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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 (date of earliest event reported): July 12, 1995
PATTEN CORPORATION
------------------
(Exact name of registrant as specified in its charter)
Massachusetts 0-19292 03-0300793
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) file number) Identification number)
5295 Town Center Road, Boca Raton, Florida 33486
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(Address of principal executive offices) (Zip Code)
407-361-2700
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(Registrant's telephone number, including area code)
None
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On July 12, 1995, Patten Corporation (the "Company") and certain subsidiaries
of the Company sold, or otherwise absolutely transferred and assigned, $68.1
million aggregate principal amount of mortgage notes receivable (the "Mortgage
Pool") to Patten Receivables Finance Corporation X, a wholly-owned subsidiary
of the Company (the "Depositor"), and the Depositor sold the Mortgage Pool to
Patten Corporation REMIC Trust, Series 1995-1 (the "1995 REMIC Trust").
Simultaneous with the sale, the 1995 REMIC Trust issued four classes of
Adjustable Rate REMIC Mortgage Pass-Through Certificates (the "Certificates").
Each Certificate evidences a fractional undivided interest in the Mortgage
Pool. The Certificates were issued pursuant to the terms of a Pooling and
Servicing Agreement dated as of June 15, 1995 (the "Pooling Agreement") among
the Company, the Depositor, Patten Corporation REMIC Trust Series 1995-1 and
First Trust National Association, as trustee. The initial principal balance of
the Class A, Class B and Class C certificates were approximately $61.3 million,
$4.8 million and $2.0 million, respectively. The Class R Certificates have no
initial principal balance and do not bear interest. The Class A, Class B and
Class C Certificates bear interest at the lesser of (a) the weighted average of
the net mortgage interest rates of certain of the notes in the Mortgage Pool
less the servicing fee rate and trustee fee rate or (b) the London interbank
offered rate for six month United States dollar deposits plus a margin of 1.5%,
3.55% and 4.0%, respectively.
The 1995 REMIC Trust is comprised primarily of a pool of fixed and adjustable
rate first mortgage loans secured by property sold by the Company. The loans
comprising the Mortgage Pool were previously owned by the REMIC trust
established by the Company in 1992 (approximately $50.1 million principal
amount) or pledged by a receivables subsidiary, or the Company, to an
institutional lender (approximately $18.0 million principal amount).
Collections of principal and interest on the Mortgage Pool, net of certain
servicing and trustee fees, are remitted to Certificateholders on a monthly
basis. The proceeds of collections on the Mortgage Pool are distributed to the
Certificateholders in the order of priority specified in the Pooling Agreement.
The Class C and R Certificates are subordinated to the Class A and B
Certificates, as provided in the Pooling Agreement.
On July 12, 1995, the Depositor sold the Class A and Class B Certificates
issued under the Pooling Agreement to two institutional investors for aggregate
proceeds of approximately $66.1 million in a private placement transaction and
retained the Class C and Class R Certificates. The terms of the REMIC
financing were determined by arm's length negotiations between the parties. A
portion of the proceeds from the transaction was used to repay approximately
$12.8 million of outstanding debt. An additional $36.3 million was used to
retire securities previously sold pursuant to the Company's 1992 REMIC
transaction. The balance of the proceeds, after payment of transaction
expenses and fees, resulted in an increase of more than $15.8 million in the
Company's unrestricted cash.
The Company will be paid an annualized servicing fee of .5% of the scheduled
principal balance of those notes in the Mortgage Pool on which the periodic
payment of principal and interest is collected in full. Under the terms of the
Pooling Agreement, the Company has the obligation to repurchase or replace
mortgage loans in the Mortgage Pool with respect to which there was a breach of
the Company's representations and warranties contained in the Pooling Agreement
at the date of sale, which breach materially and adversely affects the rights
of Certificateholders. In addition, the Company, as servicer, is required to
make advances of delinquent payments to the extent deemed recoverable.
However, the certificates are not obligations of the Company, the Depositor or
any of their affiliates and the Company has no obligation to repurchase or
replace mortgage loans solely due to delinquency.
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A copy of the Pooling Agreement is attached hereto as Exhibit 19.2 and is
incorporated herein by reference. The foregoing description of the REMIC
financing is subject to, and qualified in its entirety by, reference to such
Exhibit.
The Certificates have not been, and will not be, registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the
United States absent registration or an applicable exemption from the
registration requirements.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit Description of Exhibit
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10 Pooling and Servicing Agreement dated as of
June 15, 1995 by and among Patten Corporation
REMIC Trust Series 1995-1, Patten Corporation,
Patten Receivables Finance Corporation and
First Trust National Association, as Trustee
99 Press Release dated July 13, 1995 issued by
Patten Corporation
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.
PATTEN CORPORATION
/s/ Alan L. Murray
-----------------------------
Date: July 27, 1995 Alan L. Murray
Treasurer and Chief Financial
Officer
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EXHIBIT 10
PATTEN CORPORATION REMIC TRUST, SERIES 1995-1
Issuer,
PATTEN CORPORATION
Individually
and as
Servicer,
PATTEN RECEIVABLES FINANCE CORPORATION X
Depositor
and
FIRST TRUST NATIONAL ASSOCIATION
Trustee
--------------------------
POOLING AND SERVICING AGREEMENT
Dated as of June 15, 1995
--------------------------
Adjustable Rate REMIC Mortgage Pass-Through Certificates,
Class A, Class B, Class C and Class R
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TABLE OF CONTENTS
<TABLE>
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Section Page
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ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.2 Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.3 Representations and Warranties of Patten . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.4 Execution, Countersignature and Delivery of Certificates . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.1 Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.2 Collection of Certain Mortgage Loan Payments; Collection Account; Certificate Account . . . . . . 46
Section 3.3 Collection of Taxes, Assessments and Other Items . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 3.4 Permitted Withdrawals from the Collection Account . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 3.5 Maintenance of Hazard Insurance; Property Protection Expenses . . . . . . . . . . . . . . . . . . 51
Section 3.6 Assumption and Modification Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 3.7 Realization upon Defaulted Mortgage Loans; Title and Management of REO Property . . . . . . . . . 52
Section 3.8 Trustee to Cooperate; Release of Mortgage Documents . . . . . . . . . . . . . . . . . . . . . . . 54
Section 3.9 Servicing Compensation; Payment of Certain Expenses by the Servicer . . . . . . . . . . . . . . . 54
Section 3.10 Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 3.11 Annual Independent Public Accountant's Servicing Report . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
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<TABLE>
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Section Page
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Section 3.12 Access to Certain Documentation and Information Regarding the Mortgage Loans . . . . . . . . . . . 56
Section 3.13 Maintenance of Certain Servicing Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 3.14 Preparation of Tax Returns and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 3.15 Trustee's Interest in the Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE IV
SERVICER'S CERTIFICATE; MONTHLY ADVANCES
Section 4.1 Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 4.2 Monthly Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 4.3 Reports of Foreclosures and Abandonment of Mortgaged Property . . . . . . . . . . . . . . . . . . 61
ARTICLE V
PAYMENTS AND STATEMENTS TO
CERTIFICATEHOLDERS
Section 5.1 Distributions; Accrual of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 5.2 Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 5.3 Determination of LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 6.2 Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.3 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 6.4 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
</TABLE>
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<TABLE>
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Section Page
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ARTICLE VII
PATTEN AND THE SERVICER
Section 7.1 Liability of Patten and the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 7.2 Merger or Consolidation of, or Assumption of the Obligations of, Patten and the
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 7.3 Limitation on Liability of Patten, the Servicer and Others . . . . . . . . . . . . . . . . . . . . 79
Section 7.4 Patten and the Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 7.5 Sale, Assignment or Delegation of Duties by Servicer . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE VIII
DEFAULT
Section 8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 8.2 Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 8.3 Notification to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
ARTICLE IX
THE TRUSTEE
Section 9.1 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 9.2 Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 9.3 Trustee Not Liable for Certificates or Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.4 Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.5 Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 9.6 Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 9.7 Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 9.8 Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 9.9 Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 9.10 Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 93
</TABLE>
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<TABLE>
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ARTICLE X
TERMINATION
Section 10.1 Termination Upon Repurchase by Patten or Liquidation of All Mortgage Loans . . . . . . . . . . . . 96
Section 10.2 Additional Termination Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE XI
REMIC ADMINISTRATION
Section 11.1 REMIC Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 11.2 REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 11.3 Modifications of Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 11.4 Prohibited Transactions and Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 11.5 Indemnification with Respect to Certain Taxes and Loss of REMIC Status . . . . . . . . . . . . . . 105
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Amendment of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 12.2 Recordation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 12.3 Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 12.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 12.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 12.6 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 12.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 12.8 Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 12.9 Reports to Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 12.11 Headings Not to Affect Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
</TABLE>
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EXHIBITS
Exhibit A - Form of Class A Certificate
Exhibit B - Form of Class B Certificate
Exhibit C - Form of Class C Certificate
Exhibit D - Form of Class R Certificate
Exhibit E - Mortgage Loan Schedule
Exhibit F - Schedule of Litigation
Exhibit G-1(a) - Form of Class R Affidavit (US Holder)
Exhibit G-1(b) - Form of Class R Affidavit (Foreign Holder)
Exhibit G-2(a) - Form of Class R Transferee's Letter (US Holder)
Exhibit G-2(b) - Form of Class R Transferee's Letter (Foreign
Holder)
Exhibit H - Form of Nonrecoverable Advance Certificate
Exhibit I-A - Form of Class A Transferee's Agreement
Exhibit I-B - Form of Class B Transferee's Agreement
Exhibit I-C - Form of Class C Transferee's Agreement
Exhibit J-1 - Form of Initial Certification
Exhibit J-2 - Form of Interim Certification
Exhibit J-3 - Form of Final Certification
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POOLING AND SERVICING AGREEMENT, dated as of June 15, 1995,
among PATTEN CORPORATION REMIC TRUST, SERIES 1995-1, as Issuer ("PRT"), PATTEN
CORPORATION, individually ("Patten") and as Servicer (the "Servicer"), PATTEN
RECEIVABLES FINANCE CORPORATION X, as depositor ("Depositor"), and FIRST TRUST
NATIONAL ASSOCIATION, as trustee (the "Trustee").
W I T N E S S E T H
In consideration of the mutual agreements herein contained,
PRT, Patten, the Servicer, the Depositor and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless
the context otherwise requires, shall have the meanings specified in this
Article:
Accepted Servicing Practices: As defined in Section 3.1.
Affiliate: When used with respect to any Person, any officer,
director or partner of such Person or any other Person which, directly or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such Person. For the purposes of this definition,
"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, relation to
individuals or otherwise and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all
amendments and supplements hereto.
Amount Available: As to any Remittance Date, an amount equal
to the sum (without duplication) of (i) the amount on deposit in the Collection
Account (not including any amounts therein due on or before the Cut-off Date)
and the Certificate Account as of the close of business on the Determination
Date related to such Remittance Date, (ii) any Monthly Advance, (iii)
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any Substitution Adjustment and (iv) the Purchase Price of any Defective
Mortgage Loan to be purchased pursuant to Section 2.3 hereof, less the sum of
(x) amounts collected on the Mortgage Loans but due in a Collection Period
subsequent to the Collection Period related to such Remittance Date and (y)
amounts permitted to be withdrawn from the Collection Account or the
Certificate Account pursuant to clauses (i)-(ix) and (xi) inclusive of Section
3.4 or clauses (i) and (iii) of Section 3.2, respectively.
Amount Held for Future Distribution: As to any Remittance
Date, the total of all amounts held in the Collection Account or in the
Certificate Account on the preceding Determination Date on account of (i)
Principal Prepayments and Liquidation Proceeds received subsequent to the
related Collection Period and (ii) Periodic Payments due subsequent to the
related Collection Period.
Appraised Value: With respect to any Mortgaged Property, the
sales price of such Mortgaged Property to the Obligor on the related Mortgage
Loan.
Assignment: With respect to each Mortgage that is not an
unrecorded Land Contract, (i) the original instrument of assignment, recorded
in the real estate records of the appropriate public office in which the
related Mortgage is recorded, of each Mortgage made by the mortgagee thereunder
to the Trustee or, if such original instrument of assignment has not yet been
so recorded or returned to the Trustee, the original instrument of assignment
or a copy thereof certified by the Depositor to be a true and correct copy
thereof, and (ii) if applicable, each original intervening instrument of
assignment of such Mortgage made by each mortgagee thereunder, showing a chain
of title from the original mortgagee thereunder to the mortgagee that is
transferring such Mortgage to the Trustee as set forth in clause (i) above, or,
if any such original instrument of assignment has not yet been so recorded or
returned to the Trustee, a copy thereof certified by the Depositor to be a true
and correct copy thereof; each such instrument of assignment may be a blanket
assignment covering more than one Mortgage to the extent permitted by
applicable law. Any certification referred to in clauses (i) or (ii) above may
be in the form of one blanket certification delivered to the Trustee with
respect to the documents referred to therein.
Base Principal Distribution Amount: For any Remittance Date,
an amount equal to the sum (without duplication) of (i) the
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aggregate payments in respect of principal received on or with respect to the
Mortgage Loans, whether (A) paid by the Obligor thereunder, (B) paid by Patten
with respect to any Mortgage Loan repurchased pursuant to this Agreement or (C)
advanced by the Servicer on the Mortgage Loans, in each such case including all
scheduled principal payments, Insurance Proceeds and Net Liquidation Proceeds,
any Substitution Adjustment and the principal portion of the Purchase Price of
any Defective Mortgage Loan repurchased by Patten, to the extent that such
amounts are included in the Amount Available for such Remittance Date,
provided, that the Base Principal Distribution Amount for such Remittance Date
shall not include any Unscheduled Payments and (ii) the dollar amount of all
Realized Losses on the Mortgage Loans incurred during the preceding Collection
Period.
Bi-Weekly Mortgage Loan: Any Mortgage Loan (other than a
Current Market Rate Loan) that provides for the payment of Periodic Payments
once every two weeks.
Business Day: Any day on which each of the Trustee, the
Servicer and commercial banks in New York, New York and Boca Raton, Florida, is
open for the purpose of conducting a commercial banking business.
Certificate: Any one of the Class A Certificates, Class B
Certificates, Class C Certificates or Class R Certificates.
Certificate Account: The Eligible Account or Accounts created
and maintained with the Trustee pursuant to Section 3.2(c) and collectively
entitled "First Trust National Association, as trustee for the benefit of the
holders of Patten Corporation REMIC Trust, Series 1995-1, Adjustable Rate REMIC
Mortgage Pass-Through Certificates" or other substantially similar title which
begins "First Trust National Association, as trustee."
Certificateholder or Holder: The Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purpose of the taking of any action under Article VIII, or giving any
consent pursuant to this Agreement, any Certificate registered in the name of
Patten or any Affiliate thereof shall be deemed not to be outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
take any such action or to effect any such consent has been obtained, provided,
however, that, if any such Person (including Patten or any Affiliate thereof)
owns 100% of the
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Percentage Interests evidenced by a Class of Certificates, such Certificates
shall be deemed to be outstanding for purposes of any provision hereof that
requires the consent of the Holders of Certificates of a particular Class as a
condition to the taking of any action hereunder.
Certificate Register and Certificate Registrar: The register
maintained pursuant to, and the registrar provided for in, Section 6.2.
Class: All certificates whose form is identical except for
variations in Percentage Interest.
Class A Certificate: Any one of the Certificates signed and
countersigned by the Trustee in substantially the form set forth in Exhibit A
hereto.
Class A Certificateholder: The registered holder of a Class A
Certificate.
Class A Cross-Over Remittance Date: Any Remittance Date for
which:
(a)(i) the Subordination Percentage is at least 20.0% and (ii) no
more than 7.0% of the Mortgage Loans by Principal Balance are 61 or more days
delinquent, in foreclosure or are REO Properties and (iii) cumulative Realized
Losses on the Mortgage Loans do not exceed 2.0% of the Cut-off Date Pool
Principal Balance; or
(b)(i) the Subordination Percentage is at least 25.0% and (ii) no more
than 7.5% of the Mortgage Loans by Principal Balance are 61 or more days
delinquent, in foreclosure or are REO Properties and (iii) cumulative Realized
Losses on the Mortgage Loans do not exceed 2.5% of the Cut-off Date Pool
Principal Balance.
Class A Pass-Through Rate: During each Interest Accrual
Period, a rate per annum equal to the lesser of (a) 1.50% in excess of LIBOR
and (b) the weighted average of the Net Mortgage Interest Rates of the Mortgage
Loans, other than the Current Market Rate Loans, in effect for the latest
Installment Due Date for such Mortgage Loans occuring during such Interest
Accrual Period. Interest at the Class A Pass-Through Rate shall be calculated
on the basis of a 360-day year consisting of twelve, 30-day months.
Class A Percentage: For any Remittance Date, the greater of
(a) the percentage equivalent, not to exceed 100%, of
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a fraction, the numerator of which is the Class A Principal Balance as of the
close of business on the preceding Remittance Date and the denominator of which
is the aggregate of the Class A, Class B and Class C Principal Balances as of
the close of business on such preceding Remittance Date (or, in each case, as
of the Cut-off Date for the first Remittance Date) or (b) the percentage
equivalent, not to exceed 100%, of a fraction, the numerator of which is the
Class A Principal Balance as of the close of business on the next preceding
Remittance Date and the denominator of which is the aggregate outstanding
Principal Balance of the Mortgage Loans as of the close of business on such
next preceding Remittance Date (or, in each case, as of the Cut-off Date for
the first Remittance Date).
Class A Principal Balance: As of the Closing Date,
$61,296,000. As of any Remittance Date, the Class A Principal Balance as of
the Closing Date plus all interest accrued thereon that has not been paid to
the Class A Certificateholders and has been added to principal pursuant to
Section 5.1 up to and including such Remittance Date, less all amounts
distributed to the Holders of the Class A Certificates on account of principal
up to and including such Remittance Date.
Class A Principal Distribution Amount: For each Remittance
Date, the sum of (a) the product of (i) the Class A Percentage and (ii) the
Base Principal Distribution Amount, (b) the Class A Unscheduled Principal
Distribution Amount and (c) any portion of the Class A Principal Distribution
Amount for any previous Remittance Date which was not paid to the Class A
Certificateholders pursuant to Section 5.1 and remains unpaid as of such
Remittance Date.
Class A Unscheduled Principal Distribution Amount: (a) with
respect to each Remittance Date, other than a Class A Cross-Over Remittance
Date, principal equal to the aggregate of all Unscheduled Payments for such
Remittance Date; or
(b) with respect to any Class A Cross-Over Remittance Date,
the product of (i) the Class A Percentage and (ii) the aggregate of all
Unscheduled Payments for such Remittance Date.
Class B Certificate: Any one of the Certificates signed and
countersigned by the Trustee in substantially the form set forth in Exhibit B
hereto.
Class B Certificateholder: The registered Holder of a Class B
Certificate.
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<PAGE> 12
Class B Pass-Through Rate: During each Interest Accrual
Period, a rate per annum equal to the lesser of (a) 3.55% in excess of LIBOR
and (b) the weighted average of the Net Mortgage Interest Rates of the Mortgage
Loans, other than the Current Market Rate Loans, in effect for the latest
Installment Due Date for such Mortgage Loans occuring during such Interest
Accrual Period. Interest at the Class B Pass-Through Rate shall be calculated
on the basis of a 360-day year consisting of twelve, 30-day months.
Class B Percentage: For any Remittance Date, the lesser of
(a) the greater of (i) the percentage equivalent, not to exceed 100%, of a
fraction, the numerator of which is the Class B Principal Balance as of the
close of business on the preceding Remittance Date and the denominator of which
is the aggregate of the Class A, Class B and Class C Principal Balances as of
the close of business on such preceding Remittance Date (or, in each case, as
of the Cut-off Date for the first Remittance Date) or (ii) the percentage
equivalent, not to exceed 100%, of a fraction, the numerator of which is the
Class B Principal Balance as of the close of business on the next preceding
Remittance Date and the denominator of which is the aggregate outstanding
Principal Balance of the Mortgage Loans as of the close of business on such
next preceding Remittance Date (or, in each case, as of the Cut-off Date for
the first Remittance Date); or (b) the percentage equivalent, not to exceed
100%, to (i) one minus (ii) a fraction, the numerator of which is the Class A
Principal Balance as of the close of business on the next preceding Remittance
Date and the denominator of which is the aggregate outstanding Principal
Balance of the Mortgage Loans as of the close of business on such preceding
Remittance Date (or, in each case, as of the Cut-off Date for the first
Remittance Date).
Class B Principal Balance: As of the Closing Date
$4,767,000. As of any Remittance Date, the Class B Principal Balance as of the
Closing Date plus all interest accrued thereon that has not been paid to the
Class B Certificateholders and has been added to principal pursuant to Section
5.1 up to and including such Remittance Date, less all amounts distributed to
the Holders of the Class B Certificates on account of principal up to and
including such Remittance Date.
Class B Principal Distribution Amount: For each Remittance
Date, the sum of (a) the product of (i) the Class B Percentage and (ii) the
Base Principal Distribution Amount, (b) the Class B Unscheduled Principal
Distribution Amount and (c) any portion of the Class B Principal Distribution
Amount for any
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<PAGE> 13
previous Remittance Date which was not paid to the Class B Certificateholders
pursuant to Section 5.1 and remains unpaid as of such Remittance Date.
Class B Unscheduled Principal Distribution Amount: (a) with
respect to any Class A Cross-Over Remittance Date, the product of (i) the Class
B Percentage and (ii) the aggregate of all Unscheduled Payments for such
Remittance Date; or
(b) with respect to any other Remittance Date, zero.
Class C Certificate: Any one of the Certificates signed and
countersigned by the Trustee in substantially the form set forth in Exhibit C
hereto.
Class C Certificateholder: The registered Holder of a Class C
Certificate.
Class C Pass-Through Rate: During each Interest Accrual
Period, a rate per annum equal to the lesser of (a) 4.00% in excess of LIBOR
and (b) the weighted average of the Net Mortgage Interest Rates of the Mortgage
Loans, other than the Current Market Rate Loans, in effect for the latest
Installment Due Date for such Mortgage Loans occuring during such Interest
Accrual Period. Interest at the Class C Pass-Through Rate shall be calculated
on the basis of a 360-day year consisting of 12, 30-day months.
Class C Percentage: For any Remittance Date, (a) 100% minus
(b) the sum of the Class A Percentage and the Class B Percentage for such
Remittance Date.
Class C Principal Balance: As of the Closing Date
$2,044,028.82. As of any Remittance Date, the Class C Principal Balance as of
the Closing Date plus all interest accrued thereon that has not been paid to
the Class C Certificateholders and has been added to principal pursuant to
Section 5.1 up to and including such Remittance Date, less all amounts
distributed to the Holders of the Class C Certificates on account of principal
up to and including such Remittance Date.
Class C Principal Distribution Amount: For each Remittance
Date, the sum of (a) the product of (i) the Class C Percentage and (ii) the
Base Principal Distribution Amount, (b) the Class C Unscheduled Principal
Distribution Amount and (c) any portion of the Class C Principal Distribution
Amount for any previous Remittance Date which was not paid to the Class C
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<PAGE> 14
Certificateholders pursuant to Section 5.1 and remains unpaid as of the subject
Remittance Date.
Class C Unscheduled Principal Distribution Amount: (a) with
respect to any Class A Cross-Over Remittance Date, the product of (i) the Class
C Percentage and (ii) the aggregate of all Unscheduled Payments for such
Remittance Date; or
(b) with respect to any other Remittance Date, zero.
Class Principal Balance: Any of the Class A, Class B or Class
C Principal Balances.
Class R Certificate: Any one of the Certificates signed and
countersigned by the Trustee in substantially the form set forth in Exhibit D
hereto.
Class R Certificateholder: The registered Holder of a Class R
Certificate.
Closing Date: July 12, 1995.
Code: The Internal Revenue Code of 1986, as amended, any
successor statutes thereto, and applicable U.S. Department of Treasury
regulations issued pursuant thereto in temporary or final form and proposed
regulations thereunder, to the extent that, by reason of their proposed
effective date, such proposed regulations would apply to the Trust Fund.
Collection Account: The Eligible Account or Accounts created
and maintained pursuant to Section 3.2(b) and collectively entitled "First
Trust National Association, as trustee for the benefit of the holders of Patten
Corporation REMIC Trust, Series 1995-1, Adjustable Rate REMIC Mortgage
Pass-Through Certificates" or other substantially similar title which begins
"First Trust National Association, as trustee."
Collection Period: With respect to any Remittance Date, the
period commencing on the 16th day of the second month preceding the month of
such Remittance Date and ending on the 15th day of the month immediately
preceding the month of such Remittance Date.
Corporate Trust Office: The corporate trust office of the
Trustee in Minneapolis or St. Paul, Minnesota, at which at any particular time
its corporate trust business shall be administered, which office at the date of
the execution of this Agree-
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<PAGE> 15
ment is located at 180 East 5th Street, St. Paul, Minnesota 55101.
Current Index: As to any adjustable-rate Mortgage Loan, a
value of the applicable Index in effect no more than three months prior to the
Rate Adjustment Date for such Mortgage Loan.
Current Market Rate Loan: An adjustable-rate Mortgage Loan on
which the holder of the Mortgage Note has the right to adjust the interest rate
payable under the Mortgage Note on each related Rate Adjustment Date to an
annual rate not to exceed the most recent average, effective mortgage rate for
all homes and all major lender types as computed by the successor to the
Federal Home Loan Bank Board, provided that the minimum adjustment shall be 1/4
of 1% and the maximum adjustment shall be 3% during each one year period and
provided further that the rate of interest may not be increased to a rate
greater than 5% above the initial rate on the Mortgage Loan over the first 10
years of the term of the Mortgage Note.
Cut-off Date: June 15, 1995.
Cut-off Date Pool Principal Balance: The aggregate of the
Cut-off Date Principal Balances of the Mortgage Loans.
Cut-off Date Principal Balance: As to any Mortgage Loan, the
unpaid principal balance thereof on the Cut-off Date, excluding all payments of
principal due on or before the Cut-off Date whether or not received on or
before the Cut-off Date, but before giving effect to Periodic Payments of
principal due after the Cut-off Date but received on or before the Cut-off
Date.
Defective Mortgage Loan: Any Mortgage Loan which is required
to be replaced by a Qualified Replacement Mortgage Loan or Loans or repurchased
by Patten pursuant to Sections 2.2 and 2.3.
Depositor: Patten Receivables Finance Corporation X, a
Delaware corporation.
Determination Date: With respect to any Remittance Date, the
sixth Business Day prior thereto.
Development: Any parcel of land some or all of which is
mortgaged to secure a Mortgage Loan.
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<PAGE> 16
Disqualified Organization: Any of (i) the United States, (ii)
any state or political subdivision thereof, (iii) any foreign government, (iv)
any international organization, (v) any agency or instrumentality of any of the
foregoing, (vi) any tax-exempt organization (other than a cooperative described
in Section 521 of the Code) which is exempt from the tax imposed by Chapter 1
of the Code unless such organization is subject to the tax imposed by Section
511 of the Code, (vii) any organization described in Section 1381(a)(2)(C) of
the Code, or (viii) any other entity designated as a Disqualified Organization
by relevant legislation amending the REMIC Provisions and in effect at or
proposed to be effective as of the time of the determination. In addition, a
corporation will not be treated as an instrumentality of the United States or
of any state or political subdivision thereof if all of its activities are
subject to tax and a majority of its board of directors is not selected by such
governmental unit. The terms "United States" and "international organization"
shall have the meanings set forth in Section 7701 of the Code.
Eligible Account: An account that is either (i) maintained
with a depository institution or trust company the long-term unsecured debt
obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the debt
obligations of such holding company) have been rated by a Rating Organization
in one of its two highest rating categories or (ii) a trust account or accounts
maintained with a federal or state chartered depository institution or trust
company with trust powers acting in its fiduciary capacity, provided, however,
that if the trust account is maintained with a state chartered depository
institution, the long-term unsecured debt obligations of such institution are
rated by a Rating Organization in one of its four highest rating categories.
ERISA: The Employee Retirement Income Security Act of 1974,
as amended.
Event of Default: As defined in Section 8.1.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
Full Floating Loan: An adjustable rate Mortgage Loan on which
the Mortgage Interest Rate adjusts simultaneously with any change in the
underlying Index, which may occur more frequently than adjustments to its
Periodic Payment.
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<PAGE> 17
Gross Margin: With respect to the adjustable-rate Mortgage
Loans other than the Current Market Rate Loans, the amount set forth in each
related Mortgage Note which is added to the Index on each Rate Adjustment Date
to arrive at the Mortgage Interest Rate for each such Mortgage Loan, subject to
any Periodic Rate Cap or Lifetime Rate Cap. The parties acknowledge that the
applicable Gross Margin on certain Mortgage Loans may change from that in
effect on the Cut-off Date in certain circumstances.
Independent: When used with respect to any specified Person
means such a Person who (i) is in fact independent of Patten, (ii) does not
have any material indirect financial interest in Patten or in any Affiliate
thereof, and (iii) is not connected with Patten as an officer, employee,
promoter, trustee, partner, director or person performing similar functions.
Initial Purchasers: The initial purchasers of the class A
Certificates and Class B Certificates from the Depositor.
Index: With respect to the adjustable-rate Mortgage Loans
other than the Current Market Rate Loans, the applicable index set forth in
each related Mortgage Note which is added to the Gross Margin on each Rate
Adjustment Date to arrive at the Mortgage Interest Rate for each such Mortgage
Loan, subject to any Periodic Rate Cap or Lifetime Rate Cap.
Installment Due Date: As to each Mortgage Loan, the date set
forth on the related Mortgage Note as the date on which a Periodic Payment is
due.
Insurance Proceeds: Proceeds paid by any insurer pursuant to
any insurance policy covering a Mortgage Property and any insurance policy
required to be maintained by the Servicer pursuant to Section 3.5.
Interest Accrual Period: With respect to any Remittance Date,
the period beginning on the 15th day of the second month preceding the month of
such Remittance Date and ending on the 14th day of the month next preceding the
month of such Remittance Date.
Land Contract: An agreement for deed, land contract for deed,
real estate purchase agreement, purchase and sale agreement, contract for deed
or similar conditional land sales agreement, executed by Patten or an
Affiliate, as vendor, and a purchaser of the property, as vendee.
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<PAGE> 18
Land Contract Deed: A deed executed by Patten (or an
Affiliate thereof if such Affiliate currently holds title to a Mortgaged
Property subject to a Land Contract) in favor of the Trustee, with respect to
each Mortgaged Property related to a Mortgage Loan evidenced by a Land
Contract, conveying the fee simple interest in such Mortgaged Property to the
Trustee, subject to the rights of the Obligor under the related Land Contract.
LIBOR: The London interbank offered rate for six-month United
States dollar deposits established by the Servicer on each Determination Date
pursuant to Section 5.3.
Lifetime Rate Cap: As to each adjustable-rate Mortgage Loan,
the lesser of (i) the rate, if any, set forth as such on the related Mortgage
Note or (ii) the highest rate permitted by applicable law.
Liquidated Mortgage Loan: As to any Remittance Date, any
defaulted Mortgage Loan as to which the Servicer has determined during the
preceding Collection Period that all amounts which it expects to recover from
or on account of such Mortgage Loan have been recovered.
Liquidation Expenses: Reasonable and customary expenses
incurred by the Servicer in connection with the liquidation of any defaulted
Mortgage Loan or property acquired in respect thereof, including, without
limitation, legal fees and expenses, any unreimbursed amount expended by the
Servicer pursuant to Sections 3.5 and 3.7 respecting the related Mortgage Loan
(to the extent such amount is reimbursable pursuant to Section 3.5 or 3.7, as
the case may be), any commissions and advertising expenses, any and all accrued
and unpaid Servicing Fees and any unreimbursed expenditures for real property
taxes or for property restoration or preservation relating to the real property
that secured such Mortgage Loan.
Liquidation Proceeds: Amounts received by the Servicer as a
result of condemnation awards or similar payments (to the extent the same are
not required to be paid to the related Obligor pursuant to law or the terms of
the applicable Mortgage) and amounts received in connection with the
liquidation of defaulted Mortgage Loans or property acquired in respect
thereof, whether through trustee's sale, foreclosure sale or otherwise, other
than amounts required to be paid to the Obligor pursuant to law or the terms of
the applicable Mortgage.
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<PAGE> 19
Lot: A legally subdivided piece, parcel or tract of land in a
Development, which is mortgaged to secure a Mortgage Loan or is subject to a
Land Contract.
Loan-to-Value Ratio: As of any date, the fraction, expressed
as a percentage, the numerator of which is the then unpaid Principal Balance of
a particular Mortgage Loan and the denominator of which is the Appraised Value.
Monthly Advance: With respect to a Mortgage Loan and any
Determination Date, any advance made by the Servicer pursuant to Section 4.2,
the amount of which shall be equal to any installments of principal and
interest (less, in each case, the Servicing Fee) on such Mortgage Loan which
(x) were due after the Cut-off Date, were delinquent as of the end of the
related Collection Period and had not been received as of the close of business
on such Determination Date and (y) were not the subject of a previous Monthly
Advance, which advance is not determined by the Servicer to be a Nonrecoverable
Advance.
Mortgage: The mortgage, deed of trust, contract right,
security agreement and all agreements and other documents securing a Mortgage
Note, which term shall include, unless expressly excluded or the context
otherwise clearly requires, a Land Contract.
Mortgage Documents: With respect to each Mortgage Loan, (a)
except with respect to a Mortgage Loan evidenced by a Land Contract, the
indebtedness of the Obligor under which is not evidenced by a separate Mortgage
Note, the original Mortgage Note executed by the Obligor, endorsed by the
current holder thereof to the order of the Trustee, without recourse,
representation or warranty express or implied (except, to the extent the holder
is Patten, as provided in this Agreement), and including all intervening
endorsements of the Mortgage Note showing a complete chain of title from the
original holder thereof to the holder so endorsing to the order of the Trustee,
(b) the Mortgage executed by the Obligor (which shall be either the original
recorded Mortgage or, if the original recorded Mortgage is retained by the
public recording office or has been lost as certified by an officer of the
Depositor, then a copy of such recorded Mortgage with evidence of recordation
in the public recording office, or, if the original Mortgage has not yet been
recorded, a copy thereof certified by the Depositor to be a true and correct
copy thereof, provided that the original Mortgage has been delivered to the
appropriate recording office for recordation or, in the case of a Land
Contract, will be so delivered in accordance with
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<PAGE> 20
Section 2.1) and, has been endorsed or assigned by the current holder thereof
to the Trustee, without recourse, representation or warranty express or implied
(except, to the extent the holder is Patten, as provided in this Agreement),
and including all intervening endorsements or assignments of the Land Contract
showing a complete chain of title from the original holder thereof to the
holder so endorsing or assigning to the order of the Trustee (or will be so
endorsed or assigned in accordance with Section 2.1), (c) except with respect
to Mortgage Loans evidenced by an unrecorded Land Contract, the Assignment, (d)
the original of all guaranties or other documentation, if any, of which a
Responsible Officer of the Trustee has been notified in writing by an officer
of the Depositor whereby the indebtedness evidenced by the Mortgage Note has
been guaranteed by any Person other than the maker thereof or otherwise
modified by any Person, (e) the original of all assumption and modification
agreements, if any, (f) the title insurance policy with respect to such
Mortgage, if any, and (g) in the case of a Land Contract, the Land Contract
Deed (which shall be either the original recorded Land Contract Deed or, if the
original recorded Land Contract Deed is retained by the public recording office
or has been lost as certified by an officer of the Depositor, then a copy of
such recorded Land Contract Deed with evidence of recordation in the public
recording office, or, if the original Land Contract Deed has not yet been
recorded, a copy thereof certified by the Depositor to be a true and correct
copy thereof, provided that the original Land Contract Deed has been delivered
to the appropriate recording office for recordation or will be so delivered in
accordance with Section 2.1). Any certification referred to in or delivered
pursuant to clauses (b), (c) or (g) above may be in the form of one blanket
certification delivered to the Trustee with respect to the documents referred
to therein.
Mortgage Interest Rate: With respect to any Mortgage Loan and
Installment Due Date, the per annum rate of interest applicable to the Periodic
Payment due on such Installment Due Date.
Mortgage Loan: Each Mortgage and Mortgage Note (except with
respect to Land Contracts not having a related Mortgage Note) transferred and
assigned to and held by the Trustee pursuant to this Agreement and which are
listed on the Mortgage Loan Schedule from time to time.
Mortgage Loan Schedule: As of any date of determination, the
schedule of Mortgage Loans which are included in the Trust Fund, as such
schedule may be amended to delete any Mort-
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<PAGE> 21
gage Loans repurchased pursuant to the terms hereof or paid in full and to
include any Qualified Replacement Mortgage Loans deposited into the Trust Fund.
The initial schedule of Mortgage Loans as of the Cut-off Date is attached
hereto as Exhibit E, such schedule setting forth the following information as
to each Mortgage Loan: (i) the customer loan number; (ii) the Obligor's name,
address, city and state; (iii) the county (or other recording jurisdiction) and
state of the Mortgaged Property; (iv) the frequency of scheduled payments
(bi-weekly or monthly); (v) the Appraised Value of the Mortgaged Property; (vi)
the original amount financed by the Obligor; (vii) the Cut-off Date Principal
Balance; (viii) the principal and interest due on the Mortgage Loan on the next
Installment Due Date; (ix) the current Mortgage Interest Rate; (x) the date the
Mortgage was originated; (xi) the next Installment Due Date; (xii) the original
amortization term; (xiii) the remaining amortization term; (xiv) the type of
Mortgage Loan (fixed, adjustable or Current Market Rate); (xv) the Index used
to determine the interest rate, if applicable; and (xvi) the Gross Margin used
to determined the interest rate, if applicable.
Mortgage Note: The note or other evidence of indebtedness
evidencing the indebtedness of an Obligor under a Mortgage Loan.
Mortgaged Property: The fee simple interest in real property
securing a Mortgage Note or subject to a Land Contract.
Net Liquidation Proceeds: The amount derived by subtracting
from the Liquidation Proceeds of any defaulted Mortgage Loan the related
Liquidation Expenses.
Net Mortgage Interest Rate: As to any Mortgage Loan, other
than a Bi-Weekly Mortgage Loan, the Mortgage Interest Rate thereon minus the
Servicing Fee Rate and the Trustee Fee Rate. The Net Mortgage Interest Rate
for any Bi-Weekly Mortgage Loan for any Collection Period shall equal twelve
times the sum of the interest portions of the last Periodic Payment due on such
Bi-Weekly Mortgage Loan in such Collection Period, expressed as a percentage of
the Principal Balance of such Bi-Weekly Mortgage Loan as of the beginning of
such Collection Period, less the Servicing Fee Rate and the Trustee Fee Rate.
Nondisqualification Opinion: An opinion of Independent
counsel that a contemplated action will neither cause the Trust REMIC to fail
to qualify as a REMIC at any time that Class A, Class B or Class C Certificates
are outstanding nor cause a "pro-
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<PAGE> 22
hibited transaction" or "prohibited contribution" tax to be imposed on the
Trust REMIC.
Nonrecoverable Advance: Any portion of a Monthly Advance
previously made or proposed to be made in respect of a Mortgage Loan which has
not been previously reimbursed to the Servicer and which, in the sole
determination of the Servicer, will not or, in the case of a proposed Monthly
Advance, would not be ultimately recoverable from Liquidation Proceeds or other
recoveries in respect of the related Mortgage Loan. The determination by the
Servicer that it has made a Nonrecoverable Advance or that any proposed
advance, if made, would constitute a Nonrecoverable Advance, shall be evidenced
by an Officers' Certificate of the Servicer substantially in the form of
Exhibit H hereto delivered to the Trustee and detailing the reasons for such
determination.
Obligor: All Persons obligated to make payments with respect
to a Mortgage Loan (including the vendee/purchaser under a Land Contract).
Officers' Certificate: A Certificate signed by the Chairman
of the Board, the President, a Vice President or the Chief Financial Officer,
and co-signed by the Clerk, one of the Assistant Clerks, the Secretary or one
of the Assistant Secretaries, the Treasurer or one of the Assistant Treasurers
of a Person and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel acceptable
to the Trustee.
Ownership Interest: As to any Certificate, any ownership
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial.
Outstanding Mortgage Loan: As to any Installment Due Date, a
Mortgage Loan that was not the subject of a Principal Prepayment in Full prior
to such Installment Due Date, that did not become a Liquidated Mortgage Loan
prior to such Installment Due Date and was not repurchased prior to such
Installment Due Date pursuant to Section 2.3.
Overcollateralization Percentage: As to any Remittance Date,
the percentage equivalent to (a) one minus (b) a fraction, the numerator of
which is the aggregate of the Class A, Class B and Class C Principal Balances
and the denominator of which is
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<PAGE> 23
the aggregate Principal Balance of the Mortgage Loans (in each case determined
as of the close of business on the preceding Remittance Date).
Pass-Through Rate: Any of the Class A, Class B or Class C
Pass-Through Rates.
Patten: Patten Corporation, a Massachusetts corporation, or
its successor in interest or any successor under this Agreement as herein
provided.
Percentage Interest: As to any Class A, Class B or Class C
Certificate, the percentage interest evidenced thereby in the distributions
required to be made hereunder with respect to the related Class, and derived by
dividing the denomination of such Certificate by the aggregate denominations of
all Certificates of such Class. As to any Class R Certificate, the percentage
interest set forth on the face thereof.
Periodic Payment: As to any Mortgage Loan and Installment Due
Date, the payment due thereon in accordance with the amortization schedule at
the time applicable thereto without regard to any adjustment to such
amortization schedule by reason of any bankruptcy or similar proceeding or any
moratorium or similar waiver or grace period and assuming, in the case of a
defaulted Mortgage Loan which is not a Liquidated Mortgage Loan and as to which
title to the underlying Mortgaged Property has been acquired, that such
amortization schedule has continued in effect notwithstanding the related
foreclosure or other acquisition of title.
Periodic Rate Cap: The provision in certain of the
adjustable-rate Mortgage Notes that limits permissible changes in the Mortgage
Interest Rate on any Rate Adjustment Date.
Permitted Investments: At any time, any one or more of the
following obligations and securities:
(i) obligations of the United States or any
agency thereof, provided the timely payment of such obligations are
backed by the full faith and credit of the United States;
(ii) general obligations of or obligations
guaranteed by any state of the United States or the District of
Columbia receiving one of the two highest long-term debt ratings of a
Rating Organiza-
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<PAGE> 24
tion, or such lower rating as will not result in the downgrading or
withdrawal of the rating then assigned to the Class A Certificates by
the Rating Agency;
(iii) commercial or finance company paper
which is then rated in the highest rating category of a Rating
Organization, issue by an entity whose unsecured long-term debt
obligations are rated in one of the three highest rating categories of
a Rating Organization, or in each case such lower category as will not
result in the downgrading or withdrawal of the rating then assigned to
the Class A Certificates by the Rating Agency;
(iv) certificates of deposit, demand or time
deposits, federal funds or bankers' acceptances issued by any
depository institution or trust company incorporated under the laws of
the United States or of any state thereof and subject to supervision
and examination by federal and/or state banking authorities, provided
that the commercial paper and/or long-term unsecured debt obligations
of such depository institution or trust company (or in the case of the
principal depository institution in a holding company system, the
commercial paper or long-term unsecured debt obligations of such
holding company) are then rated in one of the two highest rating
categories for such securities of a Rating Organization, or such lower
categories as will not result in the downgrading or withdrawal of the
rating then assigned to the Class A Certificates by the Rating Agency;
(v) guaranteed reinvestment agreements issued
by any bank, insurance company or other corporation acceptable to the
Rating Agency at the time of the issuance of such agreements;
(vi) repurchase obligations with respect to
any security described in clauses (i) and (ii) above or any other
security issued or guaranteed by any agency or instrumentality of the
United States, in either case entered into with a depository
institution or trust company (acting as principal) described in clause
(iv) above;
(vii) overnight investments in units of
short-term taxable money market funds composed of
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<PAGE> 25
obligations with maturities not in excess of 30 days and backed by the
full faith and credit of the United States;
(viii) such other investments bearing interest
or sold at a discount acceptable to the Rating Agency as will not
result in the downgrading or withdrawal of the rating then assigned to
the Class A Certificates by such Rating Agency.
Permitted Transferee: As defined in Section 6.2(d).
Person: Any individual, corporation, partnership, joint
venture, bank, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
PRT: Patten Corporation REMIC Trust, Series 1995-1, the trust
formed pursuant to this Agreement to hold the Trust Fund and issue the
Certificates.
Prepayment Period: As to any Remittance Date, the Collection
Period ending in the month immediately preceding the month of such Remittance
Date.
Principal Balance: With respect to any Mortgage Loan on any
date of determination, the Cut-off Date Principal Balance thereof minus the sum
of (a) the principal portion of all Periodic Payments due during or prior to
the Collection Period (but after the Cut-off Date) immediately preceding such
date of determination, whether or not received during or prior to such
Collection Period, (b) all Principal Prepayments and all Insurance Proceeds and
Net Liquidation Proceeds (to the extent identified and applied by the Servicer
as recoveries of principal) received through the end of such Collection Period
and (c) any Realized Loss on such Mortgage Loan to the extent treated as a
principal loss and which is realized during or prior to such Collection Period.
Principal Prepayment: Any payment of principal on a Mortgage
Loan which is received in advance of its scheduled Installment Due Date.
Principal Prepayment in Full: Any Principal Prepayment of the
entire Principal Balance of the related Mortgage Loan.
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<PAGE> 26
Purchase Price: With respect to any Defective Mortgage Loan
repurchased pursuant to Section 2.3, an amount equal to the sum of (i) 100% of
the Principal Balance thereof at the end of the Collection Period prior to the
Collection Period in which such Mortgage Loan is purchased and (ii) unpaid
accrued interest thereon at the applicable Mortgage Interest Rate from the
Installment Due Date to which interest was last paid (or from the Cut-off Date
if no Periodic Payment has been received) through the last Installment Due Date
in the Collection Period preceding the Remittance Date on which the proceeds of
the related purchase are to be distributed to Certificateholders.
Qualified Replacement Mortgage Loan: A Mortgage Loan
substituted by Patten for a Defective Mortgage Loan which must, on the date of
such substitution, (i) have an outstanding Principal Balance, after deduction
of the principal portion of the monthly payment due in the month of
substitution (or in the case of a substitution of more than one Mortgage Loan
for a Defective Mortgage Loan, an aggregate Principal Balance), not in excess
of the Principal Balance of the Defective Mortgage Loan; (ii) have a Mortgage
Interest Rate not less than the Mortgage Interest Rate of the Defective
Mortgage Loan; (iii) have a remaining term to maturity not more than 30 years
after the second Remittance Date and not more than two years less or one year
more than the remaining term of the Defective Mortgage Loan; (iv) comply with
each representation and warranty set forth in Section 2.3(a); (v) have an
original Loan-to-Value Ratio not greater than that of the Defective Mortgage
Loan; (vi) have a Periodic Rate Cap no lower than the Defective Mortgage Loan,
if any; (vii) have a Lifetime Rate Cap no lower than that of the Defective
Mortgage Loan, if any; (viii) have a Gross Margin no smaller than that of the
Defective Mortgage Loan, if any; and (ix) have a Mortgage Interest Rate that is
based on the same Index as that of the Defective Mortgage Loan, if any.
Rate Adjustment Date: With respect to each adjustable-rate
Mortgage Loan, the date on which the Mortgage Interest Rate thereon may be
adjusted as set forth in each Mortgage Note.
Rating Agency: The Rating Organization that has rated the
Class A and the Class B Certificates at the request of Patten, or each of such
organizations if more than one, which shall initially be Duff & Phelps Credit
Rating Co.
Rating Organization: A nationally recognized statistical
rating organization.
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Realized Loss: With respect to any Liquidated Mortgage Loan,
the Principal Balance of such Mortgage Loan as of the date it became a
Liquidated Mortgage Loan, and accrued interest at the applicable Mortgage
Interest Rate on the declining Principal Balance thereof from the date interest
was last paid on such Mortgage Loan through the last Installment Due Date in
the Collection Period in which such Mortgage Loan became a Liquidated Mortgage
Loan, in each case remaining unpaid after application of the Net Liquidation
Proceeds thereof following final liquidation of such Mortgage Loan and/or all
property securing such Mortgage Loan.
Record Date: With respect to the Remittance Date in August
1995, July 20, 1995 and as to any other Remittance Date, the 14th day of the
month preceding the month of the related Remittance Date.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and regulations promulgated thereunder, as the foregoing may be in
effect from time to time and including any proposed legislation which, as
proposed, would have an effective date prior to enactment thereof and any
proposed regulations.
Remittance Certificate: A certificate completed by and
executed on behalf of the Trustee in accordance with Section 5.2.
Remittance Date: The first day of any month, beginning in
August 1995 or, if such first day is not a Business Day, the Business Day
immediately following.
REO Property: Any Mortgaged Property which is either (a)
acquired by the Trust Fund by foreclosure or acceptance of a deed in lieu of
foreclosure or (b) held by the Trustee subject to a Land Contract which is
cancelled or as to which the rights of the Obligor thereunder are otherwise
terminated.
Responsible Officer: When used with respect to the Trustee,
an officer of the Trustee assigned to the Corporate Trust Office, including any
Senior Vice President, Vice President, Assistant Vice President, any Assistant
Secretary, any Assistant Treasurer, any trust officer or any other officer of
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the 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.
Servicer: Patten, until a Successor Servicer shall have
become such pursuant to this Agreement, and thereafter "Servicer" shall mean
such successor.
Servicer Errors and Omissions Insurance Policy: means an
errors and omissions insurance policy maintained by the Servicer which names
the Trustee as a loss payee.
Servicer Fidelity Bond: means a bond or insurance policy
issued by an insurance company duly authorized and licensed to transact the
applicable insurance business and to write the insurance provided, and either
(i) whose claims paying ability is rated in one of the four highest rating
categories by a Rating Organization or (ii) whose selection as an insurer will
not adversely affect the rating of the Class A Certificates by the Rating
Agency, under which such insurer (a) agrees to indemnify the Servicer (subject
to standard exclusions) for all losses (less any deductible) sustained as a
result of any theft, embezzlement, fraud or other dishonest act on the part of
the Servicer's directors, officers or employees, (b) provides for limits of
liability under such bond for each director, officer or employee of not less
than an amount required by the Rating Agency and (c) names the Trustee as a
loss payee.
Servicer's Certificate: A certificate completed by and
executed on behalf of the Servicer in accordance with Section 4.1.
Servicing Fee: The fee the Certificateholders shall pay to
the Servicer, equal to the Servicing Fee Rate times the Principal Balance of
each Mortgage Loan as of each Installment Due Date for such Mortgage Loan.
Such fee shall either be retained by the Servicer from the Periodic Payments it
collects or withdrawn from the Collection Account monthly pursuant to Section
3.4. Such fee shall be payable only at the time of and with respect to those
Mortgage Loans for which payment is in fact made of the entire amount of the
Periodic Payments or, with respect to Liquidated Mortgage Loans, shall be
recoverable as Liquidation Expenses.
Servicing Fee Rate: 0.50% per annum.
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Servicing Officer: Any individual involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name appears
on a list of servicing officers furnished to the Trustee by the Servicer, as
such list may from time to time be amended.
Single Certificate: A Certificate of any Class that evidences
the smallest permissible denomination for such Class of Certificates, as
specified in Section 6.1.
60 Day Delinquent Mortgage Loan: Any Mortgage Loan which as
of the Cut-off Date had a Periodic Payment which remained unpaid for 60 or more
but less than 90 days.
Subordinate Certificates: Collectively, the Class B, Class C
and Class R Certificates.
Subordination Percentage: For any Remittance Date, the
percentage equivalent, not to exceed 100%, of the difference between (a) one
and (b) a fraction the numerator of which is the principal balance of the Class
A Certificates as of the close of business of the next preceding Remittance
Date and the denominator of which is the aggregate outstanding Principal
Balance of the Mortgage Loans as of such next preceding Remittance Date.
Substitution Adjustment: As of any Remittance Date, any
amount required to be deposited by Patten in the Collection Account on the
Business Day next preceding such Remittance Date pursuant to Section 2.3(e).
Successor Servicer: First Trust National Association or its
successor in interest, or such other party designated by the Trustee or the
Certificateholder, in accordance with Section 8.02(c) hereof.
30 Day Delinquent Mortgage Loan: Any Mortgage Loan which as
of the Cut-off Date had a Periodic Payment which remained unpaid for more than
30 but less than 60 days.
Transfer: Any direct or indirect transfer or sale of any
Ownership Interest in a Certificate.
Trustee: First Trust National Association, a national banking
association, and its successors and any corporation resulting from or surviving
any consolidation or merger to which it or its successors may be a party and
any successor trustee at the time serving as successor trustee hereunder.
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Trustee's Fee: The fee the Certificateholders shall pay to
the Trustee, equal to the aggregate with respect to all of the Mortgage Loans
of 0.055% per annum times the Principal Balance of each Mortgage Loan as of
each Installment Due Date for such Mortgage Loan. Such fee shall be withdrawn
from the Collection Account monthly pursuant to Section 3.4.
Trustee's Fee Rate: 0.055% per annum.
Trust Fund: The corpus of the trust created by this
Agreement, consisting of the Mortgage Loans (including without limitation all
Land Contracts and the rights of the seller/vendor, including all rights to
payment, thereunder), all payments on or collections in respect of the Mortgage
Loans due after the Cut-off Date, all Net Liquidation Proceeds, Insurance
Proceeds and Principal Prepayments received after the Cut-off Date, but not
including any amounts representing amounts due on or prior to the Cut-off Date,
such amounts as shall from time to time be held in the Collection Account and
the Certificate Account (to the extent provided for in this Agreement), the
insurance policies for which the Trustee is beneficiary or loss payee, if any,
relating to the Mortgaged Properties, any REO Property, and proceeds of all of
the foregoing.
Trust REMIC: The segregated pool of assets in the Trust Fund
designated as a REMIC pursuant to Section 11.1(a).
Uninsured Cause: Any cause of damage to Mortgaged Property
such that the complete restoration of such Mortgaged Property is not fully
reimbursable (less any applicable deductible) by the insurance policies
required to be maintained pursuant to Section 3.5.
Unscheduled Payments: With respect to any Remittance Date, the
aggregate of Principal Prepayments received during the related Prepayment
Period.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.1 Conveyance of Mortgage Loans. The Depositor,
concurrently with the execution and delivery of this Agreement, does hereby
sell, transfer, assign, set over and otherwise convey to the Trustee without
recourse, representation or warranty (except as provided herein) all the right,
title and interest of the Depositor in and to the Trust Fund, to have and to
hold, in trust, and the Trustee declares that, subject to the review provided
for in Section 2.2, it has received and shall hold the Trust Fund as Trustee,
in trust, for the benefit and use of the Holders of the Certificates and for
the purposes and subject to the terms and conditions set forth in this
Agreement.
In connection with such transfer and assignment, the Depositor
does hereby deliver to, and deposit with, the Trustee (with copies to the
Servicer) the Mortgage Documents.
Promptly following such transfer and assignment, the Trustee
shall release to the Servicer the unrecorded Assignments, the original Land
Contracts to the extent available, whether or not previously recorded, and, if
initially included in the Mort gage Documents delivered to the Trustee, the
Land Contract Deeds (while maintaining a copy of each thereof) delivered to the
Trustee. The Servicer shall hold the Assignments, Land Contracts and, if
applicable, Land Contract Deeds in trust for the benefit of Certificateholders.
The Servicer, at the expense of the Depositor, shall, within 45 days of the
Closing Date, or, with respect to recently originated Mortgage Loans as to
which the Servicer has not received, as of the Closing Date, recording
information for the related Mortgage, within 45 days of receipt of such
recording information, cause such Assignments, unrecorded Land Contracts (to
the extent an original was available) and, whether or not initially included in
the Mortgage Documents, the Land Contract Deeds, to be duly submitted for
recording in the name of the Trustee in the appropriate records depository for
the jurisdictions in which the Mortgaged Properties are located and shall cause
the receipt evidencing submission for recording and the Assignments, Land
Contracts and Land Contract Deeds after recordation to be delivered to the
Trustee promptly upon the release thereof to the Servicer. The Servicer shall
cause all Land Contracts, whether or not recorded, to be endorsed or assigned
to the Trustee in the manner described in the definition of "Mortgage
Documents" prior to returning such Land Contracts to
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the Trustee. If an original Land Contract is not available for recording as
provided above, then the Land Contract Deed with respect to the related
Mortgaged Property shall recite that such Deed is given subject to the rights
of the Obligor under such unrecorded Land Contract. All Land Contract Deeds
shall recite that the transferor is assigning all of its rights under the
related Land Contract. The Trustee shall hold legal title to the Mortgage
Loans as trustee for the benefit of the Certificateholders.
The ownership of the Mortgage Notes, the Mortgages and the
other Mortgage Documents is vested in the Trustee for the benefit of the
Certificateholders. The Depositor, Patten and the Servicer agree to take no
action inconsistent with the Trustee's ownership of the Mortgage Loans and to
promptly indicate to all inquiring parties that the Mortgage Loans have been
sold and to claim no ownership interest in the Mortgage Loans, other than in
connection with a repurchase or substitution of a Defective Mortgage Loan by
Patten.
The parties intend that the conveyance of the Depositor's
right, title and interest in and to the Mortgage Loans pursuant to this
Agreement shall constitute a purchase and sale and not a pledge of security for
a loan. However, if such conveyance is deemed to be a pledge for a loan, the
parties intend that the rights and obligations of the parties to such loan
shall be established pursuant to the terms of this Agreement, the Depositor
shall be deemed to have granted and the Depositor hereby grants to the Trustee
a first perfected priority security interest in all of the Depositor's right,
title and interest in, to and under the Trust Fund, all payments of principal
of or interest on such Mortgage Loans, all other payments made in respect of
such Mortgage Loans, and all proceeds thereof, to secure the obligations of the
Depositor to the Trustee under this Agreement, and this Agreement shall
constitute a security agreement under applicable law. If such conveyance is
deemed to be a loan and the trust created by this Agreement terminates prior to
the satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect, and the
Trustee shall be deemed to be the collateral agent for the benefit of such
Person.
Within 60 days after the Closing Date, Patten will send, or
cause to be sent, written notice to each Obligor of the sale, transfer and
assignment of the related Mortgage Loan to the Trustee, on behalf of the
Certificateholders.
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Section 2.2 Acceptance by Trustee. The Trustee acknowledges
receipt of the Mortgage Documents delivered pursuant to Section 2.1, subject to
the Trustee's review thereof under this Section 2.2, and declares that the
Trustee holds and will hold such documents in trust, upon the terms herein set
forth, for the use and benefit of the Certificateholders. The Trustee does not
have any actual knowledge of any adverse claims, liens or encumbrances on any
of the assets so delivered, including without limitation, federal tax liens or
liens arising under ERISA. The Trustee shall execute and deliver to Patten and
the Depositor on the Closing Date the Initial Certification in the form annexed
hereto as Exhibit J-1 to the effect that it has received the documents referred
to in the definition of "Mortgage Documents" pertaining to each Mortgage Loan
listed on the Mortgage Loan Schedule, subject to its further review of the
Mortgage Documents pursuant to Section 2.2 and provided that the Mortgage
Documents need not include the Land Contract Deeds for purposes of the Initial
Certification.
The Trustee agrees, for the benefit of Certificateholders, to
review the Mortgage Documents within 45 days after the Closing Date to
ascertain that (i) all the Mortgage Documents required to be delivered by
Section 2.1 have been executed and received, (ii) the Mortgages (including the
Land Contracts to the extent an original is available), Land Contract Deeds and
Assignments have been filed or recorded or, if certified copies of any
Mortgages, Land Contract Deeds or Assignments are delivered to the Trustee on
the Closing Date in accordance with the definition of "Mortgage Documents" or
"Assignment," that such certified copies have been received by the Trustee, and
(iii) such documents relate to the Mortgage Loans, and the Trustee shall
deliver to Patten, the Depositor and the Servicer (if other than Patten) an
Interim Certification, in the form annexed hereto as Exhibit J-2, to the
foregoing effect. In so doing the Trustee may rely on the purported due
execution and genuineness of any such document and on the purported genuineness
of any signature thereon. The Trustee shall have no responsibility for
reviewing any Mortgage Document except as expressly set forth in this Section
2.2. The Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments or certificates to independently
determine that they are genuine, enforceable or appropriate for the represented
purpose, whether the text of any assignment or endorsement is in proper or
recordable form (except, if applicable, to determine if the Trustee is the
assignee or endorsee or if the endorsement or assignment on the Mortgage Note
or Land Contract conforms to the requirements of the definition of "Mortgage
Documents"), whether any document
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has been recorded in accordance with the requirements of any applicable
jurisdiction, or to independently determine that any document has actually been
filed or recorded or that any document is other than what it purports to be on
its face.
Prior to the 9-month anniversary date of the Closing Date, the
Trustee shall deliver to Patten, the Depositor and the Servicer (if other than
Patten) a Final Certification in the form annexed hereto as Exhibit J-3
evidencing the completeness of the Mortgage Documents required to be delivered
pursuant to Section 2.1 and certifying that the Mortgages (including the Land
Contracts), Land Contract Deeds and Assignments have all been filed or
recorded.
If the Trustee finds any document constituting a part of the
Mortgage Documents not to have been executed, recorded, delivered or received
pursuant to the terms hereof or to be unrelated to the Mortgage Loans or to be
otherwise missing or defective (that is, mutilated, damaged, defaced,
incomplete, improperly dated, clearly forged or otherwise physically altered)
in any respect which materially and adversely affects the interests of the
Certificateholders, the Trustee shall promptly (and in any event within five
Business Days after such discovery) notify Patten thereof. Within 60 days from
the date it was notified of such omission or defect, Patten shall, at its
option, (i) cure such omission or defect in all material respects; (ii)
repurchase the Mortgage Loan in accordance with the provisions of Section 2.3;
or (iii) substitute in place of the related Mortgage Loan a Qualified
Replacement Mortgage Loan or Loans in accordance with the provisions of Section
2.3. It is understood and agreed that the obligation of Patten to cure (in the
manner provided above) any material defect in or omission of a constituent
document with respect to a Mortgage Loan shall constitute the sole remedy
respecting such defect or omission available to the Certificateholders or the
Trustee on behalf of Certificateholders.
Section 2.3 Representations and Warranties of Patten. Patten
hereby represents and warrants to the Trustee that:
(a) With respect to each individual Mortgage Loan as of the
Cut-off Date, or as of the date such Mortgage Loan is deposited in the Trust
Fund in the case of a Qualified Replacement Mortgage Loan:
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(1) The information set forth on the Mortgage
Loan Schedule is complete, true and correct
as of the Cut-off Date;
(2) Immediately prior to the transfer of such
Mortgage Loan to the Trustee, the Depositor
had good and marketable title to, or
beneficial ownership of, the Mortgage Note
and the Mortgage, and was the sole owner and
holder of the Mortgage Loan free and clear of
any and all liens, claims, encumbrances,
participation interests, equities, pledges,
charges or security interests of any nature
and had full right and authority, subject to
no interest or participation of, or agreement
with, any other party, to sell and assign the
same pursuant to this Agreement. The
Depositor has validly and effectively
transferred or caused to be transferred the
Mortgage Loan to the Trustee, free and clear
of any and all liens, claims, encumbrances,
participation interests, equities, pledges,
charges or security interests of any nature;
(3) With respect to Mortgages that are not Land
Contracts, the Mortgage securing such
Mortgage Loan has been duly recorded or
submitted for recording in the proper public
office and is a valid and enforceable first
lien on the fee simple interest in the
property therein described, and the Mortgaged
Property is free and clear of all
encumbrances and liens having priority over
the first lien of the Mortgage subject only
to taxes and assessments not yet due and
payable, and covenants, conditions and
restrictions, rights of way, easements and
other matters of public record as of the date
of recording of such Mortgage, such
exceptions appearing of record being
acceptable to mortgage lending institutions
generally; each Land Contract, to the extent
an original is available, and Land Contract
Deed has been duly recorded or submitted for
recording in the proper public office, or
will be so submitted in accordance with
Section 2.1, and the Land Contract Deed upon
recordation will be sufficient to convey to
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the Trustee the fee simple interest in the
property therein described, and such
Mortgaged Property is free and clear of all
encumbrances and liens having priority over
the fee interest of the Trustee subject only
to the rights of the Obligor under the
related Land Contract, taxes and assessments
not yet due and payable, and covenants,
conditions and restrictions, rights of way,
easements and other matters of public record
as of the date of recording of such Land
Contract Deed, such exceptions appearing of
record being acceptable to mortgage lending
institutions generally;
(4) The terms of the Mortgage Note and the
Mortgage have not been impaired, altered or
modified in any respect, except by a written
instrument which has been recorded, if
necessary to protect the interest of
Certificateholders and which has been
delivered to the Trustee, or except as is
otherwise reflected in the Mortgage Loan
Schedule;
(5) No instrument of release or waiver has been
executed in connection with the Mortgage
Loan, and no Obligor has been released, in
whole or in part, except in connection with
an assumption agreement which has been
delivered to the Trustee, except as is
otherwise reflected in the Mortgage Loan
Schedule;
(6) To the best of Patten's knowledge, there are
no defaults (other than as set forth in
Section 2.3(b)(5) or with respect to Mortgage
Loans which are delinquent 1-30 days) in
complying with the terms of the Mortgage, and
all taxes, governmental assessments,
insurance premiums, water, sewer and
municipal charges, leasehold payments or
ground rents which previously became due and
owing have been paid (it being understood
that Patten does not escrow for such
matters);
(7) There is no proceeding pending or, to the
best of Patten's knowledge, threatened for
the total or partial condemnation of the
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Mortgaged Property, nor is such a proceeding
currently occurring, and, to the best of
Patten's knowledge, such property is
undamaged by waste, fire, earthquake or earth
movement, windstorm, flood or other casualty,
so as to affect adversely the value of the
Mortgaged Property as security for the
Mortgage Loan;
(8) To the best of Patten's knowledge, there are
no mechanics' or similar liens or claims
which have been filed for work, labor or
material (and no rights are outstanding that
under law could give rise to such lien)
affecting the Mortgaged Property which are,
or may be, liens prior or equal to, or
coordinate with, the lien of the Mortgage, or
the fee interest of the Trustee in the case
of Mortgaged Properties subject to Land Con
tracts;
(9) All of the improvements which were included
for the purpose of determining the Appraised
Value of the Mortgaged Property lie wholly
within the boundaries and building
restriction lines of such property and do not
encroach upon easements burdening the
Mortgaged Property, and, to the best of
Patten's knowledge, no improvements on
adjoining properties encroach upon the
Mortgaged Property. The Mortgaged Property
fronts on and is contiguous to a public road
or easements or other legal rights benefit
the Mortgaged Property which allow access
thereto. The Mortgaged Property either has
all necessary permits and approvals for
ingress to and egress from the Mortgaged
Property over such public road or easements
or other legal rights benefit the Mortgaged
Property which allow access to such public
road;
(10) To the best of Patten's knowledge, no
improvement located on or being part of the
Mortgaged Property is in violation of any
applicable zoning law or regulation;
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(11) To the extent required under applicable law,
Patten and its Affiliates, or, to the best of
Patten's knowledge, each other mortgagee
under the Mortgage was authorized to transact
and do business in each jurisdiction in which
such authorization is necessary for Patten,
such Affiliates or such mortgagee to transact
and do business at all times when it held the
Mortgage Loan;
(12) The Mortgage Note and the related Mortgage
are genuine, and each is the legal, valid and
binding obligation of the maker thereof,
enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency
and other similar laws affecting the rights
of creditors generally, and to general
principles of equity. All parties to the
Mortgage Note and the Mortgage had legal
capacity to execute the Mortgage Note and the
Mortgage and each Mortgage Note and Mortgage
have been duly and properly executed by such
parties;
(13) Any and all requirements of any federal,
state or local law including, without
limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit
protection, equal credit opportunity or
disclosure laws applicable to the Mortgage
Loan have been complied with, and Patten
shall maintain in its possession evidence of
compliance with all such requirements;
(14) The proceeds, if any, of the Mortgage Loan
have been fully disbursed, there is no
requirement for future advances thereunder
and any and all requirements as to completion
of any on-site or off-site improvements and
as to disbursements of any escrow funds
therefor have been complied with. All costs,
fees and expenses incurred in making, or
closing or recording the Mortgage Loans were
paid or will be paid;
(15) Except as set forth in Section 2.3(b)(5) or
for Mortgage Loans which are delinquent 1-30
days, and except as is otherwise reflected in
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the Mortgage Loan Schedule, there is no
default, breach, violation or event of
acceleration existing under the Mortgage or
the related Mortgage Note and no event 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; and neither Patten
nor any of its Affiliates have waived any de
fault, breach, violation or event of
acceleration, except any default, breach,
violation or event of acceleration as may
have been previously cured by the related
Obligor;
(16) The Mortgage Loan is not subject to any right
of rescission, set-off, counterclaim or
defense, including the defense of usury, nor
will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render
either the Mortgage Note or the Mortgage
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 or
rescission, set-off, counterclaim or defense
has been asserted with respect thereto;
(17) Except in the case of Full Floating Loans,
the related Mortgage Note is payable in
self-amortizing installments of principal and
interest, with interest payable in arrears,
over an original term of not more than 30
years. The current Mortgage Interest Rate
borne by the related Mortgage Note (or in the
case of a Land Contract where there is no
separate Mortgage Note, by the Land Contract)
is not less than 6.13% and not greater than
18.90%. Except for a Current Market Rate Loan
(and subject to any floors and usury limits),
the Mortgage Interest Rate on an
adjustable-rate Mortgage Note is subject to
adjustment on each Rate Adjustment Date to a
new Mortgage Interest Rate equal to the sum
of the Current Index plus the Gross Margin,
subject to the limitations imposed by the
Periodic Rate Cap and Lifetime Rate Cap, if
any.
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Except for a Current Market Rate Loan, the
Gross Margin for an adjustable-rate Mortgage
Loan is not less than 0.0% or more than 9.9%.
With respect to an adjustable rate Mortgage
Loan, other than a Full Floating Loan, on
each Rate Adjustment Date, the Obligor's new
Periodic Payment with respect to each such
Mortgage Loan will be adjusted to an amount
equal to the payment which, when paid in
substantially equal installments during the
then remaining term of such Mortgage Loan,
would amortize fully the unpaid principal
balance of such Mortgage Loan at the then
applicable Mortgage Interest Rate. No such
Mortgage Loan other than a Full Floating Loan
contains terms or provisions that could
result in negative amortization. With
respect to the remaining adjustable-rate
Mortgage Loans, except as otherwise reflected
in the Private Placement Memorandum dated
July 12, 1995, the Obligor's Periodic Payment
with respect to each such Mortgage Loan will
be adjusted no less than annually to an
amount equal to the payment which, when paid
in substantially equal installments during
the then remaining term of such Mortgage
Loan, would amortize fully the unpaid
principal balance of such Mortgage Loan at
the then applicable Mortgage Interest Rate;
(18) The related Mortgage Note is not and has not
been secured by any collateral except the
lien of the corresponding Mortgage (including
the retention of title with respect to a Land
Contract), other than any guarantee of the
Mortgage Loan;
(19) The related Mortgage contains customary and
enforceable provisions which render the
rights and remedies of the holder thereof
adequate for the realization against the
Mortgaged Property of the benefits of the
security, including, (i) in the case of a
Mortgage designated as a deed of trust, by
trustee's sale and (ii) in all other cases,
by judicial foreclosure (or retention of
title in the case of a terminated Land Con-
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tract). There is no homestead or other
exemption available to the Mortgagor which
would interfere with the right to sell the
Mortgaged Property at a trustee's sale or the
right to foreclose the Mortgage or the right
to retain title in the case of a terminated
Land Contract;
(20) With respect to each Mortgage constituting 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 such Mortgage, and no
fees or expenses are or will become payable
by the Trustee or the Certificateholders to
the trustee under the deed of trust;
(21) The Mortgaged Property is located in the
state identified in the Mortgage Loan
Schedule and consists of either raw land, a
condominium or a one-family residence;
(22) The Mortgage Loan was underwritten in
accordance with Patten's then prevailing
customary and usual underwriting standards;
(23) There exist no deficiencies with respect to
escrow deposits and payments, if such are
required, for which customary arrangements
for repayment thereof have not been made, and
no escrow deposits or payments of other
charges or payments due Patten or any of its
Affiliates have been capitalized under the
Mortgage or the related Mortgage Note;
(24) The origination and collection practices used
by Patten and its Affiliates with respect to
the Mortgage Loan have been in all respects
legal, proper, prudent and customary in the
mortgage servicing business for mortgage
loans similar to the Mortgage Loans;
(25) The Mortgage Note, the Mortgage, the
Assignment and any other documents required
to be delivered pursuant to Section 2.1 with
respect to the Mortgage Loan have been
delivered to the Trustee;
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(26) Other than the Monthly Advance provided for
in Section 4.2, there is no obligation on the
part of Patten or any other Person to make
supplemental payments in addition to those
made by the Obligor or co-obligor or any
guarantor;
(27) There is no pledged account or other security
other than real estate securing the Obligor's
obligations other than any guarantee of the
Mortgage Loan. Neither Patten nor any
Affiliate thereof, including the Depositor,
has guaranteed the Mortgage Loan;
(28) No adjustable-rate Mortgage Loan contains a
provision allowing the related Obligor to
convert such Mortgage Loan into a fixed-rate
Mortgage Loan;
(29) The Mortgaged Property consists of an estate
in fee simple as evidenced by a recorded
deed, or a vendee's interest under a Land
Contract to which the fee simple interest of
the Trustee is subject, in real property and
improvements located on the Mortgaged
Property with such appurtenant and
indefeasible rights and easements as are
necessary for the legal operation, occupancy
and use thereof;
(30) No more than 3.25% of the Mortgage Loans (by
Cut-off Date Principal Balance) are secured
by Mortgaged Properties that are not covered
by a title insurance policy. With respect to
the remainder of the Mortgage Loans, either
the Development in which the Mortgaged
Property relating to the Mortgage Loan is
located is covered by an owner's title
insurance policy or the Mortgaged Property
relating to the Mortgage Loan is covered by a
lender's title insurance policy; each such
title insurance policy is in full force and
effect and will be in full force and effect
upon the consummation of transactions
contemplated by this Agreement; no claims
have been made under such title insurance
policy; full premiums for the policy,
endorsements or all special endorsements have
been paid; and no
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prior holder of the related Mortgage,
including Patten or any Affiliate thereof,
has done anything, by act or omission, or
possessed any knowledge of any matter, which
would impair or diminish the coverage of such
title insurance policy;
(31) Other than with respect to a 30 Day
Delinquent Mortgage Loan as specified in
Section 2.3(b)(5) or with respect to any
Mortgage Loan which is delinquent 1-30 days,
Patten has no actual knowledge of any
circumstances with respect to the Obligor,
the Mortgage, the Mortgaged Property or any
guarantor of any Mortgage Loan that can
reasonably be expected to cause such Mortgage
Loan to become delinquent;
(32) There is no current obligation on the part of
any person to make payments on behalf of the
Obligor in respect of the Mortgage Loan
except that there may be a guarantor who is
guaranteeing full and timely payment of the
Mortgage Loan until the maturity thereof. No
such guarantor has been released from such
guarantee and no such release is
contemplated;
(33) The Mortgage Note and, if applicable, the
Land Contract, has been or will be endorsed
pursuant to the requirements of the
definition of "Mortgage Documents" and
Section 2.1 and, together with the Mortgage,
the Assignment and any other documents
required to be delivered under this
Agreement, have been or will be delivered to
the Trustee. The Servicer is in possession
of all documents relating to the Mortgage,
other than the Mortgage Documents and any
other documents held by the Trustee, or which
have been sent for recording and have not
been returned by the applicable public
recording office, and there are no custodial
agreements in effect adversely affecting the
right or ability of the Trustee to make the
deliveries required under this Agreement;
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(34) To the best of Patten's knowledge, the
Mortgaged Property is not now and has never
been used to generate, manufacture, refine,
transport, treat, store, handle, dispose of,
transfer, produce, process or in any manner
deal with gasoline, petroleum products,
explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or
toxic substance, polychlorinated biphenyls or
related or similar materials, asbestos or any
material containing asbestos, or any other
substance or material as may be defined as a
hazardous or toxic substance by any Federal,
state or local environmental law, ordinance,
rule, or regulation ("Hazardous Materials")
in violation of any such Federal, state or
local environmental law, ordinance, rule or
regulation. To the best of Patten's
knowledge, no Hazardous Materials have ever
been installed, placed, or in any manner
dealt with on the Mortgaged Property in
violation of any such Federal, state or local
environmental law, ordinance, rule or
regulation. To the best of Patten's
knowledge, no owner, including Patten or any
Affiliate thereof, operator or manager of the
Mortgaged Property or any tenant, subtenant,
occupant, prior tenant, prior subtenant,
prior occupant or Person (collectively,
"Occupant") has received any notice or advice
from any governmental agency or any Occupant
with regard to Hazardous Materials on, from
or affecting the Mortgaged Property; and
(35) Either, at the time of origination of the
Mortgage Loan, the fair market value of the
related Mortgaged Property was not less than
80% of the original principal balance of the
Mortgage Loan or, at the Cut-off Date, the
fair market value of the related Mortgaged
Property was not less than 80% of the Cut-off
Date Principal Balance of the Mortgage Loan.
(b) With respect to the Mortgage Loans in the aggregate, as
of the Cut-off Date:
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(1) No more than 0.77% of the Mortgage Loans (by
Cut-off Date Principal Balance) had a
Loan-to-Value ratio at origination of greater
than 90% (including three Mortgage Loans that
had Loan-to-Value ratios at origination in
excess of 100%) and, except as provided in
the preceding parenthetical, no Mortgage Loan
had a Loan-to-Value Ratio at origination in
excess of 100%;
(2) Approximately 7.82% of the Mortgage Loans (by
Cut-off Date Principal Balance) bear a fixed
rate of interest (including Mortgage Loans as
to which the holder thereof has the option to
adjust the rate of interest thereon but such
option has never been exercised on a prior
Rate Adjustment Date), and approximately
92.18% (by Cut-off Date Principal Balance)
bear an adjustable rate of interest
(including Current Market Rate Loans);
(3) Approximately 77.3% of the Mortgage Loans (by
Cut-off Date Principal Balance) contain a
provision whereby Patten or an Affiliate has
the right to draw the Obligor's Periodic
Payment directly from the Obligor's bank
account;
(4) No Mortgage Loan had a principal balance at
origination of less than $2,196 or more than
$473,310, and the average remaining Cut-off
Date Principal Balance of the Mortgage Loans
was approximately $13,765;
(5) As of the Cut-off Date, Approximately 39
Mortgage Loans with an aggregate Cut-off Date
Principal Balance of approximately $571,449
were 30 Day Delinquent Mortgage Loans;
(6) Approximately 99.86% (by Cut-off Date
Principal Balance) of the adjustable-rate
Mortgage Loans have an Index based upon the
prime rate generally as reported in The Wall
Street Journal, approximately 0.14% have an
Index based upon another source, including
0.09% that are Current Market Rate Loans; and
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(7) Approximately five Mortgage Loans with an
aggregate Cut-off Date Principal Balance of
approximately $96,352 were secured by a
Mortgaged Property consisting of a
condominium.
(c) With respect to Patten as of the Closing Date:
(1) Patten and each Affiliate of Patten which
originated one or more of the Mortgage Loans
(except for Affiliates which have been merged
into Patten) are (or, with respect to each
such Affiliate, was at the time of
origination of the related Mortgage Loan)
duly organized, validly existing and in good
standing under the laws of the states of
their respective incorporation or formation,
and are (or, with respect to each such
Affiliate, was at the time of origination of
the related Mortgage Loan) duly qualified as
foreign corporations authorized to do
business in every other state where the
nature of their respective businesses
requires such qualification, except where the
failure to be so qualified would not, in any
one case or in the aggregate, have a material
adverse effect on Patten and such Affiliates
taken as a whole;
(2) Patten and each Affiliate of Patten which
originated one or more of the Mortgage Loans
are (or, with respect to each such Affiliate,
was at the time of origination of the related
Mortgage Loan) duly licensed to transact
business under all applicable laws and have
obtained all governmental approvals required
to be obtained in order to conduct their
respective businesses as now being conducted
and all such governmental approvals are in
full force and effect, except where the
failure to be so licensed or obtain such
approvals would not, in any one instance or
in the aggregate, have a material adverse
effect on Patten and such Affiliates taken as
a whole;
(3) The execution and delivery of this Agreement
and the full performance thereof by Patten
and any Affiliate which is a party hereto, do
not and will not violate any provisions of
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<PAGE> 47
the Articles of Organization or By-laws of
Patten or such Affiliate or any agreement to
which Patten or any Affiliate is a party or
by which Patten or any Affiliate is bound;
(4) This Agreement has been duly and validly
authorized, executed and delivered by Patten
and any Affiliate which is a party hereto,
and is a legal, valid and binding agreement
of Patten and any such Affiliate enforceable
against them in accordance with its terms,
except as rights to indemnity hereunder may
be limited by applicable federal or state
securities laws;
(5) Except as set forth on Exhibit F, there is no
action, suit, proceeding, governmental
investigation or arbitration (whether or not
by its terms purportedly on behalf of Patten
or any of its Affiliates) at law or in equity
or before or by any federal, state, municipal
or other governmental department, commission,
board, bureau, agency, or instrumentality,
domestic or foreign, pending, or to the
knowledge of any of such Persons probable of
assertion, against Patten or any of its
Affiliates, or any violation of any
applicable law, any of which individually or
in the aggregate could reasonably be expected
to (i) result in any material adverse change
in the business, operations, properties,
assets or condition (financial or otherwise)
of Patten and its Affiliates taken as a whole
or a material amount of the Mortgage Loans,
or (ii) have a material adverse effect on the
ability of Patten to perform its obligations
under this Agreement;
(6) Each assignment of the Mortgage Loans since
origination up through and including the
Assignment to the Trustee has been made for
reasonably equivalent value and fair
consideration;
(7) Neither this Agreement nor any statement,
report or other document furnished or to be
furnished pursuant to this Agreement or in
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connection with the transactions contemplated
hereby contains any untrue statement of a
material fact or omits to state a material
fact necessary to make the statements
contained herein or therein in light of the
circumstances under which made not
misleading;
(8) In selecting the Mortgage Loans, no selection
procedures were employed which are adverse to
the interests of the Certificateholders;
(9) The transfer, assignment and conveyance of
the Mortgage Notes and the Mortgages to the
Trustee pursuant to Section 2.1 are not
subject to the bulk transfer or any similar
statutory provisions in effect in any
applicable jurisdiction;
(10) Patten does not believe, nor does it have any
reason or cause to believe, that it or its
applicable Affiliate cannot perform each and
every covenant contained in this Agreement to
be performed by them;
(11) The transfer of the Mortgage Loans in the
manner contemplated hereby is sufficient to
transfer fully to the Trustee for the benefit
of the Certificateholders the ownership of
the Mortgage Loans;
(12) Patten has no knowledge of any default,
breach, violation or event existing under
this Agreement or any event, which, with the
passage of time or the giving of notice, or
both, would constitute such a default, breach
or violation and Patten has not waived any
such default, breach or violation;
(13) The rights of the holder of the Mortgage
Loans to receive payments of principal and
interest due thereon after the Cut-off Date
is not subordinate or junior to the rights of
any other Person to receive such payments;
(14) No information, certificate of an officer,
statement furnished in writing or report
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delivered to the Trustee by Patten or any of
its Affiliates will, to the knowledge of
Patten, contain any untrue statement of a
material fact or omit a material fact
necessary to make the information,
certificate, statement or report in light of
the circumstances under which made or given
not misleading;
(15) Patten and its Affiliates, including the
Depositor, reflected (or will reflect) the
sale of the Mortgage Loans to the Trustee on
their books and records; Patten and its
Affiliates, including the Depositor, will
treat the transfer of the Mortgage Loans to
the Trustee as a sale for tax and accounting
purposes; and Patten and its Affiliates,
including the Depositor, will respond to all
third party inquiries that the Mortgage Loans
have been sold to the Trustee;
(16) The transfer of the Mortgage Loans to the
Depositor and by the Depositor to the Trustee
was not made with the intent to hinder, delay
or defraud creditors;
(17) The Depositor is solvent on the date hereof
and will be solvent after giving effect to
the closing of the transactions contemplated
by this Agreement; and
(18) After giving effect to the simultaneous
transactions occurring on the Closing Date,
none of Patten's Affiliates transferring any
of the Mortgage Loans to the Depositor will
have any indebtedness or liabilities of any
kind, and each of such entities and Patten
will be solvent.
With respect to the representations and warranties set forth
in Sections 2.3(a)(6), (8), (9), (10), (11) and (34) that are made to the best
of Patten's knowledge or as to which Patten has no knowledge, if it is
discovered by Patten, the Servicer or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially and
adversely affects the interests of the Certificateholders in a Mortgage Loan
then, notwithstanding Patten's lack of knowledge with
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respect to the substance of such representation and warranty being inaccurate
at the time the representation or warranty was made, such inaccuracy shall be
deemed a breach of the applicable representation or warranty.
(d) It is understood and agreed that the representations and
warranties set forth in this Section 2.3 shall survive delivery of the Mortgage
Loans to the Trustee. Upon discovery by any of Patten, the Servicer or the
Trustee of a breach of any of the foregoing representations and warranties
which materially and adversely affects the interests of the Certificateholders
in a Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other. Within 60 days of its discovery or its receipt of notice
of breach, or, with the prior written consent of a Responsible Officer of the
Trustee, such longer period specified in such consent (a copy of which shall be
provided by the Trustee to the Rating Agency), Patten shall, at its option (i)
cure such breach in all material respects; (ii) repurchase the related Mortgage
Loan; or (iii) substitute in place of such Mortgage Loan a Qualified
Replacement Mortgage Loan or Loans provided such a substitution may only be
effected prior to the second anniversary of the Closing Date and subject to
Section 2.3(f). Any repurchase shall be accomplished by Patten depositing in
the Collection Account the Purchase Price for the appropriate Mortgage Loan
within such 60 day period (or such longer period as may be specified in the
Trustee's consent) and such repurchase shall be deemed to have occurred as of
the Business Day preceding the Remittance Date next following such deposit.
The Trustee shall not be charged with knowledge of any breach of the foregoing
representations unless a Responsible Officer of the Trustee at the Corporate
Trust Office has actual knowledge of such breach or receives written notice of
such breach from Patten or the Holders of Certificates of any Class evidencing,
as to such Class, Percentage Interests aggregating not less than 25%.
Notwithstanding anything to the contrary contained in this Agreement, in the
event that it is discovered that a Mortgage Loan is in breach of the
representations contained in Section 2.3(a)(3), or otherwise is not a
"qualified mortgage" within the meaning of the REMIC Provisions, Patten shall,
in all events, cure such breach or repurchase or substitute such Mortgage Loan,
as described above, within 90 days of the date of discovery of such breach.
(e) In the event of a substitution of a Defective Mortgage
Loan, as to any Qualified Replacement Mortgage Loan or Loans, Patten shall
deliver to the Trustee for such Qualified Replacement Mortgage Loan or Loans
the Mortgage Note, the Mort-
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gage, the related Assignment, and such other documents and agreements as are
required by Section 2.1 within the 60-day period (or such longer period as may
be specified in the Trustee's consent) referred to in subsection (d) of this
Section 2.3 and such substitution shall be deemed to have occurred as of the
Business Day preceding the Remittance Date next following such delivery. For
any month during which Patten substitutes one or more Qualified Replacement
Mortgage Loans, Patten shall determine the amount, if any, by which the sum of
(i) the aggregate Principal Balances of all such Qualified Replacement Mortgage
Loans at the end of such month is less than (ii) the aggregate Purchase Prices
for the related Defective Mortgage Loans had such Mortgage Loans been purchased
on the Business Day next preceding the Remittance Date next following such
substitution. The amount of such shortfall for any month computed by Patten
shall be deposited by it in the Collection Account on the Business Day next
preceding the Remittance Date in the Collection Period following the Collection
Period of substitution. All amounts received in respect of the Qualified
Replacement Mortgage Loan or Loans prior to the Business Day preceding the
Remittance Date on which such substitution occurs shall not be a part of the
Trust Fund and shall not be deposited by Patten in the Collection Account. All
amounts received by the Servicer prior to the Business Day preceding the
Remittance Date on which such substitution occurs in respect of any Defective
Mortgage Loan shall be deposited by the Servicer in the Collection Account.
Patten shall amend the Mortgage Loan Schedule to reflect the removal of such
Defective Mortgage Loan and the substitution of the Qualified Replacement
Mortgage Loan or Loans. Upon such substitution, the Qualified Replacement
Mortgage Loan or Loans shall be subject to the terms of this Agreement in all
respects, and Patten shall be deemed to have made with respect to such
Qualified Replacement Mortgage Loan or Loans, as of the date of substitution,
the covenants, representations and warranties set forth in this Section.
(f) Notwithstanding any other provision of this Agreement,
the right to substitute Mortgage Loans pursuant to this Article II shall be
subject to the additional limitations that any substitution of a Qualified
Replacement Mortgage Loan for a Defective Mortgage Loan shall be made within 90
days of the Closing Date, unless the Trustee has received an Opinion of Counsel
(at the expense of Patten) that, under the current law, such substitution will
not either (A) affect adversely the status of the Trust REMIC as a REMIC, or of
the Class A, Class B and Class C Certificates as "regular interests" in the
Trust REMIC or (B) cause the Trust REMIC to be subject to a "prohibited
transac-
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tion tax" pursuant to Section 860F of the Code or "prohibited contribution tax"
pursuant to Section 860G(d) of the Code.
(g) In addition to the obligation of Patten to cure,
substitute for (to the extent permitted herein) or repurchase any Mortgage Loan
as to which a breach under this Section 2.3 occurred and is continuing, Patten
shall indemnify the Trustee and the Certificateholders and hold them harmless
against any losses, damages, penalties, fines, forfeitures, legal fees and
related costs, judgments and other costs and expenses resulting from any claim,
demand, defense or assertion made by an Obligor to the extent resulting from a
breach of any representation or warranty contained in this Section 2.3. It is
understood and agreed that the above obligations of Patten shall constitute the
sole remedies respecting such breach available to Certificateholders or the
Trustee on behalf of Certificateholders, and that the Certificates are not and
shall not be obligations of Patten, the Depositor or any of their respective
Affiliates. Nothing contained herein shall limit the rights of the Trustee
under Section 9.5.
Section 2.4 Execution, Countersignature and Delivery of
Certificates. The Trustee acknowledges the transfer and assignment to it of
the Trust Fund and, concurrently with such transfer and assignment, has caused
to be executed, countersigned and delivered to or upon the order of the
Depositor, in exchange for the Trust Fund, Certificates in authorized
denominations evidencing the entire ownership of the Trust Fund.
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ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.1 Servicer. The Servicer shall service and
administer the Mortgage Loans on behalf of the Trustee and in the best
interests of and for the benefit of the Certificateholders (as determined by
the Servicer in its reasonable judgment) in accordance with the terms of this
Agreement and the Mortgage Loans, giving due consideration to legal, proper,
prudent and customary standards of practice in the mortgage servicing business
for mortgage loans similar to the Mortgage Loans and with a view to the
maximization of timely recovery of principal and interest on the Mortgage Loans
but without regard to (i) any relationship that the Servicer or any Affiliate
of the Servicer may have with any Mortgagor or any Affiliate of any Mortgagor;
(ii) the ownership of any Certificate by the Servicer or any Affiliate of the
Servicer; (iii) the Servicer's obligations to make Monthly Advances or to incur
servicing expenses with respect to the Mortgage Loans; or (iv) the Servicer's
right to receive compensation for its services hereunder or with respect to any
particular transaction. Subject to the above-described servicing standards
(herein referred to as "Accepted Servicing Practices") and the terms of this
Agreement (and in particular Section 11.3) and of the Mortgage Loans, the
Servicer shall have full power and authority to do any and all things in
connection with such servicing and administration which it may deem necessary
or desirable and consistent with the terms of this Agreement. Without limiting
the generality of the foregoing, the Servicer shall continue, and is hereby
authorized and empowered by the Trustee, to determine the amount, and notify
the related Obligor, of any changes to the Mortgage Interest Rate of an
adjustable-rate Mortgage Loan as fully as if the Servicer were the holder of
the related Mortgage Note, and to execute and deliver, on behalf of itself, the
Certificateholders, the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and
all other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. The Trustee shall execute and deliver to
the Servicer any such documents as are provided to the Trustee which are
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Without limiting the foregoing, in the event
that an Obligor under a Land Contract satisfies all obligations thereunder and
is entitled to receive a deed to the related Mortgaged Property, the Trustee
shall execute and deliver a deed for such Mortgaged Property if provided by the
Servicer and in substantially the
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<PAGE> 54
same form as the Land Contract Deed pursuant to which the Trustee previously
acquired title to such Property, in favor of either the Servicer or the related
Obligor as may be directed by the Servicer.
The relationship of the Servicer to the Trustee under this
Agreement is intended by the parties to be that of an independent contractor
and not that of a joint venturer, partner or agent.
All costs incurred by the Servicer in effecting the timely
payment of taxes and assessments on the Mortgaged Properties underlying the
Mortgage Loans shall not, for the purpose of calculating monthly distributions
to Certificateholders, be added to the amount owing under the related Mortgage
Loans, notwithstanding that the terms of such Mortgage Loan so permit, and such
costs shall be recoverable by the Servicer to the extent permitted by Section
3.4.
The Servicer is hereby directed that, with respect to any
Mortgage Loan which has the option for the holder of the Mortgage Note to
adjust the Mortgage Interest Rate thereon and such option has not been
exercised on a Rate Adjustment Date on or prior to the Closing Date, the
Trustee, as owner of the Mortgage Loan, hereby waives such option.
Furthermore, the Servicer is hereby directed that with respect to any
adjustable rate Mortgage Loan, the Mortgage Interest Rate of which adjusts more
frequently than its Periodic Payment, the Servicer shall not increase the
Mortgage Interest Rate, on a Rate Adjustment Date that is not a date on which
the Periodic Payment adjusts, to a rate that will cause any negative
amortization of the Mortgage Loan. In addition, the Servicer is hereby
directed that with respect to any adjustable rate Mortgage Loan, the Servicer
shall not increase the Mortgage Interest Rate, on a Rate Adjustment Date, to a
rate that would violate applicable usury laws, but will instead increase such
Mortgage Interest Rate to the maximum rate allowable under such usury laws.
Section 3.2 Collection of Certain Mortgage Loan Payments;
Collection Account; Certificate Account. (a) The Servicer shall proceed
diligently to collect all payments called for under the terms and provisions of
the Mortgage Loans, and shall, to the extent such procedures shall be
consistent with this Agreement, follow such collection procedures as it follows
with respect to mortgage loans comparable to the Mortgage Loans in its
servicing portfolio. Subject to Section 11.3 and consistent with the
foregoing, the Servicer may in its discretion waive
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<PAGE> 55
any late payment charge or any assumption fees or other fees which may be
collected in the ordinary course of servicing such Mortgage Loan.
(b) The Servicer shall establish and maintain one or more
Collection Accounts, each of which shall be an Eligible Account, into which the
Servicer shall on the Closing Date deposit any amounts representing Periodic
Payments due after the Cut-off Date but received before the Closing Date and
any Principal Prepayments received after the Cut-off Date but before the
Closing Date. Thereafter, the Servicer shall deposit into the Collection
Account on a daily basis the following payments and collections received or
made by it (other than in respect of principal of and interest on the Mortgage
Loans due on or before the Cut-off Date):
(i) All payments on account of principal,
including Principal Prepayments, received from, or on behalf of, the
related Obligor;
(ii) All payments on account of interest at
the Mortgage Interest Rate on each Mortgage Loan received from, or on
behalf of, the related Obligor (net of the Servicing Fee);
(iii) All Liquidation Proceeds received by
the Servicer with respect to each Mortgage Loan;
(iv) All Insurance Proceeds which are not
Liquidation Proceeds (including, for this purpose, any amounts
required to be deposited by the Servicer pursuant to the last sentence
of Section 3.5), other than proceeds to be applied to the restoration
or repair of the property subject to the related Mortgage or released
to the related Obligor in accordance with the normal servicing
procedures of the Servicer;
(v) The Purchase Price for any Defective
Mortgage Loan repurchased pursuant to Sections 2.2 and 2.3, or, if
applicable, any Substitution Adjustment, pursuant to said Sections;
(vi) All Monthly Advances made by the
Servicer pursuant to Section 4.2; and
(vii) The purchase price for the Mortgage
Loans repurchased pursuant to Section 10.1.
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The foregoing requirements respecting deposits by the Servicer into the
Collection Account are exclusive, it being understood that, without limiting
the generality of the foregoing, the Servicer need not deposit into the
Collection Account amounts representing fees or late charge penalties payable
by Obligors, which the Servicer is entitled to retain as additional servicing
compensation, or any amounts received by the Servicer for the account of
Obligors for application towards the payment of taxes, insurance premiums,
assessments and similar items.
Within five Business Days of receipt, and no later than the
Business Day prior to each Remittance Date, all amounts on deposit in the
Collection Account shall have been remitted to the Trustee for deposit into the
Certificate Account by wire transfer in immediately available funds.
Amounts held in the Collection Account and the Certificate
Account may be invested in one or more Permitted Investments in the name of the
Trustee, as trustee, in accordance with written instructions from Patten. Such
Permitted Investments shall mature no later than the Business Day immediately
preceding the Remittance Date following such investment. Any investment
earnings on funds in the Collection Account and the Certificate Account (net of
losses) shall be paid to the Servicer as additional servicing compensation.
Realized losses, if any, on amounts invested in the Collection Account and the
Certificate Account shall be credited against amounts in the Collection Account
and the Certificate Account for determining the Amount Available on the
Remittance Date following such investment. Permitted Investments of amounts
held in the Collection Account and the Certificate Account shall be held until
maturity.
(c) On or before the Closing Date, the Trustee shall
establish the Certificate Account. The Certificate Account shall at all times
be an interest bearing Eligible Account and shall relate solely to the
Certificates and the Trustee shall have the exclusive right to withdraw funds
therefrom. The Trustee shall deposit into the Certificate Account on the
Business Day received all moneys remitted by the Servicer pursuant to Section
3.2(b). The Trustee shall make withdrawals from the Certificate Account only
for the following purposes:
(i) to withdraw amounts deposited in the
Certificate Account in error;
(ii) to make distributions to the
Certificateholders pursuant to Section 5.1;
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(iii) to pay the Servicer investment income
on amounts on deposit in the Certificate Account; and
(iv) to clear and terminate the Certificate
Account pursuant to Section 10.1
Section 3.3 Collection of Taxes, Assessments and Other Items.
The Servicer shall pay or cause to be paid all hazard insurance premiums as
required under Section 3.5 or comparable items related to the Mortgage Loans
when and as the same shall become due and payable. The Servicer will also
advance monies to avoid the tax sale of the related Mortgaged Property. A
withdrawal from the Collection Account pursuant to Section 3.4(viii) may be
made only to reimburse the Servicer out of collections on the related Mortgage
Loan for any payments made regarding taxes and assessments or for any payments
made pursuant to Section 3.5 regarding premiums on standard hazard insurance
policies. It is understood that Patten does not escrow funds for such
purposes.
Section 3.4 Permitted Withdrawals from the Collection
Account. The Servicer may, on each Remittance Date, by Officers' Certificate
instruct the Trustee to make withdrawals from the Collection Account for the
following purposes and in the following order of priority:
(i) To reimburse the Servicer for
Liquidation Expenses theretofore incurred in respect of any Mortgage
Loan in an amount not to exceed the amount of the related Liquidation
Proceeds deposited into the Collection Account;
(ii) To pay to the Trustee any unpaid
Trustee's Fee to which it is entitled pursuant to Section 9.5 and to
pay to the Servicer (x) any unpaid Servicing Fees to which it is
entitled pursuant to Section 3.9, (y) as additional servicing
compensation the amount, if any, by which Net Liquidation Proceeds in
respect of a Liquidated Mortgage Loan are in excess of the sum of (A)
the unpaid principal balance of such Liquidated Mortgage Loan and (B)
accrued and unpaid interest at the applicable Mortgage Interest Rate
on the declining Principal Balance thereof from the Installment Due
Date to which interest was last paid by the Obligor to the Installment
Due Date next preceding the Remittance Date on which such Mortgage
Loan became
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a Liquidated Mortgage Loan and (z) as additional servicing
compensation any and all investment earnings (net of losses) of
amounts on deposit from time to time in the Collection Account;
(iii) To reimburse the Trustee for expenses
pursuant to Section 9.5 and Patten or the Servicer to the extent
permitted by Section 7.3;
(iv) To pay to Patten amounts received in
respect of any Defective Mortgage Loan repurchased by Patten to the
extent that the distribution of any such amounts on the Remittance
Date upon which the proceeds of such purchase are distributed would
make the total amount distributed in respect of any such Mortgage Loan
on such Remittance Date greater than the Purchase Price therefor;
(v) To pay to Patten amounts received in
respect of Defective Mortgage Loans which represent amounts due
subsequent to the month of substitution or which were not otherwise
reflected in the calculation of the related Purchase Price or any
Substitution Adjustment;
(vi) To reimburse the Servicer for Monthly
Advances theretofore made in respect of any Mortgage Loan to the
extent of late payments and Liquidation Proceeds received, the
Purchase Price paid or the termination price paid pursuant to Section
10.1, in each case in respect of such Mortgage Loan;
(vii) To reimburse the Servicer for any
Nonrecoverable Advance;
(viii) To reimburse the Servicer out of
collections on the related Mortgage Loan for amounts paid by the
Servicer for taxes, assessments, hazard insurance premiums or
comparable items pursuant to Sections 3.3 and 3.5, to the extent not
paid or reimbursed by the related Obligor;
(ix) To withdraw from the Collection Account
any amounts deposited therein by error;
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(x) To make payments to the Trustee for
deposit into the Certificate Account of the Amount Available in
accordance with Section 3.2(b);
(xi) To pay any and all taxes imposed on the
Trust REMIC by federal or state governmental authorities to the extent
such taxes have not been paid pursuant to Section 11.1(c); and
(xii) To clear and terminate the Collection
Account pursuant to Section 10.1.
The Servicer shall keep and maintain a separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawals from the Collection Account pursuant to clauses (i), (ii), (iv),
(v), (vi) and (viii) of this Section 3.4. Such justification shall be included
in every Officers' Certificate delivered to the Trustee pursuant to this
Section 3.4.
Section 3.5 Maintenance of Hazard Insurance; Property
Protection Expenses. The Servicer shall cause to be maintained on each
Mortgaged Property on which a dwelling was located on the date of origination
of the related Mortgage Loan hazard insurance with extended coverage in an
amount which is at least equal to the maximum insurable value of the
improvements securing the related Mortgage Loan or the Principal Balance owing
on such Mortgage Loan from time to time, whichever is less. To the extent
provided in Section 3.2(b)(iv), amounts collected by the Servicer under any
such policies shall be deposited into the Collection Account. Such costs
incurred by the Servicer in maintaining such hazard insurance shall be
recoverable by the Servicer pursuant to Section 3.3. Further, monies advanced
by the Servicer to avoid the tax sale of the related Mortgaged Property shall
be recoverable by the Servicer pursuant to Section 3.3. In cases in which a
Mortgaged Property is located in a federally designated flood area and such
Mortgaged Property includes improvements thereon as of the date of origination
of the related Mortgage Loan, the hazard insurance to be maintained for such
Mortgaged Property shall include flood insurance. The Servicer shall be under
no obligation to require that any Obligor maintain earthquake or other
additional insurance and shall be under no obligation itself to maintain any
such additional insurance on a Mortgaged Property, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Servicer shall obtain and maintain a
blanket policy insuring against
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hazard losses on all of the Mortgaged Properties on which a dwelling is
located, it shall conclusively be deemed to have satisfied its obligations as
set forth in the first sentence of this Section 3.5, it being understood and
agreed that such policy shall require prior notice of cancellation, shall name
the Trustee as an additional payee in accordance with its interest and may
contain a deductible clause, in which case the Servicer shall, in the event
that there shall not have been maintained on the related Mortgaged Property a
policy complying with the first sentence of this Section 3.5, and there shall
have been a loss which would have been covered by such policy, deposit into the
Collection Account, the amount not otherwise payable under the blanket policy
because of such deductible clause.
Section 3.6 Assumption and Modification Agreements. In any
case in which a Mortgaged Property has been or is about to be conveyed by the
Obligor, the Servicer shall exercise its right to accelerate the maturity of
such Mortgage Loan under any "due-on-sale" clause applicable thereto. If a
Mortgage Loan contains no "due-on-sale" clause, such "due-on-sale" clause, by
its terms, is not operable or the Servicer is prevented, as provided in the
last paragraph of this Section 3.6, from enforcing any such clause, the
Servicer is authorized to take or enter into an assumption and modification
agreement from or with the Person to whom such Mortgaged Property has been or
is about to be conveyed pursuant to which such Person becomes liable under the
Mortgage Note and the Obligor remains liable thereon. The Servicer shall not
take or enter into any such assumption and modification agreement, however,
unless (to the extent practicable in the circumstances) it shall have received
confirmation of the continued effectiveness of any applicable hazard insurance
policy. The Servicer shall notify the Trustee that any assumption and
modification agreement has been completed and forward to the Trustee the
original copy thereof, which copy shall be added by the Trustee to the related
Mortgage Documents and shall, for all purposes, be considered a part of such
Mortgage Documents to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such agreement, neither
the Servicer nor the Trustee shall permit modification of any term of the
Mortgage Loan. Any fee collected by the Servicer for entering into any such
agreement will be retained by the Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph of this Section 3.6 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
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Mortgage Loan, or transfer of the property subject to a Mortgage without the
assumption thereof, by operation of law or any assumption or transfer which the
Servicer reasonably believes, after due inquiry, it is restricted by law from
preventing, for any reason whatsoever.
Section 3.7 Realization upon Defaulted Mortgage Loans; Title
and Management of REO Property. (a) The Servicer shall foreclose upon or
otherwise comparably convert to ownership Mortgaged Properties securing such of
the Mortgage Loans as come into and continue in Default (as defined below) and
as to which no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.2. For purposes of this Section
3.7(a), "Default" with respect to a Mortgage Loan shall mean a payment default
or any other material default under the terms of the Mortgage Loan, which
default continues unremedied for a period of more than 90 days. In connection
with such foreclosure or other conversion (including without limitation the
cancellation or other termination of the Obligor's rights under a Land
Contract), the Servicer shall follow such practices and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general
mortgage servicing activities and as shall be in accordance with Accepted
Servicing Practices. The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that the
Servicer shall be entitled to reimbursement thereof from related Liquidation
Proceeds to the extent provided in Section 3.4. Notwithstanding the above, the
Servicer shall not be entitled to recover legal expenses incurred in connection
with foreclosure proceedings where the Mortgage Loan is reinstated and such
foreclosure proceedings are terminated prior to completion, other than sums
received from the Obligor for such expenses. The foregoing is subject to the
provision that, in any case in which property subject to a Mortgage shall have
suffered damage from an Uninsured Cause, the Servicer shall not be required to
expend its own funds in connection with any foreclosure or towards the
restoration of such property unless it shall determine in its discretion (a)
that such restoration and/or foreclosure will increase the proceeds of
liquidation of the related Mortgage Loan to Certificateholders after
reimbursement to itself for such expenses and (b) that such expenses will be
recoverable by the Servicer through Liquidation Proceeds from the related
property, as contemplated in Section 3.4.
(b) In the event that title to any Mortgaged Property is
acquired by the Servicer for the benefit of Certificateholders in foreclosure
or by deed-in-lieu of foreclosure or otherwise,
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the deed or certificate of sale shall be taken in the name of the Trustee, or
its nominee, on behalf of the Certificateholders. The Servicer, on behalf of
the Trust Fund, shall sell any REO Property as expeditiously as possible, but
in all events within the time period, and subject to the conditions, set forth
in Section 11.2. Subject to Section 11.2, the Servicer shall manage, conserve,
protect and operate each REO Property for the Certificateholders solely for the
purpose of its prompt disposition and sale.
If the Trust Fund acquires any REO Property, the Servicer
shall have full power and authority, subject only to the specific requirements
and prohibitions of this Agreement, to do any and all things in connection
therewith as are consistent with Accepted Servicing Practices, all on terms and
for such period as the Servicer deems to be in the best interest of
Certificateholders, and, consistent therewith, shall advance from its own funds
(i) all insurance premiums due and payable in respect of such REO Property;
(ii) all taxes and other impositions in respect of such REO Property that could
result or have resulted in the imposition of a lien thereon; and (iii) all
costs and expenses necessary to maintain such REO Property; in each such case,
if, but only if, the Servicer would make such an advance if it owned such REO
Property, and, in the Servicer's judgment, such amounts will be recoverable by
the Servicer from related Liquidation Proceeds.
Section 3.8 Trustee to Cooperate; Release of Mortgage
Documents. Upon the payment in full of any Mortgage Loan, or the substitution
or repurchase of a Defective Mortgage Loan pursuant to Sections 2.2 or 2.3, the
Servicer will immediately notify the Trustee by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment, repurchase or substitution which are required
to be deposited in the Collection Account pursuant to Section 3.2 have been so
deposited) of a Servicing Officer and shall request delivery to it of the
related Mortgage Documents. Upon receipt of such certification and request,
the Trustee shall promptly release the related Mortgage Documents to the
Servicer. Upon any such payment in full, repurchase or substitution, the
Servicer is authorized to execute, pursuant to the authorization contained in
Section 3.1, an instrument of satisfaction regarding such Mortgage, which
instrument of satisfaction shall be recorded by the Servicer if required by
applicable law and be delivered to the Person entitled thereto, it being
understood and agreed that no expenses incurred in connection with such
instrument of satisfaction shall be reimbursed from amounts at the time
deposited in the Collection Account. From time to time and as appropriate for
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the servicing or foreclosure of any Mortgage Loan, the Trustee shall, upon
request of the Servicer and delivery to the Trustee of a receipt signed by a
Servicing Officer, release the related Mortgage Documents to the Servicer and
shall execute such documents as shall be necessary to the prosecution of any
such proceedings. Such receipt shall obligate the Servicer to return the
Mortgage Documents to the Trustee when the need therefor by the Servicer no
longer exists unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of a certificate of a Servicing Officer, the receipt shall be released
by the Trustee to the Servicer.
Section 3.9 Servicing Compensation; Payment of Certain
Expenses by the Servicer. The Servicer shall be entitled to instruct the
Trustee to withdraw from the Collection Account or to withhold and pay to
itself as servicing compensation out of each payment received by it on account
of interest on each Mortgage Loan an amount equal to the Servicing Fee.
Additional servicing compensation in the form of assumption fees and late
payment charges, pursuant to Section 3.4 hereof or otherwise shall be retained
by the Servicer to the extent collected from the related Obligors and only to
the extent in excess of the full amount of the Periodic Payments on the related
Mortgage Loans. Additional servicing compensation in the form of investment
income on amounts on deposit in the Collection Account and the Certificate
Account and gain from the sale of REO Property as calculated pursuant to
Section 3.4(ii) shall be retained by the Servicer. The Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder (including payment of all other fees and expenses not expressly
stated hereunder to be for the account of the Certificateholders) and shall not
be entitled to reimbursement therefor except as provided in Sections 3.3, 3.4
and 3.7.
Section 3.10 Annual Statement as to Compliance. The Servicer
shall deliver to the Trustee and to the Rating Agency, on or before September
30 of each year, beginning September 30, 1996, an Officers' Certificate stating
that (a) a review of the activities of the Servicer during the 12 months ended
July 31 (or from the Closing Date to July 31, 1996, with respect to the first
such Officers' Certificate) and of its performance under this Agreement has
been made under such officers' supervision and (b) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such period, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officers and the nature and status thereof.
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Section 3.11 Annual Independent Public Accountant's
Servicing Report. On or before September 30 of each year, beginning September
30, 1996, the Servicer, at its expense, shall direct a firm of independent
public accountants to furnish a statement to the Trustee and to the Rating
Agency stating that the firm has examined certain documents and records
relating to the servicing of the Mortgage Loans during the Servicer's most
recent fiscal year (or from the Closing Date to the end of the Servicer's
fiscal year, with respect to the first such statement) and that, on the basis
of the examination, nothing has come to the attention of such firm that would
cause it to believe that the servicing has not been conducted in compliance
with this Agreement except for (a) exceptions as the firm believes are
immaterial, and (b) other exceptions as shall be set forth in the statement.
Copies of the statement shall be provided to the Certificateholders by the
Servicer or by the Trustee at the Servicer's expense if the Servicer fails to
provide the requested copies.
Section 3.12 Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Servicer shall provide to the Trustee and
Certificateholders and their respective supervisory agents and examiners access
to the documentation regarding the Mortgage Loans required by applicable laws
and regulations, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer. Nothing in this Section 3.12 shall derogate from the obligation of
the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors and the failure of the Servicer to provide
access as provided in this Section 3.12 as a result of such obligation shall
not constitute a breach of this Section 3.12.
Section 3.13 Maintenance of Certain Servicing Policies. (a)
The Servicer, at its expense, shall maintain in effect a Servicer Fidelity Bond
and a Servicer Errors and Omissions Insurance Policy, naming the Trustee as
loss payee, affording coverage for all directors, officers, employees and other
Persons acting on the Servicer's behalf. The Servicer Errors and Omissions
Insurance Policy and Servicer Fidelity Bond shall be in such form and amount
that would meet the requirements of the Rating Agency.
(b) The Servicer shall promptly report in writing to the
Trustee any material changes that may occur in any required Servicer Fidelity
Bond or Servicer Errors and Omissions Insurance Policy and shall furnish to the
Trustee copies of all binders and
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policies or certificates evidencing that such bond and insurance policy are in
full force and effect. The Servicer shall promptly report in writing to the
Trustee all cases of embezzlement or fraud or irregularities of operation,
suspected or otherwise, if such events involve funds relating to the Mortgage
Loans. The total losses, regardless of whether claims are filed with the
applicable insurer or surety, shall be disclosed in such reports together with
the amount of such losses covered by insurance. If a bond or insurance claim
report is filed with any of the Servicer's bonding companies or insurers, a
copy of such report shall be promptly furnished to the Trustee.
Section 3.14 Preparation of Tax Returns and Other Reports.
(a) Subject to Section 11.1, the Trustee shall prepare or cause to be prepared
on behalf of the Trust Fund, in reliance upon the information, if any,
furnished by the Depositor and the Servicer in accordance with this Agreement
and pursuant to instructions given by the Holders of a majority in Percentage
Interests of the Class R Certificates, shall sign and shall file, Federal
income tax and information returns and appropriate state income tax and
information returns or such other returns as may be required by applicable law
relating to the Trust Fund. The Servicer and the Depositor shall provide to
the Trustee any information within the control of each that shall be reasonably
necessary to enable the Trustee to comply with the provisions of this Section
3.14(a). The Trustee shall forward to the Depositor and the Servicer copies
thereof and of quarterly and annual REMIC tax returns and Form 1099 information
returns and such other information within the control of the Trustee as the
Depositor and the Servicer may reasonably request in writing. Moreover, the
Trustee shall forward to each Certificateholder such forms and furnish such
information within the control of the Trustee as are required by the Code to be
furnished to them, will prepare and file annual reports required by the state
authorities, will file copies of this Agreement with the appropriate state
authorities as may be required by applicable law and will prepare and
disseminate to Certificateholders Forms 1099 (or otherwise furnish information
within the control of the Trustee) to the extent required by applicable law.
The Servicer, the Depositor and the Class R Certificateholders (but not the
Trust Fund) shall indemnify the Trustee for any liability of or assessment
against the Trustee and any expenses incurred in connection with such liability
or assessment (including attorney's fees) resulting from any error in any of
such tax or information returns resulting from errors in the information or
instructions, as applicable, provided by the Servicer, the Depositor or the
Class R Certificateholders. The Trustee shall indemnify the Servicer,
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the Depositor and the Class R Certificateholders for any liability of or
assessment against the Servicer, the Depositor or the Class R
Certificateholders and any expense incurred in connection with such liability
or assessment (including attorney's fees) resulting from any error in any of
such tax or information returns resulting from errors in the preparation of
such returns by the Trustee. Any such indemnification shall survive the
termination of this Agreement.
(b) The Trustee shall prepare, sign and file with the
Internal Revenue Service ("IRS"), on behalf of the Trust REMIC, an application
for a taxpayer identification number for the Trust REMIC on IRS Form SS-4. The
Trustee, upon receipt from the IRS of the Notice of Taxpayer Identification
Number Assigned, shall promptly forward a copy of such notice to the Servicer
and the Depositor. The Trustee shall prepare and file Form 8811 on behalf of
the Trust REMIC and shall designate an appropriate Person to respond to
inquiries by or on behalf of Certificateholders for original issue discount and
related information in accordance with applicable provisions of the Code.
Section 3.15 Trustee's Interest in the Trust Fund.
(a) Notwithstanding that the parties hereto intend that the
conveyance of the Depositor's right, title and interest on and to the Trust
Fund pursuant to this Agreement shall constitute a purchase and sale and not a
pledge of security for a loan, the Servicer shall, from time to time, cause to
be taken such actions as are necessary to continue the perfection of the
Trustee's security interest in the Trust Fund (other than any statutory lien
arising by operation of law after the Closing Date that is prior to such
security interest), including, without limitation, the filing of financing
statements, amendments thereto or continuation statements and the making of
notations on the records or documents of title relating to the Trust Fund. The
Depositor will cooperate in all such actions and will execute and deliver
whatever is reasonably necessary to accomplish the foregoing.
(b) The Servicer will deliver to the Trustee and to the
Rating Agency, within 90 days after the beginning of each calendar year
beginning with 1997, an Opinion of Counsel, dated as of a date during such
90-day period, either (i) stating that in the opinion of such counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to continue the perfection of the Trustee's security
interest in the personal property in the Trust Fund in
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the event that the conveyance by the Depositor to the Trustee pursuant to this
Agreement is deemed to be a pledge for a loan, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) stating that, in the opinion of such counsel, no such action
during that calendar year is necessary to continue the perfection of such
security interest.
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ARTICLE IV
SERVICER'S CERTIFICATE; MONTHLY ADVANCES
Section 4.1 Servicer's Certificate. Each month, not later
than the third Business Day next preceding each Remittance Date, the Servicer
shall deliver to the Trustee and to the Rating Agency, a Servicer's Certificate
stating the date (month and year), the dates of the Collection Period and the
Remittance Date to which such Certificate relates, the Series number of the
Certificates, the date of this Agreement, the Cut-off Date Pool Principal
Balance and the Class A Principal Balance, Class B Principal Balance and Class
C Principal Balance, in each case as of the Closing Date and, as of the close
of business on the Determination Date for such month:
(i) The amount on deposit in the Collection
Account and the Certificate Account as of the close of business on the
preceding Determination Date (listing separately each amount deposited
therein pursuant to Section 3.2(b)), reduced by the sum of (a) the
Amount Held for Future Distribution and (b) amounts permitted to be
withdrawn from the Collection Account and the Certificate Account
pursuant to Section 3.4 and Section 3.2, respectively (listing
separately each such amount);
(ii) The aggregate Purchase Prices for, and
Principal Balances of, any Defective Mortgage Loans which Patten will
purchase on the Business Day immediately preceding the following
Remittance Date pursuant to Sections 2.2 and 2.3 together with any
Substitution Adjustment to be deposited into the Collection Account on
the Business Day next preceding such Remittance Date pursuant to
Section 2.3(e) in connection with any substitution for a Defective
Mortgage Loan;
(iii) The Principal Balances of all Mortgage
Loans which were the subject of Principal Prepayments in Full during
the preceding Prepayment Period;
(iv) The amount of all Principal Prepayments
which were not Principal Prepayments in Full and which were received
during the preceding Prepayment Period;
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(v) The Principal Balances of all Mortgage
Loans which became Liquidated Mortgage Loans during the preceding
Prepayment Period;
(vi) The aggregate of Scheduled Balances of
the Mortgage Loans for the Remittance Date in the following month;
(vii) The amount of the Monthly Advance to
be made on the following Remittance Date;
(viii) The Amount Available and the Base
Principal Distribution Amount for the following Remittance Date;
(ix) The aggregate amount of the principal
portion of the Periodic Payments which were received during the
preceding Collection Period;
(x) The aggregate amount of the interest
portion of the Periodic Payments which were received during the
preceding Collection Period;
(xi) LIBOR used in determining the Class A,
Class B and Class C Pass-Through Rates as of the preceding Remittance
Date;
(xii) LIBOR used in determining the Class A,
Class B and Class C Pass-Through Rates for the following Remittance
Date;
(xiii) The Class A, Class B and Class C
Pass-Through Rates for the preceding Remittance Date;
(xiv) The Class A, Class B and Class C
Pass-Through Rates for the following Remittance Date;
(xv) The number and aggregate outstanding
principal balances of Mortgage Loans that were (a) 30 Day Delinquent
Mortgage Loans, (b) 60 Day Delinquent Mortgage Loans, (c) Mortgage
Loans which had a Periodic Payment which remained unpaid for 90 or
more days and (d) Mortgage Loans that were in foreclosure, in each
case as of the close of business on the last day of the immediately
preceding Collection Period;
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(xvi) The amount of Realized Losses on the
Mortgage Loans as of the last day of the immediately preceding
Collection Period;
(xvii) The statement of accounting required
by Section 11.2(c); and
(xviii) The Remittance Certificate required
to be delivered by the Trustee to Certificateholders pursuant to
Section 5.2.
Section 4.2 Monthly Advances. (a) If on any Determination
Date, any Periodic Payment due during the immediately preceding Collection
Period has not been received by the Servicer by such Determination Date, the
Servicer shall make a Monthly Advance unless, in the Servicer's sole
discretion, the Servicer determines that such Monthly Advance will be a
Nonrecoverable Advance. If the Servicer determines that it will make a Monthly
Advance it shall so indicate on the related Servicer's Certificate, and on the
Business Day prior to the related Remittance Date either (i) deposit in the
Collection Account an amount equal to such Monthly Advance, (ii) cause to be
made an appropriate entry in the records relating to the Collection Account
that all or a portion of the Amount Held for Future Distribution, as permitted
by this Section 4.2, has been used by the Servicer to make such Monthly
Advance, or (iii) make an advance in the form of any combination of (i) and
(ii) aggregating the amount of such Monthly Advance. Any such Monthly Advance
shall be included with the distribution to the Certificateholders on the
related Remittance Date. Any Amount Held for Future Distribution so used shall
be replaced by the Servicer by deposit from its own funds in the Collection
Account on or before any future Remittance Date to the extent that funds in the
Collection Account on such Remittance Date shall be less than payments to
Certificateholders required to be made on such date. The Servicer shall be
entitled to be reimbursed from the Collection Account for all Monthly Advances
and Nonrecoverable Advances as provided in Section 3.4.
Section 4.3 Reports of Foreclosures and Abandonment of
Mortgaged Property. Each year beginning in 1996, the Trustee shall prepare and
execute the reports of foreclosures and abandonments of any Mortgaged Property
required by Section 6050J of the Code. In order to facilitate this reporting
process, the Servicer, on or before January 25th of each year, shall provide to
the Trustee, and, on or prior to February 28th of each year, the Trustee shall
provide to the Internal Revenue Service, reports relating to each instance
occurring during the previous
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calendar year in which the Servicer (i) on behalf of the Trustee acquires an
interest in a Mortgaged Property through foreclosure or other comparable
conversion in full or partial satisfaction of a Mortgage Loan, or (ii) knows or
has reason to know that a Mortgaged Property has been abandoned. The reports
from the Trustee shall be in form and substance sufficient to meet the
reporting requirements imposed by such Section 6050J of the Code.
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ARTICLE V
PAYMENTS AND STATEMENTS TO
CERTIFICATEHOLDERS
Section 5.1 Distributions; Accrual of Interest. (a) On each
Remittance Date, the Trustee shall make distributions to the
Certificateholders, based on information provided to the Trustee by the
Servicer in the Servicer's Certificate delivered pursuant to Section 4.1, in
the following order of priority, in each case to the extent of the Amount
Available deposited in the Certificate Account pursuant to Section 3.2(b):
(i) to the Holders of the Class A
Certificates, interest accrued on the outstanding Class A Principal
Balance immediately preceding such Remittance Date during the Interest
Accrual Period relating to such Remittance Date, at a per annum rate
equal to the Class A Pass-Through Rate;
(ii) to the Holders of the Class A
Certificates, principal equal to the lesser of (A) the outstanding
Class A Principal Balance and (B) the Class A Principal Distribution
Amount for such Remittance Date;
(iii) to the Holders of the Class B
Certificates, interest accrued on the outstanding Class B Principal
Balance immediately preceding such Remittance Date during the Interest
Accrual Period relating to such Remittance Date, at a per annum rate
equal to the Class B Pass-Through Rate;
(iv) to the Holders of the Class B
Certificates, principal equal to the lesser of (A) the outstanding
Class B Principal Balance and (B) the Class B Principal Distribution
Amount for such Remittance Date;
(v) to the Holders of the Class C
Certificates, interest accrued on the outstanding Class C Principal
Balance immediately preceding such Remittance Date during the Interest
Accrual Period relating to such Remittance Date, at a per annum rate
equal to the Class C Pass-Through Rate;
(vi) to the Holders of the Class C
Certificates, principal equal to the lesser of (A) the
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outstanding Class C Principal Balance and (B) the Class C Principal
Distribution Amount for such Remittance Date;
(vii) for any Remittance Date on or prior to
the Remittance Date in July 1996, the remainder of the Amount
Available, if any, to the Class A Certificates as principal and on
each Remittance Date thereafter, to the Class R Certificates provided
that the Trustee determines as to such Remittance Date that either:
A) (i) the Overcollateralization
Percentage is greater than 2.50%, but does not exceed 5.00%, (ii)
aggregate Realized Losses on the Mortgage Loans do not exceed 2.00% of
the Cut-off Date Pool Principal Balance and (iii) no more than 7.00%
of the Mortgage Loans (by Principal Balance) are 61 days or more
delinquent, in foreclosure proceedings or are REO Properties; or
B) (i) the Overcollateralization
Percentage is greater than 5.00% but does not exceed 8.00%, (ii)
aggregate Realized Losses on the Mortgage Loans do not exceed 3.50% of
the Cut-off Date Pool Principal Balance and (iii) no more than 9.00%
of the Mortgage Loans (by Principal Balance) are 61 days or more
delinquent, in foreclosure proceedings or are REO Properties; or
C) the Overcollateralization
Percentage exceeds 8.00%;
(viii) on any Remittance Date subsequent to
the Remittance Date in July 1996, for which the Trustee determines
that none of the conditions set forth in Section 5.1 (a)(vii)(A)-(C)
above have been satisfied, first, to the Class A Certificates, second,
to the Class B Certificates, and third, to the Class C Certificates,
in that order, until their respective Class Principal Balances have
been reduced to zero; and
(ix) the remainder of the Amount Available
to the Class R Certificates.
(b) Distributions to Certificateholders of each Class shall
be made pro rata within such Class, in proportion to the
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respective Percentage Interests of the Certificateholders within such Class.
Distributions on each Remittance Date shall be made by the Trustee to each
Certificateholder of record on the related Record Date (other than as provided
in Section 10.1 respecting the final distribution), by check or money order
mailed to such Certificateholder at the address appearing in the Certificate
Register, or upon written request by the Certificateholder, by wire transfer of
immediately available funds (in the event such Certificateholder owns of record
one or more Certificates of the same Class (i) which have denominations
aggregating at least $4,000,000, (ii) a 25% Percentage Interest of any Class or
(iii) the Class R Certificates), or by such other means of payment as such
Certificateholder and the Trustee shall agree; provided, however, that the
final distribution in retirement of any Class of Certificates shall be made
only upon presentation and surrender of the Certificate at the office or agency
of the Trustee specified in a notice from the Trustee to the
Certificateholders.
(c) If on any Remittance Date, the amount of interest
distributable on any of the Class A, Class B or Class C Certificates in
accordance with Section 5.1(a) is less than an amount equal to interest at the
Pass-Through Rate for such Class accrued during the related Interest Accrual
Period on the Class Principal Balance of such Class as of the immediately
preceding Remittance Date, or, in the case of the first Remittance Date, as of
the Cut-off Date, the amount of such interest shortfall shall accrue and be
added to the Class Principal Balance of such Class on such Remittance Date.
Section 5.2 Statements to Certificateholders. With each
distribution from the Certificate Account to the Certificateholders made on a
Remittance Date, the Trustee shall mail to each Certificateholder and to each
Initial Purchaser a Remittance Certificate prepared and delivered to the
Trustee by the Servicer pursuant to Section 4.1(xviii) setting forth:
(i) the amount of such distribution
allocable to scheduled principal on the Mortgage Loans;
(ii) the amount of such distribution
allocable to Principal Prepayments on the Mortgage Loans;
(iii) the amount of such distribution
allocable to interest on the Mortgage Loans;
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(iv) the aggregate amount of any Monthly
Advances by the Servicer pursuant to Section 4.2 included in the
amounts actually distributed to the Certificateholders;
(v) the amount of such distribution
allocable to Net Liquidation Proceeds, Insurance Proceeds, the
Purchase Price for Defective Mortgage Loans, any Substitution
Adjustment pursuant to Section 2.3 and the purchase price for the
Mortgage Loans pursuant to Section 10.1;
(vi) the Amount Available, Base Principal
Distribution Amount and amount of Realized Losses for such Remittance
Date;
(vii) the aggregate amount of Mortgaged
Properties which became REO Properties and the aggregate amount of
Mortgage Loans which became Liquidated Mortgage Loans, in each case
during the Collection Period relating to such Remittance Date, and the
aggregate amount of Mortgaged Properties which have become REO
Properties since the Cut-off Date;
(viii) the Class A Principal Balance as of
the previous Remittance Date and the portion thereof evidenced by a
Single Certificate;
(ix) the amount of such distribution
allocable to interest at the Class A Pass-Through Rate for the related
Remittance Date and the portion thereof evidenced by a Single
Certificate;
(x) the amount of such distribution
allocable to amortize the Class A Principal Balance and the portion
thereof evidenced by a Single Certificate;
(xi) the Class A Principal Balance for such
Remittance Date (stating to the extent applicable any amount
consisting of interest accrued, unpaid and added to principal on such
Remittance Date) and the portion thereof evidenced by a Single
Certificate;
(xii) the Class A Principal Balance for such
Remittance Date expressed as a percentage (rounded to eight decimal
places) of the initial Class A Principal Balance.
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(xiii) the Class B Principal Balance as of
the previous Remittance Date and the portion thereof evidenced by a
Single Certificate;
(xiv) the amount of accrued interest on the
Class B Principal Balance at the Class B Pass-Through Rate for such
Remittance Date and the portion thereof evidenced by a Single
Certificate;
(xv) the amount of such distribution
allocable to amortize the Class B Principal Balance and the portion
thereof evidenced by a Single Certificate;
(xvi) the Class B Principal Balance for such
Remittance Date expressed as a percentage (rounded to eight decimal
places) of the initial Class B Principal Balance.
(xvii) the Class B Principal Balance for
such Remittance Date (stating to the extent applicable any amount
consisting of interest accrued, unpaid and added to principal on such
Remittance Date) and the portion thereof evidenced by a Single
Certificate;
(xviii) the Class C Principal Balance as of
the previous Remittance Date and the portion thereof evidenced by a
Single Certificate;
(xix) the amount of accrued interest on the
Class C Principal Balance at the Class C Pass-Through Rate for such
Remittance Date and the portion thereof evidenced by a Single
Certificate;
(xx) the Class C Principal Balance for such
Remittance Date expressed as a percentage (rounded to eight decimal
places) of the initial Class C Principal Balance.
(xxi) the amount of such distribution
allocable to amortize the Class C Principal Balance and the portion
thereof evidenced by a Single Certificate;
(xxii) the Class C Principal Balance for
such Remittance Date (stating to the extent applicable any amount
consisting of interest accrued, unpaid and added to principal on such
Remittance Date) and the portion thereof evidenced by a Single
Certificate;
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(xxiii) the amount of any distribution to
the Class R Certificateholders;
(xxiv) LIBOR used in determining the
Pass-Through Rates as of the preceding Remittance Date;
(xxv) LIBOR used in determining the
Pass-Through Rates for such Remittance Date;
(xxvi) the Pass-Through Rates for the
preceding Remittance Date;
(xxvii) the Pass-Through Rates for such
Remittance Date;
(xxviii) the aggregate Principal Balance of
the Mortgage Loans as of such Remittance Date;
(xxix) the aggregate Principal Balances of
the Mortgage Loans as of such Remittance Date divided by the Cut-off
Date Pool Principal Balance (rounded to eight decimal places);
(xxx) the number and aggregate outstanding
principal balances of Mortgage Loans that were (a) 30 Day Delinquent
Mortgage Loans, (b) 60 Day Delinquent Mortgage Loans, (c) Mortgage
Loans which had a Periodic Payment which remained unpaid for 90 or
more days and (d) Mortgage Loans that were in foreclosure, in each
case as of the close of business on the last day of the immediately
preceding Collection Period; and
(xxxi) the amount of Realized Losses on the
Mortgage Loans as of the last day of the immediately preceding
Collection Period.
Within 60 days following the end of each calendar year, the
Trustee shall mail to each Person who at any time during the calendar year was
a Certificateholder on any Record Date during such calendar year (a) a
statement containing for such calendar year information as to the total amount
of distributions allocable to interest and the total amount allocable to
amortize principal on each Class of Certificates for which such distributions
were made as well as any amount of interest accrued and unpaid and added to
principal on each such Class of Certificate, and (b) such other customary
information as the Servicer deems necessary or desirable for Certificateholders
to prepare their
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tax returns. Such obligations of the Servicer and the Trustee shall be deemed
to have been satisfied to the extent that substantially comparable information
shall be provided by the Servicer pursuant to any requirements of the Code from
time to time in force.
Section 5.3 Determination of LIBOR. (a) For purposes of
calculating the Pass-Through Rates applicable to the Class A, Class B and Class
C Certificates, LIBOR applicable to each of the Interest Accrual Periods
beginning in June 1995, July 1995, August 1995, September 1995, October 1995,
and November 1995 shall be 5.75%. Thereafter, on the Determination Date with
respect to the Remittance Date in each February and August, commencing with the
Determination Date in January 1996, the Servicer shall determine LIBOR for the
current and the next five succeeding Interest Accrual Periods, until the Class
Principal Balances of the Class A, Class B and Class C Certificates have been
paid in full. On each semi-annual Determination Date, LIBOR for purposes of
calculating the Pass-Through Rates will be LIBOR as published in the "Money
Rates" section of The Wall Street Journal on such Determination Date. If more
than one LIBOR rate is published in The Wall Street Journal, LIBOR for purposes
of calculating the Pass-Through Rates will be the average of the rates so
published.
(b) If on any Determination Date LIBOR is not published as
described above, on such Determination Date the Servicer shall either (i)
request each of the reference banks meeting the criteria set forth herein (the
"Reference Banks") to provide the quotation offered by its principal London
office for making six-month United States dollar deposits in leading banks in
the London interbank market, as of 11:00 a.m. (London time) on such
Determination Date or (ii) in lieu of making any such request, rely on the
offered rate quotations of the Reference Banks that appear as of such time on
the display page designated as "LIBO" on the Reuters Monitor Money Rates
Service (the "Reuters Screen LIBO Page"), to the extent available. Initially,
the Reference Banks will be Bank of Tokyo LTD., Barclay's Bank plc, National
Westminster Bank plc and Bankers Trust Company. LIBOR shall then be
established by the Servicer on such Determination Date as follows:
(i) If on such Determination Date two or
more Reference Banks provide such offered quotations, LIBOR for the
current and next five succeeding Interest Accrual Periods shall be the
arithmetic mean
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of such offered quotations (rounded upwards, if necessary, to the
nearest whole multiple of 1/32%).
(ii) If on such Determination Date only one
or none of the Reference Banks provides such offered quotations, LIBOR
for the current and next five succeeding Interest Accrual Periods
shall be whichever is the lower of (i) LIBOR as determined on the
previous semi-annual Determination Date or (ii) the Reserve Interest
Rate. The "Reserve Interest Rate" shall be the rate per annum which
the Servicer determines to be either (i) the arithmetic mean (rounded
upwards, if necessary, to the nearest whole multiple of 1/32%) of the
six-month United States dollar lending rates that New York City banks
selected by the Servicer are quoting, on the relevant Determination
Date, to the principal London offices of at least two of the Reference
Banks to which such quotations are, in the opinion of the Servicer,
being so made, or (ii) in the event that the Servicer can determine no
such arithmetic mean, the lowest six-month United States dollar
lending rate which New York City banks selected by the Servicer are
quoting on such LIBOR Determination Date to leading European banks.
Each Reference Bank (i) shall be a leading bank engaged in
transactions in Eurodollar deposits in the international Eurocurrency market
and (ii) shall have an established place of business in London. If any such
Reference Bank should be unwilling or unable to act as such or if the Servicer
should terminate the appointment of any such Reference Bank or if any of the
Reference Banks should be removed from the Reuters Screen LIBO Page or in any
other way fail to meet the qualifications of a Reference Bank, the Servicer may
designate alternative Reference Banks meeting the criteria specified above.
(c) The establishment of LIBOR on each Determination Date by
the Servicer and the Servicer's calculation of the Pass-Through Rates for the
related Interest Accrual Period shall (in the absence of manifest error) be
final and binding. The Servicer shall furnish the then current LIBOR to any
Certificateholder upon request.
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ARTICLE VI
THE CERTIFICATES
Section 6.1 The Certificates. The Class A, Class B, Class C,
and Class R Certificates shall be substantially in the forms set forth in
Exhibits A, B, C and D, respectively, and shall, on original issue, be executed
on behalf of the Trust Fund, authenticated and delivered by the Trustee to or
upon the order of the Depositor upon receipt by the Trustee of the documents
specified in Section 2.1. The Class A, Class B and Class C Certificates shall
be issuable in the minimum dollar denominations, integral dollar multiples in
excess thereof and aggregate dollar denominations per Class as set forth in the
following table (except that one Certificate of each Class may be issued in a
different denomination):
<TABLE>
<CAPTION>
Aggregate Denom-
inations of all
Minimum Integral Multiples Certificates of
Class Denomination in Excess of Minimum Class
- ----- ------------ -------------------- ----------------
<S> <C> <C> <C>
A $100,000 $ 1,000 $61,296,000.00
B $100,000 $ 1,000 $ 4,767,000.00
C $100,000 $ 1,000 $ 2,044,028.82
</TABLE>
The Class R Certificates have no principal balance and do not
bear interest. The Class R Certificates are issuable in Percentage Interests.
The Certificates shall be executed by manual or facsimile
signature on behalf of the Trust Fund by the Trustee by an authorized officer
under its seal imprinted thereon. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures were
affixed, authorized to sign on behalf of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the execution and delivery of such Certificates or did not
hold such offices at the date of any such Certificate. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless such Certificate shall have been manually authenticated by the Trustee
substantially in the form provided for herein, and such authentication upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly executed and delivered hereunder. Each Certificate
executed, authenticated
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and delivered by the Trustee to or upon the order of the Depositor on the
Closing Date shall be dated as of the Closing Date. All other Certificates
that are authenticated after the Closing Date shall be dated the date of their
authentication.
Pending the preparation of definitive Certificates, the
Trustee may execute, authenticate and deliver temporary Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Certificates in lieu of which they may be so issued and with such variations as
the officers executing such Certificates may determine, as evidenced by their
execution of such Certificates.
If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee to be maintained as
provided in Section 6.2, without charge to the Certificateholder. Upon
surrender or cancellation of any one or more temporary Certificates, the
Trustee shall execute, authenticate and deliver and exchange therefor a like
aggregate initial principal amount of definitive Certificates of the same Class
and of authorized denominations. Until so exchanged, the temporary
Certificates shall in all respects be entitled to the same benefits under this
Agreement as definitive Certificates of the same Class.
Section 6.2 Registration of Transfer and Exchange of
Certificates. (a) The Trustee shall cause to be kept at an office or agency
in the city in which the Corporate Trust Office of the Trustee is located or in
the City of New York, New York, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. The Trustee shall initially serve as Certificate Registrar
for the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate
at any office or agency of the Trustee maintained for such purpose pursuant to
the foregoing paragraph and upon satisfaction of the conditions set forth
below, the Trustee shall execute, authenticate and deliver, in the name of the
designated
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transferee or transferees, one or more new Certificates of a like tenor, Class
and aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be
exchanged for any number of other Certificates of authorized denominations of a
like Class and aggregate Percentage Interest, upon surrender of the
Certificates to be exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange the Trustee shall execute,
authenticate and deliver the Certificates of such Class which the
Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee or the Certificate Registrar) be duly endorsed by, or
be accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder thereof or
his attorney duly authorized in writing.
(b) No transfer of a Certificate of any Class shall be made
unless such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended, and any applicable state securities laws or
is made in accordance with said Act and laws. In the event that such a
transfer is to be made within three years from the date of the initial issuance
of Certificates pursuant hereto (other than the initial transfers to the
Initial Purchasers), (i) the Trustee or Patten shall require a written Opinion
of Counsel acceptable to and in form and substance satisfactory to the Trustee
and Patten that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from said Act and laws or is
being made pursuant to said Act and laws, which Opinion of Counsel shall not be
an expense of the Trustee or Patten, provided, however, that if the transferee
certifies in the applicable investment letter provided for in the following
clause (ii) that such transferee is a "qualified institutional buyer" within
the meaning of Rule 144A under said Act and that such transfer is being made
pursuant to Rule 144A, then the Trustee and Patten shall not require, and the
transferee shall have no obligation to provide, the Opinion of Counsel provided
for in this clause (i), and (ii) the Trustee shall require the transferee to
execute an investment letter, substantially in the form attached hereto as
Exhibit I-A, with respect to the Class A Certificates, substantially in the
form attached hereto as Exhibit I-B, with respect to the Class B Certificates,
and substantially in the form attached hereto as Exhibit I-C, with respect to
the Class C Certificates, certifying to Patten and the Trustee the facts
surrounding such transfer, which investment letter shall not be an
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expense of the Trustee or Patten. The Holder of a Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee and
Patten 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 by reason of the
action or omission of such Holder and that the foregoing indemnification shall
survive any transfer of such Certificate by such Holder.
(c) No transfer of any Class A Certificate shall be made
unless the Trustee shall have received either (i) a representation letter from
the transferee of such Certificate, substantially in the form attached hereto
as Exhibit I-A to the effect that such transferee is not an employee benefit
plan or other entity subject to Section 406 of ERISA or Section 4975 of the
Code, nor a Person acting on behalf of any such plan or other entity, which
representation letter shall not be an expense of the Trustee, Patten or the
Trust Fund, or (ii) in the case of any such Certificate presented for
registration in the name of an employee benefit plan or other entity subject to
Section 406 of ERISA or Section 4975 of the Code, or a trustee of any such
plan, one or more opinions of counsel satisfactory to the Trustee and Patten to
the effect that the purchase or holding of such Subordinate Certificate will
not result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee or Patten to any obligation in addition to those
undertaken in this Agreement and provided further, that such opinions shall not
be an expense of the Trustee, Patten or the Trust Fund.
(d) No Subordinate Certificate may be owned, pledged or
transfered to, directly or indirectly, an employee benefit plan or other entity
subject to Section 406 of ERISA on Section 4975 of the Code, nor a Person
acting on behalf of any such plan or other entity. No transfer of any
Subordinate Certificate shall be made unless the Trustee shall have received a
representation letter from the transferee of such Certificate, substantially in
the form attached hereto as Exhibit I-B, or Exhibit I-C, as applicable, to the
effect that such transferee is not an employee benefit plan or other entity
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person
acting on behalf of any such plan or other entity, which representation letter
shall not be an expense of the Trustee, Patten or the Trust Fund.
Notwithstanding the registration in the Certificate Register
of any transfer, sale, or other disposition of a Class A, Class B or Class C
Certificate or any percentage therein to an
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employee benefit plan or other entity subject to Section 406 of ERISA or
section 4975 of the Code or an agent or nominee acting on behalf of any such
employee benefit plan or other entity, such registration shall be deemed to be
of no legal force or effect whatsoever and such employee benefit plan or other
entity (or such agent or nominee) shall not be deemed to be a Certificateholder
for any purpose hereunder, including, but not limited to, the receipt of
distributions on such Certificate.
(e) Notwithstanding anything to the contrary contained herein
or in this Agreement, no Class R Certificate or any Percentage Interest therein
may be owned, pledged or transferred, directly or indirectly, by or to a
Disqualified Organization. Prior to and as a condition of the registration of
any transfer, sale or other disposition of a Class R Certificate or any
Percentage Interest therein, the proposed transferee shall deliver to the
Certificate Registrar an affidavit in substantially the respective forms
attached hereto as Exhibit G-1(a) (for a U.S. Holder) or Exhibit G-1(b) (for a
foreign Holder) representing and warranting that such transferee is neither a
Disqualified Organization nor an agent or nominee acting on behalf of a
Disqualified Organization (any such transferee, a "Permitted Transferee"). In
addition, the Certificate Registrar may (but shall have no obligation to)
require, prior to and as a condition of any such transfer, the delivery by the
proposed transferee of an Opinion of Counsel, satisfactory in form and
substance to the Certificate Registrar, that such proposed transferee or, if
the proposed transferee is an agent or nominee, the proposed beneficial owner,
is not a Disqualified Organization. Notwithstanding the registration in the
Certificate Register of any transfer, sale, or other disposition of a Class R
Certificate or any percentage therein to a Disqualified Organization or an
agent or nominee acting on behalf of a Disqualified Organization, such
registration shall be deemed to be of no legal force or effect whatsoever and
such Disqualified Organization (or such agent or nominee) shall not be deemed
to be a Certificateholder for any purpose hereunder, including, but not limited
to, the receipt of distributions on such Class R Certificate. The Certificate
Registrar shall not be under any liability to any person for any registration
or transfer of a Class R Certificate to a Disqualified Organization or for the
maturity of any payments due on such Class R Certificate to the Holder thereof
or for taking any other action with respect to such Holder under the provisions
of the Agreement, so long as the transfer was effected in accordance with this
Section 6.2(d), unless the Certificate Registrar shall have actual knowledge at
the time of such transfer or the time of such payment or other action that the
transferee is a Disquali-
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fied Organization (or an agent or nominee thereof). The Certificate Registrar
shall be entitled to recover from any Holder of a Class R Certificate or any
Percentage Interest therein that was a Disqualified Organization (or an agent
or nominee thereof) at the time it became a Holder or any subsequent time it
became a Disqualified Organization all payments made on such Class R
Certificate at and after either such times (and all costs and expenses,
including but not limited to attorneys' fees, incurred in connection
therewith). Any payment (not including any such costs and expenses) so
recovered by the Certificate Registrar shall be paid and delivered to the last
preceding Holder of such Class R Certificate or Percentage Interest therein.
Any Percentage Interest in a Class R Certificate shall be a pro rata individual
interest.
In addition to the foregoing restrictions on transfer of a
Class R Certificate or any Percentage Interest therein, the Certificate
Registrar will not register the transfer of a Class R Certificate unless (a) it
has received a transferee letter either in the form attached as Exhibit G-2(a)
or Exhibit G-2(b) hereto and (b) in the event that the transferee letter is in
the form of Exhibit G-2(b) (a "Foreign Holder Letter"), it has received written
evidence satisfactory to the Certificate Registrar that the transferor has paid
or provided for payment of all taxes (including all accrued taxes on excess
inclusion income) accrued on such Class R Certificate in accordance with the
provisions set forth in Section 11.1(i), which written evidence shall include a
copy of the applicable Forms 1066Q (or other applicable form prescribed by the
Internal Revenue Service), to the extent that any such form has been filed,
evidencing the amount of excess inclusion income for the periods during which
the transferor held such Class R Certificate or any percentage interest
therein; (c) it has received the calculations and certifications described in
paragraph (4) of Exhibit G-2(b) or paragraph (14) of Exhibit G-2(a), and in the
event that the transferee letter is in the form of Exhibit G-2(b), the
requirements set forth in paragraph 3(xi) thereof have been complied with to
the satisfaction of the Certificate Registrar. Upon satisfaction of the
foregoing requirements, the Certificate Registrar shall register the Class R
Certificate in the name of the transferee on whose benefit the transferee
letter is made and delivered (and not in the name of any nominee thereof).
If any purported transferee shall become a registered Holder
of a Class R Certificate in violation of the provisions of this Section 6.2(d),
then, upon receipt of written notice to the Certificate Registrar that the
registration of transfer of such
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Class R Certificate was not in fact permitted by this Section 6.2(d), the last
preceding Permitted Transferee shall be restored to all rights as Holder
thereof retroactive to the date of such registration of transfer of such Class
R Certificate. The Certificate Registrar shall be under no liability to any
Person for any registration of transfer of a Class R Certificate that is in
fact not permitted by this Section 6.2(d), for making any payment due on such
Certificate to the registered Holder thereof or for taking any other action
with respect to such Holder under the provisions of this Agreement so long as
the transfer was registered upon receipt of the affidavit described in the
preceding paragraph of this Section 6.2(d).
Each Holder of a Class R Certificate or Percentage Interest
therein, by such Holder's acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section.
Each Class R Certificate shall bear a legend describing the
restrictions on transferability set forth in this Section 6.2(d).
(f) The Depositor, as initial holder of all the Class C and
Class R Certificates, agrees that it shall not transfer any of such
Certificates or any interest therein to Patten or any Affiliate of Patten
(other than a pledge of any of such Certificates to creditors of Patten in
accordance with paragraph (g) below), unless it shall have received a letter
from the Rating Agency to the effect that such Transfer will not result in the
downgrading of the rating assigned to the Class A or Class B Certificates.
Notwithstanding the foregoing or any other provision of this Agreement to the
contrary, nothing contained herein shall limit the Depositor's ability to
transfer any Certificates to the Trustee in connection with the adoption of a
plan of liquidation of PRT.
(g) Patten and the Depositor agree that any Certificate owned
by them, or any Affiliate thereof, will be registered in the name of Patten,
the Depositor or such Affiliate, as the case may be, and will not be registered
in the name of a broker or other nominee.
(h) Subject to compliance with all requirements of this
Section 6.2, including delivery of an investment letter by the pledgee, the
Depositor (or Patten or an Affiliate thereof if transfer to Patten or such
Affiliate first shall have been effected in accordance with this Section 6.2)
shall have the
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right to pledge the Class C Certificates as security in connection with
financing transactions.
(i) No service charge shall be made for any transfer or
exchange of Certificates of any Class, but the Trustee 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 Certificates.
(j) All Certificates surrendered for transfer and exchange
shall be destroyed by the Certificate Registrar.
Section 6.3 Mutilated, Destroyed, Lost or Stolen
Certificates. If (i) any mutilated Certificate is surrendered to the
Certificate Registrar or the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Trustee, Patten and the Certificate Registrar such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor, Class and Percentage Interest. Upon the issuance of any new Certificate
under this Section, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Certificate Registrar) connected therewith. Any duplicate Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or
not the lost, stolen or destroyed Certificate shall be found at any time.
Section 6.4 Persons Deemed Owners. Prior to due presentation
of a Certificate for registration of transfer, Patten, the Trustee, the
Certificate Registrar and any agent of Patten, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 5.1 and for all other purposes whatsoever, and neither
Patten, the Trustee, the Certificate Registrar nor any agent of Patten, the
Trustee or the Certificate Registrar shall be affected by notice to the
contrary. At Patten's request, the Trustee shall advise Patten as to the
registered owners of the Certificates or any thereof, the address for
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notices at which each such owner may be contacted with respect to matters
relating and limited to this Agreement and, in the case of an institutional
owner, the name of a representative of such owner.
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ARTICLE VII
PATTEN AND THE SERVICER
Section 7.1 Liability of Patten and the Servicer. Patten and
the Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by Patten and the Servicer
herein.
Section 7.2 Merger or Consolidation of, or Assumption of the
Obligations of, Patten and the Servicer. (a) Patten and the Servicer each
will maintain its existence as a corporation 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
Agreement or the Mortgage Loans, and to perform its duties under this
Agreement.
(b) Any Person into which Patten or the Servicer may be
merged or consolidated, or any Person resulting from any merger, conversion or
consolidation to which Patten or the Servicer shall be a party, or any
corporation succeeding to the business of Patten or the Servicer, which
executes an agreement of assumption to perform every obligation hereunder of
Patten or the Servicer, as the case may be, and, in the case of the Servicer,
which meets the requirements for a successor Servicer as provided in Section
8.2, shall be the successor hereunder of Patten or the Servicer, as the case
may be, 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.
Section 7.3 Limitation on Liability of Patten, the Servicer
and Others. Neither Patten, the Servicer nor any of the directors or officers
or employees or agents of Patten or the Servicer shall be under any liability
to the Trust Fund or the Certificateholders for any action taken or for
refraining from the taking of any action by Patten or the Servicer pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect Patten or the Servicer or any such person against
any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties of Patten or
the Servicer, as the case may be, hereunder or by reason of reckless disregard
of obligations and duties of Patten or the Servicer, as the case may be,
hereunder. Patten and the Servicer and any director or officer or employee or
agent of Patten or the Servicer may rely
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in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. Patten and
the Servicer and any director or officer or employee or agent of Patten or the
Servicer shall be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense related to any specific Mortgage Loan or Mortgage Loans (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) and any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Mortgage Loans in accordance with this Agreement and which in its
reasonable opinion may involve it in any expense or liability; provided,
however, that the Servicer may in its sole discretion undertake any such action
which it may deem necessary or desirable in respect of this Agreement and the
rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust Fund and the Servicer shall be entitled to be
reimbursed therefor from amounts held in the Collection Account as provided by
Section 3.4.
Section 7.4 Patten and the Servicer Not to Resign. Subject
to the provisions of Section 7.2, neither Patten nor the Servicer shall resign
from the obligations and duties hereby imposed on it except upon determination
that the performance of its duties hereunder is no longer permissible under
applicable law. Any such determination permitting the resignation of Patten or
the Servicer shall be evidenced by an Opinion of Independent Counsel to such
effect delivered to the Trustee. No such resignation of the Servicer shall
become effective until the Trustee or a successor Servicer shall have assumed
the responsibilities and obligations of the Servicer in accordance with Section
8.2.
Section 7.5 Sale, Assignment or Delegation of Duties by
Servicer. 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; provided, however, that the
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Servicer shall have the right without the prior written consent of the Trustee,
the Depositor or the Rating Agency to delegate or assign to or subcontract with
or authorize or appoint an Affiliate of the Servicer to perform and carry out
any duties, covenants or obligations to be performed and carried out by the
Servicer hereunder. In no case, however, shall any such delegation,
subcontracting or assignment to an Affiliate of the Servicer relieve the
Servicer of any liability hereunder. Notice of such permitted assignment shall
be given promptly by the Servicer to the Depositor, the Rating Agency and the
Trustee.
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ARTICLE VIII
DEFAULT
Section 8.1 Events of Default. If any one of the following
events ("Events of Default") shall occur and be continuing:
(a) Any failure by the Servicer to deposit amounts in the
Collection Account or the Certificate Account in the amount and manner provided
herein so as to enable the Trustee to distribute to Holders of Certificates of
any Class any payment required to be made under the terms of such Certificates
and this Agreement which continues unremedied for a period of 2 Business Days;
or
(b) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in the Certificates or in this Agreement, which failure (A)
materially affects the rights of Certificateholders and (B) continues
unremedied for a period of 30 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee, or to the Servicer and the Trustee by the Holders of
Certificates of any Class evidencing, as to such Class, Percentage Interests
aggregating not less than 25%; or
(c) The entry of a decree or order for relief by a court
having jurisdiction in respect of the Servicer in an involuntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other present or
future federal or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Servicer or of any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Servicer and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; or
(d) The commencement by the Servicer of a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law, or
the consent by the Servicer to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar
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official of the Servicer or of any substantial part of its property or the
making by the Servicer of an assignment for the benefit of creditors or the
failure by the Servicer generally to pay its debts as such debts become due or
the taking of action by the Servicer in furtherance of any of the foregoing;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied by the Servicer, either the Trustee, or the Holders of
Certificates of any Class evidencing, as to such Class, Percentage Interests
aggregating not less than 25%, by notice then given in writing to the Servicer
(and to the Trustee if given by Certificateholders) may, in addition to any
other remedies at law or in equity available to the Trustee for the benefit of
Certificateholders, terminate all of the rights and obligations of the Servicer
under this Agreement, including, without limitation, the right to the Servicing
Fee. On or after the receipt by the Servicer of such written notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Certificates or the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee pursuant to and under this Section 8.1, and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer and at the Servicer's sole expense, as
attorney-in-fact or otherwise, 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. The Servicer agrees to cooperate
with the Trustee in effecting the termination of the responsibilities and
rights of the Servicer hereunder, including, without limitation, the transfer
to the Trustee for the administration by it of all cash amounts that have been
or should have been deposited by the Servicer in the Collection Account and the
Certificate Account or thereafter received by the Servicer with respect to the
Mortgage Loans. In addition to any other amounts which are then, or,
notwithstanding the termination of its activities as Servicer, may become,
payable to the Servicer under this Agreement, the Servicer shall be entitled to
receive out of any delinquent payment on account of interest on a Mortgage Loan
due during the period prior to the notice pursuant to this Section 8.1 which
terminates the obligations and rights of the Servicer hereunder and received
after such notice, that portion of such payment which it would have been
entitled to retain pursuant to Section 3.4(ii) if such notice had not been
given and out of any delinquent payment on a Mortgage Loan due during such
period, that portion of such payment which it would have been entitled to
retain pursuant to Sections 3.4(vi) and (vii) if such notice had not been
given. Upon the occurrence of any Event of Default hereunder, Patten
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shall give the Rating Agency written notice of the occurrence thereof.
Section 8.2 Trustee to Act; Appointment of Successor. (a)
On and after the time the Servicer receives a notice of termination pursuant to
Section 8.1, the Trustee shall be the successor in all respects to the Servicer
in its capacity as Servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof except as otherwise provided by law; provided, however, that,
with respect to the obligation to make Monthly Advances pursuant to Section
4.2, the Trustee shall not be required to make any Monthly Advance if the
Trustee is prohibited by law from making such Monthly Advance, as evidenced by
an Opinion of Counsel. As compensation therefor, the Trustee shall, except as
provided in Section 8.1, be entitled to such compensation as the Servicer would
have been entitled to hereunder if no such notice of termination had been
given, including, without limitation, the Servicing Fee.
(b) The Trustee, as Successor Servicer, shall during the term
of its service as Servicer maintain in force (i) a policy or policies of
insurance covering errors and omissions in the performance of its obligations
as servicer hereunder, and (ii) a fidelity bond in respect of its officers,
employees and agents to the same extent as the Servicer is so required pursuant
to Section 3.14.
(c) Notwithstanding the above, the Trustee may, if it shall
be unwilling to so act, or shall, if it is unable to so act or if the Holders
of Certificates of each Class, voting as a Class, evidencing, as to each such
Class, Percentage Interests aggregating not less than 66% so request in writing
to the Trustee, appoint, or petition a court of competent jurisdiction to
appoint, any established mortgage loan servicing institution that has a net
worth of not less than $15,000,000 as the Successor Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder, provided, however, that the Trustee receives written
confirmation from each Rating Agency that such amendment will not cause such
Rating Agency to reduce the then current rating assigned to any of the rated
Certificates that were currently being rated by the Rating Agency. In the
event the Trustee is required to solicit bids, the Trustee shall solicit, by
public announcement, bids from housing and home finance institutions, banks and
mortgage servicing institutions meeting the qualifica-
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tions set forth above. Such public announcement shall specify that the
Successor Servicer shall be entitled to servicing compensation in an amount not
to exceed 0.75% per annum times the Principal Balance of each Mortgage Loan as
of each Installment Due Date for such Mortgage Loan (the "Successor Servicer
Fee"), together with the other servicing compensation in the form of assumption
fees, late payment charges net investment income, gain from REO sales or
otherwise. Within thirty days after any such public announcement, the Trustee
shall negotiate and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to the qualified party submitting the
highest qualifying bid. The Trustee shall deduct from any sum received by the
Trustee from the Successor Servicer in respect of such sale, transfer and
assignment all costs and expenses of any public announcement and of any sale,
transfer and assignment of the servicing rights and responsibilities hereunder
and the amount of any unreimbursed Monthly Advances. After such deductions,
the remainder of such sum shall be paid by the Trustee to the Servicer at the
time of such sale, transfer and assignment to the Successor Servicer. The
Trustee and such Successor Servicer shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession. The
Servicer agrees to cooperate with the Trustee and any Successor Servicer in
effecting the termination of the Servicer's servicing responsibilities and
rights hereunder and shall promptly provide the 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 Trustee or such Successor Servicer, as applicable, all
amounts which then have been or should have been deposited in the Collection
Account or the Certificate Account by the Servicer or which are thereafter
received with respect to the Mortgage Loans. Neither the Trustee nor any other
Successor Servicer shall be held liable by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof caused
by (i) the failure of the Servicer to deliver, or any delay in delivering,
cash, documents or records to it, or (ii) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer hereunder. No
appointment of a Successor Servicer hereunder shall be effective until written
notice of such proposed appointment shall have been provided by the Trustee to
each Certificateholder, and the Trustee shall have consented thereto. The
Trustee shall not resign as Servicer until a Successor Servicer has been
appointed.
Pending appointment of a Successor Servicer hereunder, the
Trustee shall act in such capacity as hereinabove provided.
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In connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such Successor Servicer out of payments on
Mortgage Loans as it and such Successor Servicer shall agree; provided,
however, that no such compensation shall be in excess of the Successor Servicer
Fee, together with other servicing compensation in the form of assumption fees,
late payment charges or otherwise as provided in this Agreement. The Servicer,
the Trustee and such Successor Servicer shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
Section 8.3 Notification to Certificateholders and Rating
Agency. Upon any termination or appointment of a Successor Servicer pursuant
to this Article VIII, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to the Rating Agency and to each Initial Purchaser. The Trustee
also shall notify the Rating Agency and each Initial Purchaser (a) if the
Trustee has actual knowledge that an Event of Default has occurred which was
then either cured or waived and (b) on an annual basis, within 60 days of each
anniversary of the Closing Date during the term of this Agreement, to the
effect that the Trustee has no actual knowledge as to the occurrence of any
Event of Default such preceding year.
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ARTICLE IX
THE TRUSTEE
Section 9.1 Duties of Trustee. The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Default has
occurred (which has not been cured), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
appear to conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of
Default, and after the curing of all such Events of Default which may
have occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
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 Trustee and, in the absence of bad faith on the part of
the Trustee, the 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 Trustee which conform to
the requirements of this Agreement and which are reasonably believed
to be genuine and duly authorized;
(ii) Neither the Trustee nor its directors,
officers, employees or agents shall be personally liable for an error
of judgment made in good faith by a
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Responsible Officer of the Trustee, unless it shall be proved that the
Trustee or such director, officer, employee or agent was negligent in
performing its duties in accordance with the terms of this Agreement;
(iii) Neither the Trustee nor its directors,
officers, employees or agents shall 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 Holders of Certificates
of any Class evidencing, as to such Class, Percentage Interests
aggregating not less than 25% relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under
this Agreement; and
(iv) So long as the Trustee is not the
Servicer, neither the Trustee nor its directors, officers, employees
or agents shall be charged with knowledge of any failure by the
Servicer to comply with its obligations referred to in clauses (a) and
(b) of Section 8.1 unless a Responsible Officer of the Trustee at the
Corporate Trust Office receives written notice of such failure from
Patten or the Holders of Certificates of any Class evidencing, as to
such Class, Percentage Interests aggregating not less than 25%.
The Trustee shall not be required 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 there
is reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of Patten or the Servicer under this Agreement, except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, the Servicer, in
accordance with the terms of this Agreement.
Section 9.2 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.1:
(i) The Trustee may rely and shall be
protected in acting or refraining from acting upon any
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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 Trustee may consult with counsel
and any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted
by it hereunder in good faith and in accordance with such Opinion of
Counsel;
(iii) The 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
hereunder or in relation hereto, at the request, order or direction of
any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the
obligations, upon the occurrence of an Event of Default (which has not
been cured), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(iv) The 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;
(v) Prior to the occurrence of an Event of
Default and after the curing of all Events of Default which may have
occurred, the 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, approval, bond or other paper or document, unless requested in
writing to do so by Holders of Certificates of any Class evidencing,
as to such
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Class, Percentage Interests aggregating not less than 25%; provided,
however, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it
by the terms of this Agreement, the Trustee may require reasonable
indemnity against such cost, expense or liability as a condition to
such proceeding. The reasonable expense of every such examination
shall be paid by Patten or, if paid by the Trustee, shall be
reimbursed by Patten upon demand. Nothing in this clause (v) shall
derogate from the obligation of Patten to observe any applicable law
prohibiting disclosure of information regarding the Obligors; and
(vi) The 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.
Section 9.3 Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein and in the Certificates (other than the
signature and authentication of the Trustee on the Certificates) shall not be
taken as the statements of the Trustee, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the signature and authentication of the Trustee on the
Certificates) or of the Mortgage Loans or any related document. The Trustee
shall not be accountable for the use or application by the Depositor or Patten
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to Patten or any of its Affiliates in
respect of the Mortgage Loans or deposited in or withdrawn from the Collection
Account or the Certificate Account by the Depositor, Patten or the Servicer,
except to the extent the Trustee becomes the successor Servicer (and in that
event, then only for withdrawals or deposits made by the Trustee in its
capacity as Servicer).
Section 9.4 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Certificates with the same rights as it would have if it were not Trustee.
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Section 9.5 Trustee's Fees and Expenses. The Trustee shall
be entitled to withdraw from the Collection Account pursuant to Section 3.4(ii)
the Trustee's Fee as reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust) for all services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, and the Trustee shall be entitled to reimbursement
from the Collection Account pursuant to Section 3.4(iii) for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or which
is the responsibility of Certificateholders hereunder. In addition, except as
otherwise set forth in Section 3.14, Patten covenants and agrees to indemnify
the Trustee, its directors, officers, employees and agents from, and hold them
harmless against, any and all losses, liabilities, damages, claims or expenses
other than those resulting from the negligence or bad faith of the Trustee, its
directors, officers, employees and agents.
Section 9.6 Eligibility Requirements for Trustee. The
Trustee hereunder shall not be an Affiliate of Patten, the Servicer or any
Obligor with respect to more than 5% of the Cut-Off Date Principal Balance of
the Mortgage Loans and shall at all times be a corporation organized and doing
business under the laws of any 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, and subject to supervision or examination by federal or
state authority and which will not adversely affect the then current rating of
the Class A Certificates. 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 9.6,
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. The Trustee and any successor trustee so long as such
Person is Trustee hereunder shall be covered by such insurance covering errors
and omissions and the fidelity of its officers, employees and agents as is
standard for Persons performing similar duties. In case at any time the Trustee
shall
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cease to be eligible in accordance with the provisions of this Section 9.6, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 9.7.
Section 9.7 Resignation or Removal of Trustee. The Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to Patten. Upon receiving such notice of
resignation, Patten shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the resigning Trustee and one copy to the successor Trustee provided, however,
that the Trustee receives written confirmation from each Rating Agency that
such amendment will not cause such Rating Agency to reduce the then current
rating assigned to any of the rated Certificates that were currently being
rated by the Rating Agency. If no successor Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.6 and shall fail to resign after
written request therefor by Patten, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
Patten may remove the Trustee. If it removes the Trustee under the authority
of the immediately preceding sentence, Patten shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.7 shall
not become effective until acceptance of appointment by the successor Trustee
as provided in Section 9.8.
Section 9.8 Successor Trustee. Any successor Trustee
appointed as provided in Section 9.7 shall execute, acknowledge and deliver to
Patten 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,
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deed or conveyance, 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. The predecessor Trustee shall deliver to the
successor Trustee the Mortgage Loans and related documents and statements held
by it hereunder; and Patten and the predecessor 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 Trustee all
such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in
this Section 9.8 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 9.6.
Upon acceptance of appointment by a successor Trustee as
provided in this Section 9.8, the Servicer shall mail notice of the succession
of such Trustee hereunder to all holders of Certificates at their addresses as
shown in the Certificate Register and to the Rating Agency. If the Servicer
fails to mail such notice within 10 days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed
at the expense of the Servicer.
Section 9.9 Merger or Consolidation of Trustee. Any
corporation into which the 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 Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 9.6, 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.
Section 9.10 Appointment of Co-Trustee or Separate 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 Trust Fund or property securing any Mortgage Note may at the time be
located, the Servicer and the Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
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benefit of the Certificateholders, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 9.10, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in the case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 9.6 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 9.8.
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 Trustee shall be conferred
or imposed upon and exercised or performed by the 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 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 (whether as Trustee hereunder or as successor to
the Servicer hereunder), the 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 Fund 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 Trustee;
(ii) No trustee hereunder shall be held
personally liable by reason of any act or omission of any other
trustee hereunder; and
(iii) The Servicer and the Trustee acting
jointly may at any time accept the resignation of or remove any
separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to
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each of them. Every instrument appointing any separate trustee or co-trustee
shall refer to this Agreement and the conditions of this Article IX. 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, either jointly with the 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 Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate trustee or co-trustee may, at any time,
constitute the 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 Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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ARTICLE X
TERMINATION
Section 10.1 Termination Upon Repurchase by Patten or
Liquidation of All Mortgage Loans. Subject to Section 10.2, the respective
obligations and responsibilities of PRT, Patten, the Servicer, the Depositor
and the Trustee created hereby (other than the obligation to make payments to
Certificateholders as hereafter set forth in this Section 10.1) shall terminate
upon (i) the later of the final payment or other liquidation (or any Monthly
Advance with respect thereto) of the last Mortgage Loan in the Trust Fund and
the disposition of all property acquired in respect of any Mortgage Loan or
(ii) the optional repurchase by Patten of the Mortgage Loans and any other
assets remaining in the Trust Fund on any Remittance Date after the date on
which the Principal Balance of all Mortgage Loans is less than 10% of the
Cut-Off Date Principal Balance, at a price equal to (A) the greater of (x) 100%
of the Principal Balance of each such Mortgage Loan as of the Installment Due
Date preceding the Remittance Date upon which the proceeds of such repurchase
are to be distributed, plus interest at the applicable Mortgage Interest Rate
through the last Installment Due Date in the Collection Period preceding the
Remittance Date on which the proceeds of such repurchase are to be distributed
to Certificateholders, and (y) the fair market value of the Mortgage Loans,
plus (B) the fair market value of any other property remaining in the Trust
Fund or (iii) provided that all of the Certificates not then paid in full are
held by Patten, the Depositor or any of their respective Affiliates (and are
not subject to any pledge or repurchase agreement), by mutual consent of
Patten, the Depositor and the Trustee (which consent, in the case of the
Trustee, shall not be unreasonably withheld); 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 to the Court of St. James, living on
the date hereof. The fair market value, in the case of the Mortgage Loans, REO
Property or other property in the Trust Fund, is to be determined by an
independent appraiser mutually agreed upon by the Servicer and the Trustee (net
of any liquidation expenses to be incurred in connection with the disposition
of such REO Property, estimated in good faith by the Servicer).
If Patten exercises its right to purchase the Mortgage Loans
pursuant to clause (ii) above, Patten shall provide to the Trustee the
certification required by Section 3.8 and the Trustee
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shall promptly release the Mortgage Documents pertaining to the Mortgage Loans
to Patten.
Notice of any termination, specifying the Remittance Date upon
which the Certificateholders may surrender their Certificates to the Trustee
for payment of the final distribution and cancellation, shall be given promptly
by Patten (if it is exercising its right to purchase the assets of the Trust
Fund) or by the Trustee (in any other case) by letter to Certificateholders
mailed not earlier than the 15th day and not later than the 25th day of the
month next preceding the month of such final distribution specifying (a) the
Remittance Date upon which final payment of the Certificates will be made upon
presentation and surrender of Certificates at the office or agency of the
Trustee therein designated, (b) the amount of any such final payment and (c)
that the Record Date otherwise applicable to such Remittance Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. If
Patten is obligated to give notice to Certificateholders as aforesaid, it shall
give such notice to the Trustee and the Certificate Registrar at the time such
notice is given to Certificateholders. In the event such notice is given by
Patten, Patten shall deposit in the Collection Account on or before the
Remittance Date so specified in immediately available funds an amount equal to
the amount necessary to make the amount, if any, on deposit in the Collection
Account on such Remittance Date equal to the purchase price for the assets of
the Trust Fund computed as above provided. Any such notice, whether given by
Patten or the Trustee, shall be given to the Rating Agency by Patten at the
time such notice is given to Certificateholders.
In the event that Patten has exercised its option to
repurchase the Mortgage Loans as above provided, the proceeds of such
repurchase shall be deposited into the Certificate Account and shall be
distributed to Certificateholders as part of the Amount Available pursuant to
Section 5.1.
In the event that all of the Certificateholders shall not
surrender their Certificates for final payment and cancellation on or before
the final Remittance Date, the Trustee shall on such date cause all funds in
the Certificate Account not distributed in final distribution to
Certificateholders to be withdrawn from the Certificate Account and credited to
the remaining Certificateholders by depositing such funds in a separate escrow
account for the benefit of such Certificateholders and Patten (if it exercises
its right to purchase the assets of the Trust Fund)
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or the Trustee (in any other case) shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within one year
after the second notice all the Certificates shall not have been surrendered
for cancellation, the Trustee may take appropriate steps, or may appoint an
agent to take appropriate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds on deposit in such escrow account.
Section 10.2 Additional Termination Requirements. (a) In
connection with any termination pursuant to clause (ii) of Section 10.1, the
Trust Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee has received an Opinion of Counsel to the
effect that the failure of the Trust Fund to comply with the requirements of
this Section 10.2 will not (i) result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in Section 860F of the Code or
"prohibited contributions" within the meaning of Section 860G(d) of the Code,
or (ii) cause the Trust Fund to fail to qualify as a REMIC at any time that any
Class A, Class B or Class C Certificates are outstanding:
(i) Within 89 days prior to the Remittance
Date set forth in the notice given by Patten under Section 10.1, the
Trustee shall adopt a plan of complete liquidation of the Trust REMIC,
meeting the requirements of a qualified liquidation under the REMIC
Provisions;
(ii) At or after the time of adoption of
such a plan of complete liquidation and at or prior to such Remittance
Date, the Trustee shall sell any remaining assets of the Trust Fund to
the Depositor for cash;
(iii) At the time of the making of the final
payment on the Certificates other than the Class R Certificates, the
Trustee shall distribute or credit, or cause to be distributed or
credited, to the Holders of the Class R Certificates all cash on hand
after such final payment (other than cash retained to meet claims),
and the Trust Fund shall terminate at that time; and
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(iv) In no event may the final payment on
the Certificates (except to the extent permitted in Section 10.1 with
respect to Certificateholders who fail to surrender their
Certificates) be made after the 89th day from the date on which the
plan of complete liquidation is adopted.
(b) By their acceptance of the Class R Certificates, the
Holders thereof hereby authorize the Trustee to adopt such a plan of complete
liquidation upon the written request of Patten and to take such other action in
connection therewith as may be reasonably requested by Patten, which
authorization shall be binding upon all successor Class R Certificateholders.
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ARTICLE XI
REMIC ADMINISTRATION
Section 11.1 REMIC Administration. (a) An election will be
made by the Trustee on behalf of the Trust REMIC to treat the segregated pool
of assets constituting the Trust Fund (other than the Collection Account) as a
REMIC under the Code (the "Trust REMIC"). Such election will be made on Form
1066 or other appropriate federal tax or information return for the taxable
year ending on the last day of the calendar year in which the Certificates are
issued. For purposes of such election, the Class A, Class B and Class C
Certificates shall be designated as the "regular interests" in the Trust REMIC
and the Class R Certificates shall be designated as the "residual interest" in
the Trust REMIC. In no event, and notwithstanding anything contained in this
Agreement to the contrary, shall any distribution be made on the Class A, Class
B or Class C Certificates after September 1, 2013 (which shall be the final
maturity date for the Class A, Class B and Class C Certificates);
(b) The Closing Date is hereby designated as the "Startup
Day" of the Trust REMIC within the meaning of Section 860G(a)(9) of the Code.
(c) Except as provided in Section 3.14 of this Agreement, the
Trustee shall pay (without reimbursement) any and all tax related expenses (not
including any taxes, however denominated, including any additions to tax,
penalties and interest) of the Trust REMIC, including but not limited to any
professional fees or expenses related to audits or any administrative or
judicial proceedings with respect to the Trust REMIC that involve the Internal
Revenue Service or state tax authorities.
(d) The Trustee shall prepare (or caused to be prepared),
sign and file all of the Trust REMIC's federal and state income or franchise
tax and information returns as the Trust REMIC's direct representative. Except
as provided in Section 3.14 of this Agreement, the expenses of preparing and
filing such returns shall be borne by the Trustee. The Servicer shall provide
on a timely basis to the Trustee or its designee such information with respect
to the Trust REMIC as is in its possession, which the Servicer has received or
prepared by virtue of its activities as Servicer hereunder and reasonably
requested by the Trustee to enable it to perform its obligations under this
subsection, and the Trustee shall be entitled to rely on such information in
the performance of its obligations hereunder.
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(e) The Trustee shall perform on behalf of the Trust REMIC
all reporting and other tax compliance duties that are the responsibility of
the Trust REMIC under the Code, REMIC Provisions, or other compliance guidance
issued by the Internal Revenue Service or any state or local taxing authority.
Among its other duties, the Trustee shall provide (i) to the Internal Revenue
Service or other Persons (including, but not limited to, the transferor of a
Class R Certificate, to a Disqualified Organization or to an agent that has
acquired a Class R Certificate on behalf of a Disqualified Organization) such
information as is necessary for the application of any tax relating to the
transfer of a Class R Certificate to any Disqualified Organization and (ii) to
the Certificateholders such information or reports as are required by the Code
or REMIC Provisions. The Servicer shall provide on a timely basis to the
Trustee or its designee such information with respect to the Trust REMIC as is
in its possession and reasonably requested in writing by the Trustee to enable
it to perform its obligations under this subsection.
(f) The Holder of the greatest percentage of Percentage
Interests of the Class R Certificates shall be the Trust REMIC's Tax Matters
Person. The duties of the Tax Matters Person for the Trust REMIC are hereby
delegated to the Trustee and each Class R Certificateholder, by acceptance of
its Class R Certificate, agrees, on behalf of itself and all successor holders
of such Class R Certificate, to such delegation to the Trustee as their agent
and attorney in fact. The Trustee shall take whatever action is necessary for
the signing of such documents and designation of a Tax Matters Person,
including the designation of such Class R Certificateholder.
(g) The Trustee, the Holders of the Class R Certificates and
the Servicer shall act in accordance with this Agreement and the REMIC
Provisions in order to create and maintain the status of the Trust REMIC as a
REMIC or, as appropriate, adopt a plan of complete liquidation.
(h) The Trustee, the Holders of the Class R Certificates and
the Servicer shall not take any action or cause the Trust REMIC to take any
action that, under the REMIC Provisions, could (i) endanger the status of the
Trust REMIC as a REMIC or (ii) result in the imposition of a tax upon the Trust
REMIC (including but not limited to the tax on prohibited transactions as
defined in Code Section 860F(a)(2) and the tax on prohibited contributions as
defined in Code Section 860G(d)) unless (A) the Trustee has received a
Nondisqualification Opinion (at the
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expense of the party seeking to take such action) with respect to such action
or (B) the Trustee has received an opinion (at the expense of the party seeking
to take such action) to the effect that such action will not cause the Trust
REMIC to fail to qualify as a REMIC and the Trustee has calculated that no tax
will actually be imposed.
(i) The Holders of the Class R Certificates shall pay when
due their pro rata share of any and all federal, state and local taxes imposed
on the Trust REMIC or its assets or transactions, including, without
limitation, "prohibited transaction" taxes, as defined in Section 860F of the
Code, any tax on contributions imposed by Section 860G(d) of the Code, and any
tax on "net income from foreclosure property" as defined in Section 860G(c) of
the Code. To the extent that such Trust REMIC taxes are not paid by the Class
R Certificateholders, the Trustee shall pay any remaining Trust REMIC taxes out
of current or future amounts otherwise distributable to the Holders of the
Class R Certificates or, if no such amounts are available, out of other amounts
held in the Collection Account pursuant to Section 3.4(xi).
(j) The Trustee and, to the extent that records are
maintained by the Servicer in the normal course of its businesses, the Servicer
shall, for federal income tax purposes, maintain books and records with respect
to the Trust REMIC on a calendar year and on an accrual basis. The books and
records must be sufficient concerning the nature and amount of the Trust
REMIC's investments to show that the Trust REMIC has complied with the REMIC
Provisions.
(k) Neither the Trustee nor the Servicer shall enter into any
arrangement by which the Trust REMIC will receive a fee or other compensation
for services.
(l) In order to enable the Trustee to perform its duties as
set forth herein, the Depositor shall provide, or cause to be provided, to the
Trustee within ten (10) days after the Closing Date all information or data
that the Trustee reasonably determines to be relevant for tax purposes on the
valuations and offering prices of the Certificates, including, without
limitation, the yield, prepayment assumption, issue prices and projected cash
flows of the Class A, Class B, Class C and Class R Certificates, as applicable,
and the projected cash flows on the Mortgage Loans. Thereafter, the Depositor
shall provide to the Trustee, promptly upon request therefor, any such
additional information or data that the Trustee may, from time to time,
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reasonably request in order to enable the Trustee to perform its duties as set
forth herein. The Trustee is hereby directed to use any and all such
information or data provided by the Depositor in the preparation of all federal
and state income or franchise tax and information returns and reports for the
Trust REMIC to Certificateholders as required herein. The Depositor hereby
indemnifies the Trustee for any losses, liabilities, damages, claims or
expenses of the Trustee arising from any errors or miscalculations of the
Trustee pursuant to this Section that result from any failure of the Depositor
to provide, or to cause to be provided, accurate information or data to the
Trustee (but not resulting from the methodology employed by the Trustee) on a
timely basis and such indemnifications shall survive the termination of this
Agreement.
The Trustee agrees that all such information or data so
obtained by it are to be regarded as confidential information and agrees that
it shall use its best reasonable efforts to retain in confidence, and shall
ensure that its officers, employees and representatives retain in confidence,
and shall not disclose, without the prior written consent of the Depositor, any
or all of such information or data, or make any use whatsoever (other than for
the purposes contemplated by this Agreement) of any such information or data
without the prior written consent of the Depositor, unless such information is
generally available to the public (other than as a result of a breach of this
Section 11.1(l)) or is required by law or applicable regulations to be
disclosed.
Section 11.2 REO Property. (a) Notwithstanding any other
provision of this Agreement, the Servicer, acting on behalf of the Trustee
hereunder, shall not rent, lease, or otherwise earn income on behalf of the
Trust Fund with respect to any REO Property which might cause such REO Property
to fail to qualify as "foreclosure" property within the meaning of section
860G(a)(8) of the Code or result in the receipt by the Trust REMIC of any
"income from non-permitted assets" within the meaning of section 860F(a)(2) of
the Code or any "net income from foreclosure property" which is subject to tax
under the REMIC Provisions unless the Trustee has received an Opinion of
Counsel (at the Trust Fund's expense) to the effect that, under the REMIC
Provisions and any relevant proposed legislation, any income generated for the
Trust REMIC by the REO Property would not result in the imposition of a tax
upon the Trust REMIC.
(b) The Trustee, or the Servicer, acting on its behalf
hereunder, shall make reasonable efforts to sell any REO Property
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for its fair market value. In any event, however, the Trustee, or the
Servicer, acting on its behalf hereunder, shall dispose of any REO Property
within two years of its acquisition by the Trust Fund unless the Trustee or the
Servicer, on its behalf, has been granted an extension of time (an
"Extension") by the Internal Revenue Service to sell such REO Property. If the
Trustee or the Servicer, on its behalf, has received such an Extension, then
the Trustee, or the Servicer, acting on its behalf hereunder, shall continue to
attempt to sell the REO Property for its fair market value for such period
longer than two years as such Extension permits (the "Extended Period"). If
the Trustee or the Servicer, on its behalf, has not received such an Extension
and the Trustee, or the Servicer acting on behalf of the Trustee hereunder, is
unable to sell the REO Property within the two year period or if the Trustee
has received such an Extension, and the Trustee, or the Servicer acting on
behalf of the Trustee hereunder, is unable to sell the REO Property within the
Extended Period, the Servicer shall before the end of the two-year period or
Extended Period, as the case may be, auction the REO Property to the highest
bidder (which may be the Servicer) in accordance with Accepted Servicing
Practices.
(c) At the time of the delivery of the next subsequent
Servicer's Certificate, the Servicer shall provide to the Trustee a statement
of accounting for such REO Property, including without limitation, (i) the date
such Mortgaged Property was acquired in foreclosure or by deed in lieu of
foreclosure, (ii) the date of disposition of such REO Property, (iii) the gross
sales price and related selling and other expenses, (iv) accrued interest on
the declining Principal Balance at the applicable Mortgage Interest Rate
calculated from the date of acquisition to the disposition date, and (v) such
other information as the Trustee may reasonably request.
Section 11.3 Modifications of Mortgage Loans.
Notwithstanding anything to the contrary in this Agreement, neither the Trustee
nor the Servicer shall permit any modification of any material term of a
Mortgage Loan (including the interest rate, the outstanding principal balance,
the amortization schedule, or any other term affecting the amount or timing of
payments on such Mortgage Loan) unless (i) the Trustee and the Servicer have
received a Nondisqualification Opinion or a ruling from the Internal Revenue
Service (at the expense of the party making the request of the Servicer or the
Trustee to modify such Mortgage Loan) to the same effect as a
Nondisqualification Opinion with respect to such modification or (ii) a payment
default with respect to such Mortgage Loan is reasonably foreseeable or has
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occurred and the Servicer determines that a modification, waiver or amendment
of such Mortgage Loan is reasonably likely to produce a greater recovery on a
present value basis than liquidation of the related Mortgaged Property;
provided, however, that the Servicer agrees not to permit any modification of a
Mortgage Loan that would change the Mortgage Interest Rate or the method of
determining the Mortgage Interest Rate, extend the maturity date of such
Mortgage Loan beyond ________________ or forgive any principal and interest
thereof, unless the Servicer has notified the Trustee and the
Certificateholders of such proposed modification and such modification has been
approved by 100% in Percentage Interests of the Certificateholders; and
provided, further, that no such modification shall release the lien of the
Mortgage on the related Mortgage Property unless the Servicer has obtained a
Nondisqualification Opinion with respect to such modification.
Section 11.4 Prohibited Transactions and Activities. Except
as otherwise provided in Section 2.3, the Trustee shall not permit the sale,
disposition or substitution of the Mortgage Loans or the substitution of a
property for a Mortgaged Property (except in a disposition pursuant to (i) the
bankruptcy or insolvency of the Trust REMIC or (ii) the termination of the
Trust REMIC in a "qualified liquidation" as defined in Section 860F(a)(4) of
the Code), nor acquire any assets for the Trust REMIC (other than REO
Property), nor sell or dispose of any investments in the Collection Account or
the Certificate Account for gain, nor accept any contributions to the Trust
REMIC (other than a cash contribution during the 3-month period beginning on
the Startup Day), unless it has received an Opinion of Counsel (at the expense
of the Person requesting the Trustee to take such action) to the effect that
such disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of the Trust REMIC as a REMIC or of the Certificates,
other than the Class R Certificates, as the regular interests therein, (b)
affect the distribution of interest or principal on the Certificates, (c)
result in the encumbrance of the assets transferred or assigned to the Trust
REMIC (except pursuant to the provisions of this Agreement) or (d) cause the
Trust REMIC to be subject to a tax on "prohibited transactions" or "prohibited
contributions" pursuant to the REMIC Provisions.
Section 11.5 Indemnification with Respect to Certain Taxes
and Loss of REMIC Status. (a) In the event that the Trust REMIC fails to
qualify as a REMIC, loses its status as a REMIC, or incurs state or local
taxes, or tax as a result of a prohibited transaction or contribution subject
to taxation under the REMIC Provisions due to the negligent performance by the
Trustee
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of its duties and obligations specifically set forth herein, the Trustee shall
indemnify the Holders of the Class R Certificates against any and all losses,
claims, damages, liabilities or expenses ("Losses") resulting from such
negligence; provided, however, that the Trustee shall not be liable for any
such Losses attributable to the action or inaction of the Servicer, the
Depositor or the Holders of the Class R Certificates nor for any such Losses
resulting from misinformation provided by the Servicer, the Depositor or such
Holders of the Class R Certificates on which the Trustee has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of
the other Holders of the Class R Certificates now or hereafter existing at law
or in equity.
(b) In the event that the Trust REMIC fails to qualify as a
REMIC, loses its status as a REMIC, or incurs state or local taxes, or a tax as
a result of a prohibited transaction or contribution subject to taxation under
the REMIC Provisions due to the negligent performance of the Servicer of its
duties and obligations specifically set forth herein, the Servicer shall
indemnify the Holders of the Class R Certificates against any and all Losses
resulting from such negligence; provided, however, that the Servicer shall not
be liable for any such Losses attributable to the action or inaction of the
Trustee, the Depositor, or the Holders of such Class R Certificates nor for any
such Losses resulting from misinformation provided by the Trustee, the
Depositor or such Holders of the Class R Certificates on which the Servicer has
relied. The foregoing shall not be deemed to limit or restrict the rights and
remedies of the other Holders of the Class R Certificates now or hereafter
existing at law or in equity.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1 Amendment of Agreement. This Agreement may be
amended from time to time by PRT, Patten, the Servicer, the Depositor and the
Trustee, without the consent of any of the Certificateholders, to (i) cure any
ambiguity, to (ii) amend any provision hereof to the extent necessary or
desirable to maintain the status of the Trust REMIC as a REMIC or (iii) correct
or supplement any provisions herein or therein which may be inconsistent with
any other provisions herein or therein, as the case may be, or to add any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action pursuant to clause (iii) shall not, as
evidenced by an Opinion of Counsel delivered to the Trustee, (i) adversely
affect in any material respect the interests of any Certificateholder not
consenting thereto or (ii) adversely affect the status of the Trust REMIC as a
REMIC. Any such amendment shall be deemed not to adversely affect in any
material respect any Holder if the Trustee receives written confirmation from
each Rating Agency that such amendment will not cause such Rating Agency to
reduce the then current rating assigned to any of the rated Certificates that
were currently being rated by the Rating Agency (and any Opinion of Counsel
requested by the Trustee in connection with any such amendment may rely
expressly on such confirmation as the basis therefor).
This Agreement may also be amended from time to time by PRT,
Patten, the Servicer, the Depositor and the Trustee, with the consent of the
Holders of Certificates of each Class affected thereby, voting as a Class,
evidencing, as to each such Class, Percentage Interests aggregating not less
than 66%, 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 Holders of Certificates; provided, however, that no
such amendment shall (a) reduce in any manner the amount of, or delay the
timing of, collections of payments on Mortgage Loans or distributions which are
required to be made on any Certificate without the consent of the Holder of
each such Certificate or (b) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of the Holders of all
Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment of this
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Agreement, unless it shall have first received an Opinion of Counsel to the
effect that such amendment will not cause the Trust REMIC to fail to qualify as
a REMIC at any time that any Class A, Class B or Class C Certificates are
outstanding.
Prior to the execution of any such amendment or consent the
Trustee shall notify the Rating Agency thereof and promptly after the execution
of any such amendment or consent the Trustee, shall furnish written
notification of the substance of such amendment to each Certificateholder and
to the Rating Agency.
It shall not be necessary for the consent of
Certificateholders under this Section 12.1 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may prescribe.
Section 12.2 Recordation of Agreement. To the extent
required by applicable law in order to protect the Trustee's interest in the
Trust Fund, this Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages
are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by Patten and at its expense.
Section 12.3 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust
Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
provided in Section 12.1) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by
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reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates of any Class evidencing,
as to such Class, Percentage Interests aggregating not less than 25% shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request an offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner and to
the extent whatever by virtue or by availing itself or themselves of any
provisions of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of the Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner and to the extent herein provided
and for the equal, ratable and common benefit of all Certificateholders. For
the protection and enforcement of the provisions of this Section 12.3, each and
every Certificateholder and the Trustee shall be entitled to such relief as can
be given either at law or in equity.
Section 12.4 Governing Law. Except as set forth in the next
sentence, this Agreement shall be construed in accordance with the internal
laws of the State of New York without giving effect to principles of conflicts
of laws and the obligations, rights and remedies of the parties hereunder shall
be determined in accordance with such laws. Notwithstanding the above, the
obligations, rights and remedies of the Trustee hereunder shall be construed
and determined in accordance with the internal laws of the State of Minnesota
without giving effect to principles of conflicts of laws.
Section 12.5 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed
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to have been duly given if personally delivered at or mailed by certified mail,
return receipt requested, to (a) in the case of the Depositor, the Servicer or
PRT, 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486, Attention:
President, with a copy to Patten, (b) in the case of Patten, to Patten
Corporation, 5295 Town Center Road, Suite 400, Boca Raton, Florida 33486,
Attention: President, (c) in the case of the Trustee, to First Trust National
Association, 180 East 5th Street, St. Paul, Minnesota 55101, Attention:
Corporate Trust, and in the case of the Rating Agency, to Duff & Phelps Credit
Rating Co., 55 East Monroe Street, Chicago, Illinois 60603, Attention:
Structured Finance Research and Monitoring Group or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party. Any notice required or permitted to be mailed to a
Certificateholder or an Initial Purchaser shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Certificate
Register or, if so requested, by facsimile transmission. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such
notice.
Section 12.6 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 of
the Certificates or the rights of the Holders thereof.
Section 12.7 Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 7.2, 7.4 and 7.5,
this Agreement may not be assigned by Patten or the Servicer without the prior
written consent of Holders of Certificates of each Class, voting as a Class,
evidencing, as to each such Class, Percentage Interests aggregating not less
than 66%.
Section 12.8 Certificates Nonassessable and Fully Paid. It
is the intention of the Trustee that Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the beneficial ownership
interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust Fund or for any reason whatsoever, and that
Certificates upon execution, countersignature and delivery thereof by
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the Trustee pursuant to Section 2.4 are and shall be deemed fully paid.
Section 12.9 Reports to Rating Agency. The Trustee or the
Servicer, as applicable, shall send the Rating Agency copies of all opinions,
notices, certificates, statements, schedules and reports sent to
Certificateholders.
Section 12.10 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.
Section 12.11 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.
* * *
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IN WITNESS WHEREOF, PRT, the Depositor, Patten and the Trustee
have caused this Agreement to be duly executed by their respective officers and
their respective seals, duly attested, to be hereunto affixed, all as of the
day and year first above written.
PATTEN CORPORATION REMIC TRUST,
SERIES 1995-1
By: First Trust National
Association, as Trustee
By: /s/ Kathi Mohammadzadah
------------------------------------
Name: Kathi Mohammadzadah
Title: Trust Officer
By: /s/ Christina Hatfield
------------------------------------
Name: Christina Hatfield
Title: Assistant Vice President
PATTEN RECEIVABLES FINANCE
CORPORATION X, as Depositor
By: /s/ Alan C. Murray
------------------------------------
Name:
Title:
PATTEN CORPORATION
By: /s/ Alan C. Murray
------------------------------------
Name:
Title:
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FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By: /s/ Kathi Mohammadzadah
------------------------------------
Name: Kathi Mohammadzadah
Title: Trust Officer
By: /s/ Christina Hatfield
------------------------------------
Name: Christina Hatfield
Title: Assistant Vice President
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EXHIBIT 99
PRESS RELEASE
Contact: Mary Jo Wiegand, Vice President and Director of Investor Relations
================================================================================
PATTEN CORPORATION ANNOUNCES PRIVATE PLACEMENT OF REAL
ESTATE MORTGAGE INVESTMENT CONDUIT (REMIC) PASS-THROUGH
CERTIFICATES
================================================================================
Boca Raton, Florida, July 13, 1995 - Patten Corporation (NYSE:PAT)
today announced that it has completed the sale of approximately $66.1 million
aggregate principal amount of Class A and Class B Adjustable Rate REMIC
Pass-Through Certificates in a private placement. The securities were not
registered under federal or state laws and may not be resold absent
registration or an applicable exemption from registration requirements. At the
date of issue, the interest rate on the $61.3 million aggregate principal
amount of Class A Certificates was set at six-month LIBOR plus 1.50%, or 7.25%.
The interest rate on the $4.8 million aggregate principal amount of Class B
Certificates was set at six-month LIBOR plus 3.55%, or 9.30%.
The REMIC, which will be serviced by the Company, primarily consists of
a pool of fixed and adjustable rate first mortgage loans secured by land
property sold by Patten. The outstanding principal balance of the mortgage
loans sold to the REMIC trust approximated $68.1 million. A portion of the
proceeds from the transaction was used to repay approximately $12.8 million of
outstanding debt. An additional $36.3 million was used to retire outstanding
securities issued pursuant to an earlier REMIC financing. The balance of the
proceeds, after payment of issuance expenses, resulted in an increase to
Patten's unrestricted cash of more than $15.8 million.
Patten Corporation is engaged in the acquisition, development, sale and
financing of recreational land, residential land and timeshare resort property.
The Company is also engaged in the construction and sale of homes in certain
markets. Patten is headquartered in Boca Raton, Florida and operates in twenty
of the United States.
xxx
