pursuant to
this Agreement.
The Trust is hereby authorized to engage in the foregoing activities.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the Basic Documents.
SECTION 2.4 APPOINTMENT OF OWNER TRUSTEE. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.5 INITIAL CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Owner Trust Estate
and shall be deposited in the Certificate Distribution Account. The Depositor or
the Company shall pay reasonable organizational expenses of the Trust as they
may arise or shall, upon the request of the Owner Trustee, promptly reimburse
the Owner Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.6 DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Owners, subject to
the obligations of the Trust under the Basic Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
federal, state and local income and franchise tax purposes (i) so long as there
is a sole Owner, the Trust shall be treated as a security arrangement, with the
assets of the Trust being the Grantor Trust Certificate and the other assets
held by the Trust, the owner of the Residual Interest Certificate being the sole
Owner and the Notes being non-recourse debt of the sole Owner, and (ii) if there
is more than one Owner, the Trust shall be treated as a partnership, with the
assets of the partnership being the Grantor Trust Certificate and other assets
held by the Trust, the partners of the partnership being the holders of the
Residual Interest Certificates and the Notes being non-recourse debt of the
partnership. The Trust shall not elect to be treated as an association under
Treasury Regulations Section 301.7701-3(a) for federal income tax purposes. The
parties agree that, unless otherwise required by appropriate tax authorities,
the sole Owner or the Trust will file or cause to be filed annual or other
necessary returns, reports and other forms consistent with the characterization
of the Trust as provided in the second preceding sentence for such tax purposes.
Effective as of the date hereof, the Owner Trustee shall have all rights, powers
and duties set forth herein and in the Business Trust Statute with respect to
accomplishing the purposes of the Trust.
SECTION 2.7 TITLE TO TRUST PROPERTY.
(a) Subject to the Indenture, legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee and/or a separate
trustee, as the case may be.
(b) The Owners shall not have legal title to any part of the Owner
Trust Estate. No transfer by operation of law or otherwise of any interest of
the Owners shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or to the transfer to it of any part of
the Owner Trust Estate.
(c) For so long as any Notes remain Outstanding, the Owner Trustee
shall cause the Grantor Trust Certificate to at all times be registered in the
name of the Indenture Trustee, as assignee of the Trust and shall cause the
Grantor Trust Certificate to be physically delivered to the Indenture Trustee.
SECTION 2.8 SITUS OF TRUST. The Trust will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York, except with respect to accounts maintained by the Indenture Trustee on
behalf of the Owner Trustee. The Trust shall not have any employees; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee from
having employees within or without the State of Delaware. Payments will be
received by the Trust only in Delaware or New York, and payments will be made by
the Trust only from Delaware or New York, except with respect to payments made
by the Indenture Trustee on behalf of the Owner Trustee. The only offices of the
Trust will be at the Corporate Trust Office in Delaware.
SECTION 2.9 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AND THE
COMPANY; COVENANT OF THE COMPANY.
(a) The Depositor hereby represents and warrants to the Owner Trustee
that:
(i) The Depositor is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware
and has all licenses necessary to carry on its business as now being
conducted. The Depositor has the power and authority to execute and
deliver this Agreement and to perform in accordance herewith; the
execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by
the Depositor and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary action
of the Depositor; this Agreement evidences the valid, binding and
enforceable obligation of the Depositor; and all requisite action has
been taken by the Depositor to make this Agreement valid, binding and
enforceable upon the Depositor in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium
and other, similar laws relating to or affecting creditors' rights
generally or the application of equitable principles in any
proceeding, whether at law or in equity;
(ii) The consummation of the transactions contemplated by this
Agreement will not result in (i) the breach of any terms or provisions
of the Articles of Incorporation or Bylaws of the Depositor, (ii) the
breach of any term or provision of, or conflict with or constitute a
default under or result in the acceleration of any obligation under,
any material agreement, indenture or loan or credit agreement or other
material instrument to which the Depositor, or its property is
subject, or (iii) the violation of any law, rule, regulation, order,
judgment or decree to which the Depositor or its respective property
is subject;
(iii) 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 other governmental agency, which default
might have consequences that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or
its properties or might have consequences that would materially and
adversely affect its performance hereunder.
(b) The Company hereby represents and warrants to the Owner Trustee
that:
(i) The Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of Oklahoma,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(ii) The Company is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such
qualifications.
(iii) The Company has the power and authority to execute and
deliver this Agreement and to carry out its terms; and the execution,
delivery and performance of this Agreement has been duly authorized by
the Company by all necessary corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of the Company, or any
indenture, agreement or other instrument to which the Company is a
party or by which it is bound; nor result in the creation or
imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the best
of the Company's knowledge, any order, rule or regulation applicable
to the Company of any court or of any Federal or state regulatory
body, administrative agency or other governmental instrumentality
having jurisdiction over the Company or its properties.
(v) There are no proceedings or investigations pending or, to the
Company's best knowledge, threatened, before any court, regulatory
body, administrative agency or other governmental instrumentality
having jurisdiction over the Company or its properties: (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement
or (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Company of its obligations
under, or the validity or enforceability of, this Agreement.
(c) The Company covenants with the Owner Trustee that during the
continuance of this Agreement it will comply in all respects with the provisions
of its Articles of Incorporation in effect from time to time.
ARTICLE III
RESIDUAL INTEREST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1 INITIAL OWNERSHIP. Upon the formation of the Trust by the
contribution by the Depositor pursuant to SECTION 2.5 and until the issuance of
the Residual Interest Certificates, the Depositor shall be the sole Owner of the
Trust.
SECTION 3.2 THE RESIDUAL INTEREST CERTIFICATES. The Residual Interest
Certificates shall not be issued with a principal amount. The Residual Interest
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of a Trust Officer of the Owner Trustee. Residual Interest
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Residual Interest
Certificates or did not hold such offices at the date of authentication and
delivery of such Residual Interest Certificates.
A transferee of a Residual Interest Certificate shall become an Owner,
and shall be entitled to the rights and subject to the obligations of an Owner
hereunder and under the Sale and Servicing Agreement, upon such transferee's
acceptance of a Residual Interest Certificate duly registered in such
transferee's name pursuant to SECTION 3.4.
SECTION 3.3 EXECUTION, AUTHENTICATION AND DELIVERY OF RESIDUAL
INTEREST CERTIFICATES. Concurrently with the initial sale of the Grantor Trust
Certificate to the Trust pursuant to the Sale and Servicing Agreement, the Owner
Trustee on behalf of the Trust shall cause the Residual Interest Certificates
representing 100% of the Percentage Interests of the Residual Interest to be
executed, authenticated and delivered to or upon the written order of the
Depositor, signed by its chairman of the board, its president or any vice
president, without further corporate action by the Depositor, in authorized
denominations. No Residual Interest Certificate shall entitle its holder to any
benefit under this Agreement, or shall be valid for any purpose, unless there
shall appear on such Residual Interest Certificate a certificate of
authentication substantially in the form set forth in EXHIBIT A, executed by the
Owner Trustee or the Administrator, as the Owner Trustee's authenticating agent,
by manual or facsimile signature; such authentication shall constitute
conclusive evidence that such Residual Interest Certificate shall have been duly
authenticated and delivered hereunder. All Residual Interest Certificates shall
be dated the date of their authentication.
SECTION 3.4 REGISTRATION OF TRANSFER AND EXCHANGE OF RESIDUAL INTEREST
CERTIFICATES. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to SECTION 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Residual Interest Certificates and
of transfers and exchanges of Residual Interest Certificates as herein provided.
The Administrator shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Residual Interest
Certificate at the office or agency maintained pursuant to SECTION 3.8, the
Owner Trustee shall execute, authenticate and deliver (or shall cause the
Administrator as its authenticating agent to authenticate and deliver), in the
name of the designated transferee or transferees, one or more new Residual
Interest Certificates in authorized denominations of a like aggregate amount
dated the date of authentication by the Owner Trustee or any authenticating
agent PROVIDED that prior to such execution, authentication and delivery, the
Owner Trustee, the Administrator and the Certificate Registrar shall have
received an Opinion of Counsel to the effect that the proposed transfer will not
cause the Trust to be characterized as an association (or a publicly traded
partnership) taxable as a corporation or alter the tax characterization of the
Notes for federal income tax or Texas state law purposes. At the option of an
Owner, Residual Interest Certificates may be exchanged for other Residual
Interest Certificates of authorized denominations of a like aggregate amount
upon surrender of the Residual Interest Certificates to be exchanged at the
office or agency maintained pursuant to SECTION 3.8.
Every Residual Interest Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the Owner or his attorney duly authorized
in writing. In addition, each Residual Interest Certificate presented or
surrendered for registration of transfer and exchange must be accompanied by a
letter from the Prospective Owner certifying as to the representations set forth
in SECTIONS 3.10(A) AND (B). Each Residual Interest Certificate surrendered for
registration of transfer or exchange shall be in substantially the form attached
hereto as Exhibit A and shall be canceled and disposed of by the Owner Trustee
in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Residual Interest Certificates, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer or
exchange of Residual Interest Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make and the Certificate Registrar shall not register
transfers or exchanges of Residual Interest Certificates for a period of 15 days
preceding the due date for any payment with respect to the Residual Interest
Certificates.
SECTION 3.5 MUTILATED, DESTROYED, LOST OR STOLEN RESIDUAL INTEREST
CERTIFICATES. If (a) any mutilated Residual Interest Certificate shall be
surrendered to the Certificate Registrar, or if the Certificate Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft of any
Residual Interest Certificate and (b) there shall be delivered to the
Certificate Registrar and the Owner Trustee such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Residual Interest Certificate shall have been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner
Trustee, or the Administrator as the Owner Trustee's authenticating agent, shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Residual Interest Certificate, a new Residual Interest
Certificate of like tenor and denomination. In connection with the issuance of
any new Residual Interest Certificate under this Section, the Owner Trustee or
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Residual Interest Certificate issued pursuant to this
Section shall constitute conclusive evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Residual
Interest Certificate shall be found at any time.
SECTION 3.6 PERSONS DEEMED OWNERS. Prior to due presentation of a
Residual Interest Certificate for registration of transfer, the Owner Trustee or
the Certificate Registrar may treat the Person in whose name any Residual
Interest Certificate shall be registered in the Certificate Register as the
owner of such Residual Interest Certificate for the purpose of receiving
distributions pursuant to SECTION 5.2 and for all other purposes whatsoever, and
neither the Owner Trustee nor the Certificate Registrar shall be bound by any
notice to the contrary.
SECTION 3.7 ACCESS TO LIST OF OWNERS' NAMES AND ADDRESSES. The Owner
Trustee shall furnish or cause to be furnished to the Master Servicer, the
Servicer, the Depositor and the Indenture Trustee, within 15 days after receipt
by the Owner Trustee of a request therefor from the Master Servicer, the
Servicer, the Depositor or the Indenture Trustee in writing, a list, in such
form as the Master Servicer, the Servicer, the Depositor or the Indenture
Trustee may reasonably require, of the names and addresses of the Owners as of
the most recent Record Date. If a Certificateholder applies in writing to the
Owner Trustee, and such application states that the applicant desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Residual Interest Certificates and such application
is accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Owner, by
receiving and holding a Residual Interest Certificate, shall be deemed to have
agreed not to hold any of the Depositor, the Company, the Certificate Registrar
or the Owner Trustee accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 3.8 MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee shall
maintain an office or offices or agency or agencies where Residual Interest
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Owner Trustee in respect of the
Residual Interest Certificates and the Basic Documents may be served. The Owner
Trustee initially designates the Administrator's office in the Borough of
Manhattan, The City of New York as its principal corporate trust office for such
purposes. The Owner Trustee shall give prompt written notice to the Company and
to the Certificateholders of any change in the location of the Certificate
Register or any such office or agency.
SECTION 3.9 APPOINTMENT OF PAYING AGENT. The Owner Trustee hereby
appoints the Indenture Trustee as Paying Agent under this Agreement. The Owner
Trustee hereby appoints the Paying Agent to establish and maintain the
Certificate Distribution Account. The Paying Agent shall make distributions to
Residual Interestholders from the Certificate Distribution Account pursuant to
SECTION 5.2 hereof and SECTION 5.02 of the Sale and Servicing Agreement and
shall report the amounts of such distributions to the Owner Trustee. The Paying
Agent shall have the revocable power to withdraw funds from the Certificate
Distribution Account for the purpose of making the distributions referred to
above. In the event that the Indenture Trustee shall no longer be the Paying
Agent hereunder, the Owner Trustee shall appoint a successor to act as Paying
Agent (which shall be a bank or trust company). The Owner Trustee shall cause
such successor Paying Agent or any additional Paying Agent appointed by the
Owner Trustee to execute and deliver to the Owner Trustee an instrument in which
such successor Paying Agent or additional Paying Agent shall agree with the
Owner Trustee that as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the Owners in
trust for the benefit of the Residual Interestholders entitled thereto until
such sums shall be paid to such Owners. The Paying Agent shall return all
unclaimed funds to the Owner Trustee, and upon removal of a Paying Agent, such
Paying Agent shall also return all funds in its possession to the Owner Trustee.
The provisions of SECTIONS 7.1, 7.3, 7.4 AND 8.1 shall apply to the Indenture
Trustee also in its role as Paying Agent, for so long as the Indenture Trustee
shall act as Paying Agent and, to the extent applicable, to any other paying
agent appointed hereunder. Any reference in this Agreement to the Paying Agent
shall include any co-paying agent unless the context requires otherwise.
Notwithstanding anything herein to the contrary, the Paying Agent shall be the
same entity as the Indenture Trustee under the Indenture and the Sale and
Servicing Agreement. If the Paying Agent ceases to be the same entity as the
Indenture Trustee under the Indenture and the Sale and Servicing Agreement, the
Paying Agent shall resign and the Owner Trustee shall assume the duties and
obligations of the Paying Agent hereunder and under the Sale and Servicing
Agreement.
SECTION 3.10 RESTRICTIONS ON TRANSFER OF RESIDUAL INTEREST
CERTIFICATES.
(a) Each prospective purchaser and any subsequent transferee of a
Residual Interest Certificate (each, a "PROSPECTIVE OWNER"), other than the
Company, shall represent and warrant, in writing, to the Owner Trustee and the
Certificate Registrar and any of their respective successors that:
(i) Such Person is (A) a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and is aware that the seller of the Residual
Interest Certificate may be relying on the exemption from the
registration requirements of the Securities Act provided by Rule 144A
and is acquiring such Residual Interest Certificate for its own
account or for the account of one or more qualified institutional
buyers for whom it is authorized to act, or (B) an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2),
(3) or (7) of Rule 501 under the Securities Act (an "INSTITUTIONAL
ACCREDITED INVESTOR") that is acquiring the Offered Notes for its own
account, or for the account of such an Institutional Accredited
Investor, for investment purposes and not with a view to, or for offer
or sale in connection with any distribution in violation of the
Security Act.
(ii) Such Person understands that the Residual Interest
Certificate have not been and will not be registered under the
Securities Act and may be offered, sold or otherwise transferred only
to a person whom the seller reasonably believes is (A) a qualified
institutional buyer or (B) an Institutional Accredited Investor, and
in accordance with the terms hereof and any applicable securities laws
of any state of the United States.
(iii) Such Person understands that the Residual Interest
Certificates bear a legend to the following effect:
"THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY
THIS RESIDUAL INTEREST CERTIFICATE HAS NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS. THIS RESIDUAL INTEREST CERTIFICATE MAY BE
DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE
DISPOSED OF BY THE HOLDER HEREOF ONLY TO (I) A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE ACT, IN A TRANSACTION THAT IS
REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO RULE
144A OR (II) AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3)
OR (7) OF RULE 501 UNDER THE ACT IN A TRANSACTION
THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS.
NO PERSON IS OBLIGATED TO REGISTER THIS RESIDUAL
INTEREST CERTIFICATE UNDER THE ACT OR ANY STATE
SECURITIES LAWS."
(iv) Such Person shall comply with the provisions of SECTION
3.10(B), as applicable, relating to the ERISA restrictions with
respect to the acceptance or acquisition of such Residual Interest
Certificate.
(b) Each Prospective Owner, other than the Company, shall either:
(i) represent and warrant, in writing, to the Owner Trustee and
the Certificate Registrar and any of their respective successors that
the Prospective Owner is not (A) an "employee benefit plan" within the
meaning of Section 3(3) of ERISA, or (B) a "plan" within the meaning
of Section 4975(e)(1) of the Code or (C) an entity, including an
insurance company separate account or general account, whose
underlying assets include plan assets by reason of a plan's investment
in the entity (each, a "BENEFIT PLAN INVESTOR") and is not directly or
indirectly purchasing such Residual Interest Certificate on behalf of,
as investment manager of, as named fiduciary of, as trustee of, or
with the assets of a Benefit Plan Investor; or
(ii) furnish to the Owner Trustee and the Certificate Registrar
and any of their respective successors an opinion of counsel
acceptable to such persons that (A) the proposed transfer of the
Residual Interest Certificate to such Prospective Owner will not cause
any assets of the Trust to be deemed "plan assets" within the meaning
of United States Department of Labor Regulation Section 2510.3-101, or
(B) the proposed transfer of the Residual Interest Certificate will
not give rise to a transaction described in Section 406 of ERISA or
Section 4975(c)(1) of the Code for which a statutory or administrative
exemption is unavailable.
(c) The Residual Interest Certificates shall bear an additional legend
referring to the foregoing restrictions contained in paragraph (b) above.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 PRIOR NOTICE TO OWNERS WITH RESPECT TO CERTAIN MATTERS;
COVENANTS.
(a) With respect to the following matters, the Owner Trustee shall not
take action, and the Owners shall not direct the Owner Trustee to take any
action, unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Owners in writing of the proposed action and the
Owners shall not have notified the Owner Trustee in writing prior to the 30th
day after such notice is given that such Owners have withheld consent or the
Owners have provided alternative direction:
(i) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the
Home Loans) and the compromise of any action, claim or lawsuit brought
by or against the Trust (except with respect to the aforementioned
claims or lawsuits for collection of the Home Loans);
(ii) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Business Trust Statute);
(iii) the amendment or other change to this Agreement or any
Basic Document in circumstances where the consent of any Noteholder is
required;
(iv) the amendment or other change to this Agreement or any Basic
Document in circumstances where the consent of any Noteholder is not
required and such amendment materially adversely affects the interest
of the Owners;
(v) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar, or the consent to the
assignment by the Note Registrar, Paying Agent or Indenture Trustee or
Certificate Registrar of its obligations under the Indenture or this
Agreement, as applicable;
(vi) the consent to the calling or waiver of any default of any
Basic Document;
(vii) the consent to the assignment by the Indenture Trustee, the
Master Servicer or Servicer of their respective obligations under any
Basic Document;
(viii) except as provided in Article IX hereof, dissolve,
terminate or liquidate the Trust in whole or in part;
(ix) merge or consolidate the Trust with or into any other
entity, or convey or transfer all or substantially all of the Trust's
assets to any other entity;
(x) cause the Trust to incur, assume or guaranty any indebtedness
other than as set forth in this Agreement;
(xi) do any act that conflicts with any other Basic Document;
(xii) do any act which would make it impossible to carry on the
ordinary business of the Trust;
(xiii) confess a judgment against the Trust;
(xiv) possess Trust assets, or assign the Trust's right to
property, for other than a Trust purpose;
(xv) cause the Trust to lend any funds to any entity; or
(xvi) change the Trust's purpose and powers from those set forth
in this Owner Trust Agreement.
(b) Without limiting any provision of Section 4.1(a) the Owner Trustee
on behalf of the Trust agrees to abide by the following restrictions:
(i) Other than as contemplated by the Basic Documents and related
documentation, the Trust shall not incur any indebtedness.
(ii) Other than as contemplated by the Basic Documents and
related documentation, the Trust shall not engage in any dissolution,
liquidation, consolidation, merger or sale of assets.
(iii) The Trust shall not engage in any business activity in
which it is not currently engaged other as contemplated by the Basic
Documents and related documentation.
(iv) The Trust shall not form, or cause to be formed, any
subsidiaries and shall not own or acquire any asset other than as
contemplated by the Basic Documents and related documentation.
(v) Other than as contemplated by the Basic Documents and related
documentation, the Trust shall not follow the directions or
instructions of the Company.
(c) The Owner Trustee on behalf of the Trust shall:
(i) Maintain the Trust's books and records separate from any
other person or entity.
(ii) Maintain the Trust's bank accounts separate from any other
person or entity.
(iii) Not commingle the Trust's assets with those of any other
person or entity.
(iv) Conduct the Trust's own business in its own name.
(v) Other than as contemplated by the Basic Documents and related
documentation, pay the Trust's own liabilities and expenses only out
of its own funds.
(vi) Observe all formalities required under the Business Trust
Statute.
(vii) Enter into transactions with Affiliates or the Company only
if each such transaction is intrinsically fair, commercially
reasonable, and on the same terms as would be available in an arm's
length transaction with a person or entity that is not an Affiliate.
(viii) Not guarantee or become obligated for the debts of any
other entity or person.
(ix) Not hold out the Trust's credit as being available to
satisfy the obligation of any other person or entity.
(x) Not acquire the obligations or securities of the Trust's
Affiliates or the Company.
(xi) Other than as contemplated by the Basic Documents and
related documentation, not make loans to any other person or entity or
buy or hold evidence of indebtedness issued by any other person or
entity.
(xii) Other than as contemplated by the Basic Documents and
related documentation, not pledge the Trust's assets for the benefit
of any other person or entity.
(xiii) Hold the Trust out as a separate entity and conduct any
business only in its own name.
(xiv) Correct any known misunderstanding regarding the Trust's
separate identity.
(xv) Not identify the Trust as a division of any other person or
entity.
(xvi) Maintain appropriate minutes or other records of
appropriate actions and shall maintain its office separate from the
office of the Company, the Depositor and the Master Servicer.
So long as the Notes or any other amounts owed under the Indenture
remain outstanding, the Trust shall not amend this Section 4.1 without the prior
written consent of 100% of the Voting Interests of the Notes and the consent of
each Rating Agency, in addition to the requirements under Section 11.1.
(d) The Owner Trustee shall not have the power, except upon the
direction of the Owners and, subject to Section 11.16 of the Indenture, 100% of
the Noteholders, and to the extent otherwise consistent with the Basic
Documents, to (i) remove or replace the Servicer, the Master Servicer, the
Indenture Trustee or the Grantor Trustee, (ii) institute proceedings to have the
Trust declared or adjudicated a bankrupt or insolvent, (iii) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (iv) file
a petition or consent to a petition seeking reorganization or relief on behalf
of the Trust under any applicable federal or state law relating to bankruptcy,
(v) consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or any similar official) of the Trust or a substantial portion of
the property of the Trust, (vi) make any assignment for the benefit of the
Trust's creditors, (vii) cause the Trust to admit in writing its inability to
pay its debts generally as they become due, (viii) take any action, or cause the
Trust to take any action, in furtherance of any of the foregoing (any of the
above, a "BANKRUPTCY ACTION"). So long as the Indenture remains in effect, no
Certificateholder shall have the power to take, and shall not take, any
Bankruptcy Action with respect to the Trust or direct the Owner Trustee to take
any Bankruptcy Action with respect to the Trust.
SECTION 4.2 ACTION BY OWNERS WITH RESPECT TO CERTAIN MATTERS. The
Owner Trustee shall not have the power, except upon the direction of the Owners,
to (a) remove the Administrator under the Administration Agreement pursuant to
Section 8 thereof, (b) appoint a successor Administrator pursuant to Section 8
of the Administration Agreement, (c) remove the Servicer or the Master Servicer
under the Sale and Servicing Agreement pursuant to Section 10.01 thereof or (d)
sell the Grantor Trust Certificate after the termination of the Indenture. The
Owner Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Owners.
SECTION 4.3 ACTION BY OWNERS WITH RESPECT TO BANKRUPTCY. The Owner
Trustee shall not have the power to commence a voluntary Bankruptcy Action
relating to the Trust unless the conditions specified in Section 4.1(d) are
satisfied and the Trust is insolvent.
SECTION 4.4 RESTRICTIONS ON OWNERS' POWER. The Owners shall not direct
the Owner Trustee to take or refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the Basic Documents or would be contrary to
SECTION 2.3 nor shall the Owner Trustee be obligated to follow any such
direction, if given.
SECTION 4.5 MAJORITY CONTROL. Except as expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by the
Majority Residual Interestholders. Except as expressly provided herein, any
written notice of the Owners delivered pursuant to this Agreement shall be
effective if signed by the Majority Residual Interestholders at the time of the
delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 ESTABLISHMENT OF TRUST ACCOUNT. The Owner Trustee shall
cause the Servicer, for the benefit of the Owners, to establish and maintain
with U.S. Bank National Association for the benefit of the Owner Trustee one or
more Eligible Accounts which, so long as the Indenture Trustee holds such Trust
Account on behalf of the Owner Trustee, shall be entitled "Certificate
Distribution Account, U.S. Bank National Association, on behalf of the Owner
Trustee and the Owners, in trust for the Empire Funding Home Loan Asset Backed
Securities, Series 1999-1". Funds shall be deposited in the Certificate
Distribution Account as required by the Sale and Servicing Agreement.
All of the right, title and interest of the Owner Trustee and the
Paying Agent in all funds on deposit from time to time in the Certificate
Distribution Account and in all proceeds thereof shall be held for the benefit
of the Owners and such other persons entitled to distributions therefrom. Except
as otherwise expressly provided herein or in the Sale and Servicing Agreement,
the Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee or Paying Agent for the benefit of the Owners and
the Servicer.
In addition to the foregoing, the Certificate Distribution Account is
a Trust Account under the Sale and Servicing Agreement and constitutes part of
the Owner Trust Estate pledged by the Trust to the Indenture Trustee under the
Indenture. The Certificate Distribution Account shall be subject to and
established and maintained in accordance with the applicable provisions of the
Sale and Servicing Agreement and the Indenture, including, without limitation,
the provisions of Section 5.02(c) of the Sale and Servicing Agreement regarding
distributions from the Certificate Distribution Account.
The Company agrees to direct and shall have the sole authority to
direct the Owner Trustee or Indenture Trustee or their successor in interest, as
to the Permitted Investments in which the funds on deposit in the Trust Accounts
(as such term is defined in the Sale and Servicing Agreement) may be invested.
SECTION 5.2 APPLICATION OF TRUST FUNDS.
(a) On each Payment Date, the Owner Trustee or Indenture Trustee, on
behalf of the Owner Trustee, shall direct the Paying Agent to distribute to the
Servicer and the Residual Interestholders from amounts on deposit in the
Certificate Distribution Account the distributions as provided in Section
5.02(b) of the Sale and Servicing Agreement with respect to such Payment Date.
(b) On each Payment Date, the Owner Trustee shall cause the Paying
Agent to send to each Residual Interestholder the statement provided to the
Owner Trustee by the Servicer pursuant to Section 6.01 of the Sale and Servicing
Agreement with respect to such Payment Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Owner
Trustee is hereby authorized and directed to retain from amounts otherwise
distributable to the Owners sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the Owner
Trustee from contesting any such tax in appropriate proceedings, and withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings). The amount of any withholding tax imposed with respect to an Owner
shall be treated as cash distributed to such Owner at the time it is withheld by
the Trust and remitted to the appropriate taxing authority. In the event of any
claimed overwithholding, Owners shall have no claim for recovery against the
Trust or other Owners. If the amount withheld was not withheld from actual
distributions, the Trust may, at its option, (i) require the Owner to reimburse
the Trust for such withholding (and each Owner agrees to reimburse the Trust
promptly following such request) or (ii) reduce any subsequent distributions by
the amount of such withholding. If the Owner Trustee determines that a
withholding tax is payable with respect to a distribution (such as a
distribution to an Owner (or any other beneficial owner of the Owner Trust) that
is not a U.S. Person and that has not established an applicable exemption from
withholding (such as an effective Form W-8, Form 1001 or Form 4224), the Owner
Trustee shall in its sole discretion withhold such amounts as it determines are
required to be withheld in accordance with this paragraph (c). In the event that
an Owner wishes to apply for a refund of any such withholding tax, the Owner
Trustee shall reasonably cooperate with such owner in making such claim so long
as such Owner agrees to reimburse the Owner Trustee for any out-of-pocket
expenses incurred.
SECTION 5.3 METHOD OF PAYMENT. Subject to SECTION 3.10, distributions
required to be made to Owners on any Payment Date shall be made to each Owner
of, record on the preceding Record Date either by wire transfer, in immediately
available funds, to the account of such Holder at a bank or other entity having
appropriate facilities therefor, if such Owner shall have provided to the
Certificate Registrar appropriate written instructions at least five Business
Days prior to such Payment Date; or, if not, by check mailed to such Owner at
the address of such holder appearing in the Certificate Register.
SECTION 5.4 SEGREGATION OF MONEYS; NO INTEREST. Subject to SECTIONS
4.1, 5.1 AND 5.2, moneys received by the Owner Trustee hereunder and deposited
into the Certificate Distribution Account will be segregated except to the
extent required otherwise by law or the Sale and Servicing Agreement and shall
be invested in Permitted Investments at the direction of the Company. The Owner
Trustee shall not be liable for payment of any interest in respect of such
moneys.
SECTION 5.5 ACCOUNTING AND REPORTS TO THE CERTIFICATEHOLDER, OWNERS,
THE INTERNAL REVENUE SERVICE AND Others. The Owner Trustee shall deliver to each
Owner, as may be required by the Code and applicable Treasury Regulations, or as
may be requested by such Owner, such information, reports or statements as may
be necessary to enable each Owner to prepare its federal and state income tax
returns. Consistent with the Trust's characterization for tax purposes as a
security arrangement for the issuance of non-recourse debt so long as the
Company or any other Person is the sole Owner, no federal income tax return
shall be filed on behalf of the Trust unless either (i) the Owner Trustee shall
receive an Opinion of Counsel that, based on a change in applicable law
occurring after the date hereof, or as a result of a transfer by the Company
permitted by SECTION 3.4, the Code requires such a filing or (ii) the Internal
Revenue Service shall determine that the Trust is required to file such a
return. In the event that there shall be two or more beneficial owners of the
Trust, the Owner Trustee shall inform the Indenture Trustee in writing of such
event, (x) the Owner Trustee shall prepare or shall cause to be prepared federal
and, if applicable, state or local partnership tax returns required to be filed
by the Trust and shall remit such returns to the Company (or if the Company no
longer owns any Residual Interest Certificates, the Owner designated for such
purpose by the Company to the Owner Trustee in writing) at least (5) days before
such returns are due to be filed, and (y) capital accounts shall be maintained
for each Owner (or beneficial owner) in accordance with the Treasury Regulations
under Section 704(b) of the Code reflecting each such Owner's (or beneficial
owner's) share of the income, gains, deductions, and losses of the Trust and/or
guaranteed payments made by the Trust and contributions to, and distributions
from, the Trust. The Company (or such designee Owner, as applicable) shall
promptly sign such returns and deliver such returns after signature to the Owner
Trustee and such returns shall be filed by the Owner Trustee with the
appropriate tax authorities. In the event that a "tax matters partner" (within
the meaning of Code Section 6231(a)(7) is required to be appointed with respect
to the Trust, the Company is hereby designated as tax matters partner or, if the
Company is not an Owner, the Owner selected by a majority of the Owners (by
Percentage Interest) shall be designated as tax matters partner. In no event
shall the Owner Trustee or the Company (or such designee Owner, as applicable)
be liable for any liabilities, costs or expenses of the Trust or the Noteholders
arising out of the application of any tax law, including federal, state, foreign
or local income or excise taxes or any other tax imposed on or measured by
income (or any interest, penalty or addition with respect thereto or arising
from a failure to comply therewith) except for any such liability, cost or
expense attributable to any act or omission by the Owner Trustee or the Company
(or such designee Owner, as applicable), as the case may be, in breach of its
obligations under this Agreement.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1 GENERAL AUTHORITY. The Owner Trustee is authorized and
directed to execute and deliver or cause to be executed and delivered the Notes,
the Residual Interest Certificates and the Basic Documents to which the Trust is
to be a party and each certificate or other document attached as an exhibit to
or contemplated by the Basic Documents to which the Trust is to be a party and
any amendment or other agreement or instrument described in Article III, in each
case, in such form as the Company shall approve, as evidenced conclusively by
the Owner Trustee's execution thereof, and, on behalf of the Trust, to direct
the Indenture Trustee to authenticate and deliver Classes of Notes in the
following aggregate principal amounts: Class A-1 Notes, $59,749,000; Class A-2
Notes, 35,032,000; Class A-3 Notes, $29,161,000; Class A-4 Notes, $30,168,000;
Class A-5 Notes, $15,890,000; Class M-1 Notes, $28,125,000; Class M-2 Notes,
$16,250,000; Class B-1 Notes, $19,375,000; and Class B-2 Notes, $16,250,000. In
addition to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions required of the Trust, pursuant to the Basic
Documents.
SECTION 6.2 GENERAL DUTIES. It shall be the duty of the Owner Trustee:
(a) to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the Basic Documents
to which the Trust is a party and to administer the Trust in the interest of the
Owners, subject to the Basic Documents and in accordance with the provisions of
this Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed
to have discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator or the Indenture Trustee has agreed in
the Administration Agreement or this Agreement, respectively, to perform any act
or to discharge any duty of the Owner Trustee or the Trust hereunder or under
any Basic Document, and the Owner Trustee shall not be held liable for the
default or failure of the Administrator or the Indenture Trustee to carry out
its obligations under the Administration Agreement or this Agreement,
respectively; and
(b) to obtain and preserve, the Issuer's qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes, the
Collateral and each other instrument and agreement included in the Owner Trust
Estate.
SECTION 6.3 ACTION UPON INSTRUCTION.
(a) Subject to the terms of this Agreement and in accordance with the
terms of the Basic Documents, the Owners may by written instruction direct the
Owner Trustee in the management of the Trust but only to the extent consistent
with the limited purpose of the Trust. Such direction may be exercised at any
time by written instruction of the Owners pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Basic Document, the Owner Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Owners requesting
instruction from the Owners as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Owners received, the Owner Trustee shall not be liable on
account of such action to any Person. If the Owner Trustee shall not have
received appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
Basic Documents, as it shall deem to be in the best interests of the Owners, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Owners
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.
SECTION 6.4 NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT, THE BASIC
DOCUMENTS OR IN INSTRUCTIONS. The Owner Trustee shall not have any duty or
obligation to manage, make any payment with respect to, register, record, sell,
dispose of, or otherwise deal with the Owner Trust Estate, or to otherwise take
or refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Owner Trustee is a party, except as expressly
provided by the terms of this Agreement, any Basic Document or in any document
or written instruction received by the Owner Trustee pursuant to SECTION 6.3;
and no implied duties or obligations shall be read into this Agreement or any
Basic Document against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to prepare or file any
Securities and Exchange Commission filing for the Trust or to record this
Agreement or any Basic Document. The Owner Trustee nevertheless agrees that it
will, at its own cost and expense, promptly take all action as may be necessary
to discharge any liens on any part of the Owner Trust Estate that result from
actions by, or claims against, the Owner Trustee that are not related to the
ownership or the administration of the Owner Trust Estate.
SECTION 6.5 NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the Basic Documents
and (iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to SECTION 6.3.
SECTION 6.6 RESTRICTIONS. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in SECTION 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for Federal income tax purposes. The
Owners shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1 ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement and the Basic
Documents. The Owner Trustee also agrees to disburse all moneys actually
received by it constituting part of the Owner Trust Estate upon the terms of the
Basic Documents and this Agreement. The Owner Trustee shall not be answerable or
accountable hereunder or under any Basic Document under any circumstances,
except (i) for its own willful misconduct or gross negligence or (ii) in the
case of the inaccuracy of any representation or warranty contained in SECTION
7.3 expressly made by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Administrator or the Owners;
(c) no provision of this Agreement or any Basic Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
any Basic Document if the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement (or to make any investigation of a
matter arising hereunder) or for the due execution hereof by the Depositor or
the Company or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Basic Documents, other than the certificate of
authentication on the Residual Interest Certificates, and the Owner Trustee
shall in no event assume or incur any liability, duty, or obligation to any
Noteholder or to any Owner, other than as expressly provided for herein and in
the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Depositor, the Company, the Indenture
Trustee, the Grantor Trustee, the Master Servicer or the Servicer under any of
the Basic Documents or otherwise and the Owner Trustee shall have no obligation
or liability to perform the obligations of the Trust under this Agreement or the
Basic Documents that are required to be performed by the Administrator under the
Administration Agreement, the Indenture Trustee under the Indenture, the Grantor
Trustee under the Grantor Trust Agreement or the Master Servicer or Servicer
under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Owners, unless such Owners have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in any
Basic Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its gross negligence or willful misconduct in the
performance of any such act provided, that the Owner Trustee shall be liable for
its negligence or willful misconduct in the event that it assumes the duties and
obligations of the Indenture Trustee under the Sale and Servicing Agreement
pursuant to SECTION 10.5.
SECTION 7.2 FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish
(a) to the Owners promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents and (b) to Noteholders promptly upon written request
therefor, copies of the Sale and Servicing Agreement, the Administration
Agreement and the Owner Trust Agreement.
SECTION 7.3 REPRESENTATIONS AND WARRANTIES.
(a) The Owner Trustee hereby represents and warrants to the Depositor
and the Company, for the benefit of the Owners, that:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee
or any judgment or order binding on it, or constitute any default
under its charter documents or by-laws or any indenture, mortgage,
contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
(b) The Paying Agent hereby represents and warrants to the Depositor
and the Company that:
(i) It is a national banking association duly organized and
validly existing in good standing under the laws of the United States.
It has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or Minnesota law, governmental rule or
regulation governing the banking or trust powers of the Paying Agent
or any judgment or order binding on it, or constitute any default
under its charter documents or by-laws or any indenture, mortgage,
contract, agreement or instrument to which it is a party or by which
any of its properties may be bound.
SECTION 7.4 RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any Basic Document.
SECTION 7.5 NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided in
this Agreement, in accepting the trusts hereby created Wilmington Trust Company
acts solely as Owner Trustee hereunder and not in its individual capacity and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6 OWNER TRUSTEE NOT LIABLE FOR RESIDUAL INTEREST
CERTIFICATES OR HOME LOANS. The recitals contained herein and in the Residual
Interest Certificates (other than the signature and countersignature of the
Owner Trustee on the Residual Interest Certificates) shall be taken as the
statements of the Depositor and the Company, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Basic Document or of the Residual Interest Certificates (other than the
signature and countersignature of the Owner Trustee on the Residual Interest
Certificates and as specified in Section 7.3) or the Notes, or of any Home Loans
or related documents, or of any funds paid to the Depositor or the Servicer in
respect of the Notes or the Home Loans, or the investment of any monies by the
Servicer before such monies are deposited in the Trust Accounts. The Owner
Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of the Grantor Trust
Certificate, any Home Loan, or the perfection and priority of any security
interest created by any Home Loan or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Owner Trust Estate or
its ability to generate the payments to be distributed to Owners under this
Agreement or the Noteholders under the Indenture, including, without limitation:
the existence, condition and ownership of any Property; the existence and
enforceability of any insurance thereon; the existence and contents of any Home
Loan on any computer or other record thereof, the validity of the assignment of
the Grantor Trust Certificate to the Trust or of any intervening assignment; the
completeness of any Home Loan; the performance or enforcement of any Home Loan;
the compliance by the Depositor, the Company, the Master Servicer or the
Servicer with any warranty or representation made under any Basic Document or in
any related document or the accuracy of any such warranty or representation or
any action of the Administrator, the Indenture Trustee, the Master Servicer or
the Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.7 OWNER TRUSTEE MAY OWN RESIDUAL INTEREST CERTIFICATES AND
NOTES. The Owner Trustee in its individual or any other capacity may become the
owner or pledgee of Residual Interest Certificates or Notes and may deal with
the Depositor, the Company, the Administrator, the Indenture Trustee and the
Servicer in banking transactions with the same rights as it would have if it
were not Owner Trustee.
SECTION 7.8 LICENSES. The Owner Trustee shall cause the Trust to use
its best efforts to obtain and maintain the effectiveness of any licenses
required in connection with this Agreement and the Basic Documents and the
transactions contemplated hereby and thereby until such time as the Trust shall
terminate in accordance with the terms hereof.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE AND PAYING AGENT
SECTION 8.1 FEES AND EXPENSES. The Owner Trustee shall receive as
compensation for its services hereunder such fees as have been separately agreed
upon before the date hereof between the Company and the Owner Trustee, and the
Owner Trustee shall be entitled to be reimbursed by the Company for its other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives, experts and counsel as the
Owner Trustee may employ in connection with the exercise and performance of its
rights and its duties hereunder. The Paying Agent shall receive as compensation
for its services hereunder such fees, if any, as have been separately agreed
upon before the date hereof between the Company and the Paying Agent.
SECTION 8.2 INDEMNIFICATION. The Company shall be liable as primary
obligor pursuant to the Administration Agreement, for, and the Transferors,
jointly and severally, shall indemnify the Owner Trustee, the Paying Agent and
their successors, assigns, agents and servants (collectively, the "INDEMNIFIED
PARTIES") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "EXPENSES") which may at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Basic Documents, the Owner Trust Estate, the administration of the Owner Trust
Estate or the action or inaction of the Owner Trustee or the Paying Agent
hereunder. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement. In any event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section, the Owner Trustee's or Paying Agent's
choice of legal counsel shall be subject to the approval of the Transferors,
which approval shall not be unreasonably withheld.
SECTION 8.3 PAYMENTS TO THE OWNER TRUSTEE AND PAYING AGENT. Any
amounts paid to the Owner Trustee and/or Paying Agent pursuant to this Article
VIII shall be deemed not to be a part of the Owner Trust Estate immediately
after such payment.
ARTICLE IX
TERMINATION OF OWNER TRUST AGREEMENT
SECTION 9.1 TERMINATION OF OWNER TRUST AGREEMENT.
(a) This Agreement (other than Article VIII) and the Trust shall
terminate and be of no further force or effect on the earlier of: (i) the
satisfaction and discharge of the Indenture pursuant to Section 4.01 of the
Indenture and the termination of the Sale and Servicing Agreement; and (ii) the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy (the late ambassador of the United States to the Court of St.
James's) alive on the date hereof. The bankruptcy, liquidation, dissolution,
death or incapacity of any Owner shall not (x) operate to terminate this
Agreement or the Trust, nor (y) entitle such Owner'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 all or any part of the Trust or Owner Trust
Estate nor (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) The Residual Interest Certificates shall be subject to an early
redemption or termination at the option of the Majority Residual Interestholders
or the Master Servicer in the manner and subject to the provisions of Section
11.02 of the Sale and Servicing Agreement.
(c) Except as provided in SECTIONS 9.1(A) AND (B) above, none of the
Depositor, the Company nor any Owner shall be entitled to revoke or terminate
the Trust.
(d) Notice of any termination of the Trust, specifying the Payment
Date upon which the Certificateholders shall surrender their Residual Interest
Certificates to the Paying Agent for payment of the final distributions and
cancellation, shall be given by the Owner Trustee to the Certificateholders and
the Rating Agencies mailed within five Business Days of receipt by the Owner
Trustee of notice of such termination pursuant to SECTION 9.1(A) or (B) above,
which notice given by the Owner Trustee shall state (i) the Payment Date upon or
with respect to which final payment of the Residual Interest Certificates shall
be made upon presentation and surrender of the Residual Interest Certificates at
the office of the Paying Agent 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 Residual Interest Certificates at the office of the Paying
Agent therein specified. The Owner Trustee shall give such notice to the
Certificate Registrar (if other than the Owner Trustee) and the Paying Agent at
the time such notice is given to Certificateholders. Upon presentation and
surrender of the Residual Interest Certificates, the Paying Agent shall cause to
be distributed to Certificateholders amounts distributable on such Payment Date
pursuant to Section 5.02 of the Sale and Servicing Agreement.
In the event that all of the Certificateholders shall not surrender
their Residual Interest Certificates for cancellation within six months after
the date specified in the above mentioned written notice, the Owner Trustee
shall give a second written notice to the remaining Certificateholders to
surrender their Residual Interest Certificates for cancellation and receive the
final distribution with respect thereto. If within one year after the second
notice all the Residual Interest Certificates shall not have been surrendered
for cancellation, the Owner Trustee may take appropriate steps, or may appoint
an agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Residual Interest Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall be distributed by the Paying Agent to the Residual
Interestholders on a pro rata basis.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3820 of the Business Trust Statute.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1 ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate powers
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or state authorities; and having (or
having a parent which has) a long-term rating of at least "A" by S&P and DCR. If
such corporation shall publish reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2 RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator and the Indenture Trustee.
Upon receiving such notice of resignation, the Administrator shall promptly
appoint a successor Owner Trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Owner Trustee and one
copy to the successor Owner Trustee. If no successor Owner Trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Owner Trustee may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of SECTION 10.1 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the authority
of the immediately preceding sentence, the Administrator shall promptly appoint
a successor Owner Trustee by written instrument in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee and payment of all fees owed to the outgoing
Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to SECTION 10.3, and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3 SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Administrator and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Administrator and the predecessor Owner Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to SECTION 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Administrator shall mail notice of the successor of such
Owner Trustee to all Owners, the Indenture Trustee, the Noteholders and the
Rating Agencies. If the Administrator fails to mail such notice within 10 days
after acceptance of appointment by the successor Owner Trustee, the successor
Owner Trustee shall cause such notice to be mailed at the expense of the
Administrator.
SECTION 10.4 MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, PROVIDED
such corporation shall be eligible pursuant to SECTION 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; PROVIDED
FURTHER that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
SECTION 10.5 APPOINTMENT OF CO-OWNER TRUSTEE OR SEPARATE OWNER
TRUSTEE. Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Property may at the time be located,
and for the purpose of performing certain duties and obligations of the Owner
Trustee with respect to the Trust and the Residual Interest Certificates under
the Sale and Servicing Agreement, the Administrator and the Owner Trustee (and,
in some cases, pursuant to the Sale and Servicing Agreement, the Servicer)
acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Owner Trustee to act
as co-owner trustee, jointly with the Owner Trustee, or separate trustee or
separate trustees, of all or any part of the Owner Trust Estate, and to vest in
such Person, in such capacity, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Administrator and the Owner Trustee may
consider necessary or desirable. If the Administrator shall not have joined in
such appointment within 25 days after the receipt by it of a request so to do,
the Owner Trustee shall have the power to make such appointment. No co-owner
trustee or separate owner trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant to SECTION 10.1 and no
notice of the appointment of any co-trustee or separate owner trustee shall be
required pursuant to SECTION 10.3.
Each separate owner trustee and co-owner trustee shall, to the extent
permitted by law, be appointed and act subject to the following provision and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised
or performed by the Owner Trustee and such separate owner trustee or
co-owner trustee jointly (it being understood that such separate owner
trustee or co-owner trustee is not authorized to act separately
without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or
acts are to be performed, the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties, and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate owner trustee or
co-owner trustee, but solely at the direction of the Owner Trustee;
PROVIDED that Paying Agent, in performing its duties and obligations
under the Sale and Servicing Agreement, may act separately in its
capacity as Indenture Trustee without the Owner Trustee joining in
such Acts;
(ii) no owner trustee under this Agreement shall be personally
liable by reason of any act or omission of any other owner trustee
under this Agreement; and
(iii) the Administrator and the Owner Trustee acting jointly may
at any time accept the resignation of or remove any separate owner
trustee or co-owner trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to the separate owner trustees and co-owner
trustees, as if given to each of them. Every instrument appointing any separate
owner trustee or co-owner trustee, other than this Agreement, shall refer to
this Agreement and to the conditions of this Article. Each separate owner
trustee and co-owner trustee, upon its acceptance of appointment, shall be
vested with the estates specified in its instrument of appointment, either
jointly with the Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the liability
of, or affording protection to, the Owner Trustee. Each such instrument shall be
filed with the Owner Trustee and a copy thereof given to the Administrator.
Any separate owner trustee or co-owner trustee may at any time appoint
the Owner Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate owner
trustee or co-owner trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
The Indenture Trustee, in its capacity as Paying Agent, shall not have
any rights, duties or obligations except as expressly provided in this Agreement
and the Sale and Servicing Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 SUPPLEMENTS AND AMENDMENTS. This Agreement may be amended
by the Depositor, the Company and the Owner Trustee, with prior written notice
to the Rating Agencies, but without the consent of any of the Noteholders or the
Owners or the Indenture Trustee, to cure any ambiguity, to correct or supplement
any provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Noteholders or the Owners
PROVIDED, HOWEVER, that such action shall not adversely affect in any material
respect the interests of any Noteholder or Owner. An amendment described above
shall be deemed not to adversely affect in any material respect the interests of
any Noteholder or Owner if (i) an opinion of counsel is obtained to such effect,
and (ii) the party requesting the amendment satisfies the Rating Agency
Condition with respect to such amendment.
This Agreement may also be amended from time to time by the Depositor,
the Company and the Owner Trustee, with the prior written consent of the Rating
Agencies and with the prior written consent of the Indenture Trustee, the
Holders (as defined in the Indenture) of Notes evidencing more than 50% of the
Outstanding Amount of the Notes and the Majority Residual Interestholders, 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 or the Owners; PROVIDED, HOWEVER, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on the Grantor Trust Certificate or
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of
the Outstanding Amount of the Notes or the Percentage Interests required to
consent to any such amendment, in either case of clause (a) or (b) without the
consent of the holders of all the outstanding Notes, and in the case of clause
(b) without the consent of the holders of all the outstanding Residual Interest
Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee, the
Grantor Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Owners, the Noteholders
or the Indenture Trustee pursuant to this Section to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents (and
any other consents of Owners provided for in this Agreement or in any other
Basic Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.2 NO LEGAL TITLE TO OWNER TRUST ESTATE IN OWNERS. The
Owners shall not have legal title to any part of the Owner Trust Estate. The
Owners shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles V and IX.
No transfer, by operation of law or otherwise, of any right, title, or interest
of the Owners to and in their ownership interest in the Owner Trust Estate shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
SECTION 11.3 LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Depositor, the
Company, the Owners, the Administrator, the Paying Agent and, to the extent
expressly provided herein, the Indenture Trustee, the Grantor Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 11.4 NOTICES. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing, mailed by
certified mail, postage prepaid, return receipt requested, and shall be deemed
given upon actual receipt by the intended recipient, at the following addresses:
(i) if to the Owner Trustee, its Corporate Trust Office; (ii) if to the
Depositor, PaineWebber Mortgage Acceptance Corporation IV, 1285 Avenue of the
Americas, New York, New York 10019, Attention: John Fearey, Esq., General
Counsel; (iii) if to the Company, Empire Funding Corp., 9737 Great Hills Trail,
Austin, Texas 78759, Attention: Richard N. Steed; (iv) if to the Indenture
Trustee, its Corporate Trust Office; (v) if to the Paying Agent, U.S. Bank
National Association, 180 East Fifth Street, St. Paul, Minnesota 55101;
Attention: Structured Finance/Empire Funding 1999-1; or, as to each such party,
at such other address as shall be designated by such party in a written notice
to each other party.
(b) Any notice required or permitted to be given to an Owner shall be
given by first-class mail, postage prepaid, at the address of such Owner as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Owner receives such notice.
SECTION 11.5 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6 SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Company, the Owner Trustee and its successors and each owner and
its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by an Owner
shall bind the successors and assigns of such Owner.
SECTION 11.8 NO PETITION. The Owner Trustee, by entering into this
Agreement, each Owner, by accepting a Residual Interest Certificate, the
Depositor, the Company and the Indenture Trustee and each Noteholder by
accepting the benefits of this Agreement, hereby covenant and agree that they
will not, except as provided in SECTION 4.1(D), at any time institute against
the Company, the Depositor or the Trust, as the case may be, or join in any
institution against the Company, the Depositor or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or law in
connection with any obligations relating to the Residual Interest Certificates,
the Notes, this Agreement or any of the Basic Documents. No Owner will have any
right to institute any proceeding with respect to this Agreement, unless such
Owner previously has given to the Owner Trustee written notice of the occurrence
of a Servicer Event of Default or an Empire Subservicer Event of Default that
arises from the Servicer's or Empire Subservicer's failure to remit to the Owner
payment when due pursuant to the Sale and Servicing Agreement.
SECTION 11.9 NO RECOURSE. Each Owner by accepting a Residual Interest
Certificate acknowledges that such Residual Interest Certificate represents a
beneficial interest in the Trust only and does not represent an interest in or
an obligation of the Company, the Servicer, the Depositor, the Administrator,
the Owner Trustee, the Indenture Trustee or any Affiliate thereof and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement, the Residual Interest
Certificates or the Basic Documents.
SECTION 11.10 HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12 RESIDUAL INTEREST TRANSFER RESTRICTIONS. The Residual
Interest may not be acquired by or for the account of a Benefit Plan Investor.
By accepting and holding a Residual Interest Certificate, the Owner thereof
shall be deemed to have represented and warranted that it is not a Benefit Plan
Investor.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS OF, the parties hereto have caused this Owner Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION
IV, as Depositor
By: _________________________________________
Name:
Title:
EMPIRE FUNDING CORP.,
as the Company
By: _________________________________________
Name:
Title:
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1,
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By: _________________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION, not in its
individual capacity but solely as Paying
Agent
By: _________________________________________
Name:
Title:
<PAGE>
EXHIBIT A
TO THE OWNER TRUST AGREEMENT
FORM OF RESIDUAL INTEREST CERTIFICATE
THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY THIS RESIDUAL INTEREST
CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS RESIDUAL
INTEREST CERTIFICATE MAY BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE
DISPOSED OF BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A UNDER THE ACT, IN A TRANSACTION THAT IS REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE ACT IN A TRANSACTION THAT IS REGISTERED
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS. NO PERSON IS OBLIGATED TO
REGISTER THIS RESIDUAL INTEREST UNDER THE ACT OR ANY STATE SECURITIES LAWS.
EXCEPT AS PROVIDED IN SECTION 3.10(B) OF THE OWNER TRUST AGREEMENT, NO TRANSFER
OF THIS RESIDUAL INTEREST CERTIFICATE OR ANY BENEFICIAL INTEREST HEREIN SHALL BE
MADE UNLESS THE OWNER TRUSTEE HAS RECEIVED A CERTIFICATE FROM THE TRANSFEREE TO
THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT (A) AN "EMPLOYEE BENEFIT PLAN" WITHIN
THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, (B) A "PLAN" WITHIN THE MEANING OF SECTION 4975(E)(1) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (C) AN ENTITY WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY (EACH,
A "BENEFIT PLAN INVESTOR"), AND (II) IS NOT DIRECTLY OR INDIRECTLY PURCHASING
SUCH RESIDUAL INTEREST CERTIFICATE ON BEHALF OF, AS INVESTMENT MANAGER OF, AS
NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH THE ASSETS OF A BENEFIT PLAN
INVESTOR.
<PAGE>
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
RESIDUAL INTEREST CERTIFICATE
No. ______
THIS CERTIFIES THAT _______________________________ (the "OWNER") is
the registered owner of a ____% residual interest in Empire Funding Home Loan
Owner Trust 1999-1 (the "TRUST") existing under the laws of the State of
Delaware and created pursuant to the Owner Trust Agreement dated as of April 1,
1999 (the "OWNER TRUST AGREEMENT") between PaineWebber Mortgage Acceptance
Corporation IV, as Depositor, Empire Funding Corp., as the Company, Wilmington
Trust Company, not in its individual capacity but solely in its fiduciary
capacity as owner trustee under the Owner Trust Agreement (the "OWNER TRUSTEE")
and U.S. Bank National Association, as Paying Agent (the "PAYING AGENT").
Initially capitalized terms used but not defined herein have the meanings
assigned to them in the Owner Trust Agreement. The Owner Trustee, on behalf of
the Issuer and not in its individual capacity, has executed this Residual
Interest Certificate by one of its duly authorized signatories as set forth
below. This Residual Interest Certificate is one of the Residual Interest
Certificates referred to in the Owner Trust Agreement and is issued under and is
subject to the terms, provisions and conditions of the Owner Trust Agreement to
which the holder of this Residual Interest Certificate by virtue of the
acceptance hereof agrees and by which the holder hereof is bound. Reference is
hereby made to the Owner Trust Agreement and the Sale and Servicing Agreement
for the rights of the holder of this Residual Interest Certificate, as well as
for the terms and conditions of the Trust created by the Owner Trust Agreement.
The holder, by its acceptance hereof, agrees not to transfer this
Residual Interest Certificate except in accordance with terms and provisions of
the Owner Trust Agreement.
<PAGE>
THIS RESIDUAL INTEREST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Residual Interest Certificate to be
duly executed.
EMPIRE FUNDING HOME LOAN OWNER TRUST
1999-1
By: Wilmington Trust Company, not in
its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement
By: _________________________________
Authorized Signatory
DATED: ___________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Owner Trust Agreement.
By: Wilmington Trust Company, not in
its individual capacity but
solely as Owner Trustee under the
Owner Trust Agreement, as
Authenticating Agent
By: _________________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
____________________________________________________________________ Attorney to
transfer said Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated: _______________
____________________________________*/
Signature Guaranteed:
____________________________________*/
- -------------------
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
<PAGE>
EXHIBIT B
TO THE OWNER TRUST AGREEMENT
CERTIFICATE OF TRUST OF
EMPIRE FUNDING HOME LOAN OWNER TRUST 1999-1
THIS Certificate of Trust of Empire Funding Home Loan Owner
Trust 1999-1 (the "TRUST"), dated April ___, 1999, is being duly executed and
filed by Wilmington Trust Company, a Delaware banking corporation, as trustee,
and U.S. Bank National Association, as paying agent, to form a business trust
under the Delaware Business Trust Act (12 DEL. CODE, ss. 3801 et seq.).
1. NAME. The name of the business trust formed hereby is Empire
Funding Home Loan Owner Trust 1999-1.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust, in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
* * *
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the owner trustee of the
Trust, have executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as owner trustee under an Owner Trust
Agreement dated as of April 1, 1999
By:______________________________________
Name:
Title:
================================================================================
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
(Depositor)
and
U.S. BANK NATIONAL ASSOCIATION
(Grantor Trustee)
and
CONTIMORTGAGE CORPORATION
(Transferor and Servicer)
and
EMPIRE FUNDING CORP.
(Transferor and Subservicer)
and
CALIFORNIA LENDING GROUP, INC., d/b/a
UNITED LENDING GROUP
(Transferor)
--------------------------------------
GRANTOR TRUST AGREEMENT
Dated as of April 1, 1999
--------------------------------------
EMPIRE FUNDING GRANTOR TRUST 1999-1
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.....................................................
ARTICLE II
CONVEYANCE OF HOME LOANS;
ORIGINAL ISSUANCE OF GRANTOR TRUST CERTIFICATE
Section 2.01 Conveyance of the Home Loans....................................
Section 2.02 Acceptance by Grantor Trustee; Authentication of Grantor
Trust Certificate.................... ........................
Section 2.03 Ownership and Possession of Home Loan Files.....................
Section 2.04 Books and Records; Sale or Security Interest....................
Section 2.05 Delivery of Home Loan Documents.................................
Section 2.06 Acceptance by the Grantor Trustee of the Home Loans; Certain
Substitutions; Certification by the Custodian.................
Section 2.07 Reserved........................................................
Section 2.08 Release and Reconveyance of Home Loans..........................
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Depositor.................
ARTICLE IV
THE GRANTOR TRUST CERTIFICATE
Section 4.01 The Grantor Trust Certificate...................................
Section 4.02 Registration, Transfer and Exchange of Grantor Trust
Certificate............................. .....................
Section 4.03 Mutilated, Destroyed, Lost or Stolen Grantor Trust
Certificate............................... ...................
Section 4.04 Persons Deemed Owners...........................................
Section 4.05 Maintenance of Office or Agency.................................
ARTICLE V
GRANTOR TRUST ACCOUNTS;
PAYMENTS TO GRANTOR TRUST HOLDER
Section 5.01 Distributions from Collection Account..........................
ARTICLE VI
CONCERNING THE GRANTOR TRUSTEE
Section 6.01 Duties of Grantor Trustee.......................................
Section 6.02 Certain Matters Affecting the Grantor Trustee...................
Section 6.03 Grantor Trustee not Required to Make Investigation..............
Section 6.04 Grantor Trustee's Fees..........................................
Section 6.05 Compliance with Code............................................
Section 6.06 Eligibility Requirements for Grantor Trustee....................
Section 6.07 Resignation and Removal of Grantor Trustee......................
Section 6.08 Successor Grantor Trustee.......................................
Section 6.09 Merger or Consolidation of Grantor Trustee......................
Section 6.10 Authenticating Agent............................................
ARTICLE VII
TERMINATION
Section 7.01 Termination.....................................................
Section 7.02 Procedure Upon Termination of Grantor Trust.....................
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01 Binding Nature of Agreement; Assignment.........................
Section 8.02 Entire Agreement................................................
Section 8.03 Amendment.......................................................
Section 8.04 GOVERNING LAW...................................................
Section 8.05 Notices.........................................................
Section 8.06 Severability of Provisions......................................
Section 8.07 Indulgences; No Waivers.........................................
Section 8.08 Headings Not To Affect Interpretation...........................
Section 8.09 Benefits of Agreement...........................................
Section 8.10 Counterparts....................................................
<PAGE>
EXHIBIT A FORM OF GRANTOR TRUST CERTIFICATE
EXHIBIT B FORM OF INVESTMENT REPRESENTATION LETTER
<PAGE>
THIS GRANTOR TRUST AGREEMENT ("GRANTOR TRUST AGREEMENT" or
"AGREEMENT"), dated as of April 1, 1999, by and among PAINEWEBBER MORTGAGE
ACCEPTANCE CORPORATION IV, as Depositor, U.S. BANK NATIONAL ASSOCIATION, as
Grantor Trustee, CONTIMORTGAGE CORPORATION, as Transferor and Servicer, EMPIRE
FUNDING CORP., as Transferor and Subservicer, and CALIFORNIA LENDING GROUP,
INC., d/b/a UNITED LENDING GROUP, as Transferor.
The parties hereto intend that this Grantor Trust Agreement be
construed so as to create an "investment trust" formed to facilitate the direct
investment by the Grantor Trust Holder in the assets of the Grantor Trust
Estate, within the meaning of Section 301.7701-4(c) of the regulations of the
U.S. Department of the Treasury, and not a partnership or an association taxable
as a corporation, and that the rights, duties, and powers of the Grantor Trustee
hereunder be construed so as not to confer on the Grantor Trustee any power to
vary the investment of the Grantor Trust Holder by taking advantage of market
fluctuations to improve its rate of return.
ARTICLE I
DEFINITIONS
Section 1.01 DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Capitalized terms used without
definition herein shall have the respective meanings assigned to them in the
Sale and Servicing Agreement.
ACT: The Securities Act of 1933, as amended, and as it may be amended
from time to time.
AUTHENTICATING AGENT: Any authenticating agent appointed by the
Grantor Trustee pursuant to Section 6.10.
CERTIFICATE REGISTER AND CERTIFICATE REGISTRAR: Respectively, the
register maintained pursuant to and the registrar provided for in Section 4.02.
The initial Certificate Registrar is the Grantor Trustee.
CONTIMORTGAGE: ContiMortgage Corporation, a Delaware corporation.
CORPORATE TRUST OFFICE: The principal office of the Grantor Trustee at
which at any particular time its corporate trust business shall be administered,
which office at date of execution of this Agreement is located at 180 East Fifth
Street, St. Paul, Minnesota 55101; Attention: Corporate Trust Department, or at
such other address as the Grantor Trustee may designate from time to time by
notice to the Grantor Trust Holder and the Issuer, or the principal corporate
trust office of any successor Grantor Trustee at the address designated by such
successor Grantor Trustee by notice to the Grantor Trust Holder and the Issuer.
CUSTODIAN: U.S. Bank National Association, a national banking
association, as custodian pursuant to the Custodial Agreement, or any successor
thereto.
CUT-OFF DATE: Close of business on March 31, 1999.
EMPIRE FUNDING: Empire Funding Corp., an Oklahoma corporation.
ERISA: The Employee Retirement Income Security Act of 1974, as amended
from time to time.
GRANTOR TRUST CERTIFICATE: The pass-through certificate issued
pursuant to this Agreement, in substantially the form attached hereto as Exhibit
A.
GRANTOR TRUST ESTATE: The corpus of the trust created by this
Agreement, consisting of (i) such Home Loans as from time to time are subject to
this Agreement as listed in the Home Loan Schedule, as the same may be amended
or supplemented from time to time including by removal of Deleted Home Loans and
the addition of Qualified Substitute Home Loans, together with the Servicer's
Home Loan Files and the Grantor Trustee's Home Loan Files relating thereto and
all proceeds thereof, (ii) the Mortgages, Manufactured Home Contracts, and
security interests in the Properties, (iii) all payments in respect of interest
on the Home Loans received on or after the Cut-Off Date (less 80% of the
interest payments received during the first Due Period which shall be retained
by the Transferors) and all payments in respect of principal received after the
Cut-Off Date, (iv) such assets as from time to time are identified as
Foreclosure Property, (v) the Depositor's rights under all insurance policies
with respect to the Home Loans and any Insurance Proceeds, (vi) Net Liquidation
Proceeds and Released Property Proceeds, (vii) all rights of the Depositor under
the Home Loan Purchase Agreements (other than the Depositor's rights under
Article V of each of the Home Loan Purchase Agreements, which the Depositor
shall not assign to the Grantor Trustee) pursuant to which the Depositor
acquired the Home Loans from the Transferors, and (viii) all proceeds of any of
the foregoing.
GRANTOR TRUST HOLDER: The Person in whose name the Grantor Trust
Certificate is registered in the Certificate Register.
GRANTOR TRUSTEE: U.S. Bank National Association, or any successor
grantor trustee appointed as herein provided.
GRANTOR TRUSTEE FEE: With respect to any Payment Date, the fee payable
to the Grantor Trustee pursuant to Section 6.04 as compensation for its
activities hereunder.
INVESTMENT REPRESENTATION LETTER: As defined in Section 4.02(c).
NON-U.S. PERSON: A Person that is not considered under the Code (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States, any State
thereof or the District of Columbia (unless, in the case of a partnership,
Treasury Regulations are adopted that provide otherwise), including any entity
treated as a corporation or partnership for federal income tax purposes, (iii)
an estate whose income is subject to the United States federal income tax
regardless of its source or (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of such trust, and
one or more Persons who are U.S. Persons under this definition have the
authority to control all substantial decisions of such trust (or, to the extent
provided in applicable Treasury regulations, certain trusts in existence on
August 20, 1996 which are eligible to elect to be treated as such a U.S.
Person).
OFFICERS' CERTIFICATE: Certificate signed on behalf of the applicable
entity by the Chairman of the Board, the Vice Chairman of the Board, the
President, any Senior Vice President or Vice President or Managing Director or
an Assistant Vice President (each, however denominated), the Treasurer, the
Secretary, one of the Assistant Treasurers or Assistant Secretaries, any Trust
Officer or other officer of the Depositor, a Transferor or the Corporate Trust
Office of the Grantor Trustee, as the case may be, customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject, or an authorized officer of the Depositor, and delivered to
the Depositor and/or the Grantor Trustee, as the case may be.
OPINION OF COUNSEL: A written opinion of counsel acceptable to the
Grantor Trustee, who, in the case of an opinion required pursuant to Section
4.02, may be outside or salaried counsel for the Grantor Trust Holder or any
affiliate of the Grantor Trust Holder.
PERCENTAGE INTEREST: With respect to the Grantor Trust Certificate,
the undivided percentage interest as specified on the face of the Grantor Trust
Certificate.
SALE AND SERVICING AGREEMENT: The Sale and Servicing Agreement, dated
as of April 1, 1999, among PaineWebber Mortgage Acceptance Corporation IV, as
depositor, ContiMortgage, as servicer and transferor, Empire Funding, as
transferor and subservicer, ULG, as transferor, Norwest Bank Minnesota, National
Association, as master servicer, Empire Funding Home Loan Owner Trust 1999-1, as
issuer, U.S. Bank National Association, as indenture trustee and grantor
trustee, and ContiFinancial Corporation, as guarantor, as the same may be
supplemented and amended.
SINGLE CERTIFICATE: With respect to the Grantor Trust Certificate, a
certificate representing a minimum denomination of 100% Percentage Interest.
TRANSFEROR: Each of Empire Funding, ContiMortgage and ULG.
ARTICLE II
CONVEYANCE OF HOME LOANS;
ORIGINAL ISSUANCE OF GRANTOR TRUST CERTIFICATE
Section 2.01 CONVEYANCE OF THE HOME LOANS. As of the Closing Date and
concurrently with the execution and delivery hereof, in consideration of the
Grantor Trustee's delivery of the Grantor Trust Certificate to the Issuer or the
Indenture Trustee, as its assignee, as initial Grantor Trust Holder, upon the
order of the Depositor, the Depositor, does hereby sell, transfer, assign, set
over and otherwise convey to the Grantor Trustee, without recourse, but subject
to the other terms and provisions of this Agreement, all of the right, title and
interest of the Depositor in and to the Grantor Trust Estate. The foregoing
sale, transfer, assignment, set over and conveyance does not, and is not
intended to, result in a creation or an assumption by the Grantor Trustee of any
obligation of the Depositor, any Transferor or any other person in connection
with the Grantor Trust Estate or under any agreement or instrument relating
thereto except as specifically set forth herein.
Section 2.02 ACCEPTANCE BY GRANTOR TRUSTEE; AUTHENTICATION OF GRANTOR
TRUST CERTIFICATE. As of the Closing Date, the Grantor Trustee acknowledges the
conveyance to it of the Grantor Trust Estate, including all right, title and
interest of the Depositor in and to the Grantor Trust Estate, receipt of which
is hereby acknowledged by the Grantor Trustee and declares that the Grantor
Trustee holds and will hold the Grantor Trust Estate, including the Home Loans,
rights and agreements and other property, including property yet to be received
in the Grantor Trust Estate, in trust, upon the trusts herein set forth, for the
benefit of all present and future Grantor Trust Holders. Without limiting the
foregoing, and notwithstanding anything to the contrary herein, so long as the
Indenture Trustee is the Grantor Trust Holder, the Grantor Trustee declares and
agrees to hold the Grantor Trust Estate, in trust, upon the trusts set forth
herein, for the benefit of the Indenture Trustee. Concurrently with such receipt
and assignment, the Grantor Trustee has executed, authenticated and delivered
upon the order of the Depositor, the Grantor Trust Certificate duly
authenticated by the Grantor Trustee in the authorized percentage of 100%
Percentage Interest and evidencing the entire beneficial ownership of the
Grantor Trust Estate. The Grantor Trustee acknowledges and agrees that so long
as the Indenture Trustee is the Grantor Certificate Holder, the Grantor Trustee
holds the Grantor Trust Estate subject to the terms of the Owner Trust
Agreement, the Sale and Servicing Agreement, the Indenture, the Administration
Agreement and the Insurance Agreement.
Section 2.03 OWNERSHIP AND POSSESSION OF HOME LOAN FILES. Upon the
issuance of the Grantor Trust Certificate, with respect to the Home Loans, the
ownership of each Debt Instrument, the related Mortgage or Manufactured Home
Contract and the contents of the related Servicer's Home Loan File and the
Grantor Trustee's Home Loan File shall be vested in the Grantor Trustee for the
benefit of the Grantor Trust Holder, although possession of the Servicer's Home
Loan Files (other than items required to be maintained in the Grantor Trustee's
Home Loan Files) on behalf of and for the benefit of the Grantor Trust Holder
shall remain with the Servicer, and the Custodian shall take possession of the
applicable Grantor Trustee's Home Loan Files as contemplated in SECTION 2.05 AND
SECTION 2.06 hereof.
Section 2.04 BOOKS AND RECORDS; SALE OR SECURITY INTEREST. The sale of
each Home Loan shall be reflected on the balance sheets and other financial
statements of the Depositor, as a sale of assets by the Depositor, under GAAP.
Each of the Servicer and the Custodian shall be responsible for maintaining, and
shall maintain, a complete set of books and records for each Home Loan which
shall be clearly marked to reflect the ownership of each Home Loan by the
Grantor Trustee for the benefit of the Grantor Trust Holder.
It is the intention of the parties hereto that the transfers and
assignments contemplated by this Agreement shall constitute a sale of the Home
Loans and the other property specified in Section 2.01 hereof from the Depositor
to the Grantor Trustee and such property shall not be property of the Depositor.
If the assignment and transfer of the Home Loans and the other property
specified in Section 2.01 hereof to the Grantor Trustee pursuant to this
Agreement or the conveyance of the Home Loans or any of such other property to
the Grantor Trustee is held or deemed not to be a sale or is held or deemed to
be a pledge of security for a loan, the Depositor intends that the rights and
obligations of the parties shall be established pursuant to the terms of this
Agreement and that, in such event, (i) the Depositor shall be deemed to have
granted and does hereby grant to the Grantor Trustee a first priority security
interest in the entire right, title and interest of the Depositor in and to the
Grantor Trust Estate pursuant to Section 2.01 hereof and all proceeds thereof
and (ii) this Agreement shall constitute a security agreement under applicable
law. Within ten (10) days of the Closing Date, the Depositor shall cause to be
filed UCC-1 financing statements naming the Grantor Trustee as "secured party"
and describing the Home Loans being sold by the Depositor to the Grantor Trust
with the office of the Secretary of State of the state in which the Depositor is
located.
Section 2.05 DELIVERY OF HOME LOAN DOCUMENTS.
(a) With respect to each Home Loan, the Depositor and each Transferor
shall, on the Closing Date, deliver or caused to be delivered to the Custodian,
as the designated agent of the Grantor Trustee, each of the following documents
(collectively, the "GRANTOR TRUSTEE'S HOME LOAN FILE"):
(i) The original Debt Instrument, endorsed in blank or in the
following form: "Pay to the order of U.S. Bank National Association, as Grantor
Trustee under the Grantor Trust Agreement, dated as of April 1, 1999, Empire
Funding Grantor Trust 1999-1, without recourse", with all prior and intervening
endorsements showing a complete chain of endorsement from origination of the
Home Loan to the applicable Transferor;
(ii) If such Home Loan is secured by a Mortgage, the original Mortgage
with evidence of recording thereon (or, if the original Mortgage has not been
returned from the applicable public recording office or is not otherwise
available, a copy of the Mortgage certified by a Responsible Officer of the
applicable Transferor or by the closing attorney or by an officer of the title
insurer or agent of the title insurer which issued the related title insurance
policy, if any, or commitment therefor to be a true and complete copy of the
original Mortgage submitted for recording) and, if the Mortgage was executed
pursuant to a power of attorney, the original power of attorney with evidence of
recording thereon (or, if the original power of attorney has not been returned
from the applicable public recording office or is not otherwise available, a
copy of the power of attorney certified by a Responsible Officer of the
applicable Transferor or by the closing attorney or by an officer of the title
insurer or agent of the title insurer which issued the related title insurance
policy, if any, or commitment therefor, to be a true and complete copy of the
original power of attorney submitted for recording);
(iii) If such Home Loan is secured by a Mortgage, the original
executed Assignment of Mortgage, in recordable form. The Assignment of Mortgage
may be a blanket assignment, to the extent such assignment is effective under
applicable law, for Mortgages covering Mortgaged Properties situated within the
same county. If the Assignment of Mortgage is in blanket form, the Custodian
shall keep a copy of such Assignment of Mortgage in the individual Grantor
Trustee's Home Loan File;
(iv) If such Home Loan is secured by a Mortgage, all original
intervening assignments of mortgage, with evidence of recording thereon, showing
a complete chain of assignment from origination of the Home Loan to the
applicable Transferor (or, if any such assignment of mortgage has not been
returned from the applicable public recording office or is not otherwise
available, a copy of such assignment of mortgage certified by a Responsible
Officer of the applicable Transferor or by the closing attorney or by an officer
of the title insurer or agent of the title insurer which issued the related
title insurance policy, if any, or commitment therefor to be a true and complete
copy of the original assignment submitted for recording); provided that the
chain of intervening recorded assignments shall not be required to match the
chain of intervening endorsements of the Debt Instrument so long as the chain of
intervening recorded assignments, if applicable, evidences one or more
assignments of the Mortgage from the original mortgagee ultimately to the person
who has executed the Assignment of Mortgage; and
(v) The original, or a copy certified by the applicable Transferor to
be a true and correct copy of the original, of each assumption, modification,
written assurance or substitution agreement, if any.
(vi) With respect to each Manufactured Home Loan:
A. the original Manufactured Home Contract;
B. either (1) the original title document for the related
Manufactured Home, a duplicate certified by the appropriate
governmental authority that issued the original thereof or, if such
original is not yet available, a copy of the application filed with
the appropriate governmental authority pursuant to which the original
title document will issue, or (2) if the laws of the jurisdiction in
which the related Manufactured Home is located do not provide for the
issuance of title documents for manufactured housing units, other
evidence of ownership of the related Manufactured Home that is
customarily relied upon in such jurisdiction as evidence of title to a
manufactured housing unit;
C. evidence of one or more of the following types of perfection
of the security interest of Empire Funding in the related Manufactured
Home granted by such Manufactured Home Contract (or, if such evidence
is not yet available, a copy of the application or other filing used
to obtain such security interest, as appropriate in the applicable
jurisdiction): (1) notation of such security interest on the title
document, (2) a financing statement meeting the requirements of the
UCC, with evidence of recording indicated thereon, (3) a fixture
filing in accordance with the UCC, with evidence of filing indicated
thereon, or (4) such other evidence of perfection of a security
interest in a manufactured housing unit as is customarily relied upon
in the jurisdiction in which the related Manufactured Home is located;
D. an original assignment of the Manufactured Home Contract from
the initial named payee thereunder to Empire Funding (unless Empire
Funding is the initial named payee for such Manufactured Home
Contract);
E. originals of any assumption agreements relating to such
Manufactured Home Contract, together with originals of any surety or
guaranty agreement relating to such Manufactured Home Contract or to
any such assumption agreement, payable to the order of the Grantor
Trustee, or, if not so payable, endorsed to the order of, or assigned
to, the Grantor Trustee by the holder/payee thereunder without
recourse;
F. originals of any extension, modification or waiver
agreement(s) relating to such Manufactured Home Contract; and
G. proof of maintenance of an Insurance Policy for the related
Manufactured Home.
(b) With respect to each Home Loan, each Transferor, as applicable,
and the Depositor shall, on the Closing Date, deliver or cause to be delivered
to the Servicer or any Subservicer designated by the Servicer, as the designated
agent of the Grantor Trustee, each of the following documents (collectively, the
"SERVICER'S HOME LOAN FILES"): (i) an original or copy of truth-in-lending
disclosure, (ii) an original or copy of the credit application, (iii) an
original or copy of the consumer credit report, (iv) an original or copy of
verification of employment and income, or verification of self-employment
income, (v) if the Home Loan is a Combination Loan, an original or copy of
contract of work or written description with cost estimates, if any, (vi) if the
Home Loan is a Combination Loan for which the applicable Transferor prepares an
inspection report, an original or copy of the report of inspection of
improvements to the Property, (vii) to the extent not included in (clause (ii)
of this Section 2.04(b), an original or copy of a written verification (or a
notice of telephonic verification, with written verification to follow) that the
Obligor at the time of origination was not more than 30 days delinquent on any
Superior Lien on the Property, (viii) a copy of the HUD-1 or HUD 1-A Closing
Statement indicating the sale price, or an existing Uniform Residential
Appraisal Report, or a Drive-by Appraisal documented on FHLMC Form 704, or a tax
assessment, or a full Uniform Residential Appraisal Report prepared by a
national appraisal firm in accordance with the applicable Transferor's
underwriting guidelines, (ix) an original or a copy of a title search as of the
time of origination with respect to the Mortgaged Property in accordance with
the applicable Transferor's underwriting guidelines and (x) a title document
with respect to such Home Loan reflecting that the title to the related Property
is vested at least 50% in the Obligor under such Home Loan.
(c) The Grantor Trustee shall cause the Custodian to take and maintain
continuous physical possession of the Grantor Trustee's Home Loan Files held by
it in the State of Minnesota, and in connection therewith, the Custodian shall
act solely as agent for the Grantor Trust Holder in accordance with the terms
hereof and, so long as the Indenture Trustee is the Grantor Trust Holder, the
Custodian shall also act as agent for the benefit of the Indenture Trustee and
not as agent for the Transferor or any other party.
(d) Within 60 days after the Closing Date, the Servicer (and not any
Subservicer), at its own expense, shall cause Empire Subservicer to record each
Assignment of Mortgage (which may be a blanket assignment if permitted by
applicable law) in the appropriate real property or other records. With respect
to any Assignment of Mortgage as to which the related recording information is
unavailable within 30 days following the Closing Date, such Assignment of
Mortgage shall be submitted for recording within 60 days after receipt of such
information but in no event later than 270 days after the Closing Date. The
Custodian on behalf of the Grantor Trustee, upon receipt, shall be required to
retain a copy of each Assignment of Mortgage submitted for recording. In the
event that any such Assignment of Mortgage is lost or returned unrecorded
because of a defect therein, the Servicer, at its expense and not at the expense
of any Subservicer, shall promptly prepare, or if Empire Subservicer is acting
as Subservicer, cause Empire Subservicer to prepare, a substitute Assignment of
Mortgage or cure such defect, as the case may be, and thereafter the Servicer
shall, at its expense and not at the expense of any Subservicer, submit, or if
Empire Subservicer is acting as Subservicer, cause Empire Subservicer to submit,
each such Assignment of Mortgage for recording.
(e) All recordings required pursuant to this SECTION 2.05 shall be
accomplished by the Subservicer, on behalf of and at the expense of the
Servicer; provided, however, that if Empire Subservicer is no longer the
Subservicer, then the Servicer shall accomplish all recordings required pursuant
to SECTION 2.05.
Section 2.06 ACCEPTANCE BY THE GRANTOR TRUSTEE OF THE HOME LOANS;
CERTIFICATION BY THE CUSTODIAN.
(a) The Grantor Trustee agrees to cause the Custodian to execute and
deliver on the Closing Date an acknowledgment of receipt of the applicable
Grantor Trustee's Home Loan File for each Home Loan held by it. The Grantor
Trustee declares that it will cause the Custodian to hold such documents and any
amendments, replacements or supplements thereto, as well as any other assets
included in the Grantor Trust Estate and delivered to the Custodian, in trust,
upon and subject to the conditions set forth herein. The Grantor Trustee agrees
to cause the Custodian to review each Grantor Trustee's Home Loan File held by
it within 45 days after the Closing Date (or, with respect to any Qualified
Substitute Home Loan, within 45 days after the conveyance of the related Home
Loan to the Grantor Trust) and to cause the Custodian to deliver to the
Transferors, the Depositor, the Grantor Trustee, the Servicer and the Master
Servicer a certification (the "CUSTODIAN'S INITIAL CERTIFICATION") to the effect
that, as to each Home Loan listed on the Home Loan Schedule (other than any Home
Loan paid in full or any Home Loan specifically identified as an exception to
such certification), (i) all documents required to be delivered to the Grantor
Trustee pursuant to this Agreement are in its possession or in the possession of
the Custodian on its behalf (other than as expressly permitted by Section 2.05
hereof), (ii) all documents delivered by the Depositor and each Transferor to
the Custodian pursuant to Section 2.05 hereof have been reviewed by the
Custodian and have not been mutilated or damaged and appear regular on their
face (handwritten additions, changes or corrections shall not constitute
irregularities if initialed by the Obligor) and relate to such Home Loan, (iii)
based upon the examination of the Custodian on behalf of the Grantor Trustee,
and only as to the foregoing documents, the information set forth on the Home
Loan Schedule accurately reflects the information set forth in the related
Grantor Trustee's Home Loan File and (iv) each Debt Instrument has been endorsed
as provided in Section 2.04 hereof. Neither the Grantor Trustee nor the
Custodian shall be under any duty or obligation (i) 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 or
(ii) to determine whether any Grantor Trustee's Home Loan File should include
any of the documents specified in Section 2.05(a)(v) hereof.
(b) The Servicer's Home Loan File shall be held in the custody of the
Servicer for the benefit of, and as agent for, the Grantor Trust Holder and the
Grantor Trustee as the owner thereof for so long as this Agreement continues in
full force and effect. It is intended that, by the Servicer's agreement pursuant
to this Section 2.06(b), the Grantor Trustee shall be deemed to have possession
of the Servicer's Home Loan Files for purposes of Section 9-305 of the Uniform
Commercial Code of the state in which such documents or instruments are located.
The Servicer (and the Master Servicer if it has actual knowledge) shall promptly
report to the Grantor Trustee any failure by it to hold the Servicer's Home Loan
File as herein provided and shall promptly take appropriate action to remedy any
such failure. In acting as custodian of such documents and instruments, the
Servicer agrees not to assert any legal or beneficial ownership interest in the
Home Loans or such documents or instruments. The Servicer (and not any
Subservicer) agrees to indemnify the Grantor Trust Holder, the Grantor Trustee
and the Indenture Trustee for any and all liabilities, obligations, losses,
damages, payments, costs or expenses of any kind whatsoever which may be imposed
on, incurred by or asserted against the Grantor Trust Holder, the Grantor
Trustee or the Indenture Trustee as the result of any act or omission by the
Servicer relating to the maintenance and custody of such documents or
instruments which have been delivered to the Servicer; provided, however, that
the Servicer will not be liable for any portion of any such amount resulting
from the bad faith, negligence or willful misfeasance of the Grantor Trust
Holder, the Grantor Trustee or the Indenture Trustee; and provided, further,
that the Servicer will not be liable for any portion of any such amount
resulting from the Servicer's compliance with any instructions or directions
consistent with this Agreement issued to the Servicer by the Grantor Trustee.
The Grantor Trustee shall have no duty to monitor or otherwise oversee the
Servicer's performance as custodian hereunder.
(c) The Custodian shall, for the benefit of the Grantor Trust Holder,
review each Grantor Trustee's Home Loan File within 60 days after the date it
delivered a Custodian's Initial Certification and deliver to the Transferors,
the Depositor, the Grantor Trustee, the Servicer and the Master Servicer an
updated certification (a "CUSTODIAN'S UPDATED CERTIFICATION"), setting forth
those exceptions listed on the Custodian's Initial Certification which continue
to exist on the date of the Custodian's Updated Certification. With respect to
any Home Loans which are set forth as exceptions in the Custodian's Updated
Certification because recorded assignments (except as permitted by Section
2.05(d) hereof) or original or certified copies of Mortgages or Manufactured
Home Contracts, as applicable, have not yet been delivered to the Custodian, the
applicable Transferor shall cure such exceptions by delivering such missing
documents to the Custodian no later than 180 days after the Closing Date.
The Custodian agrees, for the benefit of the Grantor Trust Holder and
the Indenture Trustee, to review each Grantor Trustee's Home Loan File within
180 days after the Closing Date, and to deliver to the Transferors, the
Depositor, the Grantor Trustee, the Servicer and the Master Servicer a final
certification (a "CUSTODIAN'S FINAL CERTIFICATION"), setting forth those
exceptions listed on the Custodian's Updated Certification which continue to
exist on the date of such Custodian's Final Certification.
In performing any such review, the Custodian may conclusively rely on
the applicable Transferor as to the purported genuineness of any such document
and any signature thereon. Neither the Grantor Trustee nor the Custodian shall
have any responsibility for determining whether any document is valid and
binding, whether the text of any assignment or endorsement is in proper or
recordable form, whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction or whether a blanket assignment is
permitted in any applicable jurisdiction. If a material defect in a document
constituting part of a Grantor Trustee's Home Loan File is discovered, then the
Depositor and applicable Transferor shall comply with the cure, substitution and
repurchase provisions of Section 3.05 of the Sale and Servicing Agreement.
Section 2.07 RESERVED.
Section 2.08 RELEASE AND RECONVEYANCE OF HOME LOANS.
(a) A Home Loan shall be released by the Grantor Trustee and
reconveyed to the applicable Transferor at any time (i) after a repurchase or
substitution pursuant to Section 3.05 of the Sale and Servicing Agreement, (ii)
after liquidation of the Home Loan in accordance with Section 4.10 or 4.11 of
the Sale and Servicing Agreement and the deposit in the Collection Account of
all proceeds recovered therefrom (net of any costs and expenses relating
thereto), or (iii) upon the termination of a Home Loan (due to, among other
causes, a prepayment in full of the Home Loan and sale or other disposition of
the related Property), if the applicable Transferor delivers to the Grantor
Trustee a written request (A) identifying the Home Loan and the related Property
to be released and reconveyed, (B) requesting the release and reconveyance
thereof, (C) setting forth the amount deposited in the Collection Account with
respect thereto, and (D) certifying that the amount deposited in the Collection
Account (x) equals the Substitution Adjustment related to the Qualified
Substitute Home Loan and the Deleted Home Loan released from this Grantor Trust
Agreement pursuant to item (i) above, or (y) equals the entire amount of net
proceeds recovered and received with respect to such Home Loan and the related
Property in the event of a release from this Grantor Trust Agreement pursuant to
items (ii) or (iii) above, or (z) equals the Purchase Price related to a
Defective Home Loan pursuant to item (i) above.
(b) The Grantor Trustee shall, if requested by the Servicer or any
designated Subservicer, temporarily release or cause the Custodian to
temporarily release to the Servicer or the Subservicer, as applicable, the
Grantor Trustee's Home Loan File held by such Custodian pursuant to the
provisions of Section 7.02 or Section 4.10(g) of the Sale and Servicing
Agreement upon compliance by the Servicer or such Subservicer, as applicable,
with the provisions thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor hereby represents and warrants to the Grantor Trustee and the Grantor
Trust Holder that as of the Closing Date:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has, and had at
all relevant times, full power to own its property, to carry on its business as
currently conducted, to enter into and perform its obligations under this
Agreement and to create the Grantor Trust pursuant to this Agreement;
(b) The execution and delivery of this Agreement by the Depositor and
its performance of and compliance with the terms of this Agreement will not
violate the Depositor's certificate of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Depositor is a
party or which may be applicable to the Depositor or any of its assets;
(c) The Depositor has the full power and authority to enter into and
consummate the transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement and has duly executed
and delivered this Agreement. This Agreement, assuming due authorization,
execution and delivery by the Grantor Trustee and each Transferor, constitutes a
valid, legal and binding obligation of the Depositor, enforceable against it in
accordance with the terms hereof, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, 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) The Depositor is not in violation of, and the execution and
delivery of this Agreement by the Depositor and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction, which violation
would materially and adversely affect the condition (financial or otherwise) or
operations of the Depositor or its properties or materially and adversely affect
the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations of,
the Depositor currently pending with regard to which the Depositor has received
service of process and no action or proceeding against, or investigation of, the
Depositor is, to the knowledge of the Depositor, threatened or otherwise pending
before any court, administrative agency or other tribunal that (A) if determined
adversely, would prohibit its entering into this Agreement or render the Grantor
Trust Certificate invalid, (B) seek to prevent the issuance of the Grantor Trust
Certificate or the consummation of any of the transactions contemplated by this
Agreement or (C) if determined adversely, would prohibit or materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement or the Grantor Trust
Certificate;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement or the Grantor Trust Certificate, or for the consummation of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations and orders, if any, that have been obtained prior to
the Closing Date;
(g) The Depositor is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Agreement or its obligations hereunder; no petition of bankruptcy (or
similar insolvency proceeding) has been filed by or against the Depositor prior
to the date hereof;
(h) The Depositor did not convey the Home Loans to the Grantor Trustee
with any intent to hinder, delay or defraud any of its creditors; the Depositor
will not be rendered insolvent as a result of the conveyance of the Home Loans
to the Grantor Trustee;
(i) As of the Closing Date, the Depositor had good title to, and was
the sole owner of, each Home Loan free and clear of any lien other than any such
lien released simultaneously with the sale contemplated herein, and, immediately
upon each transfer and assignment herein contemplated, the Depositor will have
delivered to the Grantor Trustee good title to, and the Grantor Trustee will be
the sole owner of, each Home Loan free and clear of any lien;
(j) The Depositor acquired title to each of the Home Loans in good
faith, without notice of any adverse claim;
(k) No Officers' Certificate, statement, report or other document
prepared by the Depositor and furnished or to be furnished by it pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading;
(l) The Depositor is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended; and
(m) The transfer, assignment and conveyance of the Debt Instruments
and the Mortgages or Manufactured Home Contracts by the Depositor pursuant to
this Agreement are not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction.
ARTICLE IV
THE GRANTOR TRUST CERTIFICATE
Section 4.01 THE GRANTOR TRUST CERTIFICATE.
(a) The Grantor Trust Certificate shall be issued only in the minimum
100% Percentage Interest of a Single Certificate and shall be substantially in
the form attached hereto as Exhibit A. On original issue the Grantor Trust
Certificate shall be executed and delivered by the Grantor Trustee to the
Indenture Trustee, as initial Grantor Trust Holder, or upon the order of the
Depositor. The Grantor Trust Certificate shall be executed by manual or
facsimile signature on behalf of the Grantor Trustee by a Responsible Officer
thereof. The Grantor Trust Certificate bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Grantor Trustee shall bind the Grantor Trustee notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Grantor Trust Certificate. The Grantor Trust
Certificate shall not be entitled to any benefit under this Agreement, or be
valid for any purpose, unless manually countersigned by a Responsible Officer of
the Grantor Trustee, or unless there appears on the Grantor Trust Certificate a
certificate of authentication executed by the Authenticating Agent by manual
signature, and such countersignature or certificate upon the Grantor Trust
Certificate shall be conclusive evidence, and the only evidence, that the
Grantor Trust Certificate has been duly countersigned or authenticated and
delivered hereunder. The Grantor Trust Certificate shall be dated the date of
its countersignature or authentication.
Section 4.02 REGISTRATION, TRANSFER AND EXCHANGE OF GRANTOR TRUST
CERTIFICATE.
(a) The Grantor Trustee shall cause to be kept at one of the offices
or agencies to be maintained in accordance with the provisions of Section 4.05 a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Grantor Trustee shall provide for the registration of the Grantor
Trust Certificate and of transfers and exchanges of the Grantor Trust
Certificate as herein provided. The Grantor Trustee shall act as, or shall
appoint, a Certificate Registrar for the purpose of registering the Grantor
Trust Certificate and transfers and exchanges of the Grantor Trust Certificate
as herein provided.
Upon surrender for registration or transfer of the Grantor Trust
Certificate at any office or agency maintained for such purpose pursuant to
Section 4.05 (and subject to the provisions of this Section 4.02) the Grantor
Trustee shall execute, and shall date, countersign or authenticate (or cause the
Authenticating Agent to authenticate) and deliver, in the name of the designated
transferee or transferees, a new Grantor Trust Certificate of a like 100%
Percentage Interest.
At the option of the Grantor Trust Holder, the Grantor Trust
Certificate may be exchanged for a Grantor Trust Certificate of an authorized
Percentage Interest of a like 100% Percentage Interest upon surrender of the
Grantor Trust Certificate to be exchanged at any such office or agency. Whenever
the Grantor Trust Certificate is so surrendered for exchange, the Grantor
Trustee shall execute, and shall date, countersign or authenticate, as the case
may be (or cause the Authenticating Agent to authenticate) and deliver, the
Grantor Trust Certificate which such Grantor Trust Holder making the exchange is
entitled to receive. The Grantor Trust Certificate presented or surrendered for
transfer or exchange shall (if so required by the Certificate Registrar or the
Grantor Trustee) be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Certificate Registrar duly executed by,
the Grantor Trust Holder or his attorney duly authorized in writing.
No service charge shall be made for any transfer or exchange of the
Grantor Trust Certificate, but the Grantor Trustee or the Certificate Registrar
may require payment from the Grantor Trust Holder of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Grantor Trust Certificate.
The Grantor Trust Certificate surrendered for transfer and exchange
shall be canceled by the Certificate Registrar, the Grantor Trustee or the
Authenticating Agent in accordance with their standard procedures.
(b) [Reserved]
(c) No offer, sale or other transfer of the Grantor Trust Certificate
shall be made unless such transfer is made pursuant to an effective registration
statement or otherwise in accordance with the requirements under the Act, and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. If a transfer (other than (i) the initial transfers of the
Grantor Trust Certificate by the Grantor Trustee to the Depositor, and by the
Depositor to the Issuer, (ii) the pledge of the Grantor Trust Certificate by the
Issuer to the Indenture Trustee pursuant to the terms of the Indenture) is to be
made in reliance upon an exemption from the Act, and under the applicable state
securities laws, either: (i) the Certificate Registrar shall require that the
transferee deliver to the Certificate Registrar an investment representation
letter (the "INVESTMENT REPRESENTATION LETTER") substantially in the form of
Exhibit B attached hereto, which Investment Representation Letter shall certify,
among other things, that the transferee is an institutional "accredited
investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Act or a
"qualified institutional buyer" as defined in Rule 144A under the Act, and the
Certificate Registrar may also require that the transferee deliver to the
Certificate Registrar an Opinion of Counsel if such transferee is not a
qualified institutional buyer within the meaning of Rule 144A under the Act; or
(ii) if the certifications described in the preceding clause (i) cannot be
provided (A) the Certificate Registrar shall require an Opinion of Counsel
reasonably satisfactory to the Certificate Registrar and the Depositor that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from registration or qualification under the
Act, applicable state securities laws and other relevant laws, which Opinion of
Counsel shall not be an expense of the Certificate Registrar, the Depositor, the
Grantor Trust or the Grantor Trustee, and (B) the Certificate Registrar shall
require the transferor to execute a certification in form and substance
satisfactory to the Certificate Registrar setting forth the facts surrounding
such transfer. In each case, the Certificate Registrar will be entitled without
further investigation to rely upon such certification or Opinion of Counsel. The
Holder desiring to effect such transfer shall, and does hereby agree to,
indemnify the Certificate Registrar, the Grantor Trustee and the Depositor
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws. None of the Depositor, the
Grantor Trustee or the Certificate Registrar is under any obligation to register
or qualify the Grantor Trust Certificate.
Unless the Grantor Trust Certificate has been registered under the
Act, the Grantor Trust Certificate shall bear a legend substantially to the
following effect:
THIS GRANTOR TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS GRANTOR TRUST
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION,
PROVIDED, HOWEVER, THAT THIS GRANTOR TRUST CERTIFICATE SHALL
BE PLEDGED BY THE HOLDER THEREOF TO THE INDENTURE TRUSTEE
PURSUANT TO THE TERMS OF THE INDENTURE.
THE HOLDER OF THIS GRANTOR TRUST CERTIFICATE BY ITS ACCEPTANCE
HEREOF AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
GRANTOR TRUST CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (A) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (B) FOR SO LONG AS THIS GRANTOR TRUST
CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE HOLDER
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF
RULE 501 UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT IN EACH OF THE FOREGOING CASES TO THE
COMPLETION AND DELIVERY BY THE TRANSFEROR TO THE GRANTOR
TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE LAST PAGE OF THIS GRANTOR TRUST CERTIFICATE, EXCEPT IN THE
CASE OF THE PLEDGE DESCRIBED ABOVE AND THE INITIAL TRANSFERS
OF THIS GRANTOR TRUST CERTIFICATE BY THE GRANTOR TRUSTEE TO
THE DEPOSITOR, AND BY THE DEPOSITOR TO THE ISSUER.
THE INITIAL INVESTOR IN THIS GRANTOR TRUST CERTIFICATE, AND
EACH SUBSEQUENT PURCHASER OF THIS GRANTOR TRUST CERTIFICATE,
BY PURCHASING THIS GRANTOR TRUST CERTIFICATE OR AN INTEREST
HEREIN, IS DEEMED TO HAVE AGREED TO COMPLY WITH CERTAIN
TRANSFER REQUIREMENTS SET FORTH IN THE GRANTOR TRUST
AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF
EXHIBIT B TO THE GRANTOR TRUST AGREEMENT IF SUCH TRANSFEREE IS
A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INSTITUTIONAL
INVESTOR, AND MAY ALSO BE REQUIRED TO DELIVER AN OPINION OF
COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN GRANTOR TRUST
CERTIFICATE. If (i) the Grantor Trust Certificate is surrendered to the Grantor
Trustee or the Authenticating Agent as mutilated or the Grantor Trustee or the
Authenticating Agent receives evidence to its satisfaction of the destruction,
loss or theft of the Grantor Trust Certificate, and (ii) there is delivered to
the Grantor Trustee or Authenticating Agent such security or indemnity as may be
required by them to hold each of them harmless, then, in the absence of notice
to the Grantor Trustee or Authenticating Agent that the Grantor Trust
Certificate has been acquired by a bona fide purchaser, the Grantor Trustee
shall execute and countersign or authenticate (or cause the Authenticating Agent
to authenticate), as the case may be, and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Grantor Trust Certificate, a new
Grantor Trust Certificate of like 100% Percentage Interest. Upon the issuance of
a new Grantor Trust Certificate under this Section, the Grantor Trustee or the
Certificate Registrar may require from the Grantor Trust Holder the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expense (including the fees and expenses of
the Grantor Trustee or Authenticating Agent) in connection therewith. Unless a
bona fide purchaser of the original Grantor Trust Certificate presents such
Grantor Trust Certificate, any duplicate Grantor Trust Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence of
ownership in the Grantor Trust, as if originally issued, whether or not the
lost, stolen, or destroyed Grantor Trust Certificate shall be found at any time.
Section 4.04 PERSONS DEEMED OWNERS. Prior to the due presentation of
the Grantor Trust Certificate for registration or transfer, the Depositor, the
Grantor Trustee, the Certificate Registrar and any agent of the Depositor, the
Grantor Trustee or the Certificate Registrar may treat the Person in whose name
the Grantor Trust Certificate is registered as the owner of the Grantor Trust
Certificate for the purpose of receiving distributions pursuant to Section 5.02
and for all other purposes whatsoever, and neither the Depositor, the Grantor
Trustee, the Certificate Registrar nor any agent of the Depositor, the Grantor
Trustee or the Certificate Registrar shall be affected by notice to the
contrary.
Section 4.05 MAINTENANCE OF OFFICE OR AGENCY. The Grantor Trustee will
maintain, at its expense, an office or agency where the Grantor Trust
Certificate may be surrendered for registration or transfer or exchange and
where notices and demands to or upon the Certificate Registrar in respect of the
Grantor Trust Certificate and this Agreement may be served. The Grantor Trustee
initially designates the Corporate Trust Office and the principal corporate
trust office of the Authenticating Agent, if any, as its offices and agencies
for said purposes.
ARTICLE V
GRANTOR TRUST ACCOUNTS;
PAYMENTS TO GRANTOR TRUST HOLDER
Section 5.01 DISTRIBUTIONS FROM COLLECTION ACCOUNT.
(a) On the sixth Business Day prior to each Payment Date, so long as
the Issuer or its assignee is the Grantor Trust Holder, the Indenture Trustee,
in accordance with Section 5.01(b)(2) of the Sale and Servicing Agreement, shall
withdraw from the Collection Account the Available Collection Amount for such
Payment Date and deposit such amount into the Note Payment Account. Such
deposits into the Note Payment Account from the Collection Account shall be
deemed to constitute distributions to and on behalf of the Grantor Trust Holder.
(b) The Indenture Trustee may also make withdrawals from the
Collection Account pursuant to Section 5.01(b)(3) of the Sale and Servicing
Agreement.
ARTICLE VI
CONCERNING THE GRANTOR TRUSTEE
Section 6.01 DUTIES OF GRANTOR TRUSTEE. The Grantor Trustee undertakes
to perform such duties and only such duties as are specifically set forth in
this Agreement.
The Grantor Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Grantor Trustee which are specifically required to be furnished pursuant
to any provision of this Agreement, shall examine them to determine whether they
are in the form required by this Agreement but the Grantor Trustee shall not be
required to determine, confirm or recalculate information contained in such
instruments.
No provision of this Agreement shall be construed to relieve the
Grantor Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; PROVIDED, HOWEVER, that:
(i) The duties and obligations of the Grantor Trustee shall be
determined solely by the express provisions of this Agreement, the Grantor
Trustee 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 Grantor
Trustee and, in the absence of bad faith on the part of the Grantor Trustee, the
Grantor Trustee 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 Grantor Trustee and conforming to the requirements of this
Agreement;
(ii) The Grantor Trustee 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 Grantor Trust Holder relating to the time,
method and place of conducting any proceeding for any remedy available to the
Grantor Trustee, or exercising any trust or power conferred upon the Grantor
Trustee, under this Agreement; and
(iii) The Grantor Trustee shall not be personally liable for any error
of judgment made in good faith by any Responsible Officer, unless it shall be
proved that the Grantor Trustee or such Responsible Officer was negligent in
ascertaining the pertinent facts.
None of the provisions contained in this Agreement shall require the
Grantor Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties as Grantor Trustee
hereunder or in the exercise of any of its rights or powers if there is
reasonable ground for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Section 6.02 CERTAIN MATTERS AFFECTING THE GRANTOR TRUSTEE. Except as
otherwise provided in Section 6.01:
(i) The Grantor Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, 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;
(ii) The Grantor Trustee may consult with counsel, and any written
advice or 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 written advice or Opinion of Counsel;
(iii) The Grantor Trustee 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;
(iv) The Grantor Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys; and
(v) All rights of action under this Agreement or under the Grantor
Trust Certificate, enforceable by the Grantor Trustee, may be enforced by it
without the possession of the Grantor Trust Certificate, or the production
thereof at the trial or other proceeding relating thereto, and any such suit,
action or proceeding instituted by the Grantor Trustee shall be brought in its
name for the benefit the Grantor Trust Holder, subject to the provisions of this
Agreement.
Section 6.03 GRANTOR TRUSTEE NOT REQUIRED TO MAKE INVESTIGATION. The
Grantor Trustee 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, or other paper or document (provided
the same appears regular on its face) or to take any remedial action, unless
directed in writing to do so by the Grantor Trust Holder; PROVIDED HOWEVER, that
if the payment to the Grantor Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of any such investigation or the
taking of any such remedial action so directed by the Grantor Trust Holder is,
in the opinion of the Grantor Trustee, not reasonably assured to the Grantor
Trustee by the security afforded to it by the terms of this Agreement, the
Grantor Trustee may require reasonable agreement for the payment or
reimbursement of any such expense or security for any such liability as a
condition to so proceeding. The reasonable expense of every such investigation
so directed by the Grantor Trust Holder shall be a nonrecourse obligation of the
Grantor Trust Holder to pay the Grantor Trustee upon demand, but only to the
extent that excess funds are available therefor.
Section 6.04 GRANTOR TRUSTEE'S FEES. The Grantor Trustee shall be
entitled to be paid the Grantor Trustee Fee pursuant to Section 5.01(c) of the
Sale and Servicing Agreement. Except as otherwise provided herein, the Grantor
Trustee will be responsible for all expenses it incurs in respect of any of its
duties or obligations hereunder and will not be entitled to any additional
amounts. The Grantor Trustee acknowledges and agrees that the Grantor Trustee
Fee constitutes reasonable compensation for its activities as Grantor Trustee
hereunder.
Section 6.05 COMPLIANCE WITH CODE. The Grantor Trustee shall be
authorized to and shall prepare and file and furnish to the Grantor Trust
Holder, or cause to be prepared and filed and furnished, all federal, and if
applicable, state and local income tax and information returns or reports
relating to the Grantor Trust (including, without limitation, information with
respect to interest or discount income, gain or loss with respect to the Home
Loans and reinvestment income, gain or loss with respect to the Collection
Account) at the time and in the manner required by the Code. In connection with
the filing of any such returns, the Grantor Trustee shall have the right to
employ accountants and other personnel to assist in the preparation of such
filings.
Section 6.06 ELIGIBILITY REQUIREMENTS FOR GRANTOR TRUSTEE. The Grantor
Trustee hereunder shall at all times be a corporation having its principal
office in a state and city acceptable to the Depositor, organized and doing
business under the laws of such state or the United States of America,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, or shall be a member of a bank
holding system, the aggregate combined capital and surplus of which is at least
$50,000,000, provided that the Grantor Trustee's separate capital and surplus
shall at all times be at least the amount specified in Section 310(a)(2) of the
Trust Indenture Act of 1939, and shall be subject to supervision or examination
by federal or state authority. If such corporation 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 this
Section the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Grantor Trustee shall cease to
be eligible in accordance with the provisions of this Section, the Grantor
Trustee shall resign immediately in the manner and with the effect specified in
Section 6.07.
Section 6.07 RESIGNATION AND REMOVAL OF GRANTOR TRUSTEE. The Grantor
Trustee may resign and be discharged from the trust hereby created only by (i)
giving written notice of resignation to the Depositor, the Grantor Trust Holder
and the Servicer and (ii) arranging for a successor trustee to be appointed. The
successor trustee shall be acceptable to the Grantor Trust Holder, shall be
eligible in accordance with the provisions of Section 6.06, and shall be
compensated solely (A) pursuant to the provisions of this Agreement, and (B) if
such arrangement is not acceptable to such successor, pursuant to an arrangement
between the successor trustee and the resigning Grantor Trustee. Any such
resignation of the Grantor Trustee shall only be effective upon the appointment
of a successor trustee. Upon receiving such notice of resignation, the Servicer
shall promptly appoint a successor trustee, acceptable to the Grantor Trust
Holder, by written instrument, in triplicate, one copy of which instrument shall
be delivered to the resigning Grantor Trustee, one copy to the successor trustee
and one copy to the Depositor. If no successor trustee shall have been appointed
and have accepted appointment within 60 days after the giving of such notice of
resignation, the resigning Grantor Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Grantor Trustee shall cease to be eligible in
accordance with the provisions of Section 6.06 and shall fail to resign after
written request for the Grantor Trustee's resignation by the Grantor Trust
Holder, or if at any time the Grantor Trustee shall become incapable of acting,
or an order for relief shall have been entered in any bankruptcy or insolvency
proceeding with respect to the Grantor Trustee, or a receiver of the Grantor
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Grantor Trustee or of its property or affairs for the
purpose of rehabilitation, conversion or liquidation, or in order to change the
status of the Grantor Trust for state tax reasons, then the Servicer shall
remove the Grantor Trustee and appoint a successor trustee, acceptable to the
Grantor Trust Holder, by written instrument, in triplicate, one copy of which
instrument shall be delivered to the Grantor Trustee so removed, one copy to the
successor trustee and one copy to the Depositor.
The Grantor Trust Holder may at any time remove the Grantor Trustee
and appoint a successor trustee by written instrument or instruments, in
triplicate, signed by such holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Depositor, one
complete set of which shall be delivered to the Grantor Trustee so removed and
one complete set of which shall be delivered to the successor so appointed.
Any resignation or removal of the Grantor Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 6.08.
Section 6.08 SUCCESSOR GRANTOR TRUSTEE. Any successor trustee
appointed as provided in Section 6.07 shall execute, acknowledge and deliver to
the Grantor Trust Holder, the Depositor and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective, and such successor
trustee, without any further act, deed or reconveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee documents and
statements relating to the Grantor Trust Estate held by it hereunder, and the
Depositor and the predecessor trustee 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 trustee all such rights,
powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 6.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Grantor Trustee shall mail notice of the succession of such
trustee hereunder to the Grantor Trust Holder at its address as shown in the
Certificate Register. If the Grantor Trustee fails to mail such notice within
ten days after acceptance of the successor trustee, the successor trustee shall
cause such notice to be mailed at the expense of the Grantor Trustee.
Section 6.09 MERGER OR CONSOLIDATION OF GRANTOR TRUSTEE. Any Person
into which the Grantor Trustee may be merged or converted or with which it may
be consolidated, to which it may sell or transfer its corporate trust business
and assets as a whole or substantially as a whole or any Person resulting from
any merger, sale, transfer, conversion or consolidation to which the Grantor
Trustee shall be a party, or any Person succeeding to the business of the
Grantor Trustee, shall be the successor of the Grantor Trustee hereunder,
provided that (i) such Person shall be eligible under the provisions of Section
6.06, 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, and (ii) the Grantor Trustee shall deliver an opinion of
counsel to the Depositor to the effect that such merger, consolidation, sale or
transfer will not subject the Grantor Trust to federal, state or local tax.
Section 6.10 AUTHENTICATING AGENT. The Grantor Trustee may appoint an
Authenticating Agent, which shall be authorized to act on behalf of the Grantor
Trustee in authenticating or countersigning the Grantor Trust Certificate.
Wherever reference is made in this Agreement to the authentication of the
Grantor Trust Certificate by the Grantor Trustee or the Grantor Trustee's
countersignature, such reference shall be deemed to include authentication on
behalf of the Grantor Trustee by the Authenticating Agent and a certification of
authentication executed on behalf of the Grantor Trustee by the Authenticating
Agent. The Authenticating Agent must be acceptable to the Depositor and must be
a corporation organized and doing business under the laws of the United States
of America or of any state, having a principal office and place of business in a
state and city acceptable to the Depositor, having a combined capital and
surplus of at least $15,000,000, authorized under such laws to do a trust
business and subject to supervision or examination by Federal or state
authorities.
Any corporation into which the Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency business
of the Authenticating Agent, shall be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Grantor
Trustee or the Authenticating Agent.
The Authenticating Agent may at any time resign by giving at least 30
day's advance written notice of resignation to the Grantor Trustee and the
Depositor. The Grantor Trustee may at any time terminate the agency of the
Authenticating Agent by giving written notice to the Depositor. Upon receiving a
notice of resignation or upon such a termination, or in case at any time the
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.10, the Grantor Trustee promptly shall appoint a
successor Authenticating Agent, which shall be acceptable to the Depositor, and
shall give written notice of such appointment to the Depositor, and shall mail
notice of such appointment to the Grantor Trust Holder. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as Authenticating
Agent herein. No successor Authenticating Agent shall be appointed unless
eligible under the provisions of this Section 6.10.
The Authenticating Agent shall have no responsibility or liability for
any action taken by it as such at the direction of the Grantor Trustee. Any
compensation paid to the Authenticating Agent shall be at the expense of the
Grantor Trustee pursuant to Section 6.04.
ARTICLE VII
TERMINATION
Section 7.01 TERMINATION. The respective obligations and
responsibilities of the Depositor and the Grantor Trustee created hereby and the
Grantor Trust created hereby shall terminate only upon the liquidation of all
the Home Loans or the Majority Residual Interest Holders' or the Master
Servicer's purchase of all the Home Loans pursuant to Section 11.02 of the Sale
and Servicing Agreement and the termination of the Indenture; PROVIDED, HOWEVER,
that in no event shall the trust created hereby continue beyond the expiration
of 21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States of America to the Court of St.
James's, living on the date hereof.
Section 7.02 PROCEDURE UPON TERMINATION OF GRANTOR TRUST.
(a) Notice of any termination pursuant to the provisions of Section
7.01, specifying the Payment Date upon which the final distribution shall be
made, shall be given promptly by the Grantor Trustee by first class mail to the
Grantor Trust Holder and the Indenture Trustee. Such notice shall specify (A)
the Payment Date upon which final distribution on the Grantor Trust Certificate
will be made upon presentation and surrender of the Grantor Trust Certificate at
the Corporate Trust Office, and (B) that the Record Date otherwise applicable to
such Payment Date is not applicable, distribution being made only upon
presentation and surrender of the Grantor Trust Certificate at the office or
agency of the Grantor Trustee therein specified. The Grantor Trustee shall give
such notice to the Depositor, the Indenture Trustee and the Certificate
Registrar at the time such notice is given to the Grantor Trust Holder.
(b) In the event that the Grantor Trust Holder does not surrender the
Grantor Trust Certificate for cancellation within three months after the time
specified in the above-mentioned written notice, the Grantor Trustee shall give
a second written notice to the Grantor Trust Holder to surrender the Grantor
Trust Certificate for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice the Grantor Trust
Certificate shall not have been surrendered for cancellation, the Grantor
Trustee may take appropriate steps to contact the Grantor Trust Holder
concerning surrender of the Grantor Trust Certificate, and the cost thereof
shall be paid out of the amounts distributable to such Grantor Trust Holder. If
within two years after the second notice the Grantor Trust Certificate shall not
have been surrendered for cancellation, the Grantor Trustee shall, subject to
applicable state law relating to escheatment, hold all amounts distributable to
the Grantor Trust Holder for the benefit of the Grantor Trust Holder. No
interest shall accrue on any amount held by the Grantor Trustee and not
distributed to a Grantor Trust Holder due to such Grantor Trust Holder's failure
to surrender its Grantor Trust Certificate for payment of the final distribution
therein in accordance with this Section.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01 BINDING NATURE OF AGREEMENT; ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the parties hereto, the
Indenture Trustee, the Issuer and their respective successors and permitted
assigns.
Section 8.02 ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof.
Section 8.03 AMENDMENT.
(a) This Agreement may be amended from time to time by the Depositor,
the Transferors and the Grantor Trustee with the consent of the Grantor Trust
Holder; PROVIDED, HOWEVER, any amendments relating to or affecting Article VII
or this Section 8.03, or any other provision of this Agreement relating to
termination of the Grantor Trust or amendment of this Agreement, shall also
require the consent of all of the holders of all of the Notes.
(b) Promptly after the execution of any such amendment, the Grantor
Trustee shall furnish written notification of the substance of such amendment to
the Grantor Trust Holder and the Depositor.
(c) It shall be necessary for the consent of the Grantor Trust Holder
under this Section 8.03 for the Holders to approve the particular form of any
proposed amendment. The manner of obtaining such consent and of evidencing the
authorization of the execution thereof by the Grantor Trust Holder shall be
subject to such reasonable rules and procedures as the Grantor Trustee may
prescribe.
SECTION 8.04 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
Section 8.05 NOTICES. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
received by (a) in the case of Depositor, to PaineWebber Mortgage Acceptance
Corporation IV, 1285 Avenue of the Americas, New York, New York 10019,
Attention: John Fearey, Esq., (b) in the case of the Grantor Trustee, to U.S.
Bank National Association, 180 East Fifth Street, St. Paul, Minnesota 55101;
Attention: Structured Finance/Empire Funding 1999-1, and (c) in the case of
Empire Funding, to Empire Funding Corp., 9737 Great Hills Trail, Austin, Texas
78759, Attention: Richard N. Steed; (d) in the case of ContiMortgage, to
ContiMortgage Corporation, 338 South Warminster Road, Hatsboro, Pennsylvania
19040, Attention: Chief Counsel; (e) in the case of ULG, to California Lending
Group, Inc., d/b/a United Lending Group, 3351 Michelson Drive, Suite 100,
Irvine, California 92612, Attention: Chief Counsel; or as to each party such
other address as may hereafter be furnished by such party to the other parties
in writing. Any notice required or permitted to be mailed to a Grantor Trust
Holder shall be given by first class mail, postage prepaid, at the address of
such Holder as shown in the Certificate Register. Any notice so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been duly given, whether or not a Grantor Trust Holder receives such notice.
Section 8.06 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the Grantor Trust
Certificate or the rights of the Grantor Trust Holder thereof.
Section 8.07 INDULGENCES; NO WAIVERS. Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
Section 8.08 HEADINGS NOT TO AFFECT INTERPRETATION. The headings
contained in this Agreement are for convenience of reference only, and they
shall not be used in the interpretation hereof.
Section 8.09 BENEFITS OF AGREEMENT. Nothing in this Agreement or in
the Grantor Trust Certificate, express or implied, shall give to any Person,
other than the parties to this Agreement and their successors hereunder and the
Grantor Trust Holder, any benefit or any legal or equitable right, power, remedy
or claim under this Agreement; PROVIDED, HOWEVER, that notwithstanding the
foregoing, the holders of the Notes are and shall be intended third party
beneficiaries of this Agreement with respect to Section 8.03, the Indenture
Trustee shall be an intended third party beneficiary in accordance with Section
8.11 hereof.
Section 8.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the Depositor, each Transferor and the Grantor
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first written above.
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION
IV, as Depositor
By: _______________________________________
Name:
Title:
CONTIMORTGAGE CORPORATION, as Transferor and
Servicer
By: _______________________________________
Name:
Title:
EMPIRE FUNDING CORP., as Transferor and
Subservicer
By: _______________________________________
Name:
Title:
CALIFORNIA LENDING GROUP, INC., d/b/a UNITED
LENDING GROUP, as Transferor
By: _______________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION, as Grantor
Trustee
By: ______________________________________
Name:
Title:
<PAGE>
EMPIRE FUNDING CORP., as Subservicer
By: ______________________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of _____________, 1999, before me, a notary public in
and for the State of New York, personally appeared _______________, known to me
who, being by me duly sworn, did depose and say that he/she resides at
___________________; that he/she is a __________________________ of PaineWebber
Mortgage Acceptance Corporation IV, one of the parties that executed the
foregoing instrument and that he/she is authorized by PaineWebber Mortgage
Acceptance Corporation IV to sign his/her name thereto.
---------------------------------------------
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF _____________ )
) ss.:
COUNTY OF ____________ )
On this ___ day of _____________, 1999, before me, a notary public in
and for the State of _____________, personally appeared _____________, known to
me who, being by me duly sworn, did depose and say that he resides at
___________________; that he/she is a __________________ of Empire Funding
Corp., one of the parties that executed the foregoing instrument and that he/she
is authorized by Empire Funding Corp. to sign his/her name thereto.
---------------------------------------------
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF _____________)
) ss.:
COUNTY OF ____________)
On this ___ day of _____________, 1999, before me, a notary public in
and for the State of _____________, personally appeared _____________, known to
me who, being by me duly sworn, did depose and say that he resides at
___________________; that he/she is a __________________ of ContiMortgage
Corporation, one of the parties that executed the foregoing instrument and that
he/she is authorized by ContiMortgage Corporation to sign his/her name thereto.
----------------------------------------
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF _____________ )
) ss.:
COUNTY OF ____________ )
On this ___ day of _____________, 1999, before me, a notary public in
and for the State of _____________, personally appeared _____________, known to
me who, being by me duly sworn, did depose and say that he resides at
___________________; that he/she is a __________________ of California Lending
Group, Inc., d/b/a United Lending Group, one of the parties that executed the
foregoing instrument and that he/she is authorized by California Lending Group,
Inc., d/b/a United Lending Group to sign his/her name thereto.
---------------------------------------------
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF ______________)
) ss.:
COUNTY OF _____________)
On this ___ day of ____________, 1999, before me, a notary public in
and for the State of _________, personally appeared _____________, known to me
who, being by me duly sworn, did depose and say that he resides at
___________________; that he/she is a __________________ of U.S. Bank National
Association, one of the parties that executed the foregoing instrument and that
he/she is authorized by U.S. Bank National Association to sign his/her name
thereto.
------------------------------------------
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF _____________ )
) ss.:
COUNTY OF ____________ )
On this ___ day of _____________, 1999, before me, a notary public in
and for the State of _____________, personally appeared _____________, known to
me who, being by me duly sworn, did depose and say that he resides at
___________________; that he/she is a __________________ of Empire Funding
Corp., one of the parties that executed the foregoing instrument and that he/she
is authorized by Empire Funding Corp. to sign his/her name thereto.
----------------------------------------
Notary Public
[NOTARIAL SEAL]
<PAGE>
EXHIBIT A
FORM OF GRANTOR TRUST CERTIFICATE
THIS GRANTOR TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS GRANTOR TRUST CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION, PROVIDED, HOWEVER, THAT THIS GRANTOR TRUST CERTIFICATE
SHALL BE PLEDGED BY THE HOLDER THEREOF TO THE INDENTURE TRUSTEE PURSUANT TO THE
TERMS OF THE INDENTURE.
THE HOLDER OF THIS GRANTOR TRUST CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT
TO OFFER, SELL OR OTHERWISE TRANSFER SUCH GRANTOR TRUST CERTIFICATE EXCEPT IN
ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND (A) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (B) FOR SO LONG AS THIS GRANTOR TRUST CERTIFICATE IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHO
THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT IN EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE
TRANSFEROR TO THE GRANTOR TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE LAST PAGE OF THIS GRANTOR TRUST CERTIFICATE, EXCEPT IN THE CASE
OF THE PLEDGE DESCRIBED ABOVE AND THE INITIAL TRANSFERS OF THIS GRANTOR TRUST
CERTIFICATE BY THE GRANTOR TRUSTEE TO THE DEPOSITOR, AND BY THE DEPOSITOR TO THE
ISSUER.
THE INITIAL INVESTOR IN THIS GRANTOR TRUST CERTIFICATE, AND EACH SUBSEQUENT
PURCHASER OF THIS GRANTOR TRUST CERTIFICATE, BY PURCHASING THIS GRANTOR TRUST
CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO HAVE AGREED TO COMPLY WITH
CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE GRANTOR TRUST AGREEMENT. A
TRANSFEREE IS ALSO REQUIRED TO DELIVER AN INVESTMENT REPRESENTATION LETTER
SUBSTANTIALLY IN THE FORM OF EXHIBIT B TO THE GRANTOR TRUST AGREEMENT IF SUCH
TRANSFEREE IS A QUALIFIED INSTITUTIONAL BUYER OR AN ACCREDITED INSTITUTIONAL
INVESTOR, AND MAY ALSO BE REQUIRED TO DELIVER AN OPINION OF COUNSEL IF SUCH
TRANSFEREE IS NOT A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A.
THE HOLDER OF THIS GRANTOR TRUST CERTIFICATE WILL BE TREATED AS THE OWNER OF A
PRO RATA UNDIVIDED BENEFICIAL INTEREST IN THE HOME LOANS. EACH TRANSFEREE OF
THIS GRANTOR TRUST CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED
THIS GRANTOR TRUST CERTIFICATE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFERABILITY, AS SET FORTH IN SECTION 4.02 OF THE GRANTOR TRUST AGREEMENT.
<PAGE>
EMPIRE FUNDING GRANTOR TRUST 1999-1
evidencing an interest in a trust
the assets of which consist primarily
of the Home Loans
Certificate No. __
Percentage Interest evidenced
by this Grantor Trust Certificate: 100%
First Payment Date: May 25, 1999
THIS CERTIFIES THAT U.S. BANK NATIONAL ASSOCIATION, as Indenture
Trustee is the registered owner of the Percentage Interest evidenced by this
Grantor Trust Certificate in monthly distributions to the Grantor Trust Holder
with respect to the Grantor Trust consisting of a trust the assets of which
consist primarily of the Home Loans. The Grantor Trust was created pursuant to a
Grantor Trust Agreement dated as of April 1, 1999 ("AGREEMENt") among
PaineWebber Mortgage Acceptance Corporation IV (the "DEPOSITOR"), ContiMortgage
Corporation (the "SERVICER" and a "TRANSFEROR"), Empire Funding Corp. (the
"SUBSERVICER" and a "TRANSFEROR"), California Lending Group, Inc., d/b/a United
Lending Group, (a "TRANSFEROR"), U.S. Bank National Association, as Grantor
Trustee (the "GRANTOR TRUSTEE"), and ContiFinancial Corporation, as guarantor, a
summary of certain of the pertinent provisions of which is set forth
hereinafter. To the extent not defined herein, the capitalized terms used herein
have the meanings ascribed to such terms in the Agreement. This Grantor Trust
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the holder of this Grantor Trust
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound.
Pursuant to the terms of the Agreement, distributions will be made on
this Grantor Trust Certificate to the Person in whose name this Grantor Trust
Certificate is registered at the close of business on the last day of the
calendar month preceding the month of such distribution, or if such day is not a
Business Day, the Business Day immediately preceding such day, in an amount
equal to the product of the Percentage Interest evidenced by this Grantor Trust
Certificate and the amount required to be distributed to the Grantor Trust
Holder on or prior to such Payment Date pursuant to Section 5.01 of the
Agreement.
Distributions on this Grantor Trust Certificate will be made by the
Grantor Trustee by check mailed to the address of the Person entitled thereto,
as such name and address shall appear on the Certificate Register unless such
Person notifies the Grantor Trustee in writing at least five Business Days prior
to a Payment Date that such payments are to be made by wire transfer (at the
expense of the Grantor Trustee) of immediately available funds to the account
specified by such person. Notwithstanding the above, the final distribution on
this Grantor Trust Certificate will be made after due notice of the pendency of
such distribution and only upon presentation and surrender of this Grantor Trust
Certificate at the office or agency specified by the Trustee for that purpose in
the notice of final distribution.
No offer, sale, or other transfer of the Grantor Trust Certificate
(other than the initial transfers of the Grantor Trust Certificate by the
Grantor Trustee to the Depositor, and by the Depositor to the Issuer) shall be
made unless such transfer is made pursuant to an effective registration
statement or otherwise in accordance with the requirements under the Act, and
effective registration or qualification under applicable state securities laws,
or is made in a transaction which does not require such registration or
qualification. If a transfer (other than the initial transfer by the Grantor
Trustee to the Depositor or one by the Depositor or an affiliate thereof) is to
be made in reliance upon an exemption from the Act, and under the applicable
state securities laws, then either: (i) the Certificate Registrar shall require
that the transferee deliver to the Certificate Registrar an investment
representation letter (the "INVESTMENT REPRESENTATION LETTER") substantially in
the form of Exhibit B to the Grantor Trust Agreement, which Investment
Representation Letter shall certify, among other things, that the transferee is
an institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or
(7) under the Act or a "qualified institutional buyer" as defined in Rule 144A
under the Act, and the Certificate Registrar may also require that the
transferee deliver to the Certificate Registrar an Opinion of Counsel if such
transferee is not a qualified institutional buyer within the meaning of Rule
144A under the Act; or (ii) if the certifications described in the preceding
clause (i) cannot be provided (A) the Certificate Registrar shall require an
Opinion of Counsel reasonably satisfactory to the Certificate Registrar and the
Depositor that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from registration or
qualification under the Act, applicable state securities laws and other relevant
laws, which Opinion of Counsel shall not be an expense of the Certificate
Registrar, the Depositor, the Grantor Trust or the Grantor Trustee, and (B) the
Certificate Registrar shall require the transferor to execute a certification in
form and substance satisfactory to the Certificate Registrar setting forth the
facts surrounding such transfer. In each case, the Certificate Registrar will be
entitled without further investigation to rely upon such certification or
Opinion of Counsel. A Grantor Trust Holder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Certificate Registrar, the
Grantor Trustee and the Depositor against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws. The Grantor Trust Holder shall pledge the Grantor Trust Certificate
to the Indenture Trustee pursuant to the terms of the Indenture.
The Agreement does not permit the amendment of the Agreement and the
modification of the rights and obligations of the Depositor, the Grantor Trustee
and the Transferors and the rights of the Grantor Trust Holder under the
Agreement without the consent of Grantor Trust Holder; PROVIDED, HOWEVER, any
amendments relating to or affecting Article VII or Section 8.03, or any other
provision of the Agreement relating to termination of the Grantor Trust or
amendment of the Agreement, shall require the consent of all of the holders of
all of the Notes.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Grantor Trust Certificate is registrable
in the Certificate Register upon surrender of this Grantor Trust Certificate for
registration of transfer at the office or agency appointed by the Grantor
Trustee, duly endorsed by, or accompanied by an assignment in the form below or
other written instrument of transfer in form satisfactory to the Grantor Trustee
and the Certificate Registrar, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon a new Grantor Trust
Certificate of authorized 100% Percentage Interest will be issued to the
designated transferee.
The Grantor Trust Certificate is issuable only as a registered Grantor
Trust Certificate without coupons in the Percentage Interest specified in the
Agreement. As provided in the Agreement and subject to certain limitations
therein set forth, the Grantor Trust Certificate is exchangeable for a new
Grantor Trust Certificate of authorized 100% Percentage Interest, as requested
by the Grantor Trust Holder surrendering the same.
The Grantor Trust Holder may at any time remove the Grantor Trustee
with or without cause, and appoint a successor trustee. If such removal is
without cause, the Grantor Trust Holder shall be responsible for making
satisfactory arrangements for compensation of the successor trustee.
No service charge will be made for any such registration of transfer
or exchange, but the Grantor Trustee or the Certificate Registrar may require
payment from the Grantor Trust Holder of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
The Depositor, the Grantor Trustee and the Certificate Registrar, and
any agent of the Depositor, the Grantor Trustee or the Certificate Registrar,
may treat the Person in whose name this Grantor Trust Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Grantor
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement in respect of the Grantor
Trust Certificate and the Grantor Trust created thereby shall terminate only
upon the liquidation of all the Home Loans or the Majority Residual Interest
Holders' purchase of all the Home Loans pursuant to Section 11.02 of the Sale
and Servicing Agreement and the termination of the Indenture; PROVIDED, HOWEVER,
that the Trust Fund will in no event continue beyond the expiration of 21 years
from the death of the last survivor of the descendants of Joseph P. Kennedy, the
late ambassador of the United States to the Court of St. James, living on the
date of the Agreement.
Unless this Grantor Trust Certificate has been countersigned by an
authorized officer of the Grantor Trustee, by manual signature, this Grantor
Trust Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the Grantor Trustee has caused this Grantor Trust
Certificate to be ______________________ duly executed as of the date set forth
below.
Dated:
U.S. BANK NATIONAL ASSOCIATION,
as Grantor Trustee
By: _____________________________________
Name:________________________________
Title: ______________________________
Countersigned:
U.S. BANK NATIONAL ASSOCIATION, as Grantor Trustee
By: ________________________________________________
Name:___________________________________________
Title:__________________________________________
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) _________________ unto _____________________________________________
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
(Please print or typewrite name and address including postal zip code
of assignee)
the beneficial interest evidenced by the within Grantor Trust Certificate and
hereby authorizes the transfer of registration of such interest to assignee on
the Certificate Register of the Grantor Trust.
I (We) further direct the Certificate Registrar to issue a new Grantor
Trust Certificate of a like Percentage Interest, to the above named assignee and
deliver such Grantor Trust Certificate to the following address:
- -----------------------------------------------------------------
Social Security or other Identifying Number of Assignee:
- -----------------------------------------------------------------
Dated:
-------------------------------------
Signature by or on behalf of assignor
-------------------------------------
Signature Guaranteed
<PAGE>
[DISTRIBUTION INSTRUCTIONS]
The assignee should include the following for purposes of
distribution:
Distributions shall be made, if the assignee is eligible to receive
distributions in immediately available funds, by wire transfer or otherwise, in
immediately available funds to
_________________________________________________________________ for the
account of ______________________________________________ account number
____________, or, if mailed by check, to
_____________________________________________________. Applicable statements
should be mailed to ----------------------
- ----------------------------------------------------------------.
This information is provided by ______________________, the assignee
named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT B
FORM OF INVESTMENT REPRESENTATION LETTER
U.S. Bank National Association
as Grantor Trustee and Certificate Registrar
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Structured Finance/Empire Funding 1999-1
Re: Transfer of Empire Funding Grantor Trust 1999-1,
Grantor Trust Certificate
Ladies and Gentlemen:
This letter is delivered pursuant to Section 4.02 of the Grantor Trust
Agreement dated as of April 1, 1998 (the "GRANTOR TRUST AGREEMENT"), by and
among PaineWebber Mortgage Acceptance Corporation IV, as Depositor,
ContiMortgage Corporation, as Servicer and Transferor, Empire Funding Corp., as
Transferor, California Lending Group, Inc., d/b/a United Lending Group, as
Transferor, and U.S. Bank National Association, as Grantor Trustee, on behalf of
the holders of Empire Funding Grantor Trust 1999-1 Grantor Trust Certificate
(the "GRANTOR TRUST CERTIFICATE"), in connection with the transfer by
_________________ (the "SELLER") to the undersigned (the "PURCHASER") of a 100%
Percentage Interest in the Grantor Trust Certificate. Terms used but not defined
herein shall have the meanings ascribed thereto in the Grantor Trust Agreement.
In connection with such transfer, the undersigned hereby represents
and warrants to you as follows:
[[For Institutional Accredited Investors] 1. The Purchaser is an
"institutional accredited investor" (an entity meeting the requirements of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as
amended (the "SECURITIES ACT")) and has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment in the Grantor Trust Certificate, and the Purchaser and
any accounts for which it is acting are each able to bear the economic risk of
the Purchaser's or such account's investment. The Purchaser is acquiring the
Grantor Trust Certificate purchased by it for its own account or for one or more
accounts (each of which is an "institutional accredited investor") as to each of
which the Purchaser exercises sole investment discretion. The Purchaser hereby
undertakes to reimburse the Grantor Trustee for any costs incurred by it in
connection with this transfer.]
[[For Qualified Institutional Buyers only] 1. The Purchaser is a
"qualified institutional buyer" within the meaning of Rule 144A ("RULE 144A")
promulgated under the Securities Act of 1933, as amended (the "SECURITIES ACT").
The Purchaser is aware that the transfer is being made in reliance on Rule 144A,
and the Purchaser has had the opportunity to obtain the information required to
be provided pursuant to paragraph (d)(4)(i) of Rule 144A.]
2. The Purchaser's intention is to acquire the Grantor Trust
Certificate (a) for investment for the Purchaser's own account or (b) for resale
to (i) "qualified institutional buyers" in transactions under Rule 144A, and not
in any event with the view to, or for resale in connection with, any
distribution thereof, or (ii) to "institutional accredited investors" meeting
the requirements of Rule 501(a)(1), (2), (3) or (7) of Regulation D promulgated
under the Securities Act, pursuant to any other exemption from the registration
requirements of the Securities Act, subject in the case of this clause (ii) to
(a) the receipt by the Certificate Registrar of a letter substantially in the
form hereof, (b) the receipt by the Certificate Registrar of an opinion of
counsel acceptable to the Certificate Registrar that such reoffer, resale,
pledge or transfer is in compliance with the Securities Act, (c) the receipt by
the Certificate Registrar of such other evidence acceptable to the Certificate
Registrar that such reoffer, resale, pledge or transfer is in compliance with
the Securities Act and other applicable laws, and (d) a written undertaking to
reimburse the Grantor Trust for any costs incurred by it in connection with the
proposed transfer. The Purchaser understands that the Grantor Trust Certificate
(and any subsequent Grantor Trust Certificate) has not been registered under the
Securities Act, by reason of a specified exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the Purchaser's investment intent (or intent to resell to
only certain investors in certain exempted transactions) as expressed herein.
3. The Purchaser acknowledges that the Grantor Trust Certificate (and
any Grantor Trust Certificate issued on transfer or exchange thereof) has not
been registered or qualified under the Securities Act or the securities laws of
any State or any other jurisdiction, and that the Grantor Trust Certificate
cannot be resold unless it is registered or qualified thereunder or unless an
exemption from such registration or qualification is available.
4. The Purchaser hereby undertakes to be bound by the terms and
conditions of the Grantor Trust Agreement in its capacity as an owner of the
Grantor Trust Certificate (the "GRANTOR TRUST HOLDER"), in all respects as if it
were a signatory thereto. This undertaking is made for the benefit of the
Grantor Trust, the Grantor Trustee, the Certificate Registrar and all Grantor
Trust Holders present and future.
5. The Purchaser will not sell or otherwise transfer any portion of
the Grantor Trust Certificate, except in compliance with Section 4.02 of the
Grantor Trust Agreement.
[Please make all payments due on the Grantor Trust Certificate:*
_____ (a) by wire transfer to the following account at a bank or
entity in New York, New York, having appropriate facilities
therefore:
Account number _________ Institution __________________
_____ (b) by mailing a check or draft to the following address:
_________________
* Please select (a) or (b).
_____________________________________________
_____________________________________________
_____________________________________________
Very truly yours,
_____________________________________________
[The Purchaser]
By: ________________________________________
Name:
Title:
Dated: ___________________ __, ____
Receipt hereby acknowledged:
____________________________________
